“Cost Causer Pays” or Where is the Incentive for T&D Grid Upgrade?

by David Niebauer

In representing a utility-scale solar developer client recently, I was surprised to learn (naively, I now realize) that the general rule for transmission upgrades is  “cost causer pays”.  What that means for my developer client is that, regardless of how desirable the project, the developer will have to pay the full cost of upgrades to the grid network to bring the generation on line.  This is the case even though most of the positive effects of the upgrades will benefit the utility and the electricity consumers in general, and even competitors that will be able to piggyback on the investment.

This has led me to ask the question in the title of this article:  who has the incentive to invest in upgrades to the nation’s electricity transmission and distribution system?

It is common knowledge to anyone working in Cleantech that the transmission grid requires extensive upgrades.  These upgrades are required in order to allow more renewable resources to be brought online, and they are necessary for modernization and expansion.   The grid was built a long time ago and infrastructure investment in the area has lagged for decades.  The most recent (and reliable) estimate that I have seen anticipates that $165 billion will be deployed over the next 20 years upgrading and expanding the grid.

Deregulation has forced utilities to cede control of transmission assets to Regional and Independent System Operators in order to open the transmission grid to all participants.  Under the current regulations, RTOs and ISOs, being non-profit entities, have no incentive or ability to either acquire existing transmission assets or develop new ones.  Some observers believe that independent for-profit transmission companies will emerge, with regulatory and financial incentives that will permit a roll-up of transmission assets into stand-alone businesses. Should such a structure emerge, the right incentives for grid upgrade might exist, but this structure is only one of a number of solutions and only time will tell if it will emerge.  In the meantime, ISOs/RTOs are unlikely candidates to spend money on transmission upgrades.

Ultimately, or course, we will all pay through higher electric utility bills.  David J. Leeds of Greentech Media makes the case that utilities will drive investment in T&D upgrades.

“When you consider that the U.S. electric utility sector, with it’s annual revenues of roughly $300 billion, is 30 percent larger than the automobile industry and twice as large as the telecommunications industry, and then bring to mind the craze of dotcom investments and telecom M&A which occurred in the mid to late 1990s, a reasonable picture starts to emerge of what can be expected of in terms of Smart Grid investments and M&A in the next five to 10 years. Many of the senior level employees working for privately held companies in Smart Grid, have backgrounds working in either telecom or IT.”

From a macro perspective, I am sure this is true.  However, given the difficulty that utilities have in passing on costs to ratepayers, the build-out will almost certainly go slower than most observers would like.  The so-called “SmartGrid City” being built out by Xcel Energy in Boulder Colorado is a case in point.  Xcel has been allowed to pass on to ratepayers $45 million of the estimated $100 million cost of that project, and the good citizens of Boulder are not happy about it. No doubt this will be read as a cautionary tale for other utilities with plans to move forward on their own with T&D upgrades.

The Federal government will be able to stimulate some of the upgrades through grants and tax incentives, but its impact is both jurisdictionally and fiscally limited.  While the FERC regulates wholesale prices, it has no authority to mandate the construction of new transmission lines – these decisions are all made at the state level.  But the grid is a network of interconnected transmission lines which of necessity cross state and regional borders.  Without a central planning authority, development occurs in a piecemeal and halting fashion.

The American Recovery and Reinvestment Act of 2009 (ARRA) is providing about $4 billion in Smart Grid stimulus funding, but given the enormity of the required work, this is really a drop in the bucket.  Yes, we desperately need a national energy policy that would include construction and upgrade of regional transmission lines.  But given the legacy of the transmission grid and the desire of state and local governments to have control over energy costs, I have a hard time seeing how coordinated activity can occur.  Add on top of this the debacle of deregulation and you can begin to see the quagmire we are in.

State governments have big plans for bringing large amounts of renewable energy on-line.  The Texas CREZ (Competitive Renewable Energy Zone) is a $5B plan to move 18 GW of wind from west Texas and the panhandle to the major load centers in east Texas consisting of 2300 miles of new 345kV transmission.  Search “Intl_ROW_012710.pdf” for more information.   In California and the west, the Western Governor’s Association has developed the Western Renewable EnergyZones (WREZ) to bring wind, solar and geothermal into the western load centers. The WREZ initiative seeks to develop 30 GW of clean energy by 2015. This initiative calls for the construction of significant new interstate transmission lines.

The CREZ will be paid for by ratepayers, but the WREZ has no funding for its ambitious plans.

To highlight the problem, the WREZ initiative states:

“In order to plan and support the permitting and construction of new transmission lines, there must, at a minimum, be close coordination among resource planners, transmission providers, sub-regional and interconnection-wide transmission planners, transmission developers, federal land use agencies, renewable developers, state, provincial and federal regulators, and environmental organizations.”

With benefits to be derived by 11 US states, 2 Canadian provinces and some areas of Mexico, how do the costs get allocated?

The Brattle Group has done a study on the cost allocation and recovery approaches to transmission grid upgrades.  They explore a number of the methodologies being used and being developed.  They document the complexity of current cost allocation approaches.  While some single state approaches appear to be working, regional transmission upgrades, which are by far the most important to the national grid, are more difficult.  The final takeaway from the report:  “Despite years of effort, cost allocation remains the number one barrier for multi-state, multi-utility transmission projects.”

Obviously, “cost causer pays” is not going to get the job done.  We need a national energy policy with a strong transmission and distribution grid upgrade component.  The task is complicated by overlapping and sometimes competing federal and state objectives, but failing to act is simply not an option.  Both financial and policy incentives must be made clear for stakeholders so that the greenpower superhighway that many envision can become a reality.

David Niebauer is a corporate and transaction attorney, located in San Francisco, whose practice is focused on clean energy and environmental technologies.

Will your Utility be ready for your Networked EV?

Yes, your electric utility will be ready to charge your new electric car if you live in the right city.  Your odds improve if you live in one of 18 cities, own a house that uses air conditioning, has a garage, and have new underground power lines. If you live in an apartment with no garage, especially in a non-priority city, then get ready to be a brave pioneer.

I recently invested a day listening, interviewing, and networking with forward thinking utility executives and some of the smartest people in the smart grid business at GTM Research and Greentech Media’s Networked EV conference.

Nissan has started shipping the LEAF. Chevrolet has handed car keys to early Volt customers. Forty thousand new electric vehicles will be on the U.S. highways by the end of 2011. Charging these vehicles could be the equivalent of powering another 40,000 houses. Since the sub-prime mortgage crisis has left that many houses empty, you would think that charging 40,000 cars should raise no concerns. Charging one million by 2015, however, is both a challenge and an opportunity.

Utility executives are raising concerns and conducting PR campaigns. They want to make sure that they are ready, that no neighborhood blackouts happen, and that they make money charging these electric cars. Early Prius sales were concentrated to certain communities; it will be the same story with electric cars. For example, universities and tech centers will have a concentration of EVs that will lead utilities to install smart meters, add smart grid software, and add $9,000 transformers. In many cases, public utility commissions must support these upgrades so that utilities make money charging EVs.

Even morning charging at work or public spots is fine with most utilities. Peak demand is often in the afternoon and early evening. It greatly helps that all electric cars, from LEAFs to Volts, use smart charging. Charging does not start when you plug-in. It starts based on your preferences, such as charging at lower night rates. With a couple of clicks on your smartphone app, night preferences can be overridden with your request to immediately charge.

Temporary TOU tiered pricing will be tested in cities such as San Diego to see if people are encouraged to charge off-peak. Some lucky test households will pay super off-peak rates that are only 1/6 of peak rates when charging their new plug-ins in San Diego. Money incentives and the simplicity of smart charging should lead to most charging being done off-peak.

Eighteen cities from San Diego to Seattle, from New York to Raleigh, have been preparing for the deliver of thousands of electric cars by installing 15,000 public charging stations as part of a DOE Ecotality project. Independently, thousands of home charging stations are being installed by EV drivers.

Greg Haddow with SDG&E in San Diego described how they have evaluated best locations for public charging considering geographies of early buyer interested as reported by their customers and automakers, employment centers, and strategic areas of public use. Starting this December, ten stations per week will be installed, with quantities increasing until 2,500 are installed.

Electric vehicle interest has been strong in areas of urban density, so SDG&E has engaged with many apartment and condo complexes. No two multi-unit dwellings have been the same in parking structures, renter/owner allocation of spaces, meters, panels, and power currently available to the complex. Some EV enthusiasts have been surprised to learn that their rental agreements prohibit EVs or use of parking power. Condo CCRs vary.

Electric utilities have already successfully handled bigger challenges than charging EVs.  They have added underground lines, new transformers, and distribution to handle new real estate development including hundreds of McMansions, each demanding more juice than even a Tesla. Utilities are upgrading grids and infrastructure to support megawatts of distributed solar. Electric utilities take on new industrial parks with hours of surges in demand for electricity.

