Is smart grid the next green-tech bubble?
WASHINGTON--Here at a conference on the utility of the future, the starring players are Google, IBM, Cisco Systems, Intel, and smart grid start-ups. The reason? Data.
Modernizing the grid isn't just about installing more transmissions lines and smart meters. It's a giant information challenge as well, said attendees of consulting firm Kema's Utility of the Future conference here on Thursday.
The heavyweight IT companies are seeking to capitalize on initiatives around the world to upgrade the power infrastructure. The U.S. Department of Energy is expected to soon announce how billions of dollars in stimulus money for smart grid will be allocated.
Smart grid has also become one of clean-tech venture capitalists' favorite areas, spawning dozens of start-ups with ways to make the grid run more efficiently and integrate more solar and wind power.
Altogether, it's a combination that could end up creating a bubble, said Diana Propper, a clean-tech venture capitalist at Expansion Capital Partners.
"I worry that there's so much money being sloshed around, whether it's venture capital or corporate or government money, that it will be spent inefficiently," she said during a panel. "The risk of a bubble is real."
People have been talking about the smart grid for ten years but a combination of factors is pushing the vision closer to reality, she said, citing the need for reliability, the need to reduce carbon emissions, and the emergence of more technology-savvy end users. "We've passed a tipping point. I think we're going to see a tremendous amount of capital in this area."
Venture investors in the past two years poured hundreds of millions of dollars into thin-film solar technology companies, many of which aren't expected to survive. Smart-grid technology (and energy storage) is generating a similar excitement level this year, but there are some differences to the solar bubble, said Ben Koch, managing director of investment banking at Southwest Securities.
"With smart grid, there are fewer companies and they are more mature," Koch said, noting that demand-response company Comverge had 500 utility customers before it went public.
On the other hand, a rush of available money tends to mean more risky ventures will get funded. "We won't have irrational exuberance...but there could be some bad investments," he said.
Koch added that the stepped-up presence of IBM, Cisco, Intel, and Google in the utility industry could stiffen competition for smaller firms.
Data overload
To understand the interest of the major IT companies in the smart grid, consider Duke Energy's program.
It has 5 million meters installed in its territory and each customer has a few major appliances, such as water heaters and refrigerators. Each one of those devices--in addition to hundreds of thousands of sensors on the distribution grid--could be networked.
To collect and make sense of the mountains of data these devices produce requires a robust network and sophisticated IT systems.
"Just the number of devices to be connected and the volume of data that needs to be processed--it's enormous," said David Mohler, the chief technology officer of Duke Energy. "We realized early on that we needed to create an information architecture. That's not a utility's sweet spot."
Instead, the utility contracted with Cisco to build that data communications network. Duke is already testing smart-grid technology and plans larger-scale deployments in Ohio and Indiana starting at the fourth quarter of this year.
Home energy management is another important piece of smart-grid programs. Microsoft and Cisco as well as telecom companies, such as Verizon, have said they expect to make energy monitoring an extension of existing home networks.
Yet, there's some concern that the majority of U.S. consumers won't act to lower electricity consumption even if they do have more detailed information or they won't be willing to allow utilities to control devices in the home, executives said.
The main elements of the smart grid have been touted for many years. Will it finally start to take shape?
(Credit: Department of Energy)With its smart grid programs, Duke plans to do as much processing near the edge of the network as possible, rather than at its data centers, executives said.
For example, substations servicing a neighborhood could collect data from devices such as street lights and plug-in electric vehicles to signal to the utility what the demand for electricity is. Rather than sending reams of real-time data back to a utility employee, Duke envisions equipping the substation with controls capable of some low-level processing to, for example, spot when an outage might occur.
Transmission line owners are investing in IT and control systems as well so they can better manage the flow of electricity, particularly with an expected increase in wind power, said Terry Boston, the CEO of grid operator PJM.
"Today our communications is very siloed. We need a steady flow of data from the generator to the customer and the grid operator," Boston said, adding that the company is developing a services-oriented architecture with a unified data bus.
