Future Energy

Innovation for the Energy Sector

  Source: MEKRA Lang

Innovation, and in particular development of the technologies needed to address the environmental challenges facing us now and in the future, is the key to any kind of sustainable future.

Back at the end of March I reviewed The Other Side of Innovation: Solving the Execution Challenge (Harvard Business Review Press, 2010), a book by Vijay Govindarajan and Chris Trimble on innovation for the corporate set.  As is always the case, since writing about the topic, I've become aware of how much commentary on innovation is pulsing through the web.  One piece in particular caught my attention.

In a post written April 25th on the Cleantech blog, Richard Steubi talks about innovation, and draws some conclusions about innovation in the energy sector:

"My experiences with large electric utilities, oil companies, equipment vendors, and engineering/construction firms — of a comparable magnitude and global reach as P&G — have not been so encouraging ........ to date, many aspects of the energy sector (particularly in the electricity industry) have largely been shielded from the imperative to innovate."

The focus of his post is twofold:

• Procter & Gamble's launch of its open innovation program, improving its ability to collaborate with outside partners in technology research and product development; and
• The U.S. federal government's hugely important catalytic role in commercial innovation, even in technologies (e.g., the iPhone) that seem on the surface to have been developed solely by “the free market".

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Smart Grid Comes to B.C.

Source: cleantechnica.com

Last week BC Hydro announced that it had selected Itron as the supplier of smart meters for the province, in a contract worth $270 million. This followed on an earlier announcement, in January, that Corix, a Vancouver company, had been selected to install 1.8 million smart meters and that Capgemini had been selected to provide project implementation and technology integration services. Installation of smart meters is a key step towards the development of a smart grid - simply put, the incorporation of digital monitoring and communications technologies into the existing electrical grid.  As BC Hydro rightly points out on their website, implementation of a smart grid potentially offers enormous benefits, including:

• Two-way communications providing real-time information allows consumers to manage their own energy use and utilities to better balance generation and demand;
• Real time information from all points of the grid also allows better customer service in the event of power failures - if utilities can pinpoint the failure earlier, they can fix it quicker;
• Allows time-of-day electricity pricing, i.e. higher prices when demand is greatest, lower prices when demand is reduced, which can lead to reduced demand in peak periods and, ultimately, less need to build (expensive) generation facilities that sit idle for all but short periods of time;
• Permits a distributed and more adaptive network that increases the stability, security and reliability of the grid;
• Allows more distributed generation such as intermittent and small-scale renewables to be attached to the grid.

Overall, making the grid smarter should support more efficient use of electricity, reduce the generating capacity that has to be built, support development of renewables and reduce emissions associated with electricity generation.

What's not to like and why are smart meters so unpopular?

U.S. utilities installing smart meters in California, Colorado, Maine, Texas and elsewhere have faced a barrage of consumer complaints (not to mention Ontario - here and here).  The biggest source of concern appears to be the perception that power bills have increased with installation of smart meters, although, social concerns relating to "big brother" monitoring or even controlling in-home electrical use have also emerged as have the usual  concerns for increased exposure to electro-magnetic fields (EMF).

Part of the problem might be ignorance.  GE published results of a 2010 survey in which it found 79% of Americans were unaware of the term smart grid and had no idea what it meant (GE did find that 80% of those who did understand the term - i.e. 16% of the total, not an overwhelming number - did believe that there would be benefits from introducing smart meters.  Judging from the public reactions in the states where smart meters have been introduced I wonder if GE isn't kidding itself about even that low level of understanding.) 

Another might be utility approaches to customer service, or lack thereof.  Back in 2009, when the California revolt against smart meters first erupted, Katie Fehrenbacher, writing at Gigacom.com, had this to say:

"Smart grid technology and smart meters don’t represent new or risky or bleeding-edge technology. They use the same type of information technology — wireless networks, silicon, software — that controls our cell phones, computers and Internet, and that plays a massive role in the U.S. economy. It’s just being used in a new industry: electricity. Of course software can occasionally be glitchy, but so can a person manually driving by and reading home meters. As Grid Net CEO Ray Bell told audience members of the GreenBeat conference today “digital meters are rigorously tested, and highly accurate.”