PG&E with 5.1 million electricity customers was ranked the greenest utility in U.S. by Newsweek 2009 and 2010. It has developed three scenarios to support 220,000 to 850,000 plug-in vehicles by 2020 in its service area. Kevin Dasso, Senior Director of  for PG&E, contrasted two neighborhoods where there is a concentration of those ordering Nissan LEAFs and Chevrolet Volts – Silicon Valley and Berkeley. New developments in Silicon Valley will be easier. The distribution infrastructure is already there to support larger air conditioned homes, newer underground wiring, and newer transformers.  A plug-in hybrid will not equal the demand of one large home. Berkeley homes are supported with older infrastructure, less likely to have air conditioning. One battery-electric car could create more demand than one home.

Yes, your electric utility will be ready for your new EV. If you live in an older neighborhood with energy-efficient homes, some planning and upgrading will be needed. The impact will be less than adding new developments, new industrial parks, and even high-growth of solar power. Most charging will be done off-peak, allowing utilities to run their most efficient power plants 24/7 and make better use of nighttime wind-power. The key to off-peak charging will be the incentives of TOU pricing and the fact that your networked EV is smart enough to charge when rates are lowest.

For a nation that is 95 percent dependent on petroleum for transportation, the chance to use home grown energy should be a blessing, especially in 70 percent efficient electric drive systems, instead of 15 percent efficient gasoline engine drive systems. Done right, your electric utility will make money. Most utility generation assets are underutilized at night when home charging is ideal; generation is underutilized in the morning when workplace charging ideally occurs.

Cleantech Blog Power 5 – Top Investors in Cleantech

It’s been a long year and a half or so since we published our last Cleantech Blog Power 5 on the top investors in cleantech.  Time for round two.

As usual the criteria for inclusion.

  • Investor made a significant contribution to the cleantech investment sector
  • More smart looking investments than stupid looking investments
  • On balance, I’d like to have your portfolio.
  • I actually might like you.

And the middle two criteria have some wiggle room.

So our Power 5 this year:

  1. CMEA Capital – A long time player, with a slice of venture capital in last year’s top cleantech IPO, A123, one of this year’s top cleantech IPOs, Codexis, and this decade’s biggest cleantech gamble, Solyndra, real hard to leave them off the list.  They come in at number 1.  Hopefully Solyndra doesn’t take back all those profits when it’s solar cattle-guard finally gets caught out.
  2. CalPERS – Despite somewhat skeptical on the performance to date, CalPERS has certainly played its part, and really anchored the explosion of venture money in cleantech.  And it continues to support it with another $500 mm commitment this fall.
  3. Bayard Capital – Makes the list for 1 deal, that is all their deals in one company.  This is the Australian firm who turned their capital fund into Landis + Gyr through a series of acquisitions before anyone in the US had heard of smart grid.
  4. Us – I mean the US DOE – Single-handedly carrying the the entire cleantech venture sector on its back?  Wow.
  5. Foundation Capital – Makes it because despite a couple of deals in their portfolio that make me cringe, they’ve gotten a lot of kudos in California for sticking it out with Silver Spring in the early days, and with one of the better cleantech exits behind them in EnerNOC and multiple bets in both solar power development and financing, and smart grid, I have to like the strategy.

And the 5 for the Royal Questioner to Question:

  1. Advanced Equities – If I need to explain why, you shouldn’t be in investing.  Do your google search.  I’m not even going to give you some links to point to this time.
  2. Every single cellulosic biofuels investor – Hey you guys, start reading our blog and stop playing the “watch my magically shrinking cellulosic biofuels forecast and my oh so please don’t notice the bait and switch to bio-anything but fuels business plan”.  Let alone the, “we can be cheaper than gasoline” or “this process has solved the oh so tricky problems and it’s just a little engineering scale-up”.  And for the record, we think the Cello Energy debacle is hilarious.
  3. Kleiner Perkins – EEStor, Bloom Energy, I turn green 1/3rd of the way down their list.  They’re the originators of the fundamentally flawed “stealth in cleantech investing strategy.”  And they make me look humble (which is hard to do).  Even making a few dollars in Amyris, doesn’t come close to making it up.  Of course, maybe the latest news articles are right, and they’re pulling out of cleantech?
  4. The American Taxpayer/ errrrr, I mean US Department of Energy – Hmmmmmmh.  Who’s the genius who signed off on massive low interest loan guarantees to Solyndra, Tesla, Beacon, and friends?  But just wait until the conditional commitments in big project dollars get spent, I’m sure that will fix it.  But for the record, it’s not generally a good sign when the government brags about out investing the private sector.  How about you guys invest my share of the total in a real chief credit officer.  I’d apply for the job, but only if you term it chief workout officer.
  5. Ok, we’re stopping, now, my stomach is still churning after number 4.

Note to all:  This list is waaaaaaaaaaaaaaaaaaaay too US centric.  I’m feeling very parochial.  More international suggestions please?

Power Flow Control Devices: Hardware for the Smart Grid

by David Niebauer

A significant amount of attention (and money) is directed at the communications and IT upgrades necessary to empower a Smart Grid.  The very concept of a more intelligent power transmission system implies a vast increase in data.  The more that can be “known” about conditions of the system, the better and more efficiently the system will operate.  This is the world of software, of information gathering, of machines “talking” to machines.

But there is the other side of the equation, a side that is not as often discussed in the media and research reports on the Smart Grid:  hardware.  One improvement to the electricity transmission infrastructure that unquestionably falls in the category of hardware is the construction of new transmission lines.  The limitations on building new transmission lines, however, become apparent as soon as one starts to think about it.  Not only do zoning, environmental and NIMBY (Not in My Backyard) concerns add delay and uncertainty to the construction of new lines, the cost is truly exorbitant.  Estimates from the National Counsel on Electricity Policy in a 2004 report (Electricity Transmission: A Primer) peg the cost at between $285,000 and $1.71 million per mile, depending on terrain and line type.

Power Flow Control

Another (far less expensive) solution in the category of hardware for the Smart Grid is comprised of devices designed to control the flow of electrons.  Power flow control devices increase the capacity of the overall system without the need to construct new transmission lines.  These devices are an integral component of the Smart Grid and utilize a variety of strategies to modulate the flow of power and therefore increase the efficiency of the power grid.

To understand how power flow control devices work, one must first understand the “meshed” nature of the Grid.  Historically, the power grid was built in a radial structure.  That is, transmission and distribution lines were constructed to directly connect the generating facility with the ultimate load centers.  This is the simplest structure and provides the most control:  essentially one on/off switch is all that is needed. However, it is also highly unreliable – a fault along any part of the line can cause the entire down-stream system to collapse.  System operators have begun to address this problem by constructing transmission and distribution networks in a meshed structure.  A meshed system is more reliable because congestion and faults can be isolated in discrete segments of the mesh without affecting other segments.  See D. Divan, H. Johal, “A Smarter Grid for Improving System Reliability and Asset Utilization,” in Proc. IEEE Power Electronics and Motion Control Conference, 2006.

Power Flow Control Increases Capacity

The increased reliability of meshed networks is obtained at the cost of capacity underutilization and inefficiency.  In a radial structure, transmission and distribution lines are kept at or near capacity. In a meshed system, capacity is limited by the lowest-capacity segment. Electricity always follows a “path of least resistance” (lowest impedance), so the first line to reach its thermal capacity limits the capacity of the entire system, even though a majority of the lines of the system are significantly below their limit.  It is estimated that US grid capacity utilization rates are typically only 45% to 60% of theoretical capacity.

Power flow control devices steer the current in a line in order to balance the loading on all the lines allowing the overall system to operate at its theoretical maximum capacity.  Visualizing electricity flowing like water through a hose helps to understand how this works.   Power Flow Control devices are like valves on the water hose.  One important difference: electricity flows at the speed of light, so controlling the flow requires highly technical solutions.

FACTS devices

A number of solutions have been proposed and are being deployed by utilities and transmission operators.  The most common such solutions are power electronics based Flexible AC Transmission Systems (FACTS) devices.  FACTS devices work by either controlling the voltage or modifying the impedance of transmission lines, thereby controlling the power flow.  For under-utilized lines, increasing voltage allows additional current to be pulled into the line; in congested areas, increasing line impedance pushes excess current into other parallel paths.  The combined effect results in an increase in system capacity and line utilization.

FACTS devices are expensive, but not when compared to the cost of construction of new power lines.  FACTS devices are priced based on increase in capacity of existing lines, and generally range from $150 – $300 per kVA. New distributed FACTS devices are being developed for significantly less and may soon be deployed.


