Carbon-Pros Analyst Blog

With carbon cap-and-trade on the horizon, utilities are looking into options for reducing their dependence on carbon-intensive coal for baseload power. Yesterday, the North Carolina Utilities Commission approved Progress Energy's plan to build a new natural gas-fueled power plant to replace a coal-fired plant in 2013.

The plant will be almost At 950MWs, nearly the capacity of a nuclear power plant. It will use a high-efficiency combined-cycle technology and sit on the site of the retiring coal-fired plant. The new gas-fueled plant is expected to cost about $900 million and take two years to build. The plan also will involve the construction of a natural gas pipeline to the site. Progress Energy expects to announce a contract for the gas supply in the near future.

Progress Energy's plan contrasts with moving to next-generation nuclear plants for baseload power. The next generation of nuclear plants is expected to cost at least $6 billion each, take up to ten years to build, and provide about 1300MWs of capacity.

If analysts are correct that North America has at least 100 years of non-conventional natural gas reserves, this strategy makes a lot of sense. Natural gas plants emit about half the carbon-dioxide as coal plants. High efficiency combined-cycle designs such as this one emit about one-third the carbon of the older coal plants they will replace. We may need next-gen nuclear plants as a bridge to the future when renewables can provide baseload power, but this model suggests that natural gas can also provide part of that bridge. Diversity in the U.S. fuel mix makes sense as a hedge against future uncertainties.

Source: EnergyCentral, Progress Energy

Posted by Carbon-Pros at 10:28 AM | Permalink | TrackBacks (0)

The climate models from 15 years ago have proven relatively accurate in predicting trends in global temperatures. Almost every measure that was predicted in 1995 is in line with observed records today. Dr. Barron identified these areas as examples of the accuracy of those models:

• The stratosphere has cooled as predicted and the Earth's surface temperatures have increased as predicted.
• The “big three” of CO2, water vapor, and melting ice caps have changed in line with predictions. Water vapor has gone up, sea levels are rising, Arctic sea ice is retreating, land-based snow cover is in decline per the model, but sea ice is disappearing faster than predicted.
  
• Note that CO2 and other greenhouse gases (GHGs), the sun, and land cover change are referred to as "forcings" of the climate system. Water vapor and melting ice caps are responses to these forcings that can amplify them.  Relative to GHGs and land cover, the sun appears not to play as big of a role in transient climate change.  This is not to say that the sun is unimportant, just that changes in solar output cannot explain the long term trends in climate.
  

Besides confirming the models from 15 years ago, scientists have gone back 100 years with today's models and run them forward to today. The results have shown to accurately predict our 2009 environment with and without CO2 forcing.

Dr. Barron said that there are more than one million lines of code in current models, and that they cannot be tampered with, and cannot be gamed. Many different countries have independent models with significant differences yet all are predicting temperature increases within a reasonably narrow band. He said it is nearly inconceivable that worldwide results from different groups are getting similar results due to conspiracy or collusion.

In the United States, we are looking at an increase of at least 4-6 degrees Fahrenheit by the end of this century. Average increases could be as high as 6-12F worldwide. This will have a major impact on ecosystems. The pine beetle infestation in the Rocky Mountains is one example of the small changes taking place because winters are not as cold as in the past. Dr. Barton said that a Florida-like savanna grassland could grow all the way up into Virginia replacing much of the forest landscape in the Southeast. He concluded by saying that climate models are accurate in terms of the trend in global temperatures and getting better every year. Actual observations show that the Earth is warming much as predicted and where predictions are off, climate changes are accelerating faster than expected.

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In contrast to the legacy grid, the smart grid will be dominated by an “overlay” of two-way digital networks. Some elements are already in existence, but not on the scale envisioned in the smart grid. These new networks will be constructed using a broad array of technologies including fiber optics, hybrid-fiber coax, twisted pair, broadband over power line (BPL), and wireless technology such as WiMAX, Wi-Fi, ZigBee, and 3G cellular (see smart grid communication discussion).

There is a lot at stake. The smart grid can help us achieve nationally important goals such as energy security, climate mitigation, and technology leadership. But at the same time, the smart grid must help protect:

• Electricity flows (business continuity and society in general)
• Physical security of grid (electronic disruption of surveillance systems)
• Quality of service (voltage fluctuations, brownouts, etc.)
• Integrity of AMI and grid overlay networks (intrusion protection)
• Personal information (customer privacy)
• Financial flows (fraudulent meter and generation data)

There are many layers in a smart grid network. Each layer will employ a set of technologies chosen for their cost effectiveness considering factors such as functionality, reliability, security, and longevity. For this discussion, we consider several of the layers in a smart grid communication network. We have marked the HAN-AMI connection as layer 1. It may be tightly connected with layer 2, the neighborhood area network (NAN) which connects a number of meters to a data collection/aggregation point. Meter aggregation-to-backhaul is labeled as layer 3. And other networks include #4, the sensor network for transmission and distribution and #5, the backhaul network connecting the other networks with the utility operations center.

Smart Grid Communication Network

Network topologies will vary from utility to utility. In the design of smart grid networks, tradeoffs must and will be made. Urban implementations dictate different technology choices than rural implementations. The AMI layer requires different choices than the backhaul network. Every network layer and every technology represents a potential avenue for attack. Here are some of the major areas of vulnerability:

Legacy grid communications – The legacy grid already uses many different communication paths and protocols to connect utility operation centers with system operators such as ISOs and RTOs. Paths range from public networks such as plain old telephony and the Internet to private networks such as dedicated fiber links and leased microwave connections. A wide variety of data transfer protocols are used. Most existing protocols have some form of vulnerability or another. Some (but not all) of these vulnerabilities are in the process of being mitigated.

AMI security – Advanced meter infrastructure and its network of smart meters provides a foundation for smart grid (layers 1 & 2). With approximately 340 million meters in North America, AMI will represent a large part of the grid-overlay network. Research firm Parks Associates estimates that 8.3M smart meters have been installed in US homes, about 6% penetration. They project rapid growth to 13.6 million smart meters by 2010 and 33 million by 2011. AMI will be composed of many different networks; most of which will not be directly connected to one another. Meters are important not just for their massive numbers, but because they are at the outer edge of the utility's network and must be accessible for ongoing maintenance and operations. Once a meter is compromised it can be used to attack other parts of the network. 

Wireless networks  – Wireless is the preferred communication strategy for HAN and AMI because it offers ubiquitous and inexpensive connectivity. Mesh topologies add to its reliability by offering multi-path connections between in-home devices, meters, and data aggregation points. This applies to layers 1 & 2, and potentially to layer 3. Many of the protocols under consideration are still in the early stages of development. Without more extensive testing, we cannot know whether the manufacturers will implement the meter and AMI network in the most secure way. In the rush to market, it is reasonable to assume that short-cuts will be taken during development and testing.

Substations – Transmission and distribution substations contain many power control devices such as circuit breakers, transformers, capacitors, and monitoring devices. According to the US DOE, most transmission substations (81%) and distribution substations (57%) already have some form of automation (layer 4). Potential consequences of successful substation cyber attacks include the destruction of generators, power outages, and grid instability. The smart grid increases the level of automation in substations. Increasing the number of electronic control elements increases the potential vulnerabilities.

Sensor networks – Because grid optimization is an important part of the smart grid business case, the size of the sensor will grow rapidly. The new sensors will enhance the situational awareness of the grid and enable operators to react to power anomalies more quickly. The data collected by these sensors will be used to optimize control of the grid both within a utility and across the national grid. These sensors will help make the grid self-healing but the sensor network itself opens up an additional line of attack. Increasing the scope and scale of the sensor network (further expanding layer 4) increases the number of potential vulnerabilities.

Utility operations centers – The operations center is often ignored in discussions of smart grid security, but it is one of the most important elements of the network. Vulnerabilities can exist in the utility enterprise firewall, its enterprise applications, and/or its operator authentication and training systems. This makes the ops center vulnerable to a top-down attack from an intruder or to an insider-attack from a disgruntled employee. With the ops center having full control over every network element and every power system element, security will be paramount. For major utilities, this is already true today. However, the scale and complexity of enterprise software and data will grow with the smart grid. This further increases the utility's need for a strong electronic security force.

The risk of successful attack is difficult to assess because every part of the smart grid is in motion. The grid itself is in a constant state of evolution and will be for the foreseeable future. There is an ongoing dynamic between new attack methods and the development of new defenses. This can be seen in everyday life on the internet and regular updates to virus databases.

Resistance to attack is one of the defining characteristics of the smart grid vision. There must be a coordinated and ongoing effort to secure the smart grid as it is developed and deployed. This challenge is being taken seriously. NIST, DOE, EPRI, and major utilities are taking the lead. One piece of the puzzle is setting technical standards for different elements of grid security so that manufacturers can produce interoperable equipment. Bringing all these moving parts together will be no easy task. Stay tuned for more coverage.

Reference: http://www.inl.gov/scada/publications/d/securing_the_smart_grid_current_issues.pdf

Posted by Carbon-Pros at 05:21 PM | Permalink | TrackBacks (0)

Electricity is fundamental to modern life. It fuels our government, the military, our hospitals, businesses, and homes. In the future it may power significant parts of our transportation fleet. Glancing at the figure, it's hard to imagine social continuity without a reliable supply of electricity.