 The big issue is that utilities need to learn to communicate a lot better, and develop a much stronger relationship, with their customers, whether that’s through marketing, PR or customer outreach. As Seth Frader-Thompson, CEO of energy management startup EnergyHub said at the Dow Jones Energy Conference this week, utilities, with their regulatory markets, have a long history of looking at their customers as “rate payers,” or even “load”.  There needs to be a sea change in the relationship between utilities and power consumers .... ultimately it’s the responsibility of the organization that’s leading the switch to the digital two-way system to keep the line of communication open."

With all of the information that is out there about managing change you would think the utilities would have perfected the art of introducing new technologies and growing electrical rates. Apparently not.  So what does it take to successfully introduce smart meters (or any significant change for that matter)?

Arguably, John Kotter's Eight-Step Process of Creating Major Change is the best known framework for bringing about change in a corporate setting:

Modified from John P. Kotter, "Why Transformation Efforts Fail", Harvard Business Review (March-April, 1995):61.

It may be a bit too Corporate so I have been using a simpler diagram to explain what I think is need to bring about a change:

Whether you like a simple approach or a more complex one, the basics appear to be the same - communication and lots of it.  And it wouldn't hurt to clearly describe the the benefits to the people that are going to be affected, in terms that are relevant for them, e.g. lower long term costs, greater reliability, faster repairs, etc.  Making consumers aware of the change and what it will mean before it arrives on their doorstep wouldn't hurt either.

The Crown corporation, which enjoys an almost complete monopoly in B.C., is obviously aware of the consumers concerns that have arisen in other jurisdictions, as a BC Hydro customer I am not aware of any significant communications efforts beyond the project website.  And this is in a province in which a previously popular Premier was forced into retirement over his failure to adequately engage voters before abruptly introducing a significant change in the province's sales tax regime - perhaps the first Canadian tax revolt in (recent) history.

Hopefully, BC Hydro will learn from that experience.  It was awfully close to home.

 

 

 

 

How Does Canada Stand in the Clean Energy Race?

Source: sustainabilitygalore.com

Although it was released March 29^th, I only got around to looking at the Pew Environment Group's latest analysis of clean energy investment over this past weekend.  Who's Winning the Clean Energy Race? 2010 Edition estimates that global clean energy investment reached US$243 billion in 2010 a 30% increase over 2009.  For the second year, the investment champion is China, which invested a total of US$54.4 billion followed by Germany (US$41.2) and the U.S. (US$34.0).

"The clean energy sector is emerging as one of the most dynamic and competitive in the world, witnessing 630 percent growth in finance and investments since 2004," said Phyllis Cuttino, director of Pew's Clean Energy Program. "Countries like China, Germany and India were attractive to financers because they have national policies that support renewable energy standards, carbon reduction targets and/or incentives for investment and production that create long-term certainty for investors."

Canada came in a lowly 7th place, investing US$5.6 billion - which is actually not bad given a population 1/10^th the sixth of that in the U.S. (and only 1/40^th that of China).  As a country we only accounted for 2.8% of the G-20 investment total.

Pew's Fact Sheet for Canada is brief but attributes most of the control over clean energy investment to the provinces - and, although, they don't break the country totals down by province, its likely that Ontario accounted for the lion's share of investment this past year.  In large part this attributable to the feed-in tariff and the Renewable Energy Standard the province has in place. 

(Interestingly, the report highlights the important role of Feed-In Tariffs (FIT's) in supporting clean energy investment.  Pew cites the US National Renewable Energy Laboratory which estimates that FIT's have led to 75% of global solar installations and 45% of global wind projects.  While Germany and Italy are the best known FIT proponents, as noted above, Ontario also has a FIT program in place - something the Ontario government has increasingly come under criticism for.)

