How to Enable the Energy Revolution

This weekend, I read what may be the most important book yet for those transforming today's grid into the Intelligent Grid, and transforming today's buildings and the systems inside them into Smart Buildings. No, it is not Thomas Friedman's "Hot Flat and Crowded", although that work has set the table nicely for discussions of the importance and opportunity of this effort. It is not and of the chap books from the Department of Energy, or the IEEE, or EPRI. It is not one of the many books on environmental eschatology. Nor is it any of George Gilder's visionary history books that bring perspective to technology.

I recommend that anyone involved in these efforts read "The Future of the Internet--And How to Stop It" (TFOTI) by Jonathan Zittrain. TFOTI is at first glance a sober history of technology and culture and regulation. TFOTI tells how the internet grew from its roots in telephone systems and closed garden communities into the amazing engine for transformation, innovation, and new wealth creation we know today. This happened because of a series of legal decisions and technological choices that let people place any device on the communication on-ramps, and create or install any program on their devices. Zittrain calls the capability of the internet to generate and support new technologies and new capabilities "generative".

Zittrain warns that we may be losing this generative aspect of the internet. The internet is being neutered by the growing deployment of locked-down devices, systems that do only what their manufacturers allow. The glamour and ease of use of the iPhone is afforded by locking down the system to approved programs. Xboxes and PlayStations offer connectivity on locked down computers. The social networks are becoming walled gardens; once again business users are establishing accounts on FaceBook, MySpace, LinkedIn, and Plexus as they once established multiple email accounts on COMPUSERVE, AOL, Prodigy and others.

Zittrain is concerned that we are losing the future opportunity of the Internet. We are recreating the dynamic of the time share system, and loosing the generative features of the internet. The siren song of ease of use can lock in today's internet and forestall future advances. Even the multimedia free-for-all risks turning into one large Cable TV system, with predicable results and one-way communication. Zittrain shares his vision of how to develop new technologies and social structures that allow users to work creatively and collaboratively, participate in solutions, and to thus preserve generativity of the Internet.

When we look at the power grid today, we see ATT way before the breakup, perhaps even before the Carterphone ruling. Today's power grid is essentially closed to the wall outlet, and with walled garden communications to the meter, at best. You can use power with any technology you want, but no technology that generates, or stores, or converts energy is allowed to participate in the wider grid. All access to the energy networks is jealously guarded by the utilities and the utility commissions. The Carterphone lawsuit opened up the old phone network to new technologies such as answering machines and fax machines. We need a similar opening up of energy networks.

The challenge of interoperability, and standards, as we move into the era of energy technology, is if we can create a system for energy creation, distribution, and use that is generative. Solving the most pressing problems of our time, those of energy and its effluents, requires engaging the creative talents of as many as possible. No one knows what the innovations of tomorrow might be. We must learn from the lessons of other large networks and build something that is generative.

Get TFOTI and read it. Send a copy to your utility commissioner as well.

(Full Disclosure: In the mid eighties, I was coding for CitiNet, briefly the largest walled garden BBS in the Northeast. Last spring, I ran into fellow CitiNet alum and star salesman Myron Kassaraba; he was talking up his smart energy venture Outsmart Power Systems. I see former CEO/CTO Tom Considine at Christmas each year. I would love to hear from any of the rest of the gang ...)

B2B2B2B

Several precise correspondents disagreed with my characterization of the ideal interface on every energy widget as a single Business to Business B2B economic interface. Some argued for Business 2 Machine (B2M) and some argued for Machine to Machine (M2M). A few argued for P2B (Person to Business). I think they all make it too complex, and limit the opportunity for new business models. B2B is meant to liberate new markets, new market entrants, new trading models.

Starting with today’s Automated Demand-Response (ADR) interfaces, we get more benefits as we move them from M2M to B2B. People want to be in charge of their own property, so a Business inside the building puts the occupant in control. A business inside the building can only express their willingness to participate with an offer or bid. As not all bids are winning bids, the energy supplier outside the building must select a group of offers that clears the market and inform the winning and losing bids. To my eye, that is a B both inside and outside the building.

Remember, the biggest Demand Response on record is when ALCOA furloughed an entire plant for the summer to sell power at high prices to California. Business response always has more options than M2M.

The homeowner, or the homeowner’s agent needs the same opportunities to bid as does the business. The homeowner’s bid may be subsumed into a larger bid, say, a bid by the green neighborhood homeowner’s association. For the utility, a single home, a row of townhouses, or a neighborhood should all have the same external interface. Clearly the neighborhood and the business should have all the same options. This means that the homeowner’s agent, no matter how small, has a business interface on its outside.

Homes may sell power to other homes in the neighborhood. This may be generator power after the storm, or solar power in the afternoon. There may be competition between my neighbor and the big utility for my business. Homes need the same selling interfaces as the larger grid.

I may even have an economic competition inside my home. If I have told my washer not to run, or my car not to charge, until the price is less than a target, that might be a simpler market interface. One source of power for the car or washer may be in-home generation. Perhaps I can charge from that whenever I wish. Or perhaps I am able to sell my local generation back to the grid for higher than the target price, so the washer sits idle.

Perhaps my car batteries and my home batteries have their own rules. Each wants a little bit of storage, say for a 20 mile drive, or to run off-grid for 1 day. Each of them also could charge up for longer. Perhaps the car and the house will bid the price higher when they are below these minima. Perhaps the house will sell stored energy to the car, but only at a premium.

Variable pricing makes economic sense out of local storage. Local storage markets grow naturally. Local storage removes Grid reliability arbitrage tax on unreliable sources. This transfers larger portion of dollars (less fee for T&D) to the unreliable producer...Local storage will grow, but only when it is priced properly.

