It’s Time to Take Risks and Embrace our Energy Future

September 20, 2016 By Bert Valdman

Bert Valdman

We are now at a critical point in our energy system. It’s time to reboot the can-do culture that once animated our energy sector, and should always be at its core. It is time for us to find a better way, as Thomas Edison once challenged his team to do.

I see three converging paths forward, and we need to make progress on all of them. One, established industry players must shake themselves out of their attachment to the status quo—possibly the most challenging and dangerous obstacle an established company must confront, particularly in the electric sector. Two, large commercial and industrial customers, emerging energy companies, and incumbents must build coalitions to collaborate on commercializing new technologies. And three, we must immediately make energy-hogging commercial buildings more efficient to reduce resource consumption.

Taking risks to power the future

Change happens slowly among long-standing institutions that manage long-term assets. I learned that firsthand in my management roles with two West Coast electric utilities. Operating an electric system requires achieving the right balance between multiple parties motivated by disparate interests. Finding that balance is especially challenging when you define success as operating a safe, reliable, and affordable system.

With those as your guiding principles, it seems as if there is no possible upside to taking a chance.  But established business models face a new environment in which holding onto the status quo is riskier than taking bold action. This is currently the case with electric utilities. New York’s Reforming the Energy Vision strategy is a prime example. The state intends to remake its electricity market to reduce greenhouse gas emissions, increase generation from renewable sources, and reduce energy consumption in buildings. Utilities can drag their feet through such proceedings (as Utility Dive readers know, California and other states are pushing similar initiatives), or they can take the lead. The terms are always better when you lead.

And utilities have done that in the past. There was a time when electric utilities took big, audacious risks. The founders of the utility industry were creating an energy system that powered an emerging industrial giant. They didn’t do it with measured and careful action—they had a strong sense of urgency.

Coalitions can drive faster innovation

One way to lead is for utilities to forge coalitions with emerging energy companies and large industrial corporations. These coalitions would draw on the strengths of all types of companies to scale new solutions more quickly, deploy technology more efficiently, and drive innovation faster. Our communities benefit when established companies combine their scale, stability, and patience with the agitation, change, and urgency of emerging companies. Energy start-ups need a faster route to commercialization. Utilities need an inside line on new approaches and easier ways to test them. And global corporations need integrated solutions backed by trusted partners.

A coalition approach has a much greater chance of success than a series of separate initiatives, especially when the coalition is led by a team with the right skill set, the authority to get things done, a willingness to take risks, and the agility to respond to specific customer and facility requirements.

Addressing the energy hog in the middle of the room

The first issue these coalitions should tackle is energy use in commercial buildings. Commercial buildings use about 20 percent of the total electricity consumed in the United States. Heating, ventilation, and air conditioning (HVAC) systems alone account for nearly half of a typical building’s electricity use.

These systems are often overengineered and inefficient. They are scaled to support peak temperature requirements, and they offer limited visibility into equipment operations and performance. They are designed for the comfort of the people who work in the buildings, rather than for energy efficiency. But we don’t have to sacrifice one value for the other.

The ideal revamped HVAC system would shrink electric load, provide measurement and visualization tools that increase energy consumption awareness, and improve the operational performance of mechanical equipment on an ongoing basis. It would deliver valuable business data, along with both comfort and efficiency. It would have an attractive economic payback with no form of subsidy. And it would integrate seamlessly with other building systems.

This kind of revamp is possible now—for HVAC and other building systems. We have the technology to operate our economy and the electric grid using less energy while maintaining comfort, growth, and profitability. But to follow Edison’s lead and find a better way for our customers, ourselves, and our future, we need to act with the same sense of urgency that energy pioneers had. We must tackle energy hogs, create coalitions between the old guard and cutting-edge players, and embrace emerging technologies.

Bert Valdman is the president and CEO of Optimum Energy, a Seattle-based software and engineering firm that optimizes HVAC systems.  Formerly, he was the senior vice president of strategy at Edison International and the chief operating officer of Puget Sound Energy.

One comment on “It’s Time to Take Risks and Embrace our Energy Future

  1. It is a very good article and clearly the change is coming albeit slowly. A slightly different way to look at what is discussed here is to look at the generation, transmission and distribution (T&D), and end use. The generation should include more renewable power; T&D cost reduction needs more micro and nano-grids; consumption reduction needs cheaper and better control systems including the incorporation of Internet of Things (IoT).

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