The recent announcement of a joint venture between GE and Abu
Dhabi to finance and build advanced water and energy infrastructure
highlights where American investment needs to be, and why we are
An analysis of todays announcement of a massive joint venture
between GE and Abu Dhabi offers the most relevant roadmap to date
for the future of high tech infrastructure, specifically the
development of clean technologies. This global movement offers an
amazing view into the future, as the most progressive companies and
goverments in the world hash out collaborative plans to deploy the
latest and best solutions for the global technology elite.
Throughout history the areas of the world with the best
infrastructure have been the dominant forces in global trade and
innovation. In the past it meant the best roads, ports, schools,
etc. GE and Abu Dhabi show us that it is now a cross pollination of
public and private partnership, facilitated by investment
authorities and Fortune 500 companies. As we break down this
strategic partnership piece by piece, we get a glimpse at the
mechanisms in place that are creating the homes, towns, and cities
of the future, and how their interplay effects a larger ecosystem
of innovation. No one can dismiss this as central planning, rather
it is an attempt by government to become more innovative and
responsive to the needs of tomorrow. (cont.)
The ‘smart grid’ is coming, but arriving at this future is likely to include some twists, turns and battles led by some ‘Big Grid’ utilities who might struggle to see their role in this alternative future.
At the surface ‘smart grid’ concepts sound like a logical next step for the modern day utility grid: minimizing downtime, managing peak demand, improving efficiencies, and anticipating problems before they occur all sound like a positive step for the world. But underneath it all the ‘smart grid’ is incredibly disruptive to the regulatory framework, operational standards, capital investment strategies and business models of most large utilities.
To understand the evolution of the ‘smart grid’ and the utility of the future, we can imagine two initial stages of development.
Part One: Software for Managing Infrastructure
The first steps to building a ‘smart grid’ utilize the power of software to maximize the efficiency of the grid. Simply put, we add a layer of information technology to improve management of existing one-way grid infrastructure to improve performance and reduce costs.
Mark your calendars! The business case for ‘smart infrastructure’ has been made by one of the world’s biggest companies. On November 6th, IBM CEO Sam Palmisano delivered a speech (text / video) at the New York Council on Foreign Relations. Palmisano highlighted ‘Big Blue’s vision of a ‘Smart Planet’ and the tremendous near term opportunities in building out the global smart infrastructures for energy, water, information, and transportation of people and goods.
Palmisano echoed a vision described by visionaries and futurists long ago of a ‘digital planet’. Now we might expect broader endorsements for ‘smart infrastructure’ by mainstream business and policy leaders especially in the US under the incoming Obama Adminstration. We can also build more reliable forecasts and roadmaps based on expectations for investments and application of technologies that improve the flow of traffic (without adding more lanes), more efficient energy grids, wider access to clean water and food, improved personal safety, and more secure information flows around financial, governance, and healthcare information.
Quotes from Palmisano’s address: What’s making this possible? First, our world is becoming instrumented
“There will likely be 4 billion mobile phone subscribers by the end of this year… and 30 billion Radio Frequency Identification tags produced globally within two years. Sensors are being embedded across entire ecosystems—supply-chains, healthcare networks, cities… even natural systems like rivers.“
Second, our world is becoming interconnected
“Very soon there will be 2 billion people on the Internet. But in an instrumented world, systems and objects can now “speak” to one another, too. Think about the prospect of a trillion connected and intelligent things—cars, appliances, cameras, roadways, pipelines… even pharmaceuticals and livestock.“
Third, all things are becoming intelligent
“New computing models can handle the proliferation of end-user devices, sensors and actuators and connect them with back-end systems. Combined with advanced analytics, those supercomputers can turn mountains of data into intelligence that can be translated into action, making our systems, processes and infrastructures more efficient, more productive and responsive—in a word, smarter.“
The Takeaway's Host John Hockenberry interviews the CEO of Sentilla and explores the huge opportunity around the convergence of energy and information. The era of 'smarter energy' systems is likely to be more efficient and profitable because it taps the integration of software, sensors and energy storage.
The new report “Transforming America’s Power Industry: The Investment Challenge 2010-2030” [Full Report / Exec Summary] estimates that the U.S. utility industry will have to invest between $1.5 and $2.0 trillion between 2010 and 2030 to maintain current levels of reliable energy service for customers throughout the country.
“This study highlights the investment challenges confronting the power industry in the coming decades,” according to Brattle Group Principal Peter Fox-Penner. “The industry is facing enormous investment needs during a period of modest growth, high costs, and very substantial policy shifts.”
Why is this important to the future of energy?
This investment figure challenges some deeply held assumptions and visions of the future promoted by people on all sides of the political spectrum. Free market advocates will have to confront role of government spending on infrastructure. Unless we completely abandon the centralized power plant to home model that exists today, most of these investments will come from states and the federal government.
But the more emotional conversation deals with the dreams of new sources from solar, wind and ocean power. This report confirms the brutal reality- Renewables alone, cannot scale to meet demand through 2030. While Al Gore’s We Campaign is trying to make a convincing case that we can go ‘all green’ in a decade, the numbers do not add up without a radical social-industrial engineering project with no budget limits.
The most likely near term future through 2030?
All sources of energy used in electric power generation will grow.
What to watch for
These types of reports often grab headlines, but are quickly forgotten by the public. Yet there is evidence to suggest that America is preparing to make significant investments in our energy infrastructure and change its regulatory framework to enable the Utility industry to transform its business and operating models. [Until those regulatory changes are made, the utilities will remain locked in their current business models, and will be unable to introduce innovative and cost saving efforts.]
The 'Big Grid' is based upon a mass distribution model from the 1930's and technology from even earlier. But industry and the Department of Energy are beginning to develop standards to transform the Big Grid into the Smart Grid so that it can handle renewable energy sources, electric vehicles, distributed energy generation, demand side managment, and information about it all. The sale of electric vehicle charging technology company V2Green to Smart Grid technology company GridPoint marks the beginning of a market where hi-tech geeks meet energy geeks.
Could there be a collision of paradigms between geeks who've grown up under Moore's law and those whose basic technology hasn't changed in 70 years?
Geeks look at the Big Grid and it reminds them of the old main frame computer days. They look at the auto industry and and see rust. So, they'll change it themselves. Through their RE<C program, Google is funding renewable energy companies with the goal of generating 1 gigawatt of energy at a price less than coal. Applied Materials has joined Google as high tech leaders that are covering their rooftops and parking garages with solar panels. Former Intel CEO Andy Grove challenges his old company to get into batteries for electric vehicles. Silicon Valley VC legends Vinod Khosla and John Doer fund cleantech companies.
Can these hi-tech leaders find success that scales in a business where there's no Moore's Law?