Eco was in economics before eco was in ecology. We can have a vibrant market ecology at every level of the grid, from the largest scale to the neighborhood microgrid, to inside the house.

Water & Power

Water policy is a bit afield for me, but sometimes it is worthwhile to look at the spaces nearby to see better, what one works with every day.

Water is in always in the news here in the southeastern U.S. Winter rains have done little more than put the ongoing drought in a holding pattern, not getting any worse, but not yet getting any better.

The towns in the triangle are running low. Mandatory water restrictions are in effect across the Research Triangle. Mandatory restrictions do not seem to result in any actual reduction for most users. Neighborhoods in Durham are still arguing over whether their homeowner’s associations still legally require them to water their lawns.

The most recent restrictions do seem to be cutting into certain businesses. As they pay for their domestic water with unemployment checks, I am sure that the displaced workers appreciate that their domestic water is still priced for affordable lawn watering.

I am keeping an eye on Durham, which sank to less than a month of drinkable water, and suddenly discovered that it had a larger water supply, now designated a “Premium” and “Normal”. I guess it’s a lot like the quality electrical service I have at home, which is up all the time if you don’t count the flickers.

The water systems don’t appear to price their product high enough for capital renewal. There is more than one main break a day in Raleigh—one reported noted dismissively that in the last one “only 200,000 gallons” were lost. All spending is determined politically, and the mayor has declared that in 2008, more pipes will be replaced. Again, it sounds like to power grid, which has plenty of money for storm repair, but no money for storm proofing.

Price signals are even worse for water than they are for electricity. To save money, the water bills are sent out every two months. On a recent plane ride, my neighbor told me how her water heater leaked when she was out of town for a few days. The heater was in the attic, and the outflow saturated the walls and created a pool in her crawl space. Three pumper trucks were required to drain under her house. She moved out for six weeks while the walls were rebuilt. The water company did not notice and her bill was under $160.

Water pricing is kept artificially low, that is why there is no capital renewal. Since prices are how we communicate scarcity and value, end users treat water as an abundant valueless resource. Regulators occasionally step in with pretend solutions that are despised (like the flush-twice toilet). Real innovations, which would be driven by price signals, do not occur.

Water may soon be recognized as a more critical issue than energy, causing us more degradation of life style sooner than does global warming. Rarely do people have some sort of event that consumes an order of magnitude more electricity than usual, as did my flight-mate above. Perhaps we should plan now to add AMI (Automated Metering Infrastructure) to water as we are now doing to electricity. If so, we should commit now to an open interface that included the customers.

And while we are at it, why not collect customer email addresses and cell phones as well, and email/text them when their water use suddenly shoots up in a sustained way. They can always ignore it if they wish.

Let me see. Scarce resource creeping toward a crisis. Inadequate capital expenditures driven by misguided progressive populism. Too-low prices causing society to substitute regulation for innovation. Nothing in common here.

Safety Net for Zero Net Energy Buildings

When thinking about Zero Net Energy Commercial Buildings, the most important thing is how you get to net. Many have willfully (it seems to me) accepted the delusion that carbon credits will be a useful or perhaps even significant component of this net. Such people suffer from a failure of imagination. They do not imagine that there will be new technologies.

They have also fallen into the fallacy that tomorrow will be a straight line from today. Today you can buy carbon credits fairly easily. My favorite source is free carbon offsets. These will not be so easy to come by in time. For one thing, the FTC is already looking into their fraudulent issue, sure to reduce the supply. The more important reason is that if we move in any significant way toward the 2030 challenge (or should I call that, after EPACT 2007, the 2025 mandate?) there will be many, many more buyers. More buyers chasing less product will be, as always, a prescription for rapidly rising prices.

The more important net is the honest balance of consumption, generation, storage, and purchase. Most sites will need all four.

Consumption gets most of the attention today. Reducing consumption gets the press. We know how to reduce consumption. It will not get us to zero, though.

Generation is pretty well understood as well. We will need to keep a close eye on real life metrics to make sure we are not swapping relatively clean distant generators for dirty (and noisy) generation locally. This demand will provide a ready market for renewable of all types as soon as we learn to smooth demand. And that will require storage.

Storage is the wild card. Storage will need to be a mix of technologies, and even energy types. I have written of storage before (And the winner is…) and of how future markets will create more ways for people to store energy. Some of these, especially some forms of thermal, change the order, i.e., store first, generate (or transform to a more useful form) second. The inefficiencies may even drive the more rapid adoption of the DC Commercial Building.

Nanoptek has recently demonstrated its new store-first, generate later technology, a process that greatly enhances the generation of hydrogen in sunlight by doping nanostructures with titanium. Technology such as this will make it easier to store energy now, and generate later.

We should probably add a fifth item to the energy toolbox of each Zero Net Energy Building – load shaping. Peak shaping can only reduce amenity and performance, albeit in return for price concessions. Load shaping, in which the energy use is not curtailed, but shifted to a different time of day can greatly improve the operation of the power grid. Load shaping is an approach that is more amenable to profound shifts in energy consumption patterns. Load shaping is what makes the other strategies work.

If you own a commercial building, you may be load shaping already. Even without formal storage systems, you may be over air-conditioning in the early morning to save air conditioning during business hours. There are power companies out there that will not only give you discounts, but will pay you for load shifting. And if you build the infrastructure to account for load shaping, you will have the infrastructure you need to manage generation and storage.

Pity, you will probably not be able to get a carbon credit for it. I wonder of the ISO's might award them....