The Final Five Smart Grid Predictions – A Progress Report

I made ten predictions in January 2014 about Smart Grid and Smart City trends and changes that will occur between 2014 and 2020. Here is an update on the final five predictions. The first five were reviewed last week. You can review the full predictions here and here, and judge for yourself the quality of my crystal ball.

6.  Debates about the future of the social compact for electricity services and the socialization of electricity costs continue. The Reforming Energy Vision initiative includes the objective to “enable and facilitate” new business models for utilities, customers, and energy service companies. This is just the first state activity that will generate significant discussion about how to equitably balance distribution grid investments that accommodate and integrate more distributed energy resources (DER). Since it will take time to implement and then measure results from new business models, this debate is sure to continue for the next decade.

7.  EVs advance to 10% of the US car market. The current electric vehicle (EV) penetration in 2013 was just a bit over .5%. The falling costs of gasoline are putting additional pressure on EV manufacturers to reduce prices of zero emission vehicles to increase consumer adoption. However, utilities are now taking a more active role, as Edison Electric Institute members will start investing up to $50 million annually in EV service trucks and charging stations for consumers. The Department of Defense (DoD) is conducting pilots for vehicle to grid or V2G applications. Their first smart charging demonstration are exploring V2G performance, and they will also examine re-purposing used EV batteries for fixed energy storage.

8.  Resiliency measures also become part of the definition of a smart building. There are a number of federal, state, and non-governmental initiatives that address resiliency, and some critical infrastructure definitions include selected buildings. The National Institute of Standards and Technology (NIST) is developing standards guidance for community disaster resilience, but this is focused on building materials and codes. Microgrids, DER and Zero Net energy codes and technologies can bridge the gap in existing resiliency initiatives for buildings. Microgrids are already in production as resources to maintain power to critical infrastructure during emergencies – one of the goals of the Borrego Springs microgrid.

9.  Nanotechnologies help propel solar harvesting efficiencies past the 50% mark, and by 2020 research scientists are aiming for 75% harvest efficiencies. The number of patents filed for innovations in nanotechnology using graphene have tripled in the past 10 years. The research pipeline contains single molecule thick sheets of graphene and molybdenum that can potentially provide 1000 times more power per weight unit of material than current commercially available solar cells. The fabrication of flexible solar panels is on the horizon, which can be wrapped around curved or uneven surfaces or reduced in scale, expand the possibilities for where solar can be deployed.

10.  There’s sufficient electricity production from renewable energy sources that we no longer talk about “renewables.” American grid-connected wind turbines have a combined capacity of 60,000 MW, projected to double by 2020. Solar is enjoying explosive growth. Energy storage solutions will “firm up” the intermittency of wind and solar and thus eliminate the last objections to reliance on renewables. It will just be a cheap and clean source of electricity without the price volatility of fossil fuels.

These final five predictions are well on their way to realization too, although the prediction about nanotechnology advances is admittedly a stretch goal. You’ll note that energy storage has a significant influence on the advancement of some of these predictions.  We’ll keep tracking these predictions and bring you periodic updates.


The Final Five Smart Grid and Smart City Predictions for 2020

Last week my article proposed the first five of ten predictions for activities, trends and changes that will occur between 2014 and 2020.  To reiterate, 2020 is a milestone year for renewable portfolio standards (RPS) in twelve states.   It is also a definition of normal visual acuity, and it is a concise summary of hindsight.

We’ve seen so much significant change in the past six years and will see more innovations in technologies, policies and financial drivers that build smarter cities as well as smarter grids.   Here are the final five of my ten predictions of how much can happen in six years time, and give you ideas of how you can leverage these trends for your business and personal goals.

6)    Debates about the future of the social compact for electricity services and the socialization of electricity costs continue.  The first forward-thinking regulatory agencies are implementing policies that re-define utility business models and revenues for delivery of “electricity assurance” for commercial business continuity and residential quality of life services.  You can go off the grid, but expect to pay for the utility to be your electricity insurer – the fallback for electricity when your systems fail to deliver.