Software is not the only Smart Grid play.  Developments in Power Flow Control – hardware wedded to power electronics – promise to increase the capacity of the existing electric transmission grid, thereby allowing the system to operate more efficiently for lower infrastructure costs.  Controlling the flow of electrons in order to improve the existing system can and is being done.   As the Smart Grid is built out, watch for companies that design and build the hardware that all the software is being designed to control.

David Niebauer is a corporate and transaction attorney, located in San Francisco, whose practice is focused on clean energy and environmental technologies.

The “Smart Grid”: An Overview

By David Niebauer

The electricity transmission and distribution grid in North America is awe-inspiring.  Often called the “world’s largest machine”, the Grid connects huge power generating facilities with end users (both residential and commercial) in a system that would have been considered magic only 150 years ago.

The big news of the 21st Century is that the Machine is getting a significant upgrade.  The electricity grid was designed to distribute power, and power only, in one direction:  from generation to end-user.  This system worked fine when electricity was a novel resource and relatively abundant, but it is rife with waste and inefficiency. Because there is no practical way to store electricity, the Grid was built with a capacity to meet the absolute peak demand.  And because utilities are paid to sell electricity, they have historically had little incentive to find ways to conserve.  Today, the accumulated hit to environmental quality caused by this inefficiency, together with the cost of constructing and operating generation assets, has reached the limits of what is tolerable.

The new “Smart Grid” is being designed to allow information flows, as well as energy, to reach all parts of the system.  The information available to system operators at present is limited.  When and how the power is used, where congestion might occur, how usage might be curtailed at critical times  – the system is essentially blind to these and many other important data points.  A more intelligent system, enhanced by developments in telecommunications and information technology, will allow the system to operate more efficiently, with corresponding benefits to society.

It is estimated that electricity transmission infrastructure investment will exceed $600 billion by 2020.  In addition to spending by utilities, the venture capital community investment in the space is accelerating, and large U.S. companies such as Microsoft, Google and Oracle are beginning to stake claims.  The vision is of a more sentient Power Machine that organizes the flow of energy and information through all of its limbs for the benefit of all who touch it.  There is even a nascent movement calling for the interconnection of a global power grid.  Essentially, the Smart Grid will allow utilities to proactively manage demand, re-route power around disturbances, integrate distributed renewables and electric transportation and continue to offer reliable and affordable electricity into the foreseeable future.

Following the excellent work of David J. Leeds of Greentech Media in his report The Smart Grid in 2010: Market Segments, Applications and Industry Players we will divide this discussion into four segments:  Advanced Metering Infrastructure (AMI), Demand Response (DR), Grid Optimization and Energy Storage.

Advanced Metering Infrastructure (AMI)

Advanced Metering Infrastructure, as its name suggests, is focused on the meter – that is, at the point of consumption.  AMI deployment is replacing mechanical meters with digital meters that allow for two-way communication.  By providing information as well as energy, the consumer is empowered to shift consumption patterns away from peak-demand periods when prices are high and system reliability is low.  Utilities are also able to collect usage data that can be used to provide more efficiency and less waste.
The Obama administration famously called for the installation of 40 million Smart Meters in US homes and businesses by 2015 and has backed up this pledge with funding from the American Recovery and Reinvestment Act.  AMI has received the lion’s share of venture investment to date and leads the Smart Grid deployment.

“AMI can best be seen as a transformative application since the AMI/FAN [Field Area Network] communication network necessary to run advanced metering applications can also be used to transport data for all kinds of other emerging Smart Grid applications.” Leeds, p.7.

Demand Response (DR)

Because electricity must be used when generated, providing sufficient power for “peak” demand periods is an ongoing problem for utilities.  The problem has been traditionally addressed with so-called “peaker plants” that are brought on-line only when needed – when demand is expected to spike, such as during a hot summer afternoon when air conditioners are sucking energy to keep things cool.  Peaker plants are generally old, inefficient, expensive and dirty to operate.  Demand Response is an alternative solution that is enabled by the Smart Grid.

DR allows a customer to reduce its use of energy during these peak periods, lowering cost for the consumer and allowing the utility to re-route the electricity where it is needed – without having to rely on starting up its peakers.  DR is cheaper, faster, cleaner and more reliable.

To date, most DR solutions have been deployed by large commercial energy users.  But with the widespread integration of Smart Meters, the practice can now begin to be rolled out for residential consumers as well.

DR is implemented by third party aggregators who enter into contracts with consumers that allow the aggregator to reduce the consumers’ energy usage during peak hours (using thermostats and intelligent grid-aware devices).  The aggregated “virtual peak power” is then sold to the utility.

Grid Optimization

Grid Optimization is all about making the distribution network more efficient through the use of information management and system controls.  Rather than focusing on changing consumer behavior, which is essentially the goal of AMI, Grid Optimization enables utilities to clean up their side of the street – distribution from the substation to the point of use.

There are a wealth of devices and technologies that are contributing to Grid Optimization, and more will be developed as the Smart Grid is built out.  Some of the many benefits include monitoring grid assets, decreasing faults and outages, rerouting power to maximize efficiency, minimizing congestion, determining when to bring renewables online and generally allowing proactive management of generation and distribution assets.  (Leeds p. 60-61).  Leeds anticipates that Grid Optimization and its cousin, Distribution Automation, will be the fastest growing market segment over the next five years.

Energy Storage

Anyone working in the renewables field (solar, wind, etc.) can immediately see that a breakthrough in energy storage would revolutionize the industry.  Renewables are referred to as “intermittent” resources because they only generate some of the time – when the sun shines or the wind blows.  If only we had an economical way to store electrons, renewable energy could begin to supply base load, and that would change the game forever.
But this is going to require a true technological breakthrough.  The available options at present are woefully inadequate.  Energy storage, such as pumped storage (hydro and air), thermal storage and flywheels, provide the best solutions, but even they have severe limitations (cost, scalability, geography, etc.)  Electricity storage –batteries (Lead Acid, sodium-sulfur, Lithium ion, etc.) and supercapacitors are worse:  expensive and inefficient.

What is needed is a distributed storage solution allowing energy to be stored at the point of use and relayed through Smart Grid management when and where it is needed.  Energy storage is getting the attention of investors and major players (such as GE and AEP), but clearly more can and needs to be done.


The Age of the Smart Grid is upon us.  Huge amounts of capital are being and will be deployed over the next decade and beyond in upgrading the nation’s power grid.  Both the political and financial will appears to be behind Smart Grid deployment.  Fortunes will be made in this arena, and our lives will all be changed for the better through the intelligent delivery of more efficient and cleaner energy.

David Niebauer is a corporate and transaction attorney, located in San Francisco, whose practice is focused on clean energy and environmental technologies.

Cleantech Success Formula = EE + ROI + 0 Capex

Cleantech Growth for Energy Efficiency, Smart Grid, Distributed Solar

metro la rooftop1 300x217 Cleantech Growth for Energy Efficiency, Smart Grid, Distributed SolarBy John Addison (11/5/10)

Energy Efficiency with Fast ROI Voted Most Likely to Succeed

Venture capitalists, cleantech executives, and technology experts gathered this week for GreenBeat 2010, hosted by SSE Labs of Stanford University andVentureBeat.

John Doerr, Partner KPCB, is optimistic about cleantech. He is one of the most successful venture capitalists of all time, backing Google, Amazon, and my alma mater Sun Microsystems. He has made six new cleantech investments this year. KPCB cleantech investmentsinclude Silver Springs Networks, Amyris, Mascoma, Ausra, Bloom Energy, and Fisker Automotive with ambitions to surpass Tesla.

Mr. Doerr is enthusiastic about cleantech in California, where voters this Tuesday defeated proposition 23, effectively showing that 60 percent of voters favor California’s climate cap-and-trade program. The oil industry proposition threatened hundreds of cleantech companies and ultimately hundreds of thousands of future jobs.

Nationally, however, the voters sent a clear message that they want fiscal responsibility and an economy that creates jobs.  Projects that need billions in federal funds or billions in loan guarantees are likely to go nowhere including nuclear, so-called clean coal, and utility-scale solar.

Distributed Solar and Energy Efficiency

Solar experts from SunRun, Sungevity, and SolarBridge observe that business is growing rapidly for distributed solar, confirming our solar energy report that distributed solar will grow over 40 percent annually. Commercial rooftops can support 100 kW to 20 MW solar projects located where power is consumed. Distribution investment is minimized. In contrast, utility-scale solar in the desert is more expensive to site, according to the industry panel, requires major high-voltage line and distribution investment, and can face years of NIMBY opposition. All this adds cost, risk, and project finance difficulty. These same factors can allow local solar, more expensive per kWh, to compete against remote coal and natural gas. A cap-trade fee for carbon emissions provides added distributed solar advantage over fossil fuel plants.

