Big Plans are susceptible to changes in the world around us, and even bold visionaries can have wrong assumptions about the future.
After blanketing the media landscape over the summer with The Pickens Plan, T Boone Pickens has announced that he is slowing down his plans to build a massive wind farm in West Texas. Pickens’ $2 billion order of GE wind turbines has not been affected, but scaling up of the project is likely to happen more slowly than originally hoped.
A changing world or wrong assumptions?
Pickens has certainly felt the pains of shifts in the market where money is now in short supply and the global economic slowdown has battered his energy intensive hedge fund. But there have always been flaws to his core assumptions that support the vision that have somehow escaped widespread critical thought or media scrutiny. Pickens deserves credit for his willingness to advance the energy conversation in the US, but it does not free his Plan from closer examination:
#1 Utilities won’t evolve without regulatory changes
#2 Wind needs storage to evolve
#3 Natural Gas is a globally integrated industry, no breaking ‘foreign’ dependency there!
#4 The Auto Industry’s problem is not oil, it’s the combustion engine.
#5 Building transmission lines in my backyard or ranch?! It’ll cost you!
#1 Utilities won’t evolve without regulatory changes
One of the great efficiency opportunities for the next century is based on the convergence of information and energy flows. The notion of a 'smart grid' is a more reliable and efficient energy web based on the integration of software, sensors and energy storage.
There are dozens of 'smart grid' infrastructure startups that service utility companies, as well as more commercial/industrial efforts being pushed by IBM, Johnson Controls, Honeywell, and Cisco.
And for those homes with 'Smart Meters' or Smart Devices, solutions are coming online quickly. Google has now thrown its hat into the ring around the basic idea: 'if you can measure it, you can improve it'. The Google Power Meter is a software tool integrated into smart meters that helps consumers better understand how they use energy in order to reduce their costs and consumption. Google is a big name, in an expanding space of 'smart energy' startups, like Sentilla and REGEN, who are trying to build demand in the residential market.
Related Smart Grid posts on The Energy Roadmap.com
Events of the last five years have shown us that living on the
grid, dependent on large utility companies, has been anything but
stable. Large electric companies, still reliant on fossil fuel to
generate power, have been forced to raise prices dramatically. An
antiquated series of electrical lines, transformers, and switches
have produced devastating blackouts that have cost our economy
billions. With global demand for energy expected to rise, and the
cost of upgrading infrastructure approaching hundreds of billions,
living off the grid may become a highly plausible and desirable
future for many people.
In order to live off the grid you need to tie production and
consumption together, creating small scale systems for water and
power that require no outside support. It also requires a heavy
dose of conservation and efficiency, utilizing a system that
operates within the constraints of a limited source. Living off the
grid requires a large up front investment in equipment and
expertise, and a pioneering spirit. Costs for solar and wind
generation systems routinely cost tens of thousands of dollars,
yielding a cost per kilowatt hour that exceeds that of the grid.
Nonetheless it is becoming an option many people are beginning to
consider as the marketplace changes. More and more people are
looking to raw materials for energy that are free, inexhaustible,
and clean.
As innovation and subsidies collide in the market to create
critical mass for residential solar and wind systems, it is
reasonable to expect demand for these technologies to grow.
According to Solar Buzz, a San Francisco-based industry research
company, demand for solar power has grown 20-25% a year for the
last twenty years. Many of these applications of solar power come
in the form of on the grid solutions, however many of these are
distributed at the point of use. It is however the biggest choice
for off the grid applications. Demand has grown so fast that more
silicon now goes into photovoltaics than computer chips.
(cont.)
What might be at the top of the list as the 'Next Big Thing' for the energy sector?
Creating a 'Smart Grid' (Guide) for Electricity that is more resilient, responsive and efficient.
2009 should be a significant year for investing in the three main ingredients of smart infrastructure: Software, Sensors & Storage.
In 2009 we will be watching for major investments made by utiltiies with the help of 'smart grid' startups and incumbents capable of transforming how we manage, distribute and store electrons:
MSNBC’s Rachel Maddow interviews Barack Obama (on 10/31/08) who highlights near term demands (and opportunities) for ‘Smart Grid’ investments needed to bring the US infrastructure into 21st Century.
‘Big Grid’ could replace ‘Big Oil’ as a major story for 2009, as it becomes clear that the regulatory frameworks of our electricity utilities are not designed to support growth of utility scale wind and solar, micro-distributed power generation, and energy storage. All these things are disruptive!
The Takeaway's Host John Hockenberry interviews the CEO of Sentilla and explores the huge opportunity around the convergence of energy and information. The era of 'smarter energy' systems is likely to be more efficient and profitable because it taps the integration of software, sensors and energy storage.
Austin Energy, the electricity company owned by the city of Austin, TX, , is asking for public input into their strategic planning process for power generation through 2020. The question they’re trying to answer is, “What should be the right mix of technologies for generating electricity? How much of energy over the next 10-12 years should come from coal, nuclear, natural gas, solar, wind, biomass, etc.?”
Austin City Council has given Austin Energy two goals:
- 30% renewables by 2020, including 100 MW of solar.
