The Triple Crown of Technologies

Tools:

Smart Grid, 4G, and Supergrid

Three FNC sponsored technologies that will change the world are the Smart Grid, 4G wireless broadband, and the Supergrid. Each of these technologies has its own section on the FNC website, each with an introductory essay and, as FNC releases details in coming days, weeks and months, summaries of the projects, partners, intellectual property, progress and, where relevant, politics.  FNC wants to emphasize, though, that these three technologies are actually more related to each other, if looked at from the perspective that FNC has developed, than has been previously discussed. FNC has looked, but to date we have not found another company that is working on all three areas, and seeking to develop the core intellectual property, and breakthrough science, that will enable an exponential increase the deployment of these three technologies. If someone reading this knows of such a company, please feel free to contact us. Let’s partner.

FNC’s plan is not just to deploy these technologies in isolation, but to seek common elements and a coordinated architecture so that Moore’s Law (roughly, that the price/performance of computer processing power doubles every year to year and a half, because the density of transistors increases at this pace) and the learning curve effect (doubling of aggregate production volume results in a 10% drop in marginal costs of production) can be brought to bear.  If we had to say what the smart grid, 4G and Supergrid all have in common, in one sentence, one answer would be, “All three technologies lead us towards the Eversmarter World.”

The Smart Grid

The Smart Grid is the Energy Internet, combining 11 different technologies and closely related industries. The Smart Grid is the biggest upgrade to the electrical utility industry since Thomas Edison, George Westinghouse, and Nikola Tesla pioneered direct current then alternating current national infrastructure, and involves having a local area network that ties together appliances and LED lights in the home with smart meters, Field Area Networks across neighborhoods, Building Area Networks in offices, malls and other large structure; and Wide Area Networks linking the FANs, LANs, and BANs so that their Smart Meters can be aggregated and read. The end result of Smart Grid investments is to drive reductions in the cost of electricity (by 30% on average, projected) to consumers, as well as enable utilities to save money by changing Amount Of Use (AOU)  pricing  to Time Of Use (TOU) pricing, starting with pilot projects for a few thousand users, to eventually becoming a complete change, in which utilities try to get as many customers as possible to use as much electricity as possible (AOU), to a brave new partially unwired world of TOU pricing.
The Smart Grid is not just a nice, fun, cute way to deploy networks. It’s a matter of surviving a potentially disastrous deployment of new electricity gobbling devices: electric cars. In 2010 to 2012 over 37 different models of electric cars will come to market in the US, with a dozen or so new models from that point on.  Each electric car, to be fully charged, needs to be plugged into a household electricity socket for 16 hours. Options exist to charge electric cars in eight hours, and four hours. Each option consumes more power than the previous option. This is where it gets horrifying for electric utility executives: a car on a four hour change consumes as much electricity during those four hours as not one, not two, but THREE full houses in San Francisco. San Francisco has roughly 600,000 people. If we assume there are three people for each house, this means 200,000 households. It would only take 50,000 shiny new electric cars to all get plugged in by their proud owners at 6 pm to do two things: the first is to (momentarily) double peak electricity usage, which would be the equivalent of blinking, and finding that San Francisco now had 1.8 million people.  The second is that the electric power grid would, unless extraordinary thinking and capacity expansion had already been performed, would crash, followed by several hours of black outs that might impact the entire state of California, or even beyond.

Beyond the need to prepare for the “shock to the system” of electric cars, there are a number of other great reasons for municipalities, states and nations, even those that have enough fossil fuels to last many years, to collaborate with Fortune Nest to begin to implement the Smart Grid.

Eight Advantages of the Smart Grid

1. Potential savings in the operating costs for electric utilities, which do not have to spin up turbines or otherwise produce power for the peak, and then see it fall off more rapidly than the costs of operation can be reduced.
2. Potential savings in the capital cost of constructing new power plants, especially to provide electricity for peaks. The peak power capacity of PG & E (the power company for 15 million people in Northern and Central California, and the national leader in percentage of electricity from renewables, as well as purchaser and producer of 40% of all solar power) is used only 5% of the time, so for 95% of the time, this capital expenditure is not producing any revenue. The bigger the peak power consumption, the greater the waste of money and percentage of time that the power plant is not being utilized. Smart Grids that allow implementation of Time of Use pricing can spread peaks out, and thereby reduce the need to build new power plants.
3. Potential savings to customers, perhaps 30%, or about $600 out of the average $2,000 a year. Telling a customer about the Smart Grid and assisting that customer in saving a substantial percentage can increase customer loyalty and satisfaction. It’s easy with each pasting quarter for consumers to switch the billing provider of their electricity, so customer satisfaction and a fact-supported brand image of the utility as implementing technology to help the consumer can reduce churn or the percentage of customers that switch technology.
4. Sophisticated way to better match the more unpredictable supply of electricity from renewables (wind sometimes doesn’t blow, clouds can keep solar below expected contribution to base load) with consumer demand. Time of Use pricing can be used to shift demand to better match renewable patterns, allowing a great use of renewable in the supply mix.
5. By enabling the addition of millions of electric vehicles to cities, Smart Grids enable the little publicized possibility of V2G, or Vehicle to Grid. Vehicles can charge up during the middle of the night, when the prices are low, and then feed back into the grid during peak periods, earning money for the cars owners, and enabling the utilities to save operating and capital costs.
6. Chance to create massive feedback loops to see exactly how consumers use electricity. The Smart Grid, combined with the Smart Green Home, can provide Terabits/second of data that can be analyzed and potentially sold to other companies that want to sell appliances, services, advertising, food, and more.
7. Greater flexibility for governments and first responders to learn, investigate, and even save lives. If there has been a fire, records can show whether there was a spike in power consumption at a certain outlet, or whether the stove or fireplace gas was turned on. With the ability to track what appliances are on, many bad habits, such as leaving appliances on for months while not being used, can be curtailed, and many new, good habits, such as turning off lights when you leave the room, can be implemented.
8. Chance to be a leader among other cities, states, or other countries in implementing the Smart Grid, and thereby having the pioneers’ advantage of creating jobs. When Nike pioneered the waffle sole for running shoes, it created a multibillion business in Oregon, creating tens of thousands of jobs. Millions of jobs will be created by the Smart Grid, many of them in the first cities that implement the Smart Grid, because of the extensive learning curve that will happen in the first months and years.