Concern about grid security is nothing new. There has long been a danger from terrorists blowing up key substations and taking out large blocks of electricity consumers. The US federal government admits that the legacy grid is also susceptible to electronic attacks from cyberspace. In 2009, reports surfaced that unidentified assailants had infiltrated the U.S. electrical grid and left behind programs that could be used to disrupt the system.

The vulnerability of the grid represents a threat to national security and business continuity. Maintaining electrical service in the event of a crisis is crucial. Major military bases can isolate themselves from the grid and run off their own private generators and microgrids. But even the military would experience disruptions from civilian supply breakdowns in the event of regional blackouts. Businesses are the lifeblood of the economy and need to be able to continue operations. The economic impact of a grid failure can be enormous. The economic losses attributed to the 2003 blackout were at least $10 billion.

Given its reliance on digital networks, there is concern that smart grid will be even more vulnerable to cyber attack. Massive power outages caused by a cyber attack, could disrupt the economy, camouflage a military attack, or spread fear and panic. Bruce Willis' movie Die Hard 4 brought the specter of grid hijacking to the mass Hollywood audience. When designed properly, nothing like the movie will ever happen.

The Energy Independence and Security Act of 2007 directs federal agencies to support the modernization of the grid, including cyber security. The Department of Homeland Security (DHS) works with the utility industry to identify and minimize grid vulnerabilities. They are also working to ensure that security is built into the smart grid as it develops. The top-level regulator, Federal Energy Regulatory Commission (FERC), coordinates work across agencies. The Department of Energy (DOE) specifically requires all smart grid projects funded with stimulus dollars to include privacy and security measures in their proposals. The Electric Power Research Institute (EPRI) is working with the National Institute for Standards and Technology (NIST) to set standards for smart grid development. Together, they are responsible for leading the effort to establish electronic security standards.

AMI ties together the meters on the smart grid for a given utility and a given service territory. One of the things that makes a new digital meters “smart” is the ability to transmit and receive information from its (private) digital network connection. The network connection is used to read the meter remotely. In older designs, utility meter readers would drive down the street with a digital receiver automatically recording data from each meter. In the smart grid, these readings will be sent upstream through the grid's digital overlay network for permanent recording at the utility operation center. Data capture, transmission, and recording leads to concerns about privacy.

Privacy. Smart Grid technology potentially lets your utility know who, what, when, where, how much electrical stuff you are doing inside your home. Instead of simply logging a running total for electricity usage, smart meters will log data with a date, time, and usage every 15 to 60 minutes. They will also collect power quality data such as voltage, phase, and frequency. They can also gather detailed operating information from networked thermostats, smart appliances, vehicle chargers, and anything else on the home area network.

This is all for the good. The utility can use this information to help its customers reduce their energy use and save money. Appliance manufacturers will be able to remotely diagnose problems so they can send a repair professional with the right parts. Medical device manufacturers will do the same. Over time, the scope and scale of organizations wanting access to meter data will grow (think law enforcement, public safety, social services, insurance companies, etc.). But where there is light, there is dark. And it's the bad guys we worry about.

Smart grid surveillance will be a concern to consumers wishing to maintain a high degree of privacy. But it should be a concern to anyone who might not want the bad guys to know when they are away from home. Access to meter data gives potential burglars an electronic profile of daily activities otherwise hidden inside the home. The bad guys would be able to “case the joint” remotely. In competitive electricity markets, competing utilities could try to get this data for industrial espionage to attract and retain the most profitable customers. Just as the Internet enabled new threats such as identity-theft, the future will bring new ways to exploit meter data.

Security. Going beyond privacy, the current generation of smart meters have much more functionality than old ones. Burglars, terrorists, and others with political agendas could use unauthorized access to AMI command and control systems to disrupt the delivery of services, create blackouts, disrupt load balancing commands, or create fear and panic. Crackers may be interested in breaking into command and control systems for personal satisfaction and/or bragging rights.

Some utilities will use the meter network connection to connect and disconnect electrical service. It's a money-saving extension to meter reading. This leads to speculation about the potential for “drive-by blackouts” in which a vehicle-mounted device could break into a wireless meter network and send commands to shut-off service. Since the meter network is localized at the neighborhood level, these would be relatively small-scale problems. If the attackers were to break into the network at the utility operations center, disconnect commands could (theoretically) be issued system-wide. Even still, electricity distribution is highly decentralized across thousands of utilities. So an attack on one utility will not necessarily take out other utilities.

With proper security in place, smart meter deployments and grid optimization should make the grid stronger and more resilient. Much of the grid is already automated but with older technology that may not be able to withstand new types of electronic threats. The smart grid's advanced capabilities will allow utilities to anticipate problems and mitigate its effects on the system. It will support broad use of distributed generation and storage. These will give some customers the capability to operate in island mode, isolating themselves from the public grid.

There is a lot of work to do in the area of grid security and privacy. It is crucial to confront and solve problems during the development phase. It won't be easy, but given that we successfully run our government, the military, our hospitals, and businesses on computer and communications technology, we have the intelligence and the technology to surmount similar challenges on the smart grid.

Stay tuned for continuing in-depth analysis of grid security. Carbon-Pros is pleased to announce that we are partnering with Securosis for in-depth security research on the smart grid. These guys are good! This is an exciting collaboration, details will be announced soon. Meanwhile check out their blog at securosis.com/blog.

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You may have never heard of Worldwide Interoperability for Microwave Access, but you probably have heard of WiMAX. This promising technology might be the solution for providing broadband wireless access over the troublesome “last mile” to the home and office. This technology for broadband wireless access is based on IEEE 802.16 standards. The strength of WiMAX is best understood by comparing it with more mature technologies such as WiFi and 3G cell networks. WiFi, for example, works at high speed but only at short range. It delivers megabit speeds while you are near the access point, but it fails as you move 10 to 20 meters away. 3G cellular networks such as GSM, UMTS, and HSPA work at lower speeds but at much longer range. They are used with smart phones and engineered to emphasize mobility over speed. The chart at the right shows WiMAX falling into a sweet spot between WiFi and the 3G technologies. Given its unique combination of range and speed, WiMAX has promise for many applications:

• Connecting WiFi hotspots to the Internet
• Wireless alternative to cable and DSL for broadband Internet access
• Providing portable connectivity to mobile devices
• Rapid recovery of communication following natural disasters
• Connecting data from meters and home area networks on the smart grid

WiMAX can either operate at higher bitrates (20+ megabits) or over longer distances (20+ miles) but not both. Most WiMAX networks run between 1-3 Mbps. WiMAX has built-in algorithms for reducing contention problems, especially for distant network nodes and during peak traffic periods. Like most wireless systems, available bandwidth is shared between users in a given radio sector, so performance deteriorates with the number of connections in a sector.

The technology has some history and momentum. The WiMAX Forum is the industry association promoting the adoption of WiMAX compatible products and services. One of their major roles is to certify device interoperability across suppliers. Grid Net, backed by GE, is focused on using WiMAX to connect smart meters to utility back offices. GE produces a WiMAX smart meter. Intel produces chips and is a major supporter of the standard.

Even if adopted widely, WiMAX will be deployed alongside other communication technologies. Here is one scenario. Inside the home, ZigBee and/or WiFi appliances connect to a base station and from there to a WiMAX smart meter. The meter connects with a neighborhood WiMAX node. The neighborhood node collects electricity usage from many consumers and relays it to the utility backhaul network for long-distance transport.

Going wireless the last mile offers many advantages. It eliminates the speed bottleneck of broadband powerline (BPL), it can be simpler to install, and it provides a future-proof connection to support utility application bandwidth requirements for decades into the future.

Right now, most utilities are deploying low-bandwidth wireless for the last mile, since its hundred-kilobit speeds are sufficient for today's energy management applications. But as more complex applications are brought online, and as smart meters scale into the tens of millions, extra bandwidth will be required. Grid optimization, for example, requires very fast response times to react to real-time grid sensors and to make instantaneous decisions for routing power across the distribution network.

The catch for utilities is that WiMAX remains a technology of the future, even if it's the near future. Developmental issues include still evolving standards, too few technology suppliers, and limited network deployments. Utilities don't necessarily require widespread national deployment because they can set up their own private network. Lack of national deployments, however, does not inspire confidence.

WiMAX could solve a very important piece of the smart grid communication puzzle. In WiMAX, utilities are exposed to the risks of early adoption. But they can also reward themselves by future-proofing the troublesome last-mile. That's a risk/reward that cuts both ways.

Posted by Carbon-Pros at 06:00 AM | Permalink | TrackBacks (0)

Some of the major telephone companies are rebuilding their copper networks with fiber to the home (FTTH). Telcos justify the investment as a way to retain telephone customers, attract and retain internet customers, and sell new services such as high-definition video on demand. The telcos aging infrastructure based on twisted-pair copper wire is no match for their future bandwidth requirements.

Here are the fiber deployments (FTTH) in North America as of 1Q2009 (source FTTH Council):

• 15.2 million homes passed
• 4.4 million homes connected (~3.3M by telcos, mostly Verizon)
• 2.7 million homes receive video over fiber
• connections growing at 1.5 million homes per year
• “take rate” is an impressive 32%
• annual growth rate is 52%

By contrast, BPL is used in about 5,000 homes. Clearly fiber optics has succeeded in the competitive market where BPL has not. 

