One of the largest US-based industry conferences for electricity, gas, and water utilities just wrapped up in San Antonio, Texas. The entire value chain for electricity was well-represented there – you could find products for generation, transmission, distribution, and consumption of electricity. These products modernize the grid – making it the Smart Grid. The profusion of products prompted me to think about what really drives innovation in the electricity value chain. In Silicon Valley, entrepreneurs know that successful new products or services have to be painkillers or vitamins. As a painkiller, an innovation has to resolve a pain for its target audience. If it’s a vitamin, an innovative product or service has to improve an existing situation. Otherwise, there’s just no motivation or incentive for a consumer or organization to adopt that innovation. And in a down economy, it’s all about painkillers.
So what are the pains in the electricity value chain? There are three main actors in the value chain –governmental entities, utilities, and consumers – that feel pain.
Governments have two specific pains that are addressed with innovations in the electricity value chain. First, the federal and state governments want to improve our energy security. Second, they want to improve our economic security. Both security concerns are answered by federal and state policies that encourage reductions in fossil fuels while simultaneously promoting development of domestic renewable energy sources. Intelligent policies can reduce the role of oil in the US economy through the adoption of electric and other alternative fuel vehicles that don’t need gasoline and improve energy efficiency in traditional internal combustion engines. The most recent policy action occurred last week with the California Air Resources Board’s (ARB) adoption of new clean car rules. If you don’t realize the import of a state like California taking this step, just research the history of how car emissions were reduced across the country because of pioneering regulations in California.
And the really good news is that stimulating new industries around the domestic production of renewable energy sources builds economic security in the form of jobs in America as well as energy security. We can’t export the jobs required to set up and maintain the numerous wind and solar generation facilities springing up across America. We won’t need to deploy military resources to keep the sun shining and the wind blowing.
Innovations that directly tie back to energy and economic security are not only painkillers, they are welcome cures for our current addiction to oil. These innovations are found in electric vehicles (EVs), renewable energy and energy storage technologies. However, these are not the only technologies that have potential to be painkillers as far as governments are concerned. The federal government is also very concerned about cyber security and reliability of the electricity supply. If you suffered through the great Northeast blackout in 2003, you will recall the pain of an unreliable electricity supply. Important painkilling technologies focus on increasing the resiliency of the electrical grid, hence the current focus on deployment of advanced sensors called Phasor Measurement Units or PMUs to help monitor and control our transmission grids.
The North American Electric Reliability Corporation (NERC) and the Federal Energy Regulatory Commission (FERC) are actively working to reduce risks of future blackouts due to unintentional (natural) or intentional (malicious) causes. Solutions that reduce risk are painkillers for governments, as well as utilities and consumers too.
Stay tuned for more exploration of innovations that are painkillers for utilities and for consumers.