While Canada is in 7th place for investment, the country falls to 12-13% (depending on technology) based on installed capacity, suggesting that conditions in the past one to two years have allowed investment in renewables in this country to accelerate - again, likely to Ontario's support programs.  If you are developing renewable power in this country, you are likely active in Ontario.

One thing Pew doesn't provide is any assessment of the effectiveness of the clean energy policy alternatives.  This type of review should have allowed some observations in that regard, but there is no mention of it that I saw.  Perhaps next year.

 

Integrating Renewables into the Grid - Its All About Flexibility

Source: techvert.com

Back in mid-January, Stanford's TomKat Centre for Sustainable Energy hosted the Grid Integration of Renewables Workshop, bringing together a group to examine the issues relating to grid expansion and the integration of renewables into that grid.  I came across a report on the workshop at the CleanTech blog that interested me but was unable to get much detail about the discussions. 

Sometime in the past few weeks, the TomKat Centre posted most of the presentations given at the workshop.  Collectively they provide an interesting picture of the issues at least these experts foresee as the proportion of intermittent renewables such as wind and solar that are connected to the grid becomes significant.

Keynote Speakers included U.S. Senator Jeff Bingaman (New Mexico) and Commissioner Jeffrey Byron of the California Energy Commission (CleanTech blog's report focuses on what the keynote speakers had to say in lots of detail so I won't try to add anything here).

Speakers included:

• Gregor Czisch, Transnational Renewables, Germany - The Supergrid: 100% Renewable Electricity Supply for Europe and Its Neighborhood » (ppt)
• Mark Jacobson, Stanford - Grid Integration Challenges for 100% Conversion to Wind and Solar Power » (pdf)
• Hans Henrik Lindboe, Ea Energy Analyses, Denmark - Enabling Renewable Energy Integration in Denmark » (pdf)
• V. John White, Center for Energy Efficiency and Renewable Technologies - Pulling the Pieces Together: Thinking Regionally and Cooperatively » (pdf)
• Antonio Alvarez, PG & E - Efforts and Challenges to Manage California's Expected Intermittent Renewable Additions » (pdf)
• Debbie Lew, National Renewable Energy Laboratory - Finding Flexibility in the Existing System » (pdf)
• Nick Jenkins, Cardiff University, UK - Optimizing AC and DC Transmission Networks for High Penetration of Renewables » (pdf)
• Michael Wara, Stanford - Key Regulatory Challenges for Deep Penetration of Renewables (no links provided)
• Willett Kempton, University of Delaware - Low Cost Grid Integration via Met-Smart Interconnection and Storage Inherent in End-Use Devices » (pdf)

The clearest point of agreement running through the speakers' presentations was that increased reliance on non-hydro renewables would lead to greater uncertainty of supply, which would in turn demand greater flexibility within the management of the grid if supply and demand were to be successfully balanced.  Suggested mechanisms for achieving the necessary flexibility generally fell into one of three categories, including:

Increase the Size of the Catchment

Speakers identified a range of approaches that relate to increasing the size of the area from which power can be drawn from to lessen the chance that power is available due to weather issues.  Suggested mechanisms included imports, Balancing Area cooperation and development of "asynchronous" resources (i.e. resources that are expected to be couter-cyclical in the availability).  The underlying assumption of efforts to increase the size of the catchment being that its always windy somewhere.  Needless to say, just about any approaches relying on increased catchment size demand big investments in transmission infrastructure - perhaps one of the most significant challenges facing future grid development.

Better Manage  Supply

While some of the suggestions appear to focus primarily on the need for standby conventional power sources, more creative approaches included development of asynchronous sources, as noted above, and the need for grid storage.

Better Manage Demand

Clearly an approach with a lot of future potential as Smart Grid technologies are developed, speakers focused on automatic demand response technologies, "dynamic pricing" (i.e. higher pricing during times of the day that electricity is in greater demand or less available) and curtailment or the ability to automatically cut off some customers or applications as demand increases/supply decreases.