Fiber can be used as the backhaul network for BPL. In that case, fiber is brought to a location near each electrical transformer, which blocks BPL signals. If the fiber is close enough, a single device can be used to bridge directly to the customer's electrical service. This potentially makes gigabit speeds available at every AC outlet in the home (or office) using the soon to be available G.hn.

G.hn is the next generation standard for legacy-wire home networking. It achieves gigabit per second sppeds and operates over existing wires for telephone, cable TV and electrical power. This new technology specifies the physical layer for the connection. It contains optimization algorithms that maximize performance when operating over each type of wire. Analysts believe that G.hn-compliant chips will be available during 2010 with equipment available before 2011.

While it will be expensive for utilities to install any type of dedicated line, at least fiber optics poses no bandwidth limitations for the foreseeable future. It is future proof. FTTH will be difficult to cost-justify solely for smart grid applications because most smart grid applications do not currently require high bandwidth. Yet, with utilities accustomed to building infrastructure with 50-year life cycles, fiber fits with their long-range strategic thrust to “build once and build well.” At least in urban areas, you can count on the more farsighted utilities to use fiber as part of their grid overlay.

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Current data are revealing (courtesy of Pew Internet). As of 2009, US homes connect to the Internet in the following ways:

• Cable – 41% (46 million households)
• DSL – 33% (37M households)
• Sat/fixed wireless – 17% (19M households)
• BPL is used in about 5,000 households. That's about zero percent.

BPL has failed to achieve meaningful penetration for a number of reasons. First, power lines are inherently noisy. Devices such as switches, relays, transistors, and rectifiers create disturbances on the line. Some devices add harmonics. PLC must be engineered to work around these signaling disruptions. Second, PLC signals cannot readily pass through transformers because they act as line filters, blocking high-frequency signals. Repeaters are needed to bypass every transformer. These often consist of three stages, a filter in series with a protection stage, and a coupler. Third, PLC signals do not propagate long distances necessitating even more repeaters on runs greater than one mile. Fourth, the initial costs for PLC are high and the maintenance costs are uncertain. The cost-benefit is questionable when considering its moderate (mid-band) data transfer speeds. Fourth, PLC can interfere with ham-radio signals and has been confronted with legal challenges from the ham-radio community. Finally, utilities may not have the risk tolerance to compete with telcos. Most operate as regulated monopolies so they tend to become shy when they move outside the regulatory guarantees that insure their profitability.

Even with these obstacles, there is little doubt that PLC/BPL will play a role in the smart grid. It might play a supporting role, however, in combination with other technologies. For example, BPL can be combined with wireless by hanging WiFi (or cellular) access points on utility poles. In Boulder's Smart Grid City, Xcel Energy uses BPL in combination with short-range radio links. BPL carries data from meters, thermostats, and renewable-energy systems. Signals flow along the power lines for about a half-mile before being shunted to a fiber-optic (or cellular) backhaul network.

In the future, BPL will also be used in combination with WiMAX (long-range broadband) networks. So even on the power-line itself, communication is not a simple matter. No one knows for sure which communication technologies will dominate the smart grid. Most utilities will only have one chance to get it right. Stay tuned for more.

Posted by Carbon-Pros at 08:34 AM | Permalink | TrackBacks (0)

Even though I am traveling this week, I wanted to keep the blog moving. A couple of weeks ago, I covered the Arizona Community Power Solar Program. In response to that post, Bob Monet, a solar industry advocate, reminded me about a similar but different approach being taken in Brighton Colorado (north of Denver). The project is a cooperative solar farm dubbed Sol Partners. Here is an an excerpt from the June 15, 2009 issue of High Country News:

Last month, a new type of farm sprouted in Brighton, Colo. United Power, the rural electric cooperative that serves the town and a large swath of communities and agricultural lands on the state's northern Front Range, unveiled what's been touted as the nation's first cooperative solar farm. Customers can "rent" one or more of the 48 panels in the 10-kilowatt array for $1,050 apiece, for a 25-year period. In return, United Power credits their monthly utility bills for the power their panels generate. Other electric co-ops see this project as a possible prototype: a way to distribute local renewable energy without forcing customers to pay for the equipment or its installation. "People can even come visit their solar panels," says Troy Whitmore, United Power's director of external affairs. "And the sky's the limit as to how many modules we can have, depending on demand."

Program details:

• 25 year lease contract
• $1,050 investment per 210 watt panel
• Panels are located on United Power's property
• Receive credit on electric bill for energy generated by your panel(s)
• Monitor the farm's production via United Power's website

This is exciting because it allows all electric customers invest in solar. The customer need not own a house suitable for placement of solar panels. Many urban and rural locations have unavoidable shading that makes solar impractical. It also means that renters can invest as little as $1000 and start generating solar energy. Let's face it, homeowners with south-facing roofs are not the only people interested in reducing their carbon footprint through distributed generation. The advantage of this program over the purchase of general carbon offsets is the local, hands-on nature of the investment. Customers know their money is being plowed right back into the community. They know their investment will be managed in a sustainable way. Kudos to United Power for pioneering yet another approach for distributed solar.

Posted by Carbon-Pros at 11:43 AM | Permalink | TrackBacks (0)

The communication question revolves primarily around that part of the grid downstream from substations. Most substations are connected by some type of backhaul network which may not bear any resemblance to what will be be used to tie meters together into a “neighborhood area network.” Several criteria must be factored into the decision including reliability, scalability, bandwidth, latency, evolvability, and cost.

One key decision point is between wireline and wireless communications. Wireless is attractive as a way to avoid the expense of stringing new wires. But wireless technologies have drawbacks too. Below are three different wireless technologies attracting interest from the utilities:

RF Mesh – These wireless “radio frequency” networks allow each node on the network to communicate with any other node within range. This increases flexibility and reliability. If a node or a link goes down, it can be bypassed by the neighboring nodes. This improves the fault tolerance of the entire network. And since we're talking about our electrical grid, fault tolerance is a key requirement. Another key requirement is scalability due to the myriad of devices involved (e.g. sensors, meters, thermostats, displays, appliances, and various load plugs). We are talking about tens of millions of nodes. As a peer-to-peer network like the Internet, RF mesh is scalable. PG&E is using RF mesh in their 5 million meter deployment in California. This technology has gained more traction in the US than any other approach. This is the key technology for innovative startups such as Silver Spring and Trilliant.

Cellular 3G – This is the option to outsource your network to public wireless carriers such as AT&T and Verizon. This approach minimizes high up-front deployment costs and turns over network maintenance to the wireless carrier who presumably know how to do it cost-effectively. If the big carriers move into this business full-force, you can count on cellular to be one of the winning long-term solutions. The key part of the previous sentence is “one of the winning solutions.” Cellular may prove too expensive to become the dominant solution but it will be valuable for some utilities in some parts of their network. SmartSynch, for example, is betting that this will be the most cost-effective and scalable solution for many utilities. Given the conservative nature of utilities, they may be right.

WiMax – This is the “holy grail” of communications because it is wireless, long-range, high bandwidth, and low latency. It's everything we need. There's only one problem. It does not exist on the scale needed and no one can be sure that it will rolled out on any particular time table. Even though it is further out on the tech radar, WiMax is an appealing option that adds a FUD-factor to decisions around more mature technologies. Utilities may want to keep their options open, but they certainly can't bet on large-scale deployment of WiMax within a defined timeframe. WiMax uses licensed spectrum which will make it more expensive than the unlicensed frequencies used by RF mesh networks. Despite the negatives, the fact that General Electric is offering a WiMax solution for grid optimization makes it all the more intriguing. Startups such as Grid Net are betting on WiMax.

There are more wireless options including WiFi, optical laser, satellite, and numerous radio bands. There are many wireline options including: power line carrier, broadband over power line (BPL), fiber optics, and DSL (phone line).

Every utility has to deal with a mix of urban and rural deployments. Most have some legacy deployments and other internal technical constraints. Most utilities will end up using a mix of technologies including both wired and wireless. We will look at the wired options in a future post. Stay tuned.

btw, Jim is traveling through Friday, so this week's posts may not come out on the usual daily schedule.

Posted by Carbon-Pros at 07:14 PM | Permalink | TrackBacks (0)

• Increase in demand

  • Extreme temperature
  • Day and time of week
  • Industrial process load being brought on

• Decrease in supply

  • Generation capacity
  • Outage at power plant
  • Availability of market-rate electricity
  • Availability of transmission capacity

One example of a demand response program to deal with super peak is the Kilowatcher Program at Colorado Springs Utilities. All utilities have programs to deal with super peak. They can contract for power on the open market, they can call on customers to reduce demand, or they can fire up peaking power plants. A lot of effort goes into managing super peaks. Nobody wants a brownout where electrical demand exceeds the supply, line voltage drops, and electrical devices burn out. Generating and buying power at peak periods is expensive. Anything a utility can do to reduce peak periods in general, and super peaks in particular, is money in the bank.