7)    EVs advance to 10% of the US car market.  Although sales have been slow to date, changes in building codes and more charging stations make EVs easier to own and operate.  However, the greatest motivator is money, as more and more vehicle to grid (V2G) service innovations create opportunities for EV owners to make money with their EVs.  Entrepreneurs focus on creating profitable second uses of EV batteries once they are retired from vehicle use ranging from conversion kits for home energy storage to being bundled into cheap, modular energy storage for critical governmental infrastructure.  EVs buck, rather than continue the depressing history of instant asset depreciation the minute cars are driven off the dealer lot.

8)    Resiliency measures also become part of the definition of a smart building.  There will be significant innovation in solutions that can be deployed in new buildings or retrofitted into existing building stock.  For instance, an elevator company just introduced the first solar-powered elevator system – one that can operate even during grid blackouts.  It includes battery storage so it operates at night too.  Just consider how this one change to building infrastructure can make a big difference for residents of high rises.  Parking lots and garages deploy PV solar.  There’s an estimated 115 square miles of parking in California that could generate almost 1.5 TW of electricity daily.  As solar energy replaces or supplements the electricity coming from distribution grids, utility revenues plummet even more precipitously.

9)    Nanotechnologies help propel solar harvesting efficiencies past the 50% mark, and by 2020 research scientists are aiming for 75% harvest efficiencies.  Advances in materials – such as quantum dot solar cells, melded with nanotechnologies – deliver more electricity in reduced spaces.  Advances in manufacturing processes follow previous history, and solar farms replace existing technologies with cost-effective new equipment and produce more power without expanding their footprints.

10) There’s sufficient electricity production from renewable energy sources that we no longer talk about “renewables.”  We talk about wind, or solar, or geothermal, or hydro, but as distinct energy categories instead of being lumped into one catchall category.  In the US, coal is relegated to the ash heap, and toxic coal ash heaps become the focus of environmental cleanup efforts.

If you’ve been paying attention, you noticed that there’s a significant emphasis on resiliency in my ten predictions.  Our interconnected economies and societies have an irreplaceable reliance on energy and communications infrastructure.  How we proactively plan or reactively scramble will make for an interesting next six years and beyond.


Can BMW Accelerate Smart Grid Benefits?

Last week in Silicon Valley BMW convened a group of transportation, electric vehicle (EV), and energy thought leaders to participate in a dialogue with their senior executives and talk about sustainability, energy, and mobility services.  It was a thought-provoking day and I shared my perspectives on V2G (Vehicle to Grid) integrations and pondered new Smart Grid convergences with sustainability principles.

BMW’s guiding view is that sustainability along the entire value chain is inseparable from their corporate self-image. The company has been systematically reducing energy use in facilities through energy-efficient materials, products, and processes; and in vehicles through use of regenerative energy technologies.  The production facilities for their electric BMW i cars will incorporate renewable energy – and from a Smart Grid perspective, this is a significant development.  Industrial plants and processes are major electricity consumers.  Adding renewables to their energy mix reduces reliance on fossil fuels, and in Germany, helps address the looming retirement of that nation’s nuclear fleet as well.  Co-located generation with consumption also reduces the need for buildouts of the transmission infrastructure and eliminates the energy losses that would otherwise occur in long distance, high voltage transmission.

All of these activities merit commendation, but the discussion group’s consensus was that creating programs that encouraged BMW dealerships to adopt renewable energy production and energy–efficient building technologies and processes would be an even more powerful means to visibly demonstrate commitments to sustainable practices.   Since many of BMW’s customers fall into the affluent and green categories, rooftop and parking lot solar installations and energy-efficient lighting could reinforce the brand’s image – and particularly with the new electric BMW models.  BMW doesn’t own dealerships nor their real estate, but some outside of the box thinking combined with that strong corporate commitment to sustainability could yield surprising innovations.

For instance, car manufacturers like GM have become financial institutions to structure car loans for customers.  Could BMW create their own green bank to help dealers finance renewable energy and/or energy efficiency investments?  Could they help dealers in specific states like California, which continue to enhance building codes for energy-efficient operations, with guidance on how to leverage technologies to save electricity costs?

There are no easy answers, and BMW has to make money at the end of the day, so any programs targeted to dealers have to show some positive impact to the corporate bottom line.  However, helping dealers save money on operating costs by reducing energy use does contribute to the corporation’s sustainability philosophy and brand values.