Google's director of climate change and energy initiative, Dan Reicher, was a speaker here as well, where he talked about Google's plan to develop products in energy, particularly those that cross IT and ET, or energy technology. "Information technology can make a major improvement to the smart grid we're all talking about," he said.
Martin LaMonica is a senior writer for CNET's Green Tech blog. He started at CNET News in 2002, covering IT and Web development. Before that, he was executive editor at IT publication InfoWorld. E-mail Martin. 
I don't see that here. There is a lot of work and opportunity in Smart Grid technology. Sure they may be alot of start-ups trying get in, but who can blame them when the business opportunities are there. Also, I am not convince that value of Smart Grid technology is overblown (which would be required for a bubble to occur). Will some start-ups go belly up and money be loss? Sure, but that risk in venture capital.
Smart Grid technology also has a way to go and more business opportunities are abound.
The technology needed for "smart-grid" is either obvious or already existing-- nothing really to invent. The only thing of significance is getting everyone to agree on a standard. Having 50 companies all trying to push proprietary technology is working in the opposite way. The Internet worked because of the simple RFC process and an open-source model-- patents didn't get in the way. The real trouble and internet bubble happened as the 'net was turned over to commercial use and companies tried to insert their proprietary solutions. I think we are headed for analogous wars the way things look for now.
Yes, the concept for real-time control of electric demand (and supply) are really worthwhile and add a huge value. We don't need some proprietary patented solution-- we should be going back to the RFC process, develop a patent-free set of standards, easy to take an implement by a refrigerator manufacturer, etc., not some third party proprietary add-on.
I hear lots about proprietary smart grid "solutions" but little on open standards.
There is a green bubble coming because sooner or later, people will realize that not only are many green ideas not cost effective, they don't reduce energy consumption or increase production.
One of the things you can't predict is what new tech will be MORE effective a few years from now. That's where the risk lies.
All exist because they are subsidized and only a very small part of overall production. If they were a larger portion, people would scream.
Every time i fill my car up with up to 10% ethanol, my mileage drops and i pay 20 cents/gallon more for the privilege.
More importantly it would allow the energy companies to more accurately predict load. As it is right now, they produce a substantial amount more than the current demand, because they want to make sure that they have enough energy for whatever comes up. If they can more accurately predict and measure load, they can reduce this excess waste, and in theory would be able to react more quickly to a spike in energy consumption. Even if this was only a 2% savings in energy, on the scale that we are talking about, that would be a large amount of savings for the companies, consumers, and the environment.
If we had spend a trillion dollars on nuclear plants, we could have reduced our CO2 emission far below 1990 levels. And if you're like me and don't believe in such things, it still would have paid off down the road. Instead, we just got useless projects and a bunch of debt.
The load issue is incorrect. The utilities always know the load since they are producing the supply and there is no storage device. I think the real issue is control. I'd like to see the payoff for cost of implementation vs. real life savings. I suspect you will never see realistic nos.
Get real. Three gigantic obstacles:
1) Why create an easy & devastating target for terrorists? (Do you really believe a large plane would just bounce off?)
2) Uranium is scarce - there is not enough on earth to fuel much more than we have now.
3) There is still no place to put the hazardous waste - is radiation hazard for a few thousand years worth a few years of energy?
Nice try. The answer is wind, solar, hydro, wave power and other sources of energy produced by nature every single day.
2) There is enough uranium along with reprocessing to provide all the power the world would need for 100 years at least (barring even more advances in the tech within those years).
3) France has reduced the size of their wastes to about 1000 X 1000 sq. That is ALL of their waste and they get about 80% of their power from nuke.
Wind, solor, wave, bio, etc have a niche place but they will never be able to provide all power needed esp. when we go to electric cars.
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Not only does this unit reduce electric bills, it also deodorizes.