- Lower carbon emissions—all NEW power generation should be carbon-neutral, however, City Council provided no other goals for lowering green house gas emissions.
Austin Energy estimates that the city will be short by 627 MW in 2020 if current growth trends continue. The gap can be reduced to 238 MW if conversation efforts are stepped up. Either way, Austin Energy will need to be generating more electricity in 10 years, but how?
What Happened?
The efforts to reduce carbon emissions and increase the use of reliable power generation of renewable fuels will determine the future of the electric grid, as was reported by the North American Electric Reliability Corporation. But solar and wind will have to overcome some fundamental challenges before they are accepted by large utilities.
“As we consider our energy future, it becomes increasingly clear that our success in reducing carbon emissions and realizing energy independence will hinge on our ability to provide reliable, clean, electricity where and when it is needed,” states Rick Sergal, President and CEO of the NERC.
What happened?
Minnesota Public Radio has featured a story of Xcel Energy’s efforts to build out the state’s first utility-sized electricity storage facility based on batteries that can store enough electricity to supply 500 homes for seven hours. This push to integrate energy storage systems with wind and solar farms could emerge as a major growth area over the next twenty years.
Why is this important to the future of energy
Today’s energy industry is dominated by two ideas: producing energy and consuming energy. As a result most leaders and consumers focus only on trying to find new ways to produce energy (‘build more plants’) or highlighting ways of being more efficient in energy consumption. But we overlook one of the most disruptive ideas in the future – energy storage.
Energy storage can help lower the cost of producing energy for utilities, accelerate adoption of renewables and electric vehicles, and bring power to billions of people who do not have reliable access to grid-based energy.
Understanding Intermittent Power Sources
Solar and wind are known as intermittent power sources since they only produce power when the wind is blowing or when the sun is shining. They are clean, but not reliable. Outside of production costs, this is the primary reason why utilities avoid making major investments to expand their renewable portfolio. They are not ‘anti’ renewable, they are ‘pro’ reliability.
Until solar and wind can overcome this problem of intermittency with energy storage systems, major utility companies will not be able to significantly expand their renewable portfolios.
What happened?
Physicists at the U.S. Department of Energy’s (DOE) Brookhaven National Laboratory have figured out a previously unknown phenomena of electron pairings used in high-temperature superconductor materials that could carry electrical current across great distances with minimal loss.
There is a saying in the energy industry that 'the cheapest power plant is the one you don't have to build'.
The alternative to focusing on the 'supply' side of finding new sources of clean electricity, is to reduce the demand side of energy use.
There are many ways to be more efficient through better products (e.g. light bulbs, refrigeration), services (e.g. Smart Grid managment) and integration of new energy systems (e.g. energy storage, onsite power generation). And there are hundreds of companies that provide energy management solutions to homes and commercial businesses. But until recently we have not had an updated industry level forecast of how much energy could be saved given the right leadership and regulatory framework for utilities.
Looking ahead to 2030 A new study from the Electric Power Research Institute (EPRI) suggests that efficiency gains could reduce the rate of growth for US electricity consumption by 22% between 2008 and 2030. 'The potential energy savings in 2030 would be 236 billion kilowatt hours, equivalent to the annual electricity consumption of 14 New York Cities.'
The EPRI study uses a growth rate baseline of 1.07% based on projections set by the U.S. Energy Information Administration's 2008 Annual Energy Outlook (AEO 2008).
EPRI believes that with strong political leadership and regulatory changes electricity consumption in the U.S. residential, commercial, and industrial sectors could be reduced to an annual rate of 0.83% between 2008 through 2030. Under the most 'ideal' conditions that rate could be lowered to 0.68% per year.
Read more: Assessment of Achievable Savings Potential From Energy Efficiency and Demand Response in the U.S (Executive Summary)
One of the biggest business opportunities of the next few decades will be enabling the convergence of Energy and Information systems to lower costs and improve efficiencies.
Companies such as Johnson Controls and IBM have been very vocal about their vision of a 'smart infrastructure' future. And there are a number of 'Smart Grid' startups offering utility-scale and building/home energy management solutions.
Cisco: 'Smarter' Energy Networks Cisco Systems is widely associated with the hardware 'backbone' (e.g. routers) of the Internet, but the company is expanding into new web-based services like video collaboration and energy management.
Cisco has a very simple vision of the future of energy efficiency: If it is on the 'network', then we can make it more efficient. Why is this important? Because within a decade or two most everything that produces and consumes power will be integrated into an information (web) network.
The company has announced its new Cisco EnergyWise [PDF] technology platform that will help its customers reduce energy consumption of Internet Protocol (IP) devices such as phones, computers, and digital access points. The next step for Cisco will be offering software solutions to help manage building systems (lighting, air conditioning and heating).
The offering puts Cisco in a strong position to compete in a fully 'embedded' world where all objects and devices are on the web and energy is never wasted.
Big Plans are susceptible to changes in the world around us, and even bold visionaries can have wrong assumptions about the future.
What might be at the top of the list as the 'Next Big Thing' for the energy sector? 
By Joel Greenberg
What happened?
There is a saying in the energy industry that 'the cheapest power plant is the one you don't have to build'.