The Eleven Parts of the Smart Grid 2010

We say 2010 because the Smart Grid is a work in progress, and some new parts, either from existing industries, or new industries, may come to be part of the “standard” Smart Grid implementation. As it is, there are very few Smart Grid projects. For example, the very first Smart Grid implementation has been announced for China, to begin with a very modest test lab. General Electric's (NYSE: GE) announced that they will partner with The City of Yangzhou (located nearly 175 miles northwest of Shanghai) for a 3-phase project, beginning with the opening of a 10,000 sq meter demonstration lab, and culminating with a city-wide deployment of various end-to-end smart grid technologies -including advanced metering, distribution automation, and in-home monitoring displays - expected to take place in 2012.
As we begin 2010, here are the eleven technologies that comprise the more or less complete Smart Grid. (This assumes an already constructed electrical grid to modern standards).

1. Electric utility that has a supportive board of directors, regulatory agency, and wireless network savvy employees. PG & E and Austin Power are respected pioneers in the Smart Grid emerging market, among utilities.
2. Smart Meters. These go next to, or in place of, the meters with slowly rotating disks that meter readers would have to get within a few feet to make a reading of. Smart meters can be read remotely, and can serve as the gateway for delivering new services. Itron (NSDQ: ITRI) is the largest provider of Smart Meters, though General Electric has entered the market, and other companies exist. With nearly $1.8 billion in annual sales, though, Itron has the resources and installed base to more than hold its own in the face of new competition.
3. Smart Meter Networking and Communications This technology enables Smart Meters to communicate with each other, and to be linked in a mesh network (each node can allow message traffic to hop over and through it) to a data collection point for 5,000 meters (for example). Silver Spring Networks appears to be the leader in this market, and has an installed base of roughly two million meters that it has networked together.
4. In Home Energy Management. Networking, using Zigbee or other low power wireless standards, between household appliances and the Smart Meter. The purpose is to get closer to real time power pricing, so that every time an appliance is turned on or uses, a display shows the hourly (or other time period) cost of using the appliances. Over time, the theory is that consumers who see what they are spending will use less electricity, and pricing can be increased at peak times and reduced at non-peak times, to get consumers to shift their time of use. (This is the core of Smart Green Home described elsewhere on the website).  GreenWave Reality is an emerging leader in this area, challenging the longer established Tendril Networks.
5. Building Management and Networking This technology, related to building automation and increasingly integrated with it, will help cut energy use for phones, computers, building HVAC and lighting systems and other commercial office space energy wasters. Echelon is the leader in the space, though Cisco is a recent entrant to the market, while Johnson Controls, Honeywell and Siemens are established players.
6. Meter Data Management: Installing millions of Smart Meters creates complexity and the need for utilities to collect data in ever-shorter increments of time, to get close to real time. eMeter and other meter data management companies create software to handle the terabits/hour of data, as well as building, customer account management and other new applications that are being brainstormed into existence.
7. Demand Response. New firms, such as EnerNOC, negotiate supply agreements for gigawatts of power to be delivered to the Demand Response firm, which resells the right to draw this power to other utilities. This is roughly like purchasing electricity supply insurance, enabling utilities to avoid building additional fixed capacity “just in case” they have spikes in demand.
8. Grid Automation Software: General Electric has been providing utilities with software to improve and optimize their efficiency and operations for decades. Recently, GE has been making software acquisitions for the Smart Grid, including to manage field automation technologies, grid cybersecurity, and software to tie together its Smart Meters with its WiMax networks.
9. Smart Grid Integration: IBM has been working to knit together multiple software applications, with special emphasis on ways to predict demand and supply related to the currently unpredictable inputs from renewable energy sources, such as wind and solar.
10. Energy Storage: Another way to manage the peaks is to create ways of storing energy. Most energy storage for utilities has been to pump water uphill, and then let the water turn a turbine on the way down to access the stored energy. A second way is to compress air or another gas. The modern, Smart Grid method is to use high temperature, high volume sulfur sodium batteries. The leading company is this energy storage arena is NKG Insulators. The cost of $4,000 per kilowatt-hour, however, is too expensive for universal diffusion.
11. Cybersecurity: The ultimate success of the Smart Grid will depend upon whether customers and utilities can trust that the prices charged are correct. Using public spectrum for wireless networks for billing can be problematic – that’s why most Internet service using the ISM (Industrial Scientific Medical) bands uses flat rate pricing. There is a great need for software that can be used to assure all stakeholders in Smart Grids that hackers and even residential and business customers don’t try to alter the billing system used.