We Need an Internet of Energy.
We’ve all heard of the “prosumer” -that is the individual who not only consumes goods and services but also creates goods and services or content. Typically the term is used to refer to those who produce online content i.e. in reference to someone who creates a blog or Youtube videos.
In a sense, even if we never create a blog or venture into the Youtube netherworld we are all prosumers. That is the nature of being human. Most human beings both consume and produce in one form or another.
Energy is a place where prosuming is primed to emerge on a large scale.
Right now most of us get our energy from central hubs, power plants of one form or another. Energy is created and then sent out to the hinterlands for us to consume. Our homes are energy endpoints, cul-de-sacs for electrons. We turn on the lights, fire up the AC, wash the dishes, and that energy is used and then seeps out into the broader universe.
This is a very 20th Century way of doing things. More of us must become prosumers of energy.
Some of us already are energy prosumers. I grew up in a house with solar powered hot water. My neighbors down the way have a wind turbine at the top of a pasture hill. There are even those who generate enough energy at times that they have an excess and can then sell the energy back to the grid. Almost anyone with a reasonably reliable stream going through their property can achieve this with an investment in a water wheel.
But too few of us produce energy, largely because it makes limited economic sense.
This will likely remain the fact for a good while. Utilities can use economies of scale, have long established networks, and so on, which makes micro-production less attractive.
To be clear this is not necessarily a bad thing. Like it or not inexpensive energy is vital to a healthy economy.
But there is a market currently for relatively small scale energy production and it is within this market that new solutions will come.
For far too long the debate around the “alternative” energy space has been dominated by the discussion of subsidies. It certainly makes sense that this is the case. Germany for instance has built an entire “green” energy industry around such subsidies. The Chinese are working on it too (in a relatively limited way, they love coal fired plants.) But in the end these subsidies are not sustainable, not to mention they put the current, and very powerful producers of energy on notice. For many powerful interests the energy debate has become a zero sum game. Green wins, and old energy loses. Powerful forces are not inclined to let this happen.
Some within the green energy movement have no problem with this. They are out to crush the old producers of energy and old ways of producing it. They have no problem fighting a nasty war to end the use of coal or nukes. As such they have thrown their lot in with the state. Government is the only thing that can compel the marketplace to be “responsible” in their eyes.
Many want a revolution in energy to happen overnight, last night if possible.
I would argue that this is the wrong way to look at the problem. It makes much more sense to encourage entrepreneurs to solve energy problems on a micro scale (and macro sale where it makes sense) and in the creation of an Internet of Energy.
There are 2 main problems with getting energy much more green as I see it.
One is the vested interests involved. There is so much money to be made in power plants that the owners (typically share holders) will never give up their cash cow. Most of these share holders are people who own parts of utilities via mutual funds, or via retirement funds because utilities are relatively stable and tend to generate relatively high dividends. So it’s not just the fat cats that want that coal fired plant generating profits, it’s CALPERS, and your grandma too.
The other is a an energy grid that is full of electron cul-de-sacs. The energy is sent out and then consumed. A very small amount is created by energy prosumers and sent back to the grid.
But even when energy is sent back to the grid on a relatively small scale, such as in parts of Europe, this presents other problems. 20th Century electrical grids are really meant to flow one way. With large amounts of energy coming in from potentially millions of sources the current grid would quickly become unstable. What is needed is an Internet of Energy where electricity can flow from where it is being produced via wind, solar, etc. to where it is needed.
This presents an interesting opportunity for the current players in the energy market.
It is unlikely that the current electrical utility companies will get on board with a “green” agenda in any real way if doing so goes against their best interests. Sure greens could engage in a protracted war (as they have) with the utilities and, yes it is possible that one day the green energy folks could emerge victorious (though they have about an equal shot in my estimation.) But in the mean time, and it would likely be decades, the progress that should be made will not be made because both sides are going head to head. There are clear exceptions to this, but for all the platitudes on both sides this is still basically the case.
However if current utility interests had an interest in an Internet of Energy, if for instance they built a piece of a 21st Century grid (since they have much of the expertise) and charged pass through fees on that part of the network that they own/constructed, they might have an interest in forwarding a more sensible energy agenda. Even if the coal fired plant one day died many utilities would still have a way to generate consitant revenue of the kind utility shareholders demand. They would act as a railroad for energy essentially. Oil pipeline companies do this all over the world.
In fact, if it was particularly profitable (and frankly who knows at this point) there is even a chance that over time utilities could become key drivers of energy change.
An Internet of Energy would also encourage entrepreneurs to find new and innovative energy solutions. So long as entrepreneurs knew that there was a ready market, a smart grid on which to effectively unload excess energy created by micro-producers, profitable ventures would emerge. The biggest challenge is the infrastructure. If the big boys take care of that then the smaller operations can get to work.
With an Internet of Energy we can become more sustainable, communities more resilient, we can encourage innovation and create real jobs that are supported by the marketplace not by subsidies, while also encouraging powerful interests to get on board and even become drivers for sensible energy policy.
An Internet of Energy needs to happen, and soon.
Nick Sorrentino 10-26-2011