When you say them fast, these all sound pretty simple.  But they represent significant shifts in approach, huge infrastructure investments and potentially years of regulatory and public process to put in place. 

Still an interesting collection of views on what seems the most likely future direction for electricity.

A List of Sustainability Lists in This Season of Lists

And yes it is a bit late in the New Year to be posting yet another take on the top 10.  But it was a busy Christmas season so here we go .....

I thought about putting together my own take on the Top 10 theme, you know, the 10 most important sustainability events for 2010, the 10 most important trends to watch for 2011 or maybe the 10 least sustainable politicians.  But the more I looked around at my favorite news and blog sites the harder it seemed to add anything that hadn't already been said.  Before I knew it I was putting together a list of all the top 10 (or five or 20, whatever) lists relating to sustainability, environment or clean tech investing.  What follows is a compilation of 23 lists that looked to be at least a bit relevant to this blog.  Enjoy!

To start, there are those basic lists that make sure we know what were the most important events from the year that has past.  In this category, the big stories of the year were undeniably BP's disasterous oil spill in the Gulf of Mexico and the U.S. Senate's failure to do anything useful about climate change.  The runner up story was probably the general failure to advance climate policy and regulation almost anywhere. 

1. Vermont Law School’s Top 10 Environmental Watch List for 2011
2. NY Times Green Blog: An Untameable Spill, An Unpassable Bill
3. Grist's Top 10 Green Stories of 2010
4. Mongabay's Top 10 Environmental Stories of 2010
5. EWG's Worst Environmental Stories of 2010
6. EWG's Top 10 Good Environmental News Stories of 2010
7. The American Lung Association's Eleven Biggest Clean Air Events of 2010
8. Sustainability's Top Trends from 2010
9. The 10 Most Hopeful Green Business Stories of 2010 by Joel Makower at Greenbiz
10. Greenbiz's 20 Most Popular Stories of 2010

Sticking with a look at the year that has past, but focusing on climate change issues were the 10 Carbon Reporting Trends That Defined 2010 from Greenbiz and Grist's Top Five Stories of the Year for Climate Hawks.  Did Grist capture the essence of the year with their lead in to the Climate Hawks list: Well That Sucked?

New Years wouldn't be complete without someone making some predictions (or just wishes) - and this list of lists won't disappoint. 

1. Top 10 Trends in Sustainable Business
2. Five Cleantech Wishes for 2011
3. The Greentech Wish List for 2011

(Greenopolis sat on the fence, listing the Top 10 Environmental Success Stories together with 10 associated Future Challenges.)

There were the clean tech/green tech investment lists.

1. 10 Clean and Green Energy Stocks for 2011 from the Alt Energ yStocks blog
2. Five Top Sustainable Investment Stories of 2010
3. The 2010 Cleantech 10 by Corporate Knights
4. The Cleantech Next 10 also by Corporate Knights

And then there were a few lists that defy my categories so far.  Popular Mechanics got the jump on this whole end of year lists thing by publishing their Debunking the Top 10 Energy Myths back in July of last year.   Triple Pundit put together And The Top Ten Most "Sustainable" CEO's Are... - and no surprise here Yvon Chouinard takes first prize. 

And last but certainly not least is what was perhaps the most interesting list, put together by Mother Jones staffers baring their souls and presenting their 10 Green New Year's Resolutions.  How can you not root for Emma L. when she tells us she's committing to:

Actually composting the veggies that melt into mush in the bottom of the veggie drawer instead of holding the bag by one corner and putting it in the trash.  There is something about the grossness factor that just makes it hard to scrape them out of the bag...I compost everything else I should!

Enjoy!

McKinsey: Energy and Environmental Resource Constraints a Key Global Trend

 

"Understanding a company's full exposure to energy and environmental risks will in many cases be a - if not the the - decisive factor determining its long-term viability."

Yet another interesting bit of information I came across over the summer was some research from McKinsey & Company.

In the June edition of McKinsey Quarterly, the authors behind a survey of more than 1,400 executives around the world discussed the importance of key global trends, their impact on business and the need for pro-active trend-spotting, issues management, etc.