Negawatts are cheaper than megawatts. The biggest opportunities are in helping commercial customers and consumers reduce their electricity and heating bills. The Empire State Building will save over $4 million per year through energy saving initiatives such as installing 6,500 dual pane windows from Serious Materials whose CEO, Kevin Surace, reports that he already has 400 employees and is adding jobs.

Optimal energy savings occurs where energy technology converges with information technology to manage everything in buildings and homes from HVAC to lighting. Energy savings of 10 and 20 percent were reported without asking people to change behavior. Customers want these savings without capital expenditure (capex). Innovative companies that provide solutions as services win. Even better is when they implement demand response solutions that make the customer money.

Smart Grid to Grow to Billions of Nodes

Smart grid technology will ultimately be used to manage billions of points of energy generation and consumption. The first payoff of smart grids is allowing electric utilities to be more efficient and avoid payroll costs of manual meter readers and technicians that turn-on home power. So far, the utilities are saving and the ratepayers are footing the bill for smart meters. Consumers are starting to benefit as they get information about where they are losing energy money. Bill Weihl, Green Energy Czar for Google reports a large number of users, with hundreds commenting about saving money.

The “killer app” for the smart grid may be electric cars. By charging cars off-peak, utilities will find a home for electricity generated in power plants that like to run 24/7. Consumers, using smart charging and friendly charging apps and net tools, will save with low time-of-use rates for nighttime charging instead of expensive trips to the gas station.

Ten cleantech start-ups presented to a panel of venture capitalists at GreenBeat 2010. The winner was Redwood Systems, an intelligent lighting provider. Redwood is already saving money for giant customers like Flour. Redwood provides LED lighting networked with sensors and software for monitoring, control, and automated lighting. The VCs liked that Redwood addressed the need for energy efficiency with a high ROI, low barriers of entry in the built environment, and no big capex decision by the customer.

Craton Barreling Ahead

by Richard T. Stuebi

Being a senior advisor to the firm, I attended last week’s annual meeting of Craton Equity Partners, a cleantech private equity fund manager based in Los Angeles.

While cleantech in its focus, Craton doesn’t take on much technology risk. Rather, Craton generally invests in companies that have largely proven their technologies – or frankly don’t rely much on proprietary technologies – and are already generating substantial revenues, requiring growth capital to build out their business models into sizable scale.

This was illustrated by the stories told by three of Craton’s portfolio companies:

  • Propel Fuels, which is developing a critical mass of biofuel retailing locations – by leasing space at existing gas stations, installing necessary equipment for biofuels, managing fuel delivery logistics, and retail marketing via co-branding – across California, with a view towards replicating this model in other geographic markets in the U.S.
  • Petra Solar, which has standardized a photovoltaic product for installation on power poles, thereby enabling utilities to meet renewable portfolio standard requirements while also improving the quality and management of power throughout their distribution grids.
  • GreenWave Reality, which is aiming to extend the smart-grid “beyond the meter” and into the home, via a centralized radio-broadcasting gateway at the service entrance and a variety of intelligence-enabled radio-controlled applications throughout the home to manage energy usage.

Along with these three presentations by portfolio company CEOs, the Craton senior partners provided their perspective on the state of the cleantech investment markets.

Of note, the Craton partners believe that the collapse of the credit markets over the past few years has yielded good opportunities for its fund to invest equity in companies – some of whom are generating tens of millions of dollars of revenues, and already profitable – that really ought to have been able to secure debt during more normal times, thereby generating attractive risk-return profiles upon which Craton could capitalize. Clearly, Craton was fortunate to have been focused on later-stage private equity opportunities, rather than earlier-stage venture capital opportunities, where the credit crunch has provided no such opening.

The recent addition of Kevin Wall to the Craton team, possessing significant high-level contacts around the world, reflects Craton’s view that many of the best growth and exit possibilities for cleantech in the coming years will occur internationally. This is a sad but entirely legitimate commentary on the state of the U.S. cleantech marketplace: if you want to really do well in cleantech investing in the next several years, you’re going to have to focus a lot of attention overseas.

Consistent with my personal experience, the Craton team noted that the key success factor for their portfolio companies continues to be management quality. Fortunately, they are seeing (as I am) an influx into cleantech of a greater quantity of better talent in the past few years. Of course, this is in part driven by deteriorating economic conditions and opportunities in other sectors of the economy. But, I also sense it’s because many capable people are increasingly drawn to cleantech for other intangible attractions. (I was recently on the phone with an old friend of mine who made a lot of money in real estate and didn’t find it challenging enough – so he’s moving into cleantech. Five years from now, I’m sure this friend of mine will not complain that making money in cleantech wasn’t sufficiently challenging!)

On the whole, it appears that Craton’s first fund is doing generally well, and the firm is beginning to prepare for raising its second fund. The question will be whether Craton’s good performance on paper (no liquidity events yet) will be able to overcome a very tough fund-raising environment. Given their strong relationships in the California marketplace – where cleantech has the most traction of anywhere in the U.S. – Craton’s progress in the coming 12-24 months will be a good barometer of the health of the cleantech investing thesis in the U.S.

Richard T. Stuebi is a founding principal of NorTech Energy Enterprise, the advanced energy initiative at NorTech, where he is on loan from The Cleveland Foundation as its Fellow of Energy and Environmental Advancement. He is also a Managing Director in charge of cleantech investment activities at Early Stage Partners, a Cleveland-based venture capital firm.

More Charge for Grid Storage

by Richard T. Stuebi

While battery technology has been the subject of intensive focus for vehicular applications since the emergence of hybrid electric vehicles over the past few years, much less attention has been paid to batteries for the electric grid.

Although energy storage for the power grid offers great promise to augment the smart grid, facilitate more application of intermittent solar and wind generation and improve power quality, the costs of such technologies have generally been prohibitive relative to the economic benefits that they enable. Accordingly, grid storage has been relegated to a relatively small niche in the cleantech community.

That may be about to change.

In July’s issue of Intelligent Utility, Kate Rowland wrote an article entitled “No More Foot Dragging for Energy Storage?”, which begins with the following grabber: “Grid storage. You’re going to be hearing those words with increasing frequence in the weeks and months to come.”

In part, this is because Senators Jeff Bingaman (D-NM), Ron Wyden (D-OR), and Jeanne Shaheen (D-NH) in mid-July introduced the Storage Technology of Renewable and Green Energy Act of 2010 (S.3617), or more pithily known as the STORAGE Act.

The gist of the STORAGE Act is to make available $1.5 billion in tax credits to storage projects connected to the U.S. power grid, with each utility-based project eligible for a 20% investment tax credit (capped at $30 million) and each customer-sited project (with minimum 80% “round-trip” efficiency, “energy out” vs. “energy in”) eligible for a 30% ITC (capped at $1 million).

In her article, Rowland interviews David Nemtzow of Ice Energy, a developer of thermal energy storage units. Nemtzow was optimistic about the effectiveness of this policy approach, noting that “tax credits are a time-honored and pretty successful way to stimulate investment,” using the wind, solar and energy efficiency industries as examples.

It will be interesting to see if the STORAGE Act passes in something like its current form. If it does, it could well signal the breakout of a new frontier in the cleantech space. If not, like so many things in the cleantech realm, grid storage may be an idea whose time has not yet quite come.

Richard T. Stuebi is a founding principal of NorTech Energy Enterprise, the advanced energy initiative at NorTech, where he is on loan from The Cleveland Foundation as its Fellow of Energy and Environmental Advancement. He is also a Managing Director in charge of cleantech investment activities at Early Stage Partners, a Cleveland-based venture capital firm.

GE Bets 10 Billion on Digital Energy

By John Addison

GE Smart Charging Stations for Electric Cars

General Electric intends to be the leader in smart grid charging of electric vehicles. GE’s Watt Station EV Charger was personally unveiled today by CEO Jeff Immelt. Globally, GE already helps thousands of electric utilities be more efficient in generating power and in distributing power. With a growing family of smart grid solutions including smart charging of vehicles, GE will help utilities lead in the intelligent generation, management, distribution, and use of energy. Mr. Immelt refers to this as Digital Energy.

After attending the presentation by Jeff Immelt and other luminaries, I was able to talk with Michael Mahan, GE’s Global Product Manager of EVSE.

The GE Watt Station is the first in a family of vehicle smart charging products and services from GE. It will be piloted this year at commercial sites and universities such as Purdue and the University of California San Diego. Within a couple of months we will see the announcement of a GE home plug-in car charger. These products will be made available commercially in 2011 simultaneously in all markets including the Americas, Europe, and Asia.

