Smart Grid: On a Path Toward Climate Stability?
Is smart grid on a path toward climate stability? Yes, it is.
Looking at the issue of climate stability purely from an environmental perspective, simply shutting down coal operations does not present a politically feasible plan nor hit the target of any reasonable climate forecast. The concept of shutting down global coal operations would require governments to agree to abandon a fuel source that is relatively cheap and abundant compared to other fossil fuel alternatives. Such a suggestion ignores both political and business realities. It also ignores the goals of any reasonable climate forecast. Even if it were possible to eliminate the use of coal as a fuel source, the measure falls short of keeping global CO2 emissions levels below 550 ppm, let alone the internationally targeted 450 ppm by the end of the century.
Doubling or tripling global government mandates, such as Renewable Portfolio Standards, to increase the use of renewable energy will tip the scales only slightly in favor of a new energy mix. It will also increase the cost of energy to the end user making the measure difficult to replicate in any economy, especially one that is enjoying rapid expansion and growth. The need for much more dramatic action is required but it needs to be market driven if it is to meet the target of any reasonable climate forecast.
So neither political action to end the use of coal nor government mandates to increase the use of renewable energy will adequately address the needs of our climate forecast. So then, what will? And why will Smart Grid?
Finding an answer to our current predicament is found by looking back at the path we have taken. Back in the late 1800s, the power grid system was developed to exploit the opportunity of the innovation brought about by electric generation. It started out as a centralized distribution and transmission system. The system was a series of localized systems eventually interconnected and powered by centralized power stations.
Approximately fifty years ago this interconnected grid reached its zenith of efficiency and was re-engineered to deliver power to major load centers through high capacity power lines. Fossil fuels were the natural choice to run this dynamic grid as they had a taken parallel path in their own development, including a global investment in the extraction and refinement of petroleum fuels and in large global coal deposits.
The 1960s grid reflected strong economies powered by power stations in the 1 GW to 3 GW scale making the system highly cost-effective. That was until the price of fuels started to rise and environmental costs from mercury, sulfur and more recently, C02 entered the equation. Also, the advent of new technologies made it possible to cost effectively decentralize power sources, eliminate environmental costs, and reduce dependency on fossil fuels.
Fifty years later we find ourselves in the midst of the next technological revolution. The Smart Grid integrates the use of information and communication systems into an interconnected grid where information and supply flows within a dynamic market. Information and communication technology allows both utility planners and market participants to improve efficiency, including the thermal efficiency of existing infrastructure. We are able to make more with less, reduce our carbon footprint, while still encouraging new technologies that will eventually shift the energy mix toward more renewable, carbon free technologies.
The result is a new grid that enjoys new investments by all market participants, including transmission companies seeking to reduce their costs. The transmission companies earn a toll paid by the end users, and by independent market makers who benefit from independently owning and operating highly efficient and cost effective power generation.
The trick is to make the system work without necessarily requiring utilities to invest in new technologies. Rather, new investment needs to come from all market participants by way of opening up the energy markets in ways that encourage greater participation in a web-like system, created by all where the price incorporates the full cost of delivery.
Thomas Stoner, author of the new book, Small Change, Big Gains: Reflections of an Energy Entrepreneur, has 30 years of experience in the C-Suite, in the boardroom, and as an investor in renewable energy assets. Professionally, he helped lead three companies in the clean technology space, including one of the original CleanTech venture funds backed by international development banks. He has also led two publicly traded companies: Econergy International PLC, a renewable energy independent power producer (IPP) traded on the London AIM market; and Evergreen Energy, a clean coal technology company traded on the NYSE Arca Exchange. Over the course of his career, he has raised more than $300 million for global clean energy initiatives. For more information please visit his website at: www.smallchangebiggains.com
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