General Electric and four venture-capital companies are putting up $200 million to award entrepreneurs for coming up with innovative ways to modernize the electricity grid.
At an event at San Francisco, the companies launched the "GE Ecomagination Challenge: Powering the Grid," a competition designed to cultivate smart-grid technologies. The money is being made available by GE, Emerald Technology Partners, Foundation Capital, Rockport Capital, and Kleiner, Perkinsk, Caufield & Byers, each of which are investing in green-technology start-ups.
Starting on Tuesday and continuing until the end of September, GE will begin receiving submissions for entries from the Ecomagination.com Web site, which will then be evaluated by a judging panel made up of GE executives and outside experts. A short list will be announced on October 21 and award winners announced on November 8. Half of the money will be made available by GE and the rest by four VC companies.
Because smart-grid products often rely on IT-related technology, venture capital investors are generally comfortable with the area. GE, meanwhile, has a long history of supplying equipment the utility industry and it is making home appliances that can communicate with smart meters.
But even with a multibillion government-aided investment, most smart-grid programs in the U.S. are still in the pilot phase. With the competition and financial awards, GE and its venture-capital partners hope to direct more entrepreneurial energy toward the power grid, much the way X-Prize competitions have inspired space travel or super-efficient cars, although the GE-led effort is to stimulate new business, GE executives said.
During an opening talk at the San Francisco event, Immelt predicted that smart grid, or what he called digital energy, will grow rapidly in the years ahead. The products cover everything from data collection from smart meters and automation tools in the home to power-optimization equipment for utilities.
"Everybody has seen the impact in every corner of lives over the last 20 years from digital technologies. It's easy to make the leap that digital is going to transform how electricity is created, connected, and used," he said, adding that a digital grid lays the groundwork for the growth of the grid in the future.
In tandem with the grid competition, GE introduced two new products including the Watt Station, which is a high-speed home electric vehicle charging station, and Nucleus, a device for monitoring electricity usage and managing connected appliances and hot water heaters.
GE held the event in San Francisco to foster greater ties with Silicon Valley where there has historically been a lot of innovation in IT and health care.
"Energy is a place where big and small companies need to work together," he said. "Energy is little bit different because it's the combination of smart digital ideas taken down the learning curve quickly, commercialized quickly."
High- and low-tech efficiency
During a panel discussion, Immelt and Kleiner Perkins investors Ray Lane listed some of the technologies that they consider promising in the digital energy area.
Overall, the competition is looking for products that can make the grid more efficient but they can fit in along the many points of the supply chain of creating and delivering electricity, said Lane. Specifically, he listed software to monitor home energy, demand response systems to lower energy use during peak times, and low-cost energy storage.
Immelt also listed low-cost storage as well as communication technology for neighborhood microgrids, tools to manage demand such as demand response, and ways to retrofit appliances to operate in a digital grid.
Over the past decade, venture capitalists and entrepreneurs have focused much more on making power generation cleaner and not enough on efficiency, Lane said.
"We've tried very hard to find efficiency opportunities but there's been a dearth of innovation in this area," said Lane. "Because it's not easy to go into 130 million consumer households and change their behavior. That's the most difficult thing to do."
Even though GE and its partners are seeking out technology ideas, executives on the panel said successful efficiency techniques should be simple, low cost, and not necessarily high tech. Energy conservation should be viewed as a way for consumers to be more productive by using information, much the way the large businesses adopted IT to become more productive, Immelt said.
One smart-grid company executive asked Immelt to address the problem companies have selling to utilities, many of which don't have a financial incentive to use energy more efficiency. Immelt noted that policies in Europe create better incentives for energy companies to invest in digital energy technologies, but he predicted that policies in the U.S. will change and utilities should be prepared.
"Basically public policy does catch up and when it does, it does so quickly. This will be no different from other trends we've seen," he said.
Updated at 10:45 a.m. PDT with comments from the media event.