In 2011, we reached two milestones, where (a) the Earth’s population topped 7 billion, and (b) over 50% of us are concentrated in densely populated, urban areas. With an expected net increase to 9 billion worldwide by 2050, the expanding middle class consumer group will likely steepen this urbanization trend.
Not too coincidentally, McKinsey Global Institute’s 2011 report titled “Resource Revolution“, which discusses ways to meet our world’s energy, materials, food and water needs, ranks 15 key opportunity areas, identifying “building energy efficiency” as the single biggest area of potential opportunity. In short, fixing inefficient cities is a big potential win if we are to stem our planet’s fever and support our growing population. McKinsey, too, cited the urbanization trend as an input.
In case you were wondering, the next 2 big opportunity areas identified by the McKinsey report are increasing agriculture yields and reducing food waste. Taken together, these 3 areas comprise 75% of the total resource productivity opportunity identified in the McKinsey report.
Architecture, Engineering and Construction (AEC) Firms Respond
The trends cited above have been closely watched by the “AEC” industries, and the response is encouraging. You need only follow the industry groups to see how LEED (Leadership in Energy and Environmental Design) construction is front and center, focused appropriately on energy efficiency and “zero carbon” construction. Of course, most of the LEED construction announcements concern new buildings, since that’s easier and more sexy that retrofitting existing buildings. Still, if McKinsey et. al. are on target, fixing existing buildings presents the rest of the proverbial iceberg of this top-ranked resource opportunity. Retrofitting existing buildings is a must; failure is not an option. And it’s impractical to rip and replace entire cities wholesale, or build new ones and abandon the old.
One Quick Win: Telecom / Datacom energy
You could start on the subject of building energy efficiency by discussing better insulation, better windows, better HVAC, better building materials, or solar panels, but why not start with the fastest growing, grandma-sized wedge of the US energy consumption pie chart: data centers and their customers? Google, Amazon, and their midstream kin are all working hard at improving their efficiency, including funding solar arrays to power their server farms. Hooray for them! Meanwhile, what about all those seething, energy-hogging, city office buildings and multi-tenant dwellings?
Here’s a ray of hope. While attending a recent BuildBoston Expo to visit some customers, I came across a curious sight: a sole telecom outfitter named CommLink Services, whose show booth displayed a sort of before/after scenario, in which a standard office building’s data communications “hot closet” stood humming, blinking and throwing off gobs of BTUs of heat and hundreds of pounds of blue Ethernet cabling. Alongside that familiar-looking steel closet rack with all its blinking metallic pizza boxes, you could see a contrasting suitcase-sized rugged plastic box that mounts easily on a wall, with fiber optic cables emanating from it- sleek, quiet, cool and small. Impressive.
In a typical office building, you can expect at least one “hot closet” for each tenant business, and additional hot closets for each 100 datacom users (PCs, phones, etc.) per tenant business. Add more closets every 250 linear blue-cable feet to house the repeaters and other equipment to refresh the data signals that decay over long trips via copper lines, and you will have consumed significant heating, cooling, electricity, carbon, system weight, building reinforcement, closet space, and ceiling crawl space – all to feed our insatiable need for datacom speed. Look at any office park from above, and you can plainly see all the heavy, energy-hogging HVAC equipment perched atop – half of it devoted to cooling your datacom infrastructure. It’s a perverse problem, hiding in plain sight. When I discussed this in a classroom of post-milennials, one little girl summed it up: “Isn’t it kind of dumb - - to heat a closet, and then cool it?” In fairness, we’ve only recently developed the optical componentry to solve it.
Fiber to the end-user Node (FTTN)
If you have at least 100 users and nodes in your data network, and you value data security, the Passive Optical Network option can offer improved datacom performance, while consuming far fewer resources and saving significant dollars. This is a quick win, hiding in plain sight. If you are a CIO, a multi-tenant commercial property owner, a building architect, or a telecom / datacom firm, this single “resource revolution” opportunity should have you drooling.