Although GE’s press release positioned the Watt Station as having a faster charging rate than some competitive offerings, this Level 2 220 volt / 32 amp smart charger delivers electrons at the same speed as other Level 2 chargers such as Coulomb Technologies, Aerovironment, and Ecotality. These competitors have the early lead in installing 15,000 charging stations in the United States. GE is taking a fast-follower strategy with the intent of being the market leader.
The Watt Station complies with J1772 smart charging standards. Its attractive design will appeal to consumers, with a simply friendly interface and retractable cord protected inside the supporting pole. The Watt Station is modular and upgradeable. It can be purchased with an optional credit card reader, or that can be added later. Watt Stations also have optional smart suite communications to utilize smart metering and wireless AMI.

Where GE does have competitive advantage is in its long-term relationship with utilities, its family of end-to-end system solutions, its partnerships, and its financial prowess. Communities littered with last decades charging stations, some no longer working from bankrupt companies will find comfort in the GE brand.

GE Provides Digital Energy End-to-End

As global electric utilities modernize and embrace the added opportunity of transportation that depends less of petroleum and inefficient engines, and more on electricity and efficient electric drive systems, GE can be a major partner. Electric vehicles can be smart charged with GE charging stations, managed with GE software services. Areas with high concentration of electric vehicles can turn to GE for new substations and distribution equipment. Power plants can be upgraded with the latest GE turbines, and supplemented with GE wind turbines, solar power, and grid storage. With a digital energy demand can be shaped off-peak.

GE Unveils Nucleus™ and Brillion Home Energy Management

GE also unveiled Nucleus™, an affordable, innovative communication and data storage device that provides consumers with secure information about their household electricity use and costs so they can make more informed choices about how and when to use power. Nucleus is expected to be available for consumer purchase in early 2011 at an estimated retail price of $149-$199.
GE’s Nucleus brings the promise of the smart grid into consumers’ homes. As utilities deploy smart meters, the Nucleus will collect and store a consumer’s household electricity use and cost data for up to three years and present it to consumers in real-time using simple, intuitive PC and smart phone applications, helping consumers monitor and control their energy use.
Nucleus is the first product in GE’s Brillion™ suite of smart home energy management solutions that will help consumers control their energy use and costs. In addition to Nucleus, GE’s Brillion suite will include a programmable thermostat, in-home display, a smart phone application and smart appliances for the entire home.

By 2012, US utilities are expected to install more than 40 million smart meters. These digital meters enable utilities to charge “time-of-use” rates for electricity throughout the day. When demand is low, electricity will cost less, and when demand is at its “peak,” utilities will charge more to encourage off-peak consumption.

Future Brillion options will also include alerts to assist consumers with daily tasks, such as when to change the refrigerator’s water filter or when the dryer cycle ends. Software upgrades will further enable Nucleus to monitor water, natural gas, and renewable energy sources, as well as plug-in electric vehicle charging.

$10 Billion Ecomagination R&D

GE is driving a global energy transformation with a focus on innovation and R&D investment to accelerate the development and deployment of clean energy technology. Since its inception in 2005, 92 ecomagination products have been brought to market with revenues reaching $18 billion in 2009. With $5 billion invested in R&D its first five years, GE committed to doubling its ecomagination investment and collaborate with partners to accelerate a new era of energy innovation. The company will invest $10 billion in R&D over five years and double operational energy efficiency while reducing greenhouse gas emissions and water consumption.
CEO Immelt expects over 30 new ecoimagination product announcements in the next 24 months, including the GE Watt Station EV charger.

Electric Car Charging and Smart Grid Reports

By John Addison. Publisher of the Clean Fleet Report and conference speaker.

Dot’s Nice

by Richard T. Stuebi

One of the virtues touted for the so-called “smart grid” of the future is the ability to help customers manage their appliance usage better, and thereby reduce unnecessary energy consumption. However, since people are heavily influenced by economic considerations, fully capturing this opportunity presupposes that customers understand how much money (= energy) they could save by reducing consumption at any moment in time.
As profiled in the January/February 2010 issue of Technology Review, a company called Talon Communications has developed a neat little product called the “edot” to address this issue.

The edot communicates wirelessly with a house’s “smart meter” to fetch updates on real-time power prices, thereby indicating when power prices are relatively high or low. At roughly $10 per unit, the magnetic edot can be stuck to many major appliances around the house, providing an on-the-spot indicator to the user whether or not it’s an especially good (i.e., lucrative) time to turn off or reduce power.

No, the edot will not save the world, but it is indicative of the many tiny but reinforcing elements necessary to bring the smart grid to full fruition — and to bring intelligence to energy decision-making at the household level.

Richard T. Stuebi is a founding principal of the advanced energy initiative at NorTech, where he is on loan from The Cleveland Foundation as its Fellow of Energy and Environmental Advancement. He is also a Managing Director in charge of cleantech investment activities at Early Stage Partners, a Cleveland-based venture capital firm.

Electric Cars Facilitate Smart Grid 2.0

By John Addison (original post Clean Fleet Report)

The electric car will facilitate the smart grid and a renewable energy charging infrastructure. The electric car will help make the smart grid relevant to consumers. Right now most cars use inefficient engines fueled with gasoline or diesel. In the coming decades, many cars will use electricity. With a smart grid, renewable energy will do much of the charging.

New electric cars from Nissan, Toyota, GM, Ford and others will use a charging standard J1772. The new charging units at home and work will include a smart meter chip. When a driver plugs-in, charging will follow preferences pre-established by the car owner. Many will prefer to save money and charge at night when rates are cheaper.

States with the earliest adopters of electric cars are also states where utilities face big renewable portfolio standards (RPS). The lowest cost renewable per megawatt is wind, but much of the wind turbine power is delivered at night when winds are most constant. With a smart grid and price incentives, electric cars will be charged off-peak using renewables.

The promise of smart grid electric vehicle charging was discussed at the GreenBeat 2009 conference last week by technology leaders such as Google and Cisco, and utility leaders such as Duke Energy and Southern California Edison. Al Gore presented smart grid and super grid findings from his comprehensive new book about climate solutions – Our Choice.

The current Smart Grid 1.0 is frankly boring. Smart Grid 2.0 promises to make our life better with less use of damaging coal power emissions.

With Smart Grid 1.0, new electric meters are being installed. Utilities save because they no longer need to send people out to read meters. Services can start and stop without rolling trucks to make manual connects and disconnects. Utilities are saving while the consumers pay for the new meters with rate hikes.

Electric utility industry has shifted from years of falling costs to rising costs. Utilities need to shift energy use and vehicle charging off-peak to avoid unnecessary investments in expensive peaking power plants. A smart grid is needed to fully utilize renewable energy and moderate fossil fuel emissions.

Smart Grid 2.0 could help some people over $1,000 per year by automating their preferences in heating, cooling, running smart appliances, and even doing jobs like running the dishwasher when excess renewable energy is available. Energy efficiency and demand management is already saving some enterprises millions per year. Most state public utility commissions (PUC) are afraid of implementing consumer time-of-use (TOU) pricing to give people the incentive to use energy when it is plentiful not scarce. The latest class action lawsuit hardly encourages PUCs to act more boldly.

Public utility commissions are more willing to allow pricing incentives for vehicle charging. Electric cars will help move us to Smart Grid 2.0. Through web browsers, smartphones, and vehicle displays, drivers will select smart charging preferences and get feedback on how to use less electricity and save money. Early electric cars will cost more than their gasoline counterparts, but their electric charging will cost a fraction of the cost of gasoline fill-ups.

Currently, there are only 40,000 electric cars running in the United States. As exciting new offerings are being tested and sold, 1.5 million electric cars are expected in the U.S. by 2015 presented Sharon Allan, the Senior Executive, North American Smart Grid Practice, for Accenture.

Charging these electric cars will help transform the promise of a smart grid into a convenient cost-saving reality.

John Addison publishes the Clean Fleet Report and speaks at conferences. He is the author of the new book – Save Gas, Save the Planet – now selling at Amazon and other booksellers.

PG&E to Smart Charge 219,000 Electric Vehicles

By John Addison (originally published in the Clean Fleet Report)

By 2020, 219,000 customers of PG&E (NYSE: PCG) may say goodbye to those trips to the gas station. No more spinning dials at the pump – $20.00, $40.00, $80.00, etc. Instead drivers will conveniently plug-in their electric cars at home or work. The fill-up will be electrons, not gasoline.

Across the country, electric utilities are preparing to offer smart charging boxes for the garage and charging stations for work and downtown locations. For a fraction of gasoline cost, you will be able to charge plug-in vehicles.

Pacific Gas and Electric (PG&E), for example, is a utility that is planning to service between 219,000 and 845,000 battery electric cars and plug-in hybrids by 2020, under three different planning scenarios presented at Greentech’s The Networked Grid Conference. PG&E currently provides electricity to 5 million customers, including a few thousand that currently drive electric cars. Currently, most of these electric cars are 25-mile per hour neighborhood vehicles that are popular in college and university towns. A few hundred can zoom past you on a freeway, such as the Tesla Roadster.