However, there’s another possibility for BMW to consider that integrates the principles of sustainability with their business models and has direct benefits to grid modernization.  EV batteries are depleted over time but still have potential for other energy storage applications once their useful auto life is over.  Community energy storage (CES) and home energy storage can potentially repurpose used EV batteries for supply during localized power outages to deliver grid resiliency.  Used EV batteries could also supply electricity to homes during peak times to reduce grid loads and improve grid reliability.  One electric utility, AEP, has already piloted community energy storage with used EV batteries.

There are many more questions than answers about repurposing EV batteries, and several studies are focused on providing those answers.  A car manufacturer like BMW could think about batteries from a complete sustainable product lifecycle (cradle to cradle) perspective – and use battery technologies that have not only the best performance for autos, but the best performance for home energy storage or CES use.  Beyond battery technology itself, there’s a need to determine the best business models to cost-effectively repurpose EV batteries.  Could BMW innovations extend beyond sustainable product design to sustainable business models for repurposed EV batteries that create compelling economic value for their EV customers, dealers, utilities, and help deliver grid resiliency and increased reliability?  It’s an intriguing thought.


Thinking Different Beyond the Smart Grid

Information and communications technologies (ICT) and machine to machine (M2M) applications will have evolutionary and revolutionary impacts on the Smart Grid and smart cities.  As more of the global population chooses to live in cities, ICT will also exert revolutionary impacts on transportation to help transform it into sustainable transportation.   However, like the coming Smart Grid transformations, tectonic shifts in thinking need to occur that change cultures, mindsets, and perspectives in transportation to make good on these visions.

What is sustainable transportation?  Here’s a description from Susan Zielinski, Managing Director of SMART at the University of Michigan.   “Sustainable transportation is about meeting needs by moving people, moving goods, and moving less in ways that are cleaner, greener, safer, healthier, more equitable, more seamlessly connected, better for the economy, and hipper.”  She will talk about this subject at the upcoming Savannah International Clean Energy Conference November 11-13 in Georgia.

Sustainable transportation is not just electric transportation, and not focused solely on electric vehicles, although these will be important options for transportation (and in the case of EVs, revenue production in the Smart Grid.)  And as her description implies, it fully embraces M2M applications that range from location-aware vehicles and devices to fractional use cars (like Zipcar) and bikes, to buses and trains to telework and locally sourced transactions.

It also makes us rethink this system as a New Mobility grid.  New Mobility is an extremely interesting convergence of ICT with automotive systems, real estate, and finance coupled with new business models.  Susan noted that “a New Mobility grid is the electric vehicle grid on steroids. It means that there’s a connected network of all modes, services, technologies and infrastructures from origin to destination, as well as an awareness, thanks to mobile devices, of how options connect seamlessly in time and space on that grid through GPS information. But it can also reduce the need to move by sourcing alternatives within walking distance or using telecommunications to eliminate trips altogether.”

ICT technologies, including sensors and mobile applications, will help transportation managers deliver the most dynamic, flexible and cost effective transportation options.  These technologies will enable users to know the range of transportation choices available to them at all times.  How cool will it be for us to move with complete confidence in an unfamiliar city because we can access realtime information about options to travel from any point of origination to any destination seamlessly? In my opinion, very cool.  I would highly value a single application on my smart phone that informs me of my aggregated transport options to move from train station or airport to lodging based on costs, timeframes, and personal preferences (i.e. do I prefer scenic routes or direct routes or faster routes or more environmentally friendly routes).  Even better, include instructions on how to use ticket kiosks.  There are cities that are making good on sustainable transport visions like Seoul, Hong Kong, Paris, London, Bogota, Curritiba, Portland, Washington DC, and New York City.

Though small, Bremen, Germany offers a good model for cities and towns interested in designing sustainable transportation systems that are highly integrated.  Bremen integrated bus, train, car/bike sharing and fractional car options into one virtual transportation platform that serves residents and visitors.

One of the key factors to note about sustainable transportation is that it doesn’t presuppose a complete reliance on electrical sources of energy – it doesn’t pick fuels, but does encourage use of energy sources that are indigenous to a region and both environmentally and socially sustainable.  With an emphasis on flexibility, there is a place for the internal combustion engine – but ideally dramatically reduced.