Hats off to Steve Welch and the forward-thinking folks at CommLink Services Corporation for taking it to the streets at BuildBoston and showing people the sustainability, energy efficiency, and bottom line advantages of the Passive Optical LAN (POLAN) option. They’ve been in the datacom game for over 25 years, with some significant large and small scale projects in the portfolio, and Steve says they have been inking significant VAR and distributor partnerships with all the major equipment firms who have come to recognize CommLink’s reliability and expertise. My take: CommLink Services knows they have been quietly successful too long. They are a mouse about to roar. Give them (or me) a shout!
- WESCO, a Fortune 500 Company, Sees Serious Growth Opportunities in Energy Efficiency (switchboard.nrdc.org)
- Three Jokers in the Energy Deck (cleantechies.com)
- Resource Revolution: Meeting the world’s energy, food and water needs (McKinsey)
- Passive Optical LAN: the Choice for Building Architects (Motorola)
If you were fortunate to attend the December 7, 2011 North Shore Technology Council’s Sustainability Forum, you saw a fascinating presentation by EnergySage, a very cool new online portal for learning, evaluating and pricing alt-energy for your business or domicile.
As a homeowner and parent of two young adult sons, one currently a Computer Science major and the other a recent MS Physics grad, I have become accustomed to healthy skepticism. When we discuss business, economics, energy, dating, etc., they continually ask: whose axe is being ground? Whose ox is being gored? Their “ax/ox” questions keep me on my toes. I am thus well trained. And I brought that to the meeting. Having been involved in some successful startups, I think that thinking like an investor is good discipline.
That said, I thought I’d pass along some of my reactions from today’s meeting.
First off, here’s what I liked.
I liked the clarity with which today’s presenter , founder Vikram Aggarwal, described alt energy as a new asset class opportunity for property owners. The case for heightening awareness, convincing homeowners of alt energy’s sound financial sense, and simplifying the purchase process, all became very clear. EnergySage is to be applauded for their superb effort at meeting a very complex set of needs for a broad audience. Which got me thinking about…
Having read McKinsey’s November 2011 report on resource opportunities and Columbia University’s Center for Research on Environmental Decisions (CRED), and blogged about it here, and having faced skeptical investors, I felt the ox/ax factors weighing in. Are all salient market aspects thoroughly vetted? How viable is the market opportunity? Who are we selling to? Who are we leaving out? Which got me thinking about…
Macro Trends and Opportunities in Housing & Tech
So, what about macro trends? For starters, it’s not just about life in the ‘burbs. Household solar may be disrupted by other trends which weigh more heavily in the global energy balance. Of course, any existing structures could benefit from energy efficiency improvements, but is that opportunity window expanding, shrinking, or stable? Consider:
- New construction trends are persistently relatively flat, as mortgagors default and young adults either boomerang home or flock to cities and jobs.
- By 2030, there will be 3 billion (with a B) more middle-class consumers.
- Resource and commodity competition will intensify nearly 150%, further inflating prices – especially for land, water and steel.
- The World Economic Forum reports that we just passed the tipping point this year, where 50% of all the earth is urbanized, and that trend is accelerating.
Taken together, these signals suggest that the iconic “American Dream” – at least the home ownership part – may have just ended, simply because today’s young adults understandably shun the extravagance of heating, cooling and lighting 2,000 square feet of detached homestead for 2 to 4 people. They are smart, mobile and mobilized, flocking to cities out of pure economic sense. Our cities are becoming smarter and, frankly, fun.
The real energy benefits, then, are in retrofitting city building envelopes, improving the alternative energy buildouts in urban centers, replacing copper with passive optical fiber and antennae, etc. Those are the big wins. Fund that, Congress. On second thought…
Your Own Private Stonehenge?