This year, Newsweek ranked PG&E as the greenest utility in the country due to its strong commitment to customer energy efficiency programs and renewable energy (RE) programs. PG&E serves 15 million people in northern and central California with 123,054 miles electric distribution lines needed to cover 70,000 square miles of its service area. Natural gas is 46 percent of PG&E’s source for electricity, nuclear 20 percent, hydro 16 percent, and out-of-state coal only 2 percent.

Renewable Energy > Coal + Natural Gas by 2020

Renewable energy is 14 percent of PG&E’s total delivered electricity today. It will miss its legal requirement to be at 20 percent by the end of 2010 due to NIMBY roadblocks to large solar thermal plants in the desert. PG&E needs approvals to install the high-voltage lines necessary to bring utility-scale RE to PG&E customers, thereby adding to its current 18,610 circuit miles of interconnected transmission lines.

Hal LaFlash, PG&E Director of Emerging Clean Technologies, outlined how the utility will have 34.8 TWh of RE in 2010 and 77.6TWh of RE in 2020, the year when California utilities must generate 33 percent of their electricity from RE. By 2020, renewable energy may be the utility’s #1 source of energy. The RE mix will be (1) solar thermal, (2) photovoltaics, (3) wind, (4) geothermal, with bioenergy and ocean adding to the total.

With terawatts of nighttime wind power, PG&E may have more electricity at night than it needs. One million electric vehicles could easily be supported provided that they charge off-peak, preferably at night. Smart charging allows customers to plug-in; yet not have charging begin until a preferred time, such as when excess electricity is available to the grid. PG&E hopes to secure regulatory approval for time-of-use pricing so that customers have an incentive to charge at night.

Utility executives worry that people will charge whenever they feel like it. Since charging an electric car is like powering an entire home, the concern is valid. People are still buying gas guzzlers as pump prices rise, so they many may ignore price incentives to charge at night. So far, early customers of plug-in vehicles have been environmentally concerned, and have shown a preference for charging with renewables including their own solar rooftops. Automakers, utilities, and regulators are working to make it easy for new electric car customers to select night time and even renewable energy charging through web browsers, smart phones, and even vehicle dash displays.

Smart Charging and Renewable Energy

Between the electric cars and renewable energy will be a smart grid. Every vehicle charging device will include a smart meter. PG&E is leading the nation with 1.6 million smart meters now installed. It is installing an average of 13,000 per day, and will have 10 million smart meters installed by 2012.

Andrew Tang, PG&E Senior Director of the Smart Energy Web, expects 35 different models of plug-in vehicles to be available within the next two years. PG&E actively meets with auto makers to make sure that smart charging networking is compatible and in place. Only some homes and communities are now ready with dedicated 240V/30A circuits for the 4-hour charging that electric car leaders, such as Nissan recommend.

Although smart charging provides for two-way communication, electricity will only be delivered one-way from the grid to the vehicle. Mr. Tang expressed skepticism about vehicle-to-grid (V2G) being cost-effective and acceptable to customers and automakers, even though PG&E has done V2G demonstrations within its own fleet, with Tesla, with Google, and elsewhere. PG&E is looking at MW grid storage alternatives such as pumped hydro and compressed air, such as the 300MW compressed air storage in Kern Country that PG&E has applied for a federal grant. Sulfur Sodium batteries that could scale to hundreds of MW were also presented at the conference.

Infrastructure issues may be greatest in communities that are now adopting hybrid cars at fast rates. For example, in Berkeley, 18 percent of new car sales are hybrids. As electric cars sell briskly in some communities, PG&E will likely need to upgrade substations to handle the increased distribution of electricity.

With the advanced planning outlined in PG&E’s presentations and with regulatory support for time-of-use pricing, renewable energy, and high-voltage lines, PG&E will be ready to power a new generation of vehicles for a fraction of the cost of gasoline. Increasingly, these electric cars will be powered by solar, wind, and other renewables.

By John Addison who publishes the Clean Fleet Report and speaks at conferences. He is the author of the new book – Save Gas, Save the Planet – now selling at Amazon and other booksellers.

A Smart Grid Requires Smart Utilities

by Richard T. Stuebi

In my more cynical moments, I might quip that the phrase “smart utility” is oxymoronic.

For sure, most utilities remain captive to technologies that are decades old. And, unquestionably, some utilities are managed by people and within cultures that seem to be stuck in the middle 20th Century (or even more obsolete).

But, some utilities are clearly more advanced than others. In an article published in the July/August edition of Intelligent Utility, Rick Nicholson and H. Christine Richards of IDC Energy Insights provide their assessment of which utilities are leading the pack towards a “smart grid”.

A clear pattern emerges: the first six utilities at the top of the list – Sempra Energy (NYSE: SRE), Austin Energy, Edison International (NYSE: EIX), Oncor, PG&E Corporation (NYSE: PCG) and CenterPoint Energy (NYSE: CNP) – are all based in either California or Texas.

In these two states, the combination of retail energy competition and policies to support renewable energy and energy efficiency has spurred these utilities to be ahead of the pack relative to their peers elsewhere in the country. In turn, this should serve them well as they build new business models for the electricity business in the 21st Century.

There are probably many observers that would claim that the significant electricity policy changes over the past 10 years have harmed Texas and California more than they have helped. Perhaps. However, longer-term, legislators and regulators in Texas and California have arguably done their citizens and their utilities a great favor by pushing the policy envelope, because it is likely that customers in these states that will soonest benefit from the adoption of smart grid technologies.

Smart utilities are the future. Those utilities that didn’t show up on this list are at risk of being left out in the dark as the electric industry transforms itself in the coming decades.

Richard T. Stuebi is the Fellow for Energy and Environmental Advancement at The Cleveland Foundation, and is also Managing Director of Early Stage Partners.

Smart Electric Vehicles and Smart Grids

By John Addison (8/20/09). The new freeway-speed electric vehicles will also be smart electric vehicles (SEV). They will be smart about using energy inside the vehicle so that it can go 100 miles between charges. The SEV will be smart about navigation options that consider your preference for getting somewhere fast or traveling with minimal energy use. SEVs will be full of electronics to entertain passengers, like kids in the back seat.

They will be smart about charging to meet driver preferences for saving money or charging more quickly. Smart electric vehicles ideally use a smart grid for charging. The electric utilities see the electric vehicle as part of the new smart grid which uses information technology to make the electric grid efficient, reliable, distributed, and interoperable. Years ago, mainframe computers with dumb terminals gave way to network computing. Similar improvements are now underway with the electric grid.

At the Plug-in 2009 Conference and Exposition in Long Beach, I joined thousands in seeing new electric vehicles, new smart charging stations, and joining presentations by leading auto makers, utilities, early fleet users, and sustainable city leaders from Southern California Edison (EIX), SDGE (SRE), AQMD, EPRI, and many others.

At the Plug-in Conference, the new Nissan Leaf (NSANY) got a lot of deserved attention. By the end of 2011, Nissan may deliver as many as 10,000 of these. Most will be delivered where utility and other partners have committed to complete programs to install garage, employer, and other public charging stations.

The new 2010 Nissan Leaf is a comfortable compact hatchback that seats five. Clean Fleet Report’s test drives of Nissan EV prototypes demonstrated plenty of acceleration. The Nissan Leaf is powered by 24kWh of lithium-ion batteries. The Leaf has a range of about 100 miles. In 8 hours you are good for another 100 miles with a Level 2 AC200V home-use charger; in 26 minutes you can be 80 percent charged with a Level 3 DC 50kW quick charger.

Transportation expert, Antonio Benecchi a Partner with Roland Berger forecasts that plug-in hybrids and electric vehicles will capture 10 to 20 percent of the auto market by 2030. The speed of adoption will depend on cost and early customer experience. If the lifetime cost of owning and operating an electric vehicle is less than a comparable gasoline powered one, 20 percent could be low by 2030.

When you get an iPhone, Nokia, or Blackberry, the cost of the smartphone depends on the type of subscription plan you have with the wireless carrier. Similarly, over the next few years, automakers and their partners may explore different business models such as:

· Vehicle purchased with battery leased
· Vehicle, battery, and energy for charging are all subscribed
· EV and charging are part of carsharing plans
· Integrated mobility offerings will include an EV

For example, the Nissan Leaf might be offered by a dealer for under $30,000 with battery and charging offered on a subscription plan by Better Place or various electric utilities.

If charging and subscription plans are kept simple, consumers will love it. If consumers must sign for different plans as they go to different cities, EVs will be a turn-off. Early cell phone users rebelled against complicated plans and big surprise “roaming” charges.

Standards are being put in place so that auto makers, charging station providers, and electric utilities will be compatible. A key standard is automotive SAE J1772, which standardizes the electrical connection, current flow, and some communication between smart vehicle and smart charger. This standard is compatible with important advanced metering smart home electric standards such as Smart Energy 2.0.