Posted by Carbon-Pros at 06:21 AM | Permalink | TrackBacks (0)

Research firm Parks Associates estimates that 8.3M smart meters have been installed in US homes, about 6% penetration. That's almost double the penetration of one year ago. Smart meters are capable of two-way digital communications. They are crucial because they provide the foundation for widespread deployment of the smart grid. Parks' projects rapid growth with 13.6M smart meters by 2010 and 33M by 2011. This hypergrowth explains the large number of smart-grid startups and the recent entrance of the tech giants. To give you an idea of the momentum behind smart grid deployment, we profile some of major projects in the US. We start with the first proof-of-concept project on the Olympic Peninsula. Some of these projects are full end-to-end smart grid deployments, others are smart meter projects which incorporate demand-response functionality for reducing peak electrical demand.

Olympic Peninsula GridWise – In 2007-08, Pacific Northwestern National Lab (PNNL) conducted a one-year demonstration project with many partners including IBM and Whirlpool. This was one of the earliest field experiments in the US. It included dynamic pricing, real-time EMS, and homeowner tools for managing energy consumption. Consumers responded by adjusting their behavior to save an average of 10% on their electric bills. Peak demand went down by 15% on average for the year and in some cases went down by 50%. The overall energy savings was 20%. If scaled up nationally, the results would provide savings of $70B over 20 years, putting the $4.5B federal stimulus investment into perspective.

Pecan Street Project - The municipal utility Austin Energy (Texas) already has version 1.0 of its smart grid up and running. Key components include 400K smart meters, 86K smart thermostats, and more than 2K grid sensors. Version 2.0, dubbed the Pecan Street Project will integrate renewable power generation, energy storage systems, smart appliances, electric vehicle charging, and home portals. Austin Energy is opening up its grid for entrepreneurs and researchers. The city of Austin Texas will be the laboratory. They have attracted a long list of partners including Applied Materials, Cisco, Dell, Freescale, GE, GridPoint, IBM, Intel, Microsoft, Oracle, and SEMATECH.

Boulder Smart Grid City – Xcel's Boulder Colorado project is one of the most advanced in the country. The grid overlay is a dedicated fiber optic network. Xcel is using the project as a test bed for many new technologies. Xcel estimates that it will cost $100 million to connect 45,000 customers to its Boulder network. Xcel has an extensive list of partners who also invested in the project. These include Accenture (project management), Current (monitoring), GridPoint (software platform), OSIsoft (data and asset management), SEL (sensing and control), SmartSynch (smart meters), and Ventyx (utility application software). See our previous post on Smart Grid City.

PG&E Smart Meter Program - The California utility is deploying 5.3M smart electric meters by mid-2012. This is the foundation for their smart grid project. PG&E uses programmable solid-state meter technology with secure wireless communication between the meter and the utility. Meters are provided by GE and Landis+Gyr. P&E's communication partner is Silver Spring Networks. The utility used Aclara for communications in the first phase of meter deployment. They will use ZigBee to communicate between smart meters and in-home devices. The estimated cost for up to 10 million gas and electric meters is $2.2B.

Posted by Carbon-Pros at 06:21 PM | Permalink | Comments (1) | TrackBacks (0)

In this installment of our smart grid ecosystem, we begin our look at the startups and focused players. In part 5, we placed the giant tech companies into the ecosystem. That was the easy part. The giants cover a lot of territory, there are few of them, and they have well known competencies. The startups, by contrast, are all over the map. True to their DNA, entrepreneurs come up with new ideas and run with them. They expand as niches open up, as capital and talent allow. They don't follow a predictable pattern. Nor do they acknowledge established industry and sector boundaries. Entrepreneurs are boundary spanners. So consider the chart below a work-in progress, a rough approximation. There are more exceptions than rules.

If you are not familiar with the smart grid, we suggest that you review our July 2 post illustrating the major companies competing for space in the smart grid.

We'll discuss this chart in several more posts coming up. We will take a look at the partnerships that are forming (and in some cases de-forming). Meanwhile, if you have suggestions for clarifying our model, please let us know. We'd love to simplify it, but then again, that's not necessarily how innovation drives new technology and new markets.

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The companies placed on the first chart below are primarily from the technology space. The companies placed on the second chart are primarily from the power systems/industrial space. The latter group includes industrial giants such as GE, ABB, Areva, and Siemens. These Goliath's are major suppliers to the legacy grid. Each of them manufactures and markets a full range of new and legacy technologies for the utility industry. They know more about the legacy grid than anyone on the planet, but their expertise thins when it comes to IP networks, scalable real-time databases, and enterprise-class software. The tech and industrial giants need each other. 

Across the board, those companies that already compete in their core business will continue to do so on the smart grid. This is a land-grab and the giants play the game better than anyone. Natural competitors include:

• Google vs. Microsoft (software giants)
• GE vs. Siemens (industrial giants)
• Verizon vs. AT&T (wireless giants)
• Cisco vs. small innovators such Silver Spring (e.g. Goliath vs. David)
• IBM vs. Oracle (Oracle has announced it will go end-to-end)

At the other end of the spectrum are the natural collaborators. These are companies that come to the smart grid with complementary strengths. They may come from different industries or from different technologies. Prominent examples include:

• IBM & GE
• Intel and IBM or Microsoft
• Intel and the industrial giants
• Cisco & IBM & GE (three Goliath's that could work together)
• Google & Oracle & GE (possibly three more)
  

In between are dozens of companies with overlapping competences. Examples of partially competitive overlaps include:

• IBM & Google or Microsoft
• IBM & Oracle
• Cisco & Silver Spring or Trilliant

 This market is moving very fast. All the big players want to expand their reach. For example:

• Cicso would like to cover all the major networking components by itself
• Oracle has announced an end-to-end solution, though it's not clear if anybody believes them
• IBM wants to get into industrial solutions such as grid-connected storage smack in the middle of GE and Siemens turf
• Some of the tech giants want to extend into the industrial space and vice versa.
  
• Metering/AMI players want to extend through the networking space and into utility enterprise apps.

When you add 100 small innovators into the competitive mix, it leaves utility executives scratching their heads about which technologies and companies will survive the next five years. When in doubt (and they are), the utilities will move very slowly. That pacing difference will set up some interesting dynamics for the tech giants. Next week, we'll look at the smaller innovators. Stay tuned. 

See related posts on the smart grid. 

Posted by Carbon-Pros at 07:53 AM | Permalink | TrackBacks (0)

Continuing from part 3, giant companies (both tech and industrial) are jumping into the smart grid business. Since the opportunity is too big for any one company, an ecosystem of partners and competitors is starting to emerge. Battle lines are drawn clearly in some areas and not at all in others. To convey the size and scope of the opportunity, we have sketched out the landscape in the chart below. Sketch is the operative word, because the smart grid has too many dimensions to capture on one chart. We'll start with this chart and develop it further in upcoming posts.

The upper half of the chart represents the software applications of the smart grid. The lower half represents the facilities and networks that transport data about electrical supply and demand. The left side of the chart represents the domain of the utilities and generators, whereas the right side represents the residential and commercial customers. This gives us four quadrants labeled Enterprise Apps (software to run the utilities), EMS (energy management systems for use by customers), the HAN (the home area network, usually wireless, to connect all the devices in a home or building), and "Grid overlay" (the new digital network that will overlay the legacy grid for monitoring and control).

If you read clockwise from the upper left, we can walk through a flow of requests and responses and monitoring and control. For example, the utilities use Enterprise Apps such as Demand Response systems to balance electrical supply and demand. At 1 PM on a hot summer day, they know the peak load is coming. They send out a signal to cut back on non-essential power use. Back at the customer's site, the consumer (or facilities manager) uses their own EMS (Energy Management System) to set their preferences, possibly overriding the utilities' request. The actual communication between applications takes place down at the network level (lower half of chart). In the consumer's home or building, devices are connected to one another through the HAN (home area network) to coordinate signaling. For example the smart thermostat might let the utility turn down the air conditioning because no one is home, but the smart fridge might override the smae signal because it's full of fresh cold beer from the local microbrew. Connected to the house or building, the AMI (advanced metering infrastructure) picks up these signals and monitors the flow of electricity as it's being adjusted by the above systems. The AMI is logging real-time power consumption so that prices can be set higher during peak periods when the utilities' generation costs are higher. The network signals continue through the Grid overlay in a clockwise direction feeding back to the utilities' Enterprise Apps including billing which is part of BOSS. They also feed back into Demand Response thus showing the utilities how much power is needed from which generators and which transmission lines so the power can flow where it's needed.

In tomorrow's post, we will overlay the tech giants. You'll see they are literally all over the map. Soon after, we will add in the smaller, more focused players. Stay tuned.

See related posts on the smart grid.

Posted by Carbon-Pros at 06:54 AM | Permalink | Comments (1) | TrackBacks (0)

Yes. Nuclear is the big issue that divides proponents of climate mitigation. Supporting a low-carbon future, nuclear plants offer baseload power with very low operational emissions. Baseload plants are crucial because they provide power around the clock 24x7, i.e. when the wind is not blowing and the sun is not shining. Coal, hydro, and geothermal are the other types of baseload plants. Most hydro is already developed, geothermal will help but not on a large enough scale, and coal is a carbon nightmare. As I have studied the nuclear question my position has shifted more than once. There is no good answer but we can't rewind the clock.