If grid solar eclipses residential solar, years from now archaeologists may well wonder what we were thinking. Solar panels on a fundamentally inefficient detached suburban household roof are, by definition, an isolated solution. House rooftop solar serves mainly the narrow self interests of the residential bill-payer. It could be made more broadly cost effective if it is subsidized (a false economy), but it does little to solve our seething, problematic, collectively used fossil fuel burning national electric energy grids. In other words, unless your own household math is too compelling to ignore (try it, though!), putting solar panels on a house could be like patching a pothole in a dead end street while the main arteries crumble. To fix those arteries (the Grid), you need solar arrays by the acre. Fortunately, they are being built. Brownfields, office parks…all the top siting ideas are either on the table, in the works, or already quietly online (maybe too quiet!). Spot-mark them on Google Earth, and you’ll be looking at a virtual pincushion. The question lingers: Will Grid solar “eclipse” the market for residential? Who has that answer? Holla back!
A Plug for Organic Solar
And let’s not forget the aesthetically attractive alternatives, like oh, say… organic solar paint. That’s right, paint. Using green chemistry to blend organic photovoltaic compounds into just about any outer coating, the actual shingles on our roofs could be the circuit someday soon. Recent efficiency leaps are bringing it closer to everyday practicality. For details, visit the local Nobel laureates at Konarka.
Entering the Grid Parity Zone
Fortunately, we are nearing the solar gid parity “zone”, where by mid-decade solar energy will be broadly cheaper than fossil grid energy. As solar technology improves, though, it improves the math for both residential solar panel installations and for grid-feeding solar array “farms”. So, again, the question is: will grid solar obviate residential solar?
Currently, only about 4 world regions (Spain, Japan, California, Mexico) are in that Solar Grid Parity Zone, principally because of the cost per KwH of grid-based power. Above the Mason/Dixon line, geothermal and wind power seem generally viable (check it out) – and both technologies continue to improve.
Last Word on Real Estate
NSTC meeting attendees heard an anecdote about how new homes with alt energy installations sell faster and at higher prices than other homes in the same development tract. Not to be too much of a wet blanket here, but note, however, that this is a statistically small, anecdotal sample – uplifting and instructive, yes, but still. Okay, so how’s that macro home sales market doing? Oh, yeah. Even those new alt energy homes are selling at deflated prices in this market, whose inventory is projected to take 20 years to churn through, by which time many of us will have moved on, demographically speaking.
Buyers want low prices. I wish this weren’t true but, as altruistically and fatalistically compelling as the “green” argument may be, it’s about cash. The good folks at Ogilvy Earth, who on behalf of the world’s biggest consumer product companies exhaustively studied how to communicate effectively about “green” products, have concluded that the “green” message fails…but they offer solutions, too, so study the learnings from Ogilvy and from Columbia University. You’ll know whether you need that info if you find yourself struggling to convince the owner of a 401(k) (make that 2o1(k)) about energy as an asset class. Where will that money come from? Speaking on behalf of today’s typical household, at a time when the average household disposable income after essentials has declined to under $10K, an up-front investment upwards of $3K in energy efficiency is about as likely as a new pool. To paraphrase the J. Geils Band’s frontman Peter Wolf: ”First I look at the purse”. Alt energy as a new asset class looks attractive, but to the skeptical, indebted homeowner, it is like those 401(k) assets that were once deemed rock solid. Boing.
Getting the Flywheels Turning
Improved resources utilization, price-driven markets, and other macro trends will help us learn how to do the greatest good for the greatest number of people. Keeping the earth’s temperature increase under 2 degrees Celsius, improving infrastructure, and funding basic research into solutions that show the greatest promise, are just 3 flywheels that need to turn faster. Fortunately, the pace of innovation is good. Even I, the surly adopter, am encouraged.
Anything else is like patching a pothole on a dead end street: nice, but not as important and possibly irrelevant.
But, in the end, I am speaking in generalities. Your own residential results may vary, so visit the good folks at Energy Sage. You just may be in for a pleasant shock. I hope so!