EV customers will be able to check on how much their EV batteries are charged through a web browser, their smart phone, or by looking at their vehicle dash. The networking and software is there, so that they could look at monthly vehicle use and charges.

Electric utility operators will be able to track, manage, and forecast EV electricity use thanks to smart charging stations with electric utility meter chips built in such as Coulomb ChargePoint Networked Charging Stations and ETEC (ETLY.OB – disclosure: author owns this stock), who has already installed over 5,500 charging stations. ETEC will be installing over 12,500 new charging stations thanks to a matching grant of almost $100 million from DOE.

I am on the wait list to buy the Nissan Leaf. When I get a new EV or PHEV, I would be glad to agree to a subscription plan that would save me $100 per month if I would agree to have my vehicle not charge during peak-demand hours. We’ll see if I am given that kind of option. Thanks to software services from GirdPoint and others, the technology is there to plug-in and having charging managed by user preferences and subscription agreements.

Utilities could shape demand to off-peak. Utilities could use EVs for spinning reserves and peak power using vehicle-to-grid (V2G). Dr. Jasna Tomic with CALSTART estimates that the national grid would only need 7 percent additional capacity to off-peak charge 100 million electric vehicles. Those same vehicles could provide 70 percent of the national grid’s needed peak power. Smart grid upgrades, customer price signals and subscription agreements could enable growing use of V2G in the coming decade.

Smart vehicles and smart grids create a trillion dollar opportunity for incumbents and innovators. The opportunity has attracted GM, Ford, Toyota, Nissan, and hundreds of other auto makers. It has attracted the world’s largest electric utilities and grid operators. This smart grid “Internet” for electricity now has devoted teams inside IBM, Google, Cisco, Microsoft, and other information technology giants.

The smart electric vehicle is symbiotic with the smart grid. The information communication technology is there. It is the business models and customer experience that count. Get ready for the most comfortable and intelligent ride of your life.

By John Addison. John Addison publishes the Clean Fleet Report and speaks at conferences. He is the author of the new book – Save Gas, Save the Planet – now selling at Amazon and other booksellers.

If Larry King Wrote My Column….

by Richard T. Stuebi

You heard it here first: the energy consultancy Douglas-Westwood is claiming in a May 11 white paper that “peak oil” may have already happened, as far back as October 2004, and that the oil price boom followed by economic collapse is indicative of how things will play out over the decades to come as oil supplies are unable to expand in the face of increasing demands. Stay tuned….

The American Wind Energy Association (AWEA) exposition WINDPOWER 2009 attracted 23,000 attendees to Chicago earlier this month. Glad AWEA didn’t ask me to do the headcount!….

Your stock portfolio isn’t the only thing that’s plummeted. According to a snippet in the March 2009 issue of Power, so too have PV prices fallen, by an estimated 10% since last October, with a further 15-20% decline expected in the coming year. Seems that, after several years of tight supplies, there’s now a glut in the market, due to collapsing demand in Europe….

Lots happening in DC these days. Looks like cap-and-trade requirements for carbon dioxide emissions are making real progress, embodied in the grandiosely called “The American Clean Energy and Security Act” (H.R. 2454) — better known as the Waxman-Markey bill. Cap-and-trade might even pass the House sometime this summer. Don’t think it’s going to be so easy in the Senate, though….

The U.S. Department of Energy (DOE) has created ARPA-E, to fund the initial evaluation of new whiz-bang ideas for energy, just like DARPA’s been doing for out-of-the-box defense gizmos for decades. One can only imagine what’s going to come out of that shop in years to come….

It also appears that the e-DII concept floated by Brookings earlier this year, to create Clean Energy Innovation Centers mainly affiliated with universities, is gaining traction, now having been tucked into the Waxman-Markey bill. Wonder what the national research labs, such as NREL, NETL, ORNL, LBNL and other alphabet soupers, think of this?….

Speaking of NREL, hats off to Joel Serface, who just completed a year’s residence there on behalf of uber-VC firm Kleiner Perkins to help accelerate technology commercialization and spin-outs from the lab. A year in Golden/Boulder is hardly hardship duty, but as Joel indicates in a recent post at this very CleanTechBlog site, it wasn’t enough time to make much of a dent in the bureaucracy….

Congratulations to my former colleague Cathy Zoi, who’s been tabbed by President Obama to lead the Office of Energy Efficiency and Renewable Energy at DOE. Wish her good luck: she’ll need it!….

Let’s hear it for Joseph Romm, now a Senior Fellow at the Center for American Progress. He calls ‘em like he sees ‘em. In a note in the May/June Technology Review, Romm claims “it’s not possible to have a sustained economic recovery that isn’t green” and calls our economic system a “global Ponzi scheme: investors (i.e., current generations) are paying themselves (i.e., you and me) by taking from future generations.” Whew!….

The U.S. Chamber of Commerce just released a study performed by Charles River Associates estimating 3 million jobs to lost in the U.S. by 2030 as a result of climate change legislation. Last year, the Chamber commissioned a similar study announcing a similar doom-and-gloom result. I’m not saying there won’t be job losses as a result of cap-and-trade – there certainly will – but I don’t think it’s going to be apocalyptic either….

Gotta hand it to Bob Galvin, former Chairman of Motorola. Not content to be retired, he has launched the Galvin Electricity Initiative to promote a “Perfect Power System” to help prevent future blackouts. In a sense, he’s trying to Galvinize the grid….

Last Wednesday evening, the Cleveland Chapter of the American Jewish Committee honored The Cleveland Foundation for its advanced energy initiative. Accepting the award on behalf of the Foundation was President and CEO Ronn Richard. A good time was had by all….

Richard T. Stuebi is the Fellow for Energy and Environmental Advancement at The Cleveland Foundation, and is also the Founder and President of NextWave Energy, Inc. Later in 2009, he will also become Managing Director of Early Stage Partners.

What the FERC?

by Richard T. Stuebi

The Federal government is a mighty bureaucracy, so it’s impossible to keep track of all the parts. Still, few areas are as unknown by the general public as the Federal Energy Regulatory Commission (FERC).

The FERC (it’s always referrred to as “The FERC”) is responsible for interstate regulation of energy markets, which in practice means the transmission or transportation of electricity and natural gas. As a result, the FERC is going to be a key player in all Smart Grid developments, which in turn will be a key driver of a variety of new energy technologies — renewable energy, energy storage, advanced meters, and so on.

President Obama recently appointed Jon Wellinghoff to be Chairman of the Commission. Wellinghoff is a long-time proponent of environmental protection, so it’s no surprise that he’s rapidly making moves to promote renewable energy and energy efficiency. For instance, Wellinghoff recently announced the formation of the Office of Energy Policy and Innovation, to be effective today. (Innovation in a Federal agency? Hmmmmm.)

Wellinghoff has already demonstrated the gall to radically challenge conventional wisdom — which is always a risky and courageous thing to do in the electricity sector. In late April, as noted in the New York Times, Wellinghoff told reporters following a United States Energy Association forum that baseload generation options may not be necessary in the future, thereby undercutting one of the key selling-points for the construction or continued operation of nuclear and coal-fired powerplants.

Quoting Wellinghoff: “I think baseload capacity is going to become an anachronism…People talk about ‘Oh, we need baseload.’ It’s like people saying we need more computing power, we need mainframes. We don’t need mainframes; we have distributed computing.”

Of course, Wellinghoff’s seductive vision depends on a major and costly overhaul of the national power grid, which seems light-years away to me. In his seminal New York Times editorial last November, Al Gore projected the cost of a Smart Grid at $400 billion — whereas the American Recovery and Reinvestment Act of 2009 (a.k.a., Stimulus Bill) allocates a seemingly large but comparatively paltry $4.5 billion to Smart Grid projects.

To get over the formidable humps we face in Washington, we’re going to need leaders who are willing to rattle the china on the dinner table. In Wellinghoff, it looks like we have one. His comments no doubt have a lot of people in the energy sector muttering, “What the FERC?”

Richard T. Stuebi is the Fellow of Energy and Environmental Advancement at The Cleveland Foundation, and is also the Founder and President of NextWave Energy, Inc. Later in 2009, he will also become a Managing Director of Early Stage Partners.

Cleantech Blog "Power 10" Ranking Vol II 2009

Last year I did my first “Power 10” ranking for 2008 of cleantech companies, and the response was so good we’re doing it again.

I spend most of my day meeting and talking to companies in the cleantech sector. And those of you who know me know I have opinions on who is doing it right, and who is doing it wrong.

As before this is the Cleantech Blog Power 10 Ranking of cleantech companies doing it right.

