"...it is possible to produce electricity that is too cheap to meter."

By John Ballard

That was not a headline. I found it buried in Investment Strategies for Smart Grids and Meterc. Our house is located on a South-facing lot with good elevation, so I have a natural curiosity about wind and/or solar power. First, some background...

Two years ago, anticipating possible tax credits for adding energy-saving improvements, I looked into the feasibility of residential solar panels. To my disappointment I learned that the only initiatives for solar panel electricity production in Georgia are still commercial. Moreover, I learned that places producing electricity require a meter capable of running in both directions. For those times that wind or solar electricity exceeds what is needed, a special meter is capable of sending it back into the grid, in effect "selling " the unneeded power back to the provider electric company by running backward.

Makes sense. A windmill at night might well produce more power than we need while everyone is asleep, so rather than waste the power, the economical alternative is to use it where needed elsewhere. For the electric company which must furnish electricity all the time, it's a smart move. All that stands in the way is a lack of infrastructure in the way of "smart grids" and "smart meters."

I hope he will forgive me for saying it, but Bill St.Arnaud is a wonk.

Bill St. Arnaud is Senior Director of Network Projects for CANARIE Inc., Canada's advanced Internet development organization and has led the development, coordination and implementation of the national optical R&D Internet network - CA*net 3.

Prior to his appointment at CANARIE, Mr. St. Arnaud was a consultant and chief engineer at Switzer Engineering where he developed and patented encryption devices for transmitting high quality video for TV broadcasts, Project Manager at Motorola where he was involved in the nationwide deployment of a Police wireless communications system, President and founder of TSA Proforma - software and LAN company that developed networked trading systems for brokers and traders which was sold to Eastern Datacomm and ABC Communications (Hong Kong) in 1988, consultant for a number of high tech start ups, and Project Director for Vision 2000.

Mr. St. Arnaud is a member of the editorial board of Optical Networking Magazine, is a member of the STAR TAP advisory committee, a Glocom Fellow of the Center for Global Communications, Steering Committee for the SPIE Technical Group on Optical Networks. He is a frequent guest speaker at conferences on the Internet and optical networking and a regular contributor to several networking magazines.

Like most wonks, few people outside his field know about him. But like all candidates for future greatness, he's smart, informed and is blessed with a creative imagination. Like all the rest of us smart folks, he also blogs. And via Earth2Tech I found the link above in which he lays out a few known realities about electricity production. Here is the abridged version...

1. The real price of electricity in most of the world, but especially in North America has been declining over the last 30 years.

2. Most utilities, perhaps excluding those in the UK, have surplus generating capacity.

3. New shale gas discoveries are significantly lowering the capital and operating cost of new power plants, especially those used for peak power demands.

4. The power plant utility culture is extremely conservative.

5. There have only a handful studies on the potential energy savings of smart meters.

6. According to the IEA, consumer electronics is now the biggest consumption of power in most home as opposed to traditional appliances.

7. The largest portion of most consumer�s electric bill is not consumption, but fixed charges such as debt retirement, infrastructure upgrades, transmission line charges etc. Smart meters or grids will have little effect on these non-consumption charges.

It is important to note that there are at least 3 primary markets for Smart grids/meters:

1. Smart grid backbone infrastructure.

2. Demand Management systems and meters. This technology allows utilities to manage HVAC and other systems in order to reduce peak demand. Most smart meters being installed by utilities today are to implement demand management.

3. Load Management systems. This technology allows customers to more effectively manage their own load and hopefully reduce overall energy consumption. This is where most entrepreneurs and VCs hope to make vast fortunes.

My suggest investment strategies for smart grids/meters:

1. Use the Internet model of technology development. The Internet only came about because brilliant engineers realized that a new type of network could be deployed as an overlay over the existing telephone infrastructure without requiring any of the existing complex telephone control and signaling mechanisms. The same lesson needs to be adapted for next generation power systems.

2. Focus on carbon not energy. Energy costs are getting cheaper and likely to continue in price because of surplus power and advent of shale gas power plants. The only thing that will make electricity more expensive is some sort of price on carbon.

3. Focus on working with energy too cheap to meter. Remember that old slogan? Believe it or not it is possible to produce electricity that is too cheap to meter. But you aint going to get that kind of power from your local friendly utility. On campus windmills can produce very low cost power, although not free, in many cases it makes no sense to meter. The problem is the high degree of variability in power. Developing technology solutions ( in addition to storage) that are adaptable to highly variable will be attractive. Besides most proposed cap and trade plans call for at least 30% of utility power to come from highly variable renewable sources as well. The utilities will be desperate to find customers who can use this type of power

4. Focus on ICT. Computers and networks are the adaptable technologies to using 400 Hz and/or variable power. Reliability can be achieved through numerous such as clouds, distributing computing etc.

Yeah, I'm a sucker for that wonky stuff. (I left out a lot of details but the interested reader can find them at the source.)  All it takes is another post from Ron about peak oil to keep me looking. I'm still hoping we find a way out of our burning airplane to land it safely before we crash. 

Al Gore has been kicked around almost as much as Jimmy Carter and climate change deniers are almost as ubiquitous as birthers. The media hasn't been connecting many scientific dots since the Kennedy challenge that America put a man on the moon, and information about scientific matters is infused with so much politics and ignorance that Texas school books will soon feature separate chapters dedicated to in-depth examinations of William Jennings Brian's arguments from the Scopes monkey trial.

In the same way that health care inflation must be curbed by eliminating tests and treatments that fail the risk/benefits test, future power challenges will be resolved by replacing expensive, hazardous technologies with others that are safer and cheaper. And yes, conservation will have to be part of the solution.