And since one of the tenets of sustainable transport is to figure out how to reduce the need for transport, like the negawatt, the trip never taken is the lowest carbon transit impact too.  ICT once again can play a key role here.  My credit union now offers an option for me to take photos of the checks my clients send for my consulting services – saving me trips to physically deposit paper.  I doubt if my credit union thinks that this application achieves a primary objective of sustainable transport, but it’s great that it has that positive consequence.

There are some interesting parallels between sustainable transportation and the Smart Grid – and I’m not referring to electric vehicles.  In terms of recreating systems thinking in new ways, in terms of the applications of ICT and M2M applications, in terms of creating opportunity ecosystems for innovations – these are the parallels to appreciate.


Grid Resiliency Is Required for Improved Grid Reliability

The Massachusetts Institute of Technology (MIT) co-chairs of the recent Smart Grid study titled “The Future of the Electric Grid”  just visited Silicon Valley to discuss their report with investors and entrepreneurs.   If you haven’t read the study, I recommend it because it’s an interesting read.  The study co-chairs, John Kassakian and Richard Schmalensee, cover the efficiency and reliability of the current grid and the implications of new technologies on transmission (high voltage) and distribution (low voltage) grids.  Their study includes recommendations in policy and technology areas that will be of interest to a wide audience – not just industry insiders or Silicon Valley technology types. 

What is missing from their study is information about grid resiliency, and that mirrors an absence of discussion in the electric utility industry.  Resiliency is defined in the Smart Grid Dictionary as the ability to resist failure and rapidly recover from breakdown.  It can apply to individual grid components or to systems.  Resiliency absolutely impacts grid reliability.  A more resilient grid is a more reliable grid. 

Building a resilient grid is accomplished by policy and technology.  On the policy side, the MIT study points out that there are no national standards in place for cybersecurity.  We lack benchmarks for regulators or utility executives to measure the effectiveness of cybersecurity strategies and tactics.  One important recommendation urges the establishment of national cybersecurity oversight, although whether that should reside within the Department of Energy or the Department of Homeland Security or another federal agency is left for lawmakers to decide.  The good news is that there are mature cybersecurity technologies and solutions that can be deployed in utilities to improve system-wide resistance and resiliency to malicious cyber attacks.  The bad news is that technology is, relatively speaking, easy to acquire and deploy.  Change – for people and processes – is hard.  Utilities must incorporate the appropriate skills, policies, and practices into their daily operations to maintain a cybersecure, and thus more resilient grid.

On the technology side, the study examines the challenges and opportunities associated with distributed generation (DG) and electric vehicles (EVs).  Poorly integrated DG and EVs could reduce grid reliability, and the study offers sensible suggestions to mitigate this concern.  But the opportunities for grid resiliency were shortchanged in the omission of Distributed Energy Resources (DER) assets like energy storage and microgrids.  The study notes that today’s energy storage technologies haven’t hit the price points that compete with traditional generation sources.  However, we’ve seen significant price drops in solar photo-voltaic technologies that are rapidly expanding market size and adoption rates.  The next press release could announce a game-changing technology in energy storage that completely revises existing cost assumptions. 

The absence of microgrids from this study is most troubling.  You can find a full definition of a microgrid in the Smart Grid Dictionary.  It is a microcosm of the electrical grid, minus transmission.  Microgrids contain generation assets – typically renewables, but can include co-generation and traditional energy sources too.   The electricity generated by these assets is consumed within the microgrid, or it can be sold back to the larger utility grid through interconnection agreements.  Distribution grids that have interconnected microgrids and other DER assets are more resilient to disruptions resulting from natural or human causes because they can reduce the numbers of homes and business affected by an outage.  Indeed, a DER strategy can be likened to a diversified investment portfolio.  You spread your assets across a range of investments to minimize the risks of failure. 

Grid resiliency through sensible cybersecurity and DER strategies will improve grid reliability.  Generation and energy storage assets must be distributed across the grid, along with the intelligent devices and software to securely manage these assets.  That means new policies and technologies are needed.  That was an important point of the MIT study.  The Smart Grid will require new software applications and services to manage the increasing numbers of devices that create, monitor, and control electricity across the supply chain.  That’s good news for Silicon Valley, which is very good at finding and funding innovative software applications.   This region should be a significant contributor of technologies and business models that help modernize our electrical grid.