Eligibility for inclusion in the ranking requires meeting a 6 point test. Suggestions for inclusions in future volumes are welcome. The 6 point test:
1. The company is energy or environmental technology related
2. I like their products
3. The market needs them
4. The company is smart about building their business
5. I’d like to own the company if I could (for the right price, of course!)
6. It is not already one of mine (my apologies to my friends Zenergy Power)

I have included cleantech companies big and small.

  1. Sharp – Makes the list again as top dog battling to hold its crown in solar PV. Keep on trucking.
  2. GE – Their M&A strategy delivered venture like returns, and they still hold power positions in wind, T&D, clean gensets, and water capital equipment. Hard to dethrone.
  3. Iberdrola – Barely didn’t make the cut last year. Largest wind operator in the world now. Deserves it.
  4. First Solar (NASDAQ:FSLR) – Still the low cost producer in PV and growing. Smart move swapping expensive stock for the Optisolar project pipeline. Keep those factories full!
  5. Goldman Sachs (NYSE:GS) -The only investor to merit consideration, but area a part of too many power plays in cleantech to leave off this time.
  6. DNV – Their auditors underpin roughly half of the carbon markets. In carbon, audit and verification is everything. Their market share slipped some, but they hold their crown as the only one of the big carbon auditors yet aggressively investing in the US.
  7. Applied Materials – The future of thin film if they can deliver on their strategic moves. But I need to see some of your customer’s production taking serious market share, or making next year’s list could be tough.
  8. Cleantech Group – The business is now definitely more than just a conference operator. Despite massive competition in conferences (long a cash cow for them), the Cleantech Group hasn’t lost its footing as the preeminent brand. And now seems to be learning how to play well with others. Great job guys on both creating an asset class AND building a cool company.
  9. Bayard Group/Landis Gyr – Smart grid is the big cleantech play along with carbon and solar. Bayard, now branded around Landis Gyr, is a global Metering/Smart Grid roll up powerhouse. Bought Cellnet, Hunt, Enermet, and Landis Gyr et al.
  10. Valero – Texas refiner’s acquisition of VeraSun and move into renewable fuels gets it the nod. Now where to from here?

Honorable mention to Zenergy Power plc (AIM: ZEN.L), one I helped cofound. I couldn’t resist this year since the team is making hay off of fault current limiter technology we bet on in 2004, and deserves the nod. Also to Smart Fuel Cell (XETRA:F3C.DE) – Still the most mature fuel cell company in the world by a mile. But revenues flattened in 2008 and it made no moves allowing it to stave off the newcomers to Power 10. 2009 is the make or break year. And finally to Sindicatum – Mover of the year in carbon in 2008. Raised a warchest into the teeth of a tough carbon market. Now we’ll see what they can do with it.

Also on our watchlist for next year: Abengoa, Acciona, SGS, Duke Energy, SoCal Edison, Origin Energy, Ecosecurities, Q-Cells, SunPower, Oerlikon, ConocoPhillips, BP, Shell.

Of note, no CIGS or solar thermal this year. The list is indicative of a shift towards carbon and projects. Still no cellulosic, and I can’t bring myself to add EVs to the Power 10 until somebody shows something real. Perhaps the 2013 list?

Neal Dikeman is a founding partner at Jane Capital Partners LLC, a boutique merchant bank advising strategic investors and startups in cleantech. He is founding contributor of Cleantech Blog, Chairman of, and the Chairman of Carbonflow, Inc..

Superconducting Blackout Protection Device for Smart Grid

Today, Zenergy Power plc (AIM:ZEN), a company I am a cofounder of, announced that ConEd, one of thought leaders in the utility sector on transmission & distribution technology (conventional wisdom says they have to be, as given its tremendous load in a small area, the Manhattan grid is devilishly tricky to operate), has agreed to a deal to put in a new kind of fault current limiter, using high temperature superconducting technology.

This is hit number two in FCLs for Zenergy, which last month announced the first ever HTS FCL implementation into the grid with SoCal Edison, another of the global utility thoughtleaders.

Neal Dikeman is a partner at Jane Capital Partners, the editor of, and Chairman of Carbonflow, Inc. and

Report from GridEcon Conference

by Richard T. Stuebi

My colleague Carter Williams, formerly CEO of Gridlogix, which was bought recently by Johnson Controls (NYSE: JCI), invited me to participate in a panel in last week’s GridEcon conference in Chicago. Because it had been awhile since I had plugged into (so to speak) the Smart Grid discussions, I accepted Carter’s offer so that I could get more up-to-speed.

If you are one of the seven people in the U.S. who haven’t pored over the American Recovery and Reinvestment Act of 2009 (better known as the Obama Economic Stimulus package), you may not know that a large pot of money — $4.5 billion to be exact — has been allocated to the Smart Grid, plus other pockets of money may also be accessible for Smart Grid development. The Smart Grid is thus going to be the subject of a lot more attention than it has been so far. The national TV ads about the Smart Grid products from GE (NYSE: GE) are only intensifying that interest.

What did I learn from the GridEcon conference? I was hoping to crystallize my thinking about the Smart Grid, but unfortunately I walked away with my thinking just about as muddled as it had been. Joe Miller of Horizon Energy Group did provide a fairly good primer on the Smart Grid, grouping innovations into five technological areas: (1) grid condition sensing/measurement, (2) grid controls, (3) decision-support tools (for both electricity companies and users), (4) advanced customer-sited components, and (5) communications to/from and/or between any of the first four areas.

Probably most intriguingly, I discovered that, the philanthropic arm of Google (NASDAQ: GOOG), has recently begun toying with a Google PowerMeter, which is aimed to allow just about anyone to be able to assess their electricity consumption over the web (or over their BlackBerry or iPhone) on a real-time basis. Of course, the real question is: how many people will be interested in watching their electricity use the way they text their friends or surf Facebook?

Beyond Google’s presentation (by David Bercovich), I was a little underwhelmed by the insights offered by the speakers. Candidly, many of the topics discussed — wholesale power market structures, electricity pricing — seemed to me like they were lifted straight out of the late 1990’s. And, the discussions of the carbon markets did not seem cutting-edge or particularly illuminating.

At least the second day of the conference was more energized (again, no pun intended, or maybe it was, I don’t know) than the first. No doubt, this was because of the provocative comments of Marc Levinson, an economist from JPMorgan Chase (NYSE: JPM), who had the gall of asking the uncomfortable question: does the Smart Grid really provide that much value, and if so, who really ought to be willing to pay for it? This hand-grenade punctured what had been a quiet, polite and therefore mostly dull set of sessions.

The panel on which I sat — including Carter, Jamie Wimberley of Distributed Energy Financial Group and John Moore of Acorn Energy — did our best to keep up the heat. The general perspective I offered was that the Smart Grid wasn’t going to happen anytime soon, no matter how good the intentions. This is mainly because of the complex tussle of jurisdiction between Federal and State authorities to which the grid is beholden, which is unlikely to be eliminated by fiat notwithstanding the comments of observers that ought to know better, such as Senator Harry Reid (D-NV). This is further amplified by the fact that electric utilities will remain the primary implementor of Smart Grid technologies on the grid assets that they own and control, and utilities just don’t move very fast even when all of the forces are aligned.

My overall take is that the Smart Grid community is still self-organizing and finding its footing. Now that it’s much more in the bright spotlight, I expect that leaders will emerge to help better coalesce the thinking and dissemination of information. Their mission will be to cut the Gordian knot that strangles the current not-so-smart grid.

Richard T. Stuebi is the Fellow for Energy and Environmental Advancement at The Cleveland Foundation, and is also the Founder and President of NextWave Energy, Inc. Later in 2009, he will also become a Managing Director at Early Stage Partners.

Smart Grid Primer

by Richard T. Stuebi

If you want to quickly gain a good overview of the smart grid, check out “The Smart Grid: An Introduction”. A slick 48-page wire-ring bound primer developed for the U.S. Department of Energy, one can find several juicy data tidbits, such as:

1. The U.S. power grid consists of 9200 electric generating units connected by 300,000 miles of transmission lines — of which only 668 miles were added since 2000.

2. Between 1988-98, U.S. electricity demand increased by nearly 30%, while transmission capacity grew by only 15%. (What about since then?)

3. In the U.S., there were 41% more outages affecting more than 50,000 customers in the second half of the 1990’s than in the first half of the 1990’s. (Again, what about since then?)

4. The average age of a substation transformer on the U.S. power grid is 42 years — two years more than their expected life span.

5. 10% of all generation assets, and 25% of distribution infrastructure, are required for less than 5% of the hours of the year.

All of this, plus a great picture of Dr. Zachary Smith (the inimitable Jonathan Harris) and the robot from “Lost in Space”. What more could you want?

Richard T. Stuebi is the BP Fellow for Energy and Environmental Advancement at The Cleveland Foundation, and is also the Founder and President of NextWave Energy, Inc.