One of the challenges in mitigating climate change is that "time is of the essence." CO2 stays in the atmosphere for 100 years. Almost all of the CO2 we have emitted during industrial revolution is still in the atmosphere. Since annual emissions are still increasing, we can't wait another 20 years for future solutions such as “clean” coal, “low-carbon” biofuels, "large-scale" hydrogen fuel cells, and “baseload” wind and solar. We need to stop the increase of global CO2 emissions before 2020 and then reduce it by 50-85% below 2000 levels. The things we do in the next 10 years will have the greatest impact.

Nuclear is here now. It works and it is relatively safe. In fifty years of operation, no one has been killed by a nuclear power plant accident in the US. The damage at Three Mile Island was contained to the reactor itself. Chernobyl is not comparable since that plant lacked the basic safety features used everywhere outside Russia (their reactor was built inside the equivalent of a tin shed). The US already generates 20% of its electricity from nuclear, Japan generates 35%, and France generates 80%.

Solar and wind won't be capable of baseload operations until two key problems are solved. We need to implement the smart grid on a massive scale. For the first time, this will give utilities the ability to accurately monitor and manage customer electrical loads. We also need large-scale energy storage solutions such as flow batteries, fuel cells, and compressed air. This will buffer some of intermittency of wind and solar. Someday the combination of smart grid with large-scale storage will turn wind and solar into baseload power. Nuclear can get us to that “someday” without tipping the planet toward an ecological brown-out. Nuclear plants last 60 or more years. Uranium is not a renewable resource, it could run out in 100 years. Known reserves are enough to fuel a new generation of reactors that could be swapped out for renewables 50 years from now. 

Meanwhile the dark-side of nuclear continues to be storage. Yucca Mountain is dead in the water. By default, on-site “dry cask storage” is moving from an interim to a long-term solution. This method could last a century or more and eliminates the need to move radioactive waste across the highways. A reasonable objective is to use this century to build fuel-reprocessing facilities to minimize the volume of spent-fuel. In parallel, we can develop a permanent storage solution. With additional nuclear capabilities in place, we can retire coal plants and buy time for renewables.

Recent scientific evidence shows that our climate is changing faster than predicted. Since next generation of nuclear plants could take 10 years to come online, we need to get moving sooner than later. The faster we mitigate, the less chance our grandchildren will see a planetary ecological disaster. Since policy objectives include both energy security and carbon mitigation, moving nuclear forward with a few pilot projects gives us the option to build more nuclear in the future. In 2008, Japan opened 8 new nuclear plants. They are working on wind and solar too but they are moving on all low-carbon fronts. New reactor designs are safer and more efficient. Building the next generation of nuclear plants can give society a 50-year lead time to develop the technologies needed for a sustainable low-carbon future. We can't rewind the clock on the industrial revolution, but we can buy some time. Nuclear is not popular, it's not without problems, but it is a realistic part of the solution. 

Posted by Carbon-Pros at 08:12 AM | Permalink | Comments (1) | TrackBacks (0)

Arizona Public Service (APS) is the largest electric utility in Arizona, serving nearly a million customers. APS has launched a pilot project to install, own, operate, and maintain solar panels on customer rooftops at no upfront cost to qualified customers.

• Eligible customers must be served by a specific part of the APS distribution system (the Sandvig 4 feeder).

• The customer's home must meet technical requirements such as roof direction, building age, and structural integrity.

• An on-site assessment of the home will verify engineering and eligibility requirements.

• Customers will sign an easement, allowing APS access for installation and maintenance.

• After installation is complete the customer will be eligible to receive a reduced rate for the power generated on their rooftop.

Community Power programs are based on the same concept as Energy Service Companies (ESCOs) where an independent company “rents” rooftop space on commercial buildings, installs a renewable energy system, and sells the power back to the building owner (see Wiki). ESCOs typically split their profits with the building owner through revenue sharing agreements. Due to the capital-intensive nature of renewable energy investments, this approach to energy service provisioning will play a larger role in our future.

Even as renewable energy costs decline, new systems still require a large upfront investment. Let's face it, most people don't have the needed $10,000-$15,000 to prepay their electric bill for 30 years. Credit markets remain tight and few loans are available. The homeowners who do have cash might not have the optimal south-facing pitch.

Projects such as APS' will put distributed solar on the best rooftops in the most grid-accessible parts of the community. This helps utilities meet regulatory mandates. For example, Arizona’s Renewable Portfolio Standard (RPS) requires that 30 percent of its renewable energy be generated from distributed sources. Utilities are well positioned to make these long-term investments. Power plants, for example, can be amortized over 50 years. Plus utilities have access to the necessary capital and expertise. These projects won't solve all our problems, but they provide invaluable support for developing the renewable energy industry and educating consumers. The costs are reasonable when spread across the rate base. It's hard to see a downside for Community Solar projects. They are win-win-win: good for the homeowner, good for the community, good for the environment.

Posted by Carbon-Pros at 06:12 AM | Permalink | Comments (2) | TrackBacks (0)

Continuing our discussion of the smart grid ecosystem...

The smart grid has been called the “energy Internet” so it makes sense that giant tech companies are rolling out products and services. The enterprise IT companies, in particular, are ramping up their investments. IBM has been focused on utilities consulting and software for several years. They offer enterprise software with extensive systems integration and IT support. Some of IBMs solutions are purpose-built for the grid, but many are just reconfigured from its extensive portfolio of enterprise applications. You can count on Cisco to get involved in every application of IP networks. The smart grid is no exception. Cisco will work with utilities on home area networking (HAN), backhaul services, network security, and network operations. Microsoft is naturally focused on software. A late mover, it recently jumped in with a software suite now in field trials. Coming out of the web, Google is experimenting with a web-based solution which it offers free to partner utilities (and their customers). Google sees a major play in all the data that will be generated. As in their primary market, they will go head-to-head with Microsoft, courting utilities and their customers. Oracle is focused on utility data management and operations integration around their database, middleware, applications and back-end technology infrastructure. Most of the majors are also making investments in the smaller players. And last to mention here, Intel is developing microprocessors for embedding into transmission and distribution equipment.

The other tech giants are not (yet) as deeply involved but they won't sit on the sidelines and let this market develop for long. Consumer electronics (CE) competencies revolve around the digital home and creating stylish, easy to use products. The growth of the smart grid will depend heavily on consumer acceptance and the CE companies know the consumer better than anyone. With the smart grid's requirement for digital networks spanning the continent, telecoms giants such as Verizon are offering 3G wireless networking services to the utilities so they don't have to build their own networks from the ground up. They will also offer consumer solutions based on their cell-phone platforms. In Boulder's smart city, Xcel built out it's own fiber optic network, but that won't be the norm.

Each one of these companies brings its core competencies into the utility industry. Each one is building large partner networks. This opportunity wide and deep, no single company can provide all the solutions. The utilities industry is America's largest, almost double the size of the telecoms industry. Electric utilities control more than $600B in assets with $260B in annual revenue. There are more than a billion meters worldwide with more than 100M in the US. Upgrading so many meters, homes, and network assets is an opportunity on the scale of the internet. Next week, we'll discuss some of the smaller, innovative players in this space.

See related posts on the smart grid.

Posted by Carbon-Pros at 07:21 AM | Permalink | Comments (1) | TrackBacks (0)

The world is moving from a fossil-fuel economy to an electricity economy based on nuclear and renewables (see previous post). There are  major obstacles to overcome including rapid technology change, a fragmented regulatory landscape, and the conservative nature of utilities. The grid will collect information about energy use and display it for the consumer and their utilities. Consumers win if they use the information to save money. Utilities win by providing opt-in incentives for shaving peak loads and avoiding the cost of new power plants at $500M to $1B each, with nuclear at $10B. The home energy management system (EMS) might appear to take center stage, but it's just one element in the digital home (see Smart Grid News). You can view the full-size map.

If the smart grid represents the future of electricity, then it also represents the future of home technology. Consider that the digital home already includes a combination of broadband, PCs and Macs, iPods, smart cell phones, digital televisions, media centers, game players, music controllers, and more. Consider that these devices are becoming more interoperable year-by-year. Smart phones are becoming as capable as PCs, iPods run home stereo systems, digital televisions record and playback TV on demand with recordings controlled from PCs or smart phones, media controllers connect to computer downloads, etc. Yet the potential of all these devices has not been realized. Synergies have not been achieved.

Both the digital home and smart grid will be based on open standards which embrace and extend those that power the web today. In a mere 15 years, the web has completely redefined the global landscape of communication and business technology. In the next 15 years, the smart grid (in concert with the digital home) will again redefine our technology experience. This won't be restricted to residential digital homes, it will grow even faster in commercial buildings. Together they use almost 70% of US electricity. The focus in commercial buildings will center on building automation and energy management.

With the emphasis on digital networking and standardized technologies, tech giants are being sucked in like steel to a magnet. The grid is pulling in top companies from information technology, consumer electronics, telecoms, and the web. Not to mention the industrial giants such as GE and Seimens. In upcoming posts we will profile the giants and work our way down to the focused players who are making the needed technological breakthroughs. I don't believe this is hype. Capital is pouring in, standards are being set, and infrastructure is being deployed. I've written about the city-wide project in Boulder, CO. More projects are starting up every quarter. Sure, it's going to take longer than everyone wants. But look at what happened in 15 years of commercial internet development. Tech change builds on itself and accelerates over time. Therefore the 15 years of internet-time could easily shrink to 10 years. And these next 5 years will set the stage for the next 50. Fasten your tech seat-belts. We live in interesting times.