The inventor, Ralph Bergstresser, said that in 1978 the Canadian Government ran tests on this device: "They found that by placing the 'Fridge Freshener' in a home refrigerator, a saving of $4.00 per month on electrical consumption resulted from its use," he said. "This was an added feature that was never anticipated. Most thermostats must be raised on home refrigerators, otherwise the food will freeze and, of course, this saves energy."
The 12? by 12? square) is placed on the center shelf of a home refrigerator. Should there be any odors, they will gradually disappear, but do not expect this to happen instantly - several days may be required.
Amazingly, the Canadian government tested this device almost 20 years ago, and found that the fridge freshener has the innate ability to reduce the internal temperature of the refrigerator in which the energy cube was used. This resulted in a savings of $4.00 per month in electrical
Once the SmartGrid data network is installed, you have to put in smart meters which cost hundreds of dollars each. And every appliance which you want to monitor and control has to have some kind of SmartGrid data node added, probably using some kind of Powerline technology which transmits data over your home's power lines to a SmartGrid router (presumably built into the smart meter) which talks to the fiber network. Ideally this would be built into your major appliances at an extra cost of tens of dollars retail, but since very few people will replace perfectly good appliances just for SmartGrid, I expect there will be a market for external boxes which connect between your appliance and the wall, which might cost as much as $100 each to start (ultimately this should go down dramatically).
The upshot is that consumers will have to pay hundreds if not thousands of dollars to make full use of SmartGrid in the early years between increased utility fees and purchasing SmartGrid home technology. It will take years for the average consumer to make that upfront investment back in energy savings and I suspect many people will delay making that kind of investment for as long as possible, especially since you can do almost as much with a $25 Kill-a-Watt meter. Over a year into Boulder's SmartGrid trial, only one or two demonstration homes in the city are fully wired with appliances that talk to the SmartGrid network. Right now the emphasis in on installing smart meters, but not going any further into the home.
The net effect is that any company investing tens of millions on SmartGrid software is just pouring money down a rathole. The number of households which can fully take advantage of such software and be willing to pay hundreds of dollars for it will be minuscule for at least five to ten years.
Smart grid is not a phoney, we can leave that out. It does not exist, at least our electricity grids cannot be by any stretch of imagination be called smart.
Which leaves me with the third - it needs more defining and its benefits clearly spelt out before many investors are willing to open their purses
NS @ Alternative Energy Profits - http://www.altprofits.com/blog
- by Bill_I July 6, 2009 12:46 PM PDT
- Since about 50% of generated power is wasted in the grid, it will take an awful lot of smarts to improve it. --- Every time you walk past a loudly humming transformer in the motel parking lot, consider that regulation by magnetic saturation is standard practice. Those big fins on the sides use an oil-cooling scheme to dissipate all those wasted kilowatts, so the transformer does not overheat. --- You can change all the light bulbs in the world to those complex and weird CFLs, and not make a dent in the power wasted just trying to get it as far as your electric meter. --- Reliable, yes, efficient, NO WAY !
- Reply to this comment
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- by jason_hanna July 10, 2009 1:05 PM PDT
- Hi Bill,
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(19 Comments)By your own logic, 1 kilowatt saved by consumers results in 2 kilowatts of avoided electricity generation.
You're right about transmission losses in the grid, but to suggest end user behavior doesn't have an effect is inaccurate. Our behavior matters, and we should always be looking for ways to do things more efficiently.
Regarding definition of smart grid - I'd suggest there are so many varied definitions because it touches every aspect of one of our most important and vital industries. When we use the term smart grid we're talking upping our investment in generation, transmission, distribution, efficiency, storage, renewables, information technology, etc.
Certainly there are segments which are over-hyped and many technologies (and companies) won't pan out - that's the nature of innovation. If we're to move forward, however, we must continue to invest, both privately and with our tax dollars.
Most of the greatest accomplishments of the last two centuries wouldn't have been possible with government-sponsored investment. Hopefully we do it wisely this time around.
Cheers,
-jmh