How Smart Grid Policies Create Employment Opportunities

Most Smart Grid discussions about human impacts address the demographic trends in utility workforces or the influences that Smart Grid technologies and applications have on people in residential and commercial settings. While both are very worthy topics, the subject of job creation doesn’t get the same attention. And that’s a puzzle, given today’s economy. The Smart Grid’s technology, policy, and financial disruptors have happy consequences for the labor market through increased and sustainable local employment opportunities.

Jobs can be defined as direct, indirect, and induced. Direct jobs are the positions created to perform a specific function. Indirect jobs are created in supply chains and the businesses that support those direct jobs. Induced jobs are created based on the savings generated from the results of the direct and indirect jobs.

For instance, one of the most important Smart Grid trends is the growth of distributed energy resources (DER). One important DER asset class is renewable energy such as found in solar generation solutions. The state of California has more than 47,000 people working in this sector – about one third of the nation’s total solar employment. Many of these jobs are focused on installation and maintenance of solar systems – “boots on the ground” or direct jobs that every region of the USA should encourage.

What led to solar generating energy and jobs? It’s not just the natural climate of abundant sunshine in the state. The state renewable portfolio standard of 33% that Governor Jerry Brown stated was a “floor, not a ceiling requirement”; the million solar roofs program, and other regulatory and legislative actions created the business climate, which enabled companies to put certainty to former risks, and led to the establishment or growth of scores of businesses and new direct, indirect, and induced jobs.

Other DER asset classes include energy storage, energy efficiency retrofits, and demand response programs. The California Public Utilities Commission (CPUC) mandated in 2013 that its regulated utilities must incorporate 1.325 GW of energy storage into their grids by 2020, the largest amount of storage in the world today. Energy storage and renewable generation assets go together like peanut butter and jelly – good on their own, but even better together. Like recent solar cost trends, upfront energy storage costs are expected to decrease as deployments increase and benefit from economies of scale. New market entrants with innovations in technologies, processes, and services will bend the cost curves downwards even more. These trends mean more direct jobs for skilled technicians and a labor force that remains in place to respond to maintenance and upgrade requests. Greentech Media estimates that the energy storage market will quadruple every four years, and one of the reasons is California policy, which essentially made a market for energy storage solutions at the transmission, distribution, and behind the meter (consumer and prosumer) points.

Energy efficiency is another promising homegrown employment area. Spurred by the oil embargo and economic shocks of the early 1970s, California has gradually introduced energy efficiency (EE) standards for white goods like refrigerators, electronics like TVs, and commercial and residential buildings themselves. The building standards are updated every three years. Similar policies have been adopted worldwide since then. The latest round of EE building standards will create locally-situated jobs as building owners retrofit structures or deploy the appropriate energy efficiency measures in their new construction. This American Council for an Energy-Efficiency Economy (ACEEE) paper outlines the economic impacts of EE projects in both employment and cost savings. The cost savings benefits of energy efficiency measures are sometimes overlooked too. As less money is needed to pay for energy expenditures, more capital is available to invest in business growth.

There are two centers in California designed to support job training on EE technologies and services. The newest center is a collaboration between the International Brotherhood of Electrical Workers (IBEW) and the National Electrical Contractors Association (NECA). These organizations understand the connection between smart energy policies and sustainable employment. California has often led the way in smart energy policy, although the aftermath of Superstorm Sandy has prompted some eastern states to promulgate innovative energy policies that build and enhance grid and community resiliency. Where these pioneers lead – will other states follow? They would be wise to enact similar energy policies to benefit their regional economies through job creation and reductions in energy costs for citizens and businesses.

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Sweden’s Energy Policy – Could the USA Find Inspiration Here?

The USA could learn a number of valuable lessons from Sweden about energy policy.  The Swedish Trade delegation recently sponsored a Smart Grid roundtable in San Francisco with Anna-Karin Hatt, Minister for Information Technology and Energy in the government of Sweden’s Ministry of Enterprise, Energy and Communications.  Several Silicon Valley Smart Grid organizations, including resources from Oracle, Silver Springs Networks, EPRI, and the Smart Grid Library participated with moderation by Lars Friberg, the Swedish attaché for Climate and Energy.

Ms. Hatt set the knowledge foundation for the roundtable by describing Sweden’s energy policy targets for 2020:

  1. Achieve 50% renewables.  This is the highest target in the European Union, and they are on track to achieve it as they were at 48.9% in 2010.
  2. Deliver 20% more savings through energy efficiency measures than today – and Sweden already scores well here too
  3.  Reduce emissions 40% from 1990 levels, and by 2030, eliminate fossil fuels from their vehicle fleets.

By 2050, the country aims to be carbon neutral.  These are serious energy policy goals that starkly contrast to the conflicted USA energy policy.  The Swedish government understands that 80% of the world’s current energy consumption is fossil fuels, and that’s a significant problem for energy security, environmental balance, and economic competitiveness.  The leadership concluded that they don’t need to remain part of the problem.  With the support of their citizens, Sweden intends to become part of the solution – which is to achieve independence from fossil fuels.  Sweden plans to be in the forefront of the energy market evolution – and indeed they already have been.