"The fact is, trends matter. Systematically spotting and acting on emerging ones helps companies to capture market opportunities, test risks, and spur innovation. Today, when the biggest business challenge is responding to a world in which the frame and basis of competition are always changing, any effort to set corporate strategy must consider more than traditional performance measures, such as a company’s core capabilities and the structure of the industry in which it competes. Managers must also gain an understanding of deep external forces and the narrower trends they can unleash. In our experience, if senior executives wait for the full impact of global forces to manifest themselves at an industry and company level, they will have waited too long."

McKinsey's research identified five global trends expected to define the coming era, including:

• The Great Re-balancing - the shift in the nexus of the global economy from developed to emerging economies.

• The Productivity Imperative - the need for among developed-world economies for pronounced gains in productivity.

• The Global Grid - impacts of increasing cross-border flows of capital, information, goods and people on the global economy.

• Pricing the Planet - the effects of growing resource shortages and competition.

• The Market State - the role of national entities in a globalized world.

The most interesting/relevant trend from an energy point of view is "Pricing the Planet", i.e. McKinsey's take on the role of resources and resource shortages in the future economy.

"A collision is shaping up among the rising demand for resources, constrained supplies, and changing social attitudes toward environmental protection. The next decade will see an increased focus on resource productivity, the emergence of substantial clean-tech industries, and regulatory initiatives."

McKinsey identified three forces that will affect what resources we use, how we use them and what price we will need to pay for them, including:

• Growing demand - projections for global economic growth over the next decade suggest that demand for natural resources will rise by at least a third. About 90 percent of that increase will come from growth in emerging markets.

• Constrained supply - as easy-to-tap, high-quality reserves are depleted, supply will come from harder-to-access, more costly, and more politically unstable environments.

• Increased regulatory and social scrutiny - there is an emerging global consensus focused on environmental sustainability. While climate change is the most visible battleground, other issues loom: water scarcity, pollution, food safety, and depletion of global fish stocks, among other things. For businesses, this new sensibility will lead to stricter environmental regulations and growing demands from consumers and employees that companies demonstrate greater environmental responsibility.

McKinsey's research is really a business-focused take on what has been a long line of research and opinion tattempting to understand the limits to human population growth.  Beginning with Malthus in the early 19th century, the Club of Rome in the 1970's and more recently the exploration of "planetary boundaries",  there as been a regular dialog on the limits to how much our population can growth and obtain the resources needed to support us.  McKinsey is looking at the globalizing economy and what it means for business, but it builds on a well established foundation.

McKinsey's research applies to resources in general.  However, looking specifically at energy, the authors offer two views.

One speaks for the status-quo:

"The fossil fuel consumption infrastructure is so large that, despite recent clean-energy investments, the ratio of fossil fuel to renewable and nuclear power use in 2020 will still be 80 percent, as it is today. ....... Despite huge investments in clean energy, in 2020 the ratio of fossil fuel consumption to renewable and nuclear power will remain largely as it is today—roughly 80 percent. No realistic scenario will move the needle: the embedded resource infrastructure is so large that any transition away from fossil fuels will take decades."

But the other looks at the key role clean tech will have for new energy investment:

"But the view changes dramatically when you look beneath the supply stock to the flows of new investment. Suddenly, clean tech emerges as one of the next decade’s biggest growth industries. Upward of $2 trillion will probably be invested in building clean-energy capacity globally over the next ten years. In the United States, 90 percent of this expanded capacity will be in renewable or nuclear energy—66 percent in the European Union and China. Before 2020, this investment will probably create a clean-tech industry generating well over $1 trillion a year in sales."

As these trends come to affect energy and other resource availability, McKinsey predcts a changed global economy, one in which resource productivity will be key.  To achieve that goal, the authors offer a range of prescriptions.  However, the philosophy that they are espousing seems best summarized as "in uncertain times, the need to plan for widely differing outcomes is the one clear certainty".