See related posts on the smart grid.

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There is a lot of money pouring into development of the smart grid. The federal stimulus package set aside $4.5 billion for starters. That's not bad for seed money. Private money is also pouring in because investors believe this is the "next big thing." However the architecture develops, the smart grid will be tied together using a digital network running open standards. These standards will overlap heavily with those running the internet. All the tech giants are jumping into the smart grid at some level or another. It makes perfect sense. They have the capital and the digital pedigree. The scale and scope of this problem-set is so large that each one has a variety of partners. Partners range from big utilities, to tiny start-ups, to legacy grid suppliers. There are direct competitors in opposing camps (e.g. Microsoft vs. Google), as well as companies placing bets across competing technologies to increase their chances of winning market share (e.g. Cisco and IBM). It's reminiscent of the early days of the commercial internet when new giants were born and others consolidated their power. We're posting our "ecosystem map" for reference in an upcoming discussion. If you receive our blog posts by email, visit carbon-pros.com to view the full-size map. Stay tuned.

See related posts on the smart grid. 

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• Energy efficiency – The smart grid includes digital tools for managing demand. We've not had these before on a widespread basis. We're talking about an array of monitoring and control tools for utilities, residential customers, and commercial consumers. Demand-response tools help shave (or shift) peak electrical loads. With comprehensive data available, the smart grid supports variable pricing, incentives for load shifting, sub-metering, smart appliances, and household energy dashboards. When the right incentives are provided, consumers will reduce their energy use. Reduced energy use means fewer carbon emissions (climate mitigation) and fewer imported fuels such as liquid natural gas (LNG) and the remaining oil-fired plants (energy security).
  
  
• Renewable energy – The smart grid also includes digital tools for managing supply. This allows utilities to make greater use of renewable and distributed energy sources. Because wind and solar power fluctuate unexpectedly, the legacy grid can only accommodate a small share of renewables. Even when wind or solar is available, utilities are required to have spinning reserves based on more stable sources such as coal, nuclear, and natural gas. A coal plant produces CO2 whether we are using the power or not. Greater integration of renewables will radically reduce carbon emissions (climate mitigation). Nuclear will also support renewables, but let's cover that in a different post.
  
  
• Low-carbon Transportation - Biofuels will play a supporting role. Clearly we can grow fuel inside the US. But biofuels can't play a major role because they won't radically reduce carbon emissions. In the long run, electric vehicles (EVs) will play the major role because they allow substitution of imported oil for renewable sources of electricity. EVs and renewables go together. EVs make no sense if they are running on coal power. With the smart grid more renewables will come online and some of that will power our transportation fleet. For example, the smart grid will let utilities delay the full charge of a EV until excess power is available such as after midnight or when the wind is blowing. So the smart grid supports EVs in a major way (energy security + climate mitigation).

Posted by Carbon-Pros at 08:38 PM | Permalink | Comments (1) | TrackBacks (0)

Some of our largest high-tech firms are adopting broad sustainability programs. Here is a list of some of our biggest IT companies along with a link to their latest efforts. If you scan through a few of the reports, you'll see  everything from energy-efficient server farms to low-powered microprocessor chips. Energy Star 5.0 is a hot topic since energy consumption represents around 80% of the carbon footprint of most IT equipment. You'll see high-level applications for carbon accounting and mico-level apps for monitoring electricity in the smart grid. There are hundreds of programs involved in corporate social responsibility and environmental protection. There are major continuing efforts to reduce waste and recycle what's left. There is a lot of talk about innovation driving future product road maps. Innovation is crucial. It is the only way we can move forward in a sustainable way. Every one of these companies needs to improve on their current efforts. That said, it is good to see the industry paying attention to sustainability and taking constructive steps in the right direction.

IBM Sustainable Solutions

http://www.ibm.com/ibm/green/index5.shtml

HP Eco Solutions

http://www.hp.com/hpinfo/globalcitizenship/environment/index.html

Cisco Environment

http://www.cisco.com/web/about/citizenship/environment/

Intel Eco Smart

http://www.intel.com/technology/ecotech/

Microsoft Environment

http://www.microsoft.com/environment/

Dell Earth

http://content.dell.com/us/en/corp/about-dell-earth.aspx

Oracle Environment

http://www.oracle.com/corporate/community/environment/

Accenture Environment

http://www.accenture.com/Global/About_Accenture/Company_Overview/Corporate_Citizenship/Environment/

CAP Gemini Environment

http://www.capgemini.com/about/corporateresponsibility/environment/

SAP Sustainability

http://www.sap.com/solutions/sustainability/

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Global Reporting Initiative provides a set of voluntary guidelines, definitions, indicators, and templates to help standardize sustainability reporting across industries and nations. GRI is applicable to organizations of all types and sizes. You define your own reporting boundary and determine which of the 100+ measures to include. Indicators are divided into core performance and “additional” to indicate their relative applicability. Templates are provided for major industry sectors and smaller enterprises (SMEs). GRI has thousands of members; the framework can seem complicated but it's the closest we have to a global standard. GRI's core performance indicators support TBL (triple-bottom line) reporting. GRI uses six categories because societal impacts are divided into community, product responsibility, labor practices, and human rights. FYI, here is our summary of GRI's top-level performance indicators.

Economic

• Financial performance

• Wages and direct economic impacts

• Indirect economic impacts

Environmental

• Materials

• Energy

• Water

• Biodiversity

• Emissions, effluents, waste

• Products and services

• Transportation

• Fines and sanctions

• Overall

Societal

• Society
  

• Community and civic contributions

• Corruption

• Public policy

• Anti-competitive behavior, fines, and sanctions

• Labor practices

• Employment and labor/management practices

• Health and safety

• Training and education

• Diversity and equal opportunity

• Product Responsibility

• Customer health and safety

• Product and service labeling

• Marketing communication and customer privacy

• Human rights

• Procurement practices

• Non-discrimination and union support

• Child and compulsory labor

• Security practices and indigenous rights

Posted by Carbon-Pros at 07:22 AM | Permalink | TrackBacks (0)

Managing and reporting on the 3Ps of profits, people, and the planet is also called managing the triple-bottom line (TBL). In the age of sustainability, managing your TBL is a critical-success factor. First suggested by John Elkington in 1994, TBL is an expansion of traditional accounting to cover your company's impact on society and the environment. The concept has grown in popularity over the past decade. Andy Savitz' book, The Triple Bottom Line, is an excellent overview and contains many good examples. You can think of TBL as a “balanced scorecard” for sustainability reporting. If you already use a balanced scorecard for internal performance then it can be adapted for sustainability. Measures on the financial side can be the same as your traditional reporting with a few extensions. They include revenue, expenses, profit, taxes paid, jobs created and the like. Measures of social performance vary widely but might cover direct and indirect community impacts, human rights policies, labor practices, charitable donations, matching contributions, employee community service hours, and product responsibility initiatives. Measures of environmental performance vary depending on your industry. In the services sector, environmental measures include carbon-related metrics such as overall footprint, carbon per employee, per customer served, and/or per dollar revenue. Additional measures include overall energy usage, green energy offsets, airline miles traveled, employee commute miles, paper and office materials usage, recycling programs, and carbon offsets purchased. In the industrial sector, additional measures cover smokestack metrics, water quality testing, and waste generation. It's a good idea to measure and report your use of "sustainable alternatives" such as web conferencing instead of airline miles and electronic billing and reporting instead of printing and mailing. All measures can be annualized and compared on a year-over-year basis. They can be benchmarked against global and industry norms. For comprehensive reporting, the GRI provides a set detailed of guidelines and a global site for posting sustainability reports.

Posted by Carbon-Pros at 08:11 AM | Permalink | TrackBacks (0)

US energy security and climate mitigation are overlapping but different issues. Whereas climate mitigation deals with reducing the carbon intensity of the entire US economy, energy security deals with reducing oil imports from the Middle East. We have a variety of paths to reduce carbon emissions but we don't have any near-term options for getting off oil imports. Solutions such as plug-in hybrid electric vehicles (PHEVs), electric vehicles (EVs), and hydrogen fuel cells are too far out into the future. With 250M cars on the road, we can't change the transportation mix fast enough. This is gnarly problem; innovation is badly needed. Recently, Robert Burgelman and Andy Grove asked their students at Stanford to solve the energy security problem (McKinsey). Their premise was that waiting 20 years for PHEVs to dominate the highway was unacceptable. So what else can be done? The class came up with an interesting idea: Spend $10 billion to retrofit part of the existing transportation fleet with hybrid-drive technology. That's right, take conventional cars and trucks and convert them to hybrids. They suggested a goal of retrofitting 1M vehicles within three years (at $10,000 per vehicle). This won't solve the energy security problem but it will accelerate development of the required technologies. With government funding in the lead, private money will quickly follow. If successful, the program would rapidly accelerate domestic battery development. With the battery problem solved at least partially inside US borders, PHEVs and EVs would penetrate the market more rapidly. That in turn will help transform the US auto industry. And the increased electric demand will help accelerate the transformation of public utilities. Put in the context of our energy security problem, $10B is not a lot of money.* As a side-effect, climate mitigation gets a boost by switching transportation to electric, while at the same time switching electric to renewable sources feeding through a smart grid. The power of innovation keeps us optimistic. On the one hand the twin problems of energy security and climate mitigation seem insoluble. But when we put bright minds together and ask them to solve the insolvable; we can generate very interesting solutions.