There are three cornerstones for their policy objectives that cover economic competitiveness, economic sustainability, and security of energy supplies.  To do that will require increasing renewables at utility-scale and through distributed generation with renewables in the distribution grid.  The Minister acknowledged that renewables create a challenge for grid operations insofar as their variabilities need to be managed, but that isn’t impeding their planning.  They are careful to structure policy goals and conditions for actions, but not dictate how the transitions to more renewables should occur.  As Ms. Hatt noted, “we’re only at the beginning of a truly transformative period world wide, in which there will be enormous investments in energy efficiency and renewables technologies and services.”

The government in Sweden recently established a Smart Grid Council and charged its appointees with establishing a national knowledge platform for its citizens that would raise awareness of Smart Grid benefits for all stakeholders and create an action plan that identified evolving business models and research gaps.   The minister indicated that there is much to learn about consumer reactions to electricity price variations and detailed consumption data.

Sweden is making significant advances to modernize their electrical grid and integrate clean energy sources into it and transportation infrastructures.  So why did this forward-thinking government ministry convene with Silicon Valley Smart Grid players?  To collaborate on technology development, business and financial model innovations, and consumer/prosumer transformations.  This roundtable was just the first step to exchange ideas and information, such as the Property Assessed Clean Energy (PACE) programs and other creative approaches to finance renewables in the distribution grid for residential and commercial customers.  One key takeaway for us American participants – we shouldn’t limit our thinking in terms of the ambitious goals we could and should set for an energy policy that promotes energy independence from fossil fuels, and therefore delivers energy, economic, and environmental security.

The Swedish Trade delegation is planning a seminar in the San Francisco Bay Area in the first half of 2013 to continue this discussion, so stay tuned for more information and inspiration.

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Doing the Right Thing on Energy Policy

“You can always count on Americans to do the right thing – after they’ve tried everything else.”  Winston Churchill made this statement in the context of a World War and a Cold War.  Today, the context is a new “arms race” – to be the global leader in energy security technologies encompassing clean energy sources, energy transmission and storage, and energy efficiency.   The question is – can we win this technology race without a clear, focused, and forward-thinking federal energy policy? 

At the GridWise Global Forum this past week, a parade of speakers highlighted the need for a coherent national energy policy.  Silicon Valley venture capitalists are also vocal about the need for market certainty promulgated by federal and state energy policies to aid the flow of investments into Smart Grid technologies and new energy sources.   Jeffrey Immelt, CEO of General Electric, said during a presentation at GridWise, “The rest of the world is moving 10 times faster than we are. This is a great country. But, you know, we have to have an energy policy. This is just stupid what we have today.”  

What we have today in the USA is an extremely fragmented energy ecosystem.  There are over 3200 utilities ranging from investor-owned utilities (IOUs) to municipals and rural cooperatives.  There are 50 state regulatory agencies focused on retail electricity, gas, and telecom, involved in rate setting and consumer issues.  The Federal Energy Regulatory Commission (FERC) has oversight of interstate transmission and wholesale electricity rates.  The North American Electric Reliability Corporation (NERC) has a mission to ensure the reliability of the bulk power system.   There are Independent System Operators (ISOs) and Regional Transmission Operators (RTOs) that coordinate regional power markets and transmission.  In contrast, nations like China and Australia have simpler regulatory structures, and can formulate and enact energy policy on a national scale.

While there may not be any quick fixes to achieve a more rational regulatory structure in the USA, the federal government is taking positive steps as outlined by Secretary Steven Chu of the Department of Energy (DOE).  For instance, overall electric grid security is extremely important to national security, and a natural focus for federal action.  $30 M in funding allocations recently were announced for R&D and coordination between the public and private sectors in cyber security technologies. The Advanced Research Projects Agency – Energy (ARPA-E) funds early-stage, innovative technologies that could be potential-gamechangers.  Recent investments are in energy storage, efficient energy transmission, and advances in cooling technologies for buildings.  As Dr. Chu pointed out in his speech at the GridWise Global Forum, some of the greatest challenges are not technical – they are behavioral.  Getting Americans to change their energy consumption habits will not be easy, and requires outreach and education from a variety of entities and through a number of media channels.   

The progress towards a Smart Grid, especially when contrasted to other nations, highlights the problems with our current regulatory practices, our aging infrastructure, and our lack of a federal energy policy.  Thinking that we can continue as is with the current systems, technologies, and subsidized fossil fuels is not a policy that wins this energy technology race.  Will we do the right thing, as Churchill observed, to succeed in this new global competition?

Learn more

An upcoming conference in San Francisco, West Coast Green, will explore themes around the built environment and creating smarter cities and communities.  I will moderate a panel titled Smart Systems for Future Communities, which will discuss technologies and approaches to revising our thinking about infrastructure and better energy systems. 

Utilities and energy service providers will have massive amounts of data on generation, transmission, distribution, and consumption because of Smart Grid technologies.  How will they handle it, and what does this mean for consumers?  A new ebook available for download here covers topics focused on Smart Grid data management, with content reflecting contributions from several writers, including myself.  

 

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