The market
The global smart grid technology market is expected to exceed $110 billion in 2011 and is projected to continue growing to $171 billion by 2014. The strongest growth is anticipated in the smart sensor market, which is expected to more than double, from $37 billion to $85 billion between 2009 and 2014. Smart grid hardware and software are also expected to expand rapidly over the same period, from $15 billion to $40 billion, while integrated communication systems will nearly triple, from $10 billion to $27 billion. However, the highest compound annual growth rate is projected for smart metering hardware and software, rising from a low $6.4 billion to just under $20 billion five years later. The US market was the largest in the world in 2010, valued at $21.4 billion, and is projected to reach $43 billion by 2014. However, by then, it will be eclipsed by the Chinese market, expected to reach $61.4 billion. Smart metering transmits and organizes data waves collected by meters. This is driving the growth of companies like General Electric, Siemens, IBM, Itron, and Landis+Gyr, which supply equipment for installation in millions of homes. Smart grid providers like Silver Spring Networks and home energy monitoring companies such as Tendril, OpenPeak, and Control4 are vying for dominance. However, behind the dozens of startups are the pillars of the internet boom, like Intel and Cisco Systems, which provide additional revenue for utilities that are transitioning from energy and water providers to full-service companies.
Innovation
Most of the utilities deployed in industrialized countries were built between 60 and 80 years ago. They were designed to supply as much power, water, and gas as customers could possibly consume, from a massive fossil fuel plant. Concerns about climate change and renewable energy mandates are forcing utilities to upgrade their infrastructure. To accommodate renewable energy sources on an intermittent basis, precise measurement, monitoring, control, analysis, and correction are necessary. Innovations have therefore focused on mobile communications, IP standards, data processing, and mining. Meters and the grid are connected, communicating, and becoming smarter, while the average American home has 24 consumer electronics, compared to 3 in 1980. Electronics now account for 31% of household energy consumption, and satellite and cable TV receivers now use more energy than a family-sized refrigerator. The time has come to move beyond smart meters, beyond aggregated data. Dan Yates, a computer science graduate from Harvard University, began his entrepreneurial career as the founder of Edusoft, an educational software company that assesses performance. After selling the company, he embarked on a childhood dream, driving with his wife from the Arctic coast of Alaska to the southern tip of South America. During the journey, Dan became acutely aware of environmental degradation and decided to dedicate his professional life to corporate sustainability. He realized that energy consumption was a major culprit and committed himself to leveraging his computer skills to engage millions of people who are unaware of their energy consumption. In 2007, he founded Opower, starting with a rented office in San Francisco. In 2011, it was a finalist for the Ernst & Young Entrepreneur of the Year award and already has more than 200 employees – and that number continues to grow.
The first cash flow
Dan and his team invented a new platform that allows utility companies to interact with their customers—from the quality of the information provided to how it's presented and distributed, helping people use energy efficiently, save money, and make energy consumption personally relevant. It starts with a home energy report that reviews how much energy the home uses, when, and at what price. Today, Opower provides reports to more than 3 million homes, putting people on the path to saving hundreds of millions of dollars. Utility companies have put a lot of information on rates—only to realize that their customers barely browse their websites. Dan and his colleagues are transforming the utility website into highly personalized and engaging energy management tools. These include alerts indicating consumption spikes and immediate advice on how to avoid them. Because Dan doesn't believe in overwhelming people with data and maps, he filed a patent application to convert this flood of information into simple, practical, and personalized advice. Opower doesn't produce electricity; it works with what's available and makes the grid more efficient, thus applying one of the fundamental principles of the Blue Economy. By working with over 50 utility companies, Opower has saved as much energy in just a few years as is produced by 40% of the US solar industry, without compromising quality of life.
The opportunity
A study conducted by Oxford University confirmed that when consumers have real-time information about their electricity consumption, they can take action and reduce their consumption by 10% without changing anything in their current system. A Chilean team led by electrical engineers Gabriel Antonio Villalón Sepúlveda and Robinson Eduardo Gálvez Herrera has gone a step further than Opower. Their smart grid provides real-time electricity consumption data and displays real-time performance data, both in kWh consumed and cost for each electrical appliance switched on in the home. Their software compares actual consumption with theoretical performance, detecting underperformance and overconsumption. It also checks whether the equipment is actually needed at that particular time and whether standby mode would be better converted to a complete shutdown using a remote control. If, on the other hand, the data indicates that certain machines need to be switched on, the system anticipates their activation. The entire management system begins with the existing installation, evolving into optimization that includes the instant calculation of carbon emission savings, based on the energy source for the electricity provider. This team, based in Santiago, Chile, then created the eKeeper, and each customer is equipped with a portable screen, the size of a GPS, which provides all the information and allows corrective actions to be taken via any mobile phone or computer interface. These Opower and eKeeper experiments will soon be complemented by smart grids that will regulate energy production from multiple renewable energy sources generated at home or in the office, and not just by the utility company. The next smart grid combines home energy production and consumption to create true sustainability, controlling all uses as they are today, but complementing them with local electricity supply management. This includes energy from building compression resistance (case 59), energy recovery from water heaters (case 60), energy generated by water flow (case 42), thin-film solar cells in windows, wind vibrations (case 12), biogas from wastewater and organic solid waste (case 51), and black wall heat exchange (case 14). Since none of these energy sources provides power all day, or enough to meet all needs on its own, a smart grid is necessary to manage the supply of these relatively small sources of electricity. The smart grid of the future will not only monitor individual consumption and costs, but will also regulate individual electricity supply from more than a dozen sources to guarantee electricity availability at all times. This is one of the key features of the Blue Economy Center, which will integrate not only the energy sources described, but also the next generation of smart grids.