* Compare this $10B investment with the $100B annual spending by the US military protecting Middle East shipping channels and the $700B we paid Saudi Arabia for oil imports during the two years 2007-08.

Posted by Carbon-Pros at 07:21 AM | Permalink | TrackBacks (0)

A company incorporating sustainability puts emphasis on achieving long-term positive results for all stakeholders. The broader term “stakeholders” is preferred because it includes everyone and everything impacted by your company. This means shareholders AND employees, customers, suppliers, governments, society, and the environment. A focus on sustainability therefore requires measurement and goal-based performance reviews in each of the three dimensions of sustainability: financial, social, and environmental. While some of the impacts on employees, customers, and suppliers are covered in your financial reporting; they only capture part of the story. Measuring impacts on society and the environment typically require new measures to answer questions such as:

• What is your company's impact on the local, regional and national population? Support for  education? Charitable contributions? Civic partnerships? Community service?
  
• What is your impact on the environment including air quality, water quality, land use, and waste production?
• Does your company comply with all applicable labor and environmental laws? in what areas do you exceed legal and regulatory standards?
  
• What are your weakest areas of social and environmental performance?
  
• What programs are in place for continuous improvement? What are your specific improvement goals?
  

It's crucial to recognize that sustainability does not ignore profitability. An unprofitable company is unsustainable. But a profitable company that mistreats citizens and pollutes the atmosphere won't be profitable for long. Managing and reporting on the 3Ps of profits, people, and the planet is also called managing your triple-bottom line (TBL). In the age of sustainability, managing your TBL is a critical-success factor.

Posted by Carbon-Pros at 08:12 AM | Permalink | TrackBacks (0)

Business sustainability can be defined as “achieving long-term financial success while measurably improving both society and the environment.” Common to all definitions of sustainability is measuring company results in three crucial areas: financial, societal, and environmental. These are the three pillars of sustainability. To grow sustainably, a company must replenish its sources of capital and remedy its impacts on society and the environment. A sustainable business does not run out of capital. Nor does it harm the communities and the environment in which it operates. By operating within the within the carrying capacity of its supporting systems (financial, societal, and environmental), it can operate indefinitely. Speaking more generally, the World Commission on Environment and Development defines sustainability as: "[meeting] the needs of the present without compromising the ability of future generations to meet their own needs.” (Wiki) Business sustainability comes up more and more in boardrooms and executive suites around the world. When directors and executives talk about sustainability, they reach beyond traditional financial metrics to measure impacts on all stakeholders. Sustainability does not ignore profitability. An unprofitable company is unsustainable. If sustainability consultants seem to focus primarily on the societal and environmental issues, that's because they are the less understood elements we need to integrate into management thought and action.

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We are fortunate to work in Colorado in a community that supports carbon reduction through energy efficiency, renewable energy, and smart grid technology. Yesterday, Rebecca Johnson from the University of Colorado, and Craig Eicher from Xcel Energy gave us an update on the the roll-out of the smart grid in Boulder. Xcel Energy, the Minneapolis-based, investor-owned utility, has been deploying smart grid infrastructure since April 2008. To date, Xcel has laid more than 200 miles of fiber-optic cable. They are ready to deploy broadband-over-power-line (BPL) communications to 40,000 households. Xcel has installed 10,000 devices on the network with real-time monitoring and are ramping up for broad deployment in 2010. Xcel and its partners will use this pilot project as a test-bed to experiment with various demand-response tools including variable pricing, incentives for load shifting, sub-metering, smart appliances, and household energy dashboards. No one really knows how consumers will change their behavior when given real-time information about their energy consumption and costs. The few studies with real data have found that consumers reduce energy use an average of 10% just by having information readily available. This may be an early-adopter effect that won't prove true for the mainstream, but most people like to save money so we will likely see energy savings just from the information feed. More important, smart grid technologies give the utility flexibility to more pro-actively manage both supply and demand. This supports the integration of renewable and distributed energy sources since wind and solar production can fluctuate unexpectedly. Integration of renewables will help reduce carbon emissions. Utilities are required to have ‘spinning’ reserve capacity of approximately 7% of anticipated load. Spinning reserve is generation that is synchronized to the system and is available to come online within minutes should demand spike, equipment fail, or wind power decrease unexpectedly. In other words, they have a regulatory requirement to overbuild. As customers, we are required to pay for that spare capacity just so we don't run out of power for a few minutes on a hot afternoon. The demand-side management tools on the smart grid give Xcel the ability to reduce its peak load. They could shut off a percentage of central air conditioners for five minutes at a time, or they could temporarily lower the temperature setting on electric hot water heaters on a hot afternoon, or they could delay the full charge of a plug-in hybrid until after midnight. This won't be an invasion of privacy. It will apply to customers who give permission and join the program. The smart grid represents the future of electricity. There are hundreds of unknowns. Therein lies the importance of city-wide pilots such the Boulder project. Soon, Xcel and its partners will be able to test the thousands of interconnections required and experiment with a wide range of technologies and incentive packages. The lessons learned will be invaluable for mass-deployment. The federal stimulus package set aside $4.5 billion for smart grid projects. That's a lot of money, but we have even more at stake considering the twin goals of energy security and carbon mitigation. Smart grid projects will pay for themselves over time. The US DOE estimates that modernizing the national electrical grid could save between 46 and 117 billion dollars over the next 20 years. It's good to see us moving on this important front.

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In the renewable energy industry, solar photovoltaic (PV) and wind get most of the press, and rightly so. Solar PV is best known as a small-scale distributed power source for use on rooftops. For example, we have a 5.25KW array on our roof and through net metering it generates about 90% of our electricity. Wind is best known as a utility-scale centralized power source. Our local utility, Xcel Energy, owns or purchases 3 GW of wind capacity. As of YE2008, the US leads the world with more than 25 GW of installed wind generators. Wind is cheap enough to be competitive with natural gas, whereas solar PV is still too pricey for mainstream utilities (Hawaii excepted). Utility-scale wind is estimated to cost $0.056/kWh, compared with coal and gas at $0.052/kWh (Wiki). Solar PV averages $0.25/kWh but costs are falling rapidly. At utility-scale, Concentrated Solar Power (CSP) is cheaper at $0.10-.15/kWh, but still too expensive for widespread use. Solar economics are expected to reach parity with wind, gas, and coal by 2015 to 2020 (Wiki). Long-term cost projections heavily favor wind and solar over fossil fuels and other renewable sources. For starters, they are abundant sources of energy available everywhere on the planet. Global development of solar and wind will go a long ways toward stabilizing national energy security interests. Solar and wind have the advantage of zero “fuel costs” during their operating life whereas the price of coal and gas is subject to volatility and rising over the long-term. On the down side, the majority of costs for renewables are paid up front when the plant is built. The global credit crunch has slowed but not stopped the growth of roof-top solar and the construction of new wind farms. Another obstacle is the lack of cost-effective storage solutions to smooth out power production. Wind turbines can spike from zero to several hundred megawatts in fifteen minutes. That's not helpful when it happens when demand is going down in the evening. Major advantages will accrue to solar and wind when the US market sets a price for carbon. This is likely in 2010 driven by cap-and-trade legislation and agreements coming out of the Copenhagen Climate Conference. With a market price for carbon, coal plants will see their long-term operating costs go up; as will natural gas plants. While utility-scale CSP has promise over the long-run, solar PV is viable in many markets today. It is a great choice for distributed power solutions in sunny regions. With utilities embracing centralized wind and home and business owners embracing distributed solar, these two technologies are increasingly important to our energy and climate security.

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Most of us think of solar thermal as a renewable source of domestic hot water. A lesser known application of solar thermal is for utility-scale power plants. The technology is called Concentrated Solar Power (CSP). Heat from the sun is concentrated by mirrors or lenses to obtain higher temperatures than can be achieved through flat-plat collectors. Concentration reduces the plant's environmental and economic footprint per kWh generated. At utility scale, CSP has major advantages over solar photovoltaic (PV). For starters, the costs are lower ($0.10-.15/kWh) compared with solar PV ($0.25/kWh). Plant performance is also better matched to a utility’s electrical load. Like PV, CSP works best when outside temperatures are hottest and demand is greatest. Better than PV, the heat can be stored and used for generation in the evening when demand is still high but the sun is no longer available. This reduces intermittency, one of the drawbacks of renewable energy sources. Perhaps most important, a CSP plant uses a turbine to generate electricity from heat. When the sun is not shining, natural-gas boilers can be used to heat the fluid and spin the turbine. This combination of CSP supplemented with natural gas promises to be as reliable as a standard fossil-fuel power plant but with minimal carbon emissions. (Economist). Several technologies are in operation today. The two most common designs are parabolic troughs and power towers (Wiki). Parabolic troughs use a curved trough to reflect solar radiation onto a pipe containing the working fluid. Power towers use mirrors to focus the sun's energy on a central tower giving it the advantage of higher temperature and more efficient generation and storage. CSP technology is advancing rapidly. NREL estimates that by 2020 the cost of producing electricity from CSP will drop to $0.054-.0621/kWh putting it on par with wind. Capacity factors will range from 50% to 70%, much better than solar PV and wind.