Center for Research on Environmental Decisions (CRED) (Columbia University)
Solar Grid Parity: Are You in the Zone? (SocialClimate)
Environmentally Benign Products: A Green Chemistry Mentor Speaks (SocialClimate)
According to recent scientific and economic reports, Solar (a.k.a. Photovoltaic, or “light-electricity”) power is nearing a point at which it is equal or less in cost than power supplied by the world’s electric grids. Surprised?
Someday soon, your utility bill for power from coal-fired power plant operators could be higher than the cost of solar power, and your pocketbook will say: “Go solar”. Or, your utility will just handle it for you. Or both. Depending on where you live, that tipping point has already come to pass. For others of us it remains impractical, and geothermal looks more viable. What’s it like where you live? Find out in this article.
At a recent meeting of the North Shore Technology Council, Dr. Paul Sullivan, Ph.D., a Vice President at Varian Semiconductor Equipment Associates, presented some compelling evidence that solar grid parity is imminent for more and more world regions. Here are some highlights of his well-researched, thoroughly informative talk.
The Practicalities of Solar
What factors make Solar attractive? What drawbacks prevent its widespread adoption? Solar power is attractive because of factors like:
- Lifetime value – current PV installations have surpassed their expected useful life of 30 years
- Passive – once installed, solar requires minimal costly human intervention
- Modular – solar power systems can be built to suit a broad variety of situations
- Fuel-efficient – solar requires no fossil fuel or water to operate
- Environmentally low-impact – except for the solar cell chips that use expensive silicon
- Low noise – no machinery means no noise pollution
- Mechanically efficient – this improves on solar’s innate low efficiency and makes it viable
- No emissions – solar power generation is essentially pollution-free
Solar is not without challenges, though, which chiefly include:
- Light dependency – the amount of sunlight that reaches the PV installation, affected by latitude, weather, climate, geography, topography, vegetation, etc.
- Storage – off-grid and night-time power require some sort of power storage
- Startup cost – subsidies are necessary these days to make payoff a near term reality; they exist in the form of cheap loans, tax breaks, and feed-in tariffs (FITs)
- Space & site – a large surface is needed to produce useful power; site factors like angles and shading also affect efficiency. Large solar farms are more efficient than rooftop installations
- Conversion loss – converting Solar from Direct Current (DC) to AC to make it useful for everyday consumption is a key cause of solar power leakage, loss and inefficiency
Entering the Grid Parity Zone
All the pro and con factors described above, fed into calculations, indicate that certain world regions are already in the Grid Parity “zone”, where the cost of Solar power is cheaper than electric grid power, in places like California, Hawaii, Spain and Japan. Wikipedia defines Grid Parity as the generated cost of power using lowest-cost alternatives versus the currently dominant electic power grid. In these strict financial terms, those world regions have arrived at Grid Parity.
Three Big Financial Factors
Currently, the initial startup cost of residential solar power installation is dauntingly high for most private citizens. In recent years, disposable income has hovered at around the $10,000 USD mark. It would be tough to convince any family to forgo vacation, entertainment, leisure and other expenses and sink it all into solar panels – no matter how sensible it may be in the long term. A fortunate ray of hope on the affordability front is that as PV becomes more efficient and cost-effective, certain economies of scale kick in and accelerate its affordability. The three largest looming factors are:
Solar Cell Efficiency. The efficiency of the performance of each individual solar cell is the single biggest factor; it affects the rest of the value chain. Advancements in solar cell R&D continue to improve the efficiency factor.
Thinner Wafers – the “chips” upon which solar cells are implanted are made of expensive Silicon. Reducing silicon consumption reduces chip cost.
Experience Curve – increasing production results in economies of scale. As a rule, each doubling of cumulative sold PV power installations reduces prices by over 20%.
From a global perspective, there is no true market driven dynamic for the solar power industry. Fragmentation is the norm, driven by subsidies and the whims of politics. A viable solar power industry with true grid parity requires solar cells whose cost per megawatt hour eclipses traditional energy sources. Thanks to recent technology and economic developments, we are nearing a point in the current decade where solar power is becoming a more universally practical and affordable power generation alternative.
Welcome to the zone of Universal Grid Parity. Don’t you just love a sunny day?
