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.
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.
The Smart Grid is often described as bi-directional energy and information flows, enabled by a convergence of information technologies (IT) with operational technologies (OT). That’s all true, but the word convergence is getting frayed from overuse, and for the latest trend, it’s not quite the right word. That word is meld, and it is an apt term to describe the combination of Smart Grid technologies. Two stories the past week highlighted how energy storage technologies are melding with renewable energy generation technologies and building technologies. It also signals the future direction of grid modernization.
The first announcement features Solar City and Tesla, where cousins Elon Musk and Lyndon Rive (there’s a fair amount of entrepreneurial DNA in that family) recently announced plans to offer Tesla’s batteries with Solar City’s panels to commercial business customers. This is a batteries-as-a-service innovation, which addresses one of today’s primary concerns about energy storage – upfront costs. It’s a great idea. This business model has proven its popularity to avoid upfront costs of computer, software, and data centers through various as-a-service models. Renewable generation and energy storage naturally meld together, and it’s heartening to see innovative business models leveraging this combination.
The other interesting technology meld was announced by Nissan. They have a unique V2B or Vehicle to Building solution that plugs up to 6 Nissan Leaf electric vehicles (EVs) into a building’s power distribution board to perform smart charging and discharging. The objective is to help the building reduce it’s draw of electricity at peak price periods. V2B is different from V2G (Vehicle to Grid). V2B doesn’t send the electricity drawn from EVs to the grid – it is used within the building. The building benefits by taking less electricity from the grid, and thereby lowers its bills. This type of scenario could be used for pure economic justifications, or also play into demand response (DR) strategies. A combination of power from EVs plus shifts of cooling or heating can give a building additional negawatts to bid in various DR situations. What will this type of charge/discharge cycling will do to the EV batteries? These pilot deployments will help answer that question. However, the melding of EVs to building structures – residential and commercial – will happen for economic and resilency reasons.
These technology melds pose a threat to utilities. They reduce electricity sales – the primary source of revenue for electric utilities. This is the one of the scenarios associated with the death spiral that is feared by utilities around the globe. But those of us with telecom backgrounds have seen this before. It was called the Private Branch Exchange or PBX, which in essence was a privately-owned dialtone generator – and it was very similar to privately owned power generation assets like solar panels. When melded with battery backup, the PBX gave large (and then small) industrial and commercial customers an alternative to the monopoly telephone services provided by the old Bell system.
Back then, the Bell system was a cloud that delivered phone-as-a-service to residential, business, and industrial customers at 99.999% uptime. But customers liked the idea of having control over an essential business service and enjoying fixed telephony costs. Prices dropped as a number of intensely competitive companies rapidly innovated PBX technology and expanded capabilities. Voice mail, call forwarding, and computer-telephone integrations followed.
Had the US Justice Department not been pursuing the Bell system monopoly to its eventual breakup, the PBX would have inflicted significant revenue losses as commercial customers defected to PBXs. That would have precipitated a different existential crisis for the old AT&T. Fast forward to today and the electric utility ecosystem, and small-scale renewables melded with energy storage pose the same possibility of eroding revenues from a profitable customer segment (commercial business) for electric utilities.
So what’s a utility (or utility regulator) to do? Think about changing the electric utility business model, not fighting inevitable technology and financial trends. Leave that futile strategy to the American Legislative Exchange Council (ALEC) as they try to shove the rooftop solar genie back in the bottle. Smart utilities and regulators should seek policy changes that enable utilities to obtain revenues for value-added services, not just basic delivery of electricity. The melding of Smart Grid technologies into energy generation/storage nodes (aka distributed energy resources or DER) embedded within the grid presents opportunities as well as challenges for utilities. Encouraging utilities to evolve can help them leverage these opportunities into business models that maintain the social compact to deliver safe, reliable, and cost-effective electricity for all.
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.
Albert Einstein said, “We can’t solve problems by using the same kind of thinking we used when we created them.” We won’t get out of the energy mess we’re in with the same fuel sources and energy technologies that got us here. The US government typically invests $3 billion into energy research per year, although ARRA (the American Recovery and Reinvestment Act) put more into energy R&D in 2 years than is normally seen. Three billion seems like a lot until you compare it to the $30 billion per year spent on healthcare research and the $80 billion poured into defense research.
America’s ability to compete as a world leader in energy technologies based on this investment number looks bleak indeed. However, here’s a compelling number to consider: $7 a charge. This is the cost of two weekly EV charges at California rates – often identified as among the highest electricity rates in the country. Two charges a week will easily handle the 30 miles per day round trip driving habits of most Americans. Compare that to the costs of filling up a gas tank once or twice a week to support those same trips.
The EV has the potential to be the most transformative technology for the US electrical grid and the American consumer. Its impacts will ripple through the entire national economy and accelerate Smart Grid-related deployments. Here are three examples:
- EVs will spur more distributed generation, microgrids, and energy storage as utilities look to avoid investment in additional remote generation or transmission assets. Generation facilities sited at homes or at work campuses leverage clean, domestic, renewable forms of energy and energy storage that can be used to charge EVs.
- EV charge/discharge functionality will require new transformers and other upgrades in the distribution network. Today’s installed transformers are not designed to manage bi-directional electricity needed for vehicle to grid (V2G) charging and Feed-in-Tariff (FiTs) situations, and thus need to be replaced. Even if V2G charging is not in place, aging transformers will get more hours of heavy-duty use since many EVs will charge at night, reducing their former “down time” and accelerating their replacement timeframes.
- EV fleets, aggregated with predictable patterns of charging or discharging, can become mobile distributed generation and energy storage assets and improve the reliability of the electrical grid.
Einstein talked about changing ways of thinking, and my blog on October 4 offers one example of how to think about EVs. But we also need to change technologies to compete in the global clean energy economy and enjoy the most effective Smart Grid. American consumers can do the math on the ever-increasing costs of oil and the insanity of handing over money to unfriendly oil-producing countries. Even the fossil fuel lobbyists who outspend cleantech lobbyists 59:1 will have a hard time making two $7 electrical fill-ups look more expensive than one $50 trip to the gas station.