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As a business owner and executive, you should view climate change primarily in business terms. Whether you believe the science or not is irrelevant. What is relevant is that markets are changing, and changing rapidly. The legal and regulatory environment has already changed in most developed countries, and here in the US it will change rapidly over the next two years. These changes are the first wave of a long term trend. One the certainties we face is the creation of a market and/or regulatory price for carbon. Carbon pricing affects the cost of energy and will have ripple effects up and down the value chain. This has strategic implications such as affecting your operational costs, your product investment decisions, and the value of your assets. Mid-2009, we are operating in a recessionary cycle that has temporarily reduced the cost of oil and many energy-intensive products. Virtually all energy experts say that oil prices will rise steeply once the economy starts to grow. Adding the incremental cost of carbon to the rising price of energy will steepen the cost curve and magnify the impact on business. In the same time frame, increasingly disruptive weather patterns heighten the need to review operational security. And not just for companies with facilities on the seacoast. Virtually all companies can benefit from reviewing their insurance coverage, emergency back-up power, data storage and recovery procedures, and business continuity plan. If you are a climate skeptic, fine. But don't base your business decisions solely on personal views. Otherwise, you may not be fulfilling your fiduciary responsibly to stakeholders. If you are running a public company, Sarbanes-Oxley section 302 requires disclosure of all material risks. Does climate change pose a material risk? Maybe not. But the risks vary by company, by industry, and by geographic location. More and more businesses think climate change represents a material risk and are making carbon- and climate-related disclosures. Understanding the risks requires a systematic assessment of your company's exposure to carbon pricing and to disruptive weather patterns. A high-level assessment is not as difficult as it sounds; the 80-20 rule applies. It does, however, require management time and attention. Waiting to assess your exposure is not recommended. Conduct an assessment, then you'll have a sound basis for making business decisions about climate change. An excellent primer is Climate Change: What's your business strategy?

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Business sustainability is being discussed more often in boardrooms and executive suites around the world. When executives talk about sustainability, they talk about going beyond financial metrics to measure company impacts on all stakeholders, not just shareholders. Shareholders (owners) are rightly focused on financial metrics. All too often, however, they are biased towards short-term metrics, e.g. the rolling 30-day average share price. Shareholder focus on the short-term values of public companies can give private companies the advantage of patience and persistence in achieving their strategic vision. In both the public and private sectors, it takes a talented CEO to balance short- and long-term financial objectives. A company incorporating sustainability puts considerable emphasis on achieving long term financial objectives but also puts emphasis on their impact on all stakeholders. “Stakeholders” include everyone and everything impacted by the company. This means employees, suppliers, customers, society, and the environment. A focus on business sustainability therefore requires measurement and goal-based performance reviews in all these areas. While the impacts on employees, suppliers, and customers may fit conveniently within the sphere of financial metrics; society and the environment typically require a new set of metrics. What is your company's impact on the local, regional and national population? What is your impact on the environment including air quality, water quality, land use, and waste production? Does your company comply with all applicable labor and environmental laws? We hope so. But sustainability goes beyond compliance to evaluate your company's impact on people and the planet. Sustainability does not ignore profitability. It covers profits, people, and the planet. An unprofitable company is unsustainable. But a profitable company that mistreats citizens and pollutes the atmosphere won't be profitable for long. Managing and reporting on the 3Ps of profits, people, and the planet is also called managing the triple-bottom line (TBL). In the age of sustainability, managing your TBL will be a critical-success factor in all business endeavors.

Posted by Carbon-Pros at 07:32 AM | Permalink | TrackBacks (0)

As business owners and managers, we should include energy modeling in our toolbox for making cost-effective sustainability decisions. Yesterday I attended a workshop on energy modeling organized by BGBG and presented by Roger Hedrick of Architectural Energy Corporation. The topic might put some people to sleep, but energy modeling is an increasingly important business tool. Essentially, an “energy model” takes the design of a building through a 24x7 computer simulation of energy loads, demands, and performance. It gives us a way to predict the relative effects of different design decisions on building energy performance. Essentially it supports “what-if” analyses by owners, managers, and designers. This is crucial in new designs and major renovations. For example, an energy model lets you understand the trade-offs of investing incremental funds in new windows vs. wall insulation vs. exterior green-wall shading. The need for energy modeling is no different than GM's need to put the Chevy Volt through wind-tunnel testing to minimize its drag coefficient. The need for performance simulation is increasing across all areas of business decision making. As the software and underlying data improve, you will see energy modeling employed across a broad range of applications including all new construction, all major renovations, and in the operation and maintenance of large facilities. In different forms, energy modeling will also show up in transportation management and supply chain management.

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Running a tight ship (think business efficiency) has paid off in the past and it will pay off even more when carbon is factored into your business results. Carbon, in the form of greenhouse gases, costs all businesses money. But not as a line-item in the accounting system. Up until now, carbon has gone unaccounted for by most businesses. It's invisible, it's not taxed, and yet comes as a byproduct of many business activities. With the EPA officially listing carbon emissions as a “form of pollution endangering public health,” we need to start thinking of carbon in business terms. Currently, the cost of carbon is an intangible. Depending on your industry, carbon emissions may affect your brand-value (especially in the consumer segment), customer loyalty (repeat sales), employee engagement (productivity), retention (cost of HR), supply chain compliance (long-term sales) and risk exposure. FASB is developing accounting guidelines for long-term business risks such as those related to carbon emissions and climate change but they are a work-in-progress. In the future, carbon caps and taxes will be priced into the cost of energy, transportation, and other carbon-intensive business purchases. These added costs will show up in our accounting systems. Fortunately, as we tighten budgets for these line-items, the cost of carbon AND our overall costs will go down.

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In measuring carbon emissions, we typically begin by defining a relevant scope, boundary, and base year. Since business value chains are complex and overlapping, it can be difficult to draw the lines. For companies covered under federal legislation, the law will define the scope. For others, the scope will subject to management judgment given the objectives of the carbon inventory. We generally start by including all direct emissions by the business and any related organizations it controls. Direct emissions include all internal operations but exclude all emissions from suppliers and customers. While direct emissions give you a starting point, they often fail to provide a fair assessment of the businesses' impact on carbon released into the atmosphere. In the old days of vertical integration where all functions were performed internally, counting direct emissions would have been sufficient. In the current era built around specialization and core-competencies, many formerly core activities are now accomplished through suppliers, thus we typically count indirect emissions. For example, if a company uses computers, paper, and toner in its operations, the carbon footprint of these materials is typically counted even though provided by outside suppliers. If the company retains a janitorial service that uses toxic cleaners with high levels of offgassing, these “emissions” should be counted even though provided by your supply chain. In the carbon inventory for a service business, we typically count the following direct and indirect sources:

• Energy services: heating, cooling, electricity, gas, propane, oil, etc.
• Transport fleet: company cars, trucks, etc.
• Business travel: auto mileage, airline miles, rail miles, etc.
• Products/services consumed: office supplies, furniture, janitorial, etc.
• Fugitive emissions from wastewater, trash, and landfill.
• Employee commute method, distance, and frequency.
• With additional components from the supply chain depending on the situation.

Once sources are identified and data are collected, we enter the details into a tracking system, calculate carbon emissions, and privately report the results. The fun begins with benchmarking, analysis, and making ongoing carbon reductions. This helps the environment, saves you money, and strengthens your position in the marketplace.

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The concentration of carbon dioxide in the atmosphere has always “mattered” to planet Earth. And the human release of CO2 has mattered since the dawn of the industrial revolution. Unfortunately, nobody realized until recently that CO2 levels were getting out of control. Over the past decade, the science of global warming has become more established and better understood. Most scientists now agree that human activities are the root cause of skyrocketing levels of atmospheric carbon dioxide. More than a decade ago, the big industrialists (e.g. 3M, Dow, DuPont, and others) began reducing their carbon footprint when “air pollution” was federally monitored and eventually capped. GHG emissions were reduced as a byproduct of increased production efficiencies and decreased waste. Big companies found that becoming more efficient (releasing fewer pollutants and fewer GHGs) actually saved them $100s of millions of dollars. Today, the convergence of several factors has heightened awareness of carbon: 1) developed nations are feeling global pressure to take coordinated action, 2) governments and businesses are facing growing public opinion that they must take action soon, 3) European businesses began facing new carbon caps as of 2008, and 4) US businesses will likely see federal carbon regulation as early as 2009. In a cap and trade system, some businesses will be forced to live within a carbon cap, with the cap declining over time. Even if they are not subject to the cap, businesses within the supply chain of a capped company may be forced to make CO2 reductions. Other businesses are moving ahead of the market by cutting their carbon footprint before their hand is forced by the government or a major customer. They want the flexibility to to make cost-effective carbon reductions on their own terms. Sill other businesses see carbon as a unknown business risk and are measuring their footprint to assess that risk. And finally some businesses are measuring and reducing their footprint because they believe it's the right thing to do.

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