Buongiorno, solar parity! (SmarterPlanet)
Group Purchasing Gets Solar to Grid Parity in Los Angeles (ThinkProgress)
Awesome resource links at the end!
If changing human behavior were easy, we’d have a carbon neutral global society, body mass indexes within normal range, and financial resilience. We’d have wealth, good looks and a sustainable earth.
The answers are many but, for starters, let’s look at the success factors behind change and how they impact our striving for personal, career, company, societal and Sustainability goals. I’m speaking of the concept of Feedback Loops, also known sometimes as Virtuous Cycles. Each of us is a system, nested within other systems (family, company, society, etc.). Each of these systems is comprised of multiple interacting feedback loops. Feedback Loops work when they are fundamentally intact and well maintained. They don’t when they aren’t. But they can be fixed if you understand where and how they need fixing.
The Eco-consumer’s Broken Feedback Loop
Presently, the typical feedback loop of consumer thinking is: “The economy is shaky, it’s not a good time to invest in unproven enviro-alternatives, I may be okay anyway, the government’s taxation stance is fickle from year to year, and I’m just one person, so I’ll wait until I have more clear direction or can find a shining example to follow, or feel enough pain to motivate me to adapt”.
In other words, although the message is clear and it’s rather widely known that by mid-century we’ll require the equivalent of three Earths’ resources to sustain our projected 7-billion person world society, we nonetheless short-circuit our feedback loop thinking with short-term, emotional, pocketbook-level rationalizations. The predictable outcome: inadequate results, slippage, and in some views, looming catastrophe. This is not a virtuous cycle, to say the least.
Let’s look at the elements of a successful, intact feedback loop. You can apply it to any situation to learn where there are leaks or breaks, make repairs, and improve results.
- Evidence. Measure the behavior you want to change. Sounds simple, right? But how do you know you’re measuring the right thing? Are you measuring CO2/KWH? Gallons H2O per capita? Calories burned? What? Measure the right thing – constantly over time.
- Relevance. Interpret the data and give it meaning. Just knowing I can measure my carbon footprint isn’t enough. I have to know how I rank relative to either my own pocketbook goal, or some trendline, or some legal standard, or other interpretation. Fortunately, the price of measuring just about anything is dropping to levels where we can cheaply and easily get good data. Ask anyone who owns an iPhone, Nike shoes, or GPS. Chances are there are free and commercially available measurement and interpreting solutions out there already, no matter what you’re seeking to measure and interpret.
- Consequence. Fit the meaningful data into a larger goal or purpose to properly motivate action. Let’s say I want to consume energy at some rate below the per capita average, and I get to enjoy the positive consequences in terms of pocketbook savings, energy independence, and other worthwhile consequences in which I am emotionally invested. Help me measure it, interpret it, change my behavior, celebrate success, track corrective action, and celebrate that improvement.
- Action. Empower people to act on their new-found motivation, stimulating the creation of new data. Measure and appreciate behavioral improvement to stimulate habit formation. It can take up to 2o instances of measured improvement for a habit to become ingrained in an average adult (half that number for younger people), so keep at it. After a month of measuring anything daily, even with the occasional skipped day, you’ll be there.
To accelerate a habit, though, it helps to socialize it among your close contacts. Remember, too, that people buy pleasure, not prevention. This has implications for how you talk to yourself about it.
We cannot rely on the best brains and systems thinking to tune our personal feedback loops critical to personal, business environmental sustainability. It’s an inside job. It is up to each of us to get started. I hope this post helps you get started.
- Feedback Loops Are Changing What People Do (wired.com)
- Reboot Agriculture! (the Land Institute) – blog article
- How to keep any project on track (IBM)
- Why We Buy (FanFoundry.com)
- Marketing Green Products: Customers Weigh In (SocialClimate)
- Make Sustainability…er…Sustainable (SocialClimate)
- Tightening The Feedback Loop (SlideShare – by Patrick Kua at Thoughtworks.com)