The four big utilities in California get together every year to check some of the latest solutions developed by start-ups. PG&E hosted the Emerging Technology Coordinating Council (ETCC) Open Forum in San Francisco last week. It was an opportunity to get a heart beat in the smart grid sector while private investments in start-ups have taken a dive.
I was expecting to see a mixture of utility strategy executives and product managers along with investors, similarly to the Telecom Council that used to meet regularly in Silicon Valley ten years ago. Apart from a few angel investors, the room was packed with technical personnel. The Q&A discussion following the presentation of the fourteen selected companies was of high quality as a result, but it got me thinking about where the smart grid sector is going.
Most of the companies adressed some parts of the challenges awaiting the utilities to transform an aging infrastructure to a platform that can integrate renewable energy sources, support the uptake of electric vehicles, and improve energy efficiency. Utilities have to go from a central model to a distributed network of micro-grids for a variety of reasons: energy efficiency, resiliency, scale, etc.
Most of the start-ups pitching at the ETCC Open Forum used data analytics or the cloud to save energy. As the grid gets smarter with wireless sensors and automated software, it also becomes more prone to cyber attacks. Utilies like Hydro One in Canada, which have been at the forefront of smart grid deployments, actually decided to integrate cyber security from the design phase. They even use the service of hackers to test their installations at times.
Security is a big concern and the CEO of Duke Energy, Jim Rogers made the case last month at Stanford University that cyber security is the biggest threat to a central grid. The progressive utility, now also the largest in North America after its merger with Progress Energy, is already working on distributed grids that are more resilient. For Jim Rogers the concept of smart grids has been over-hyped.
Utilities have also come short in deploying smart grid features beyond a few pilot projects that aim to integrate intermittent sources of energy like solar and support the deployment of electric vehicles. One example at the ETCC Open Forum among entrepreneurs is the so called "smart meter". "Not that smart" shares with me one LED lighting company executive, "The data is only available after 24 hours, once the utility releases it".
For some reasons, the utilities in California turned off that the second wirless port that can make data available to smart devices at the customer premise on per second timeframe. This is hindering innovation as back-end data analytics and energy optimization is limited from a distance and at a smaller time increment. Utilities only capture electricity data, and the according price, every 15 minutes.
So what are the utilities waiting for to make the data available to smart devices? Privacy is sometimes mentioned, but there is a lot more going on. Is it unfair competitive advantage? I was able to sign up with the SmartAC program with my utility in San Francisco, which involves a little device that communicates to my Smart Meter.
Despite this, the start-ups that presented did show some interesting savings in the low double digits. Enerliance optimizes electricity in commercial buildings, and their representative actually mentioned that they were forced to dial back the savings a bit to make sure workers were comfortable. An unhappy company is no customer for a landlord in a depressed commercial real-estate market.
Energy savings is taking a back seat: "It ain't easy to be green" to paraphase a famous green frog. Many start-ups have to find other ways to engage customers. Apps are the technology answer to most of the companies that pitched last week. Swan Digital Media, still at a early stage, had a different story by leveraging the broadcast network infrastructure used for radio to implement demand response, circumverting the entire "smart meters".
One excited entrepreneur stated to me that the digital nature of LED's makes them very attractive because it can be easiliy integrated with control devices, dimming the light to offer energy savings part of demand response mechanisms for instance. Now that they are cost competitive, this year might be the big year for LED lights. One lighting expert confided that CFL are dead. "They don't like to be switched on and off, and they consumer more energy".
Four LED related companies pitched in the afternoon, and their business case was the most attractive. At least there is a light this year for the cleantech sector. However, it isn't going to come from utilities without some more pressure from consumers about what smart grids should do from them. End users are open to do the right choice for the environment but they want to see how this is going to make sense economically.
California’s energy savings can do so much to incentivize utilities to do more for end users. The State of California wants to save 23 billion kilowatt hours of electricity and 45 million therms of natural gas by 2013. That's the annualized equivalent of taking nearly 2 million cars off the road or lighting 3.4 million homes. The truth is that we could save a lot more energy, and money at the same time, if innovation was embraced by utilities.