This morning, we’re hosting the latest GigaOM Bunker Series event here at our San Francisco offices. The topic this time is next-generation applications for the smart-grid sector. We’ve gathered a select group of about 75 entrepreneurs, executives and investors to engage in a town hall forum.
We’ll examine what applications and services will be delivered on top of the current smart grid infrastructure buildout, including home and commercial building energy management, smart EV charging, and next-gen demand response and billing — all potentially billion-dollar markets. The underlying question is, how can tech companies, utilities and investors create an environment that delivers a future of innovation, energy efficiency and reduced carbon emissions?
A few speakers will lead the debate at the forum, but the overall emphasis will be on participation and comment by all those invited. Our conversation leaders will include:
- Andrew Tang, senior director of PG&E’s Smart Energy Web
- Scott Lang, CEO of Silver Spring Networks
- Warren Weiss, partner at Foundation Capital
- John Steinberg, CEO of EcoFactor
We’ll provide the livestream, along with exclusive video, post-game analysis, and live blog coverage starting at 9:30 a.m. PST. You can also follow along with the Twitter hashtag #e2tbunker and participate in the comments thread below.
Session One: Andy Tang, PG&E
Katie Fehrenbacher, editor of Earth2Tech, kicked off with the prompt, “What services and applications are you working on for your customers, and what’s next?”
PG&E as a company is looking at smart grid applications from grid to the home:
- synchrophasor: to improve efficiency of the transmission network — an estimated 15% boost in transmission without siting or NIMBY issues. PG&E received ARRA funds to support this.
- utility scale store: a compressed air storage facility — an underground acquifer to store compressed air during night time. PG&E working a 300 MW project.
- pricing plans: demand response, pricing signal for 15 critical days a year where we’re close, in California, to running out of generation
- distributed generation: what do we have to do to make the grid grow reliably alongside growth in distributed renewables, specifically rooftop solar. 50% of the nation’s rooftop solar exists within PG&E’s service territory.
- electric vehicles: will start to see movement this summer when EVs start coming to market. looking at smart charging pilots — the ability to control the rate and pace of charging; a very large resource on the electrical system — more than plasma TVs and even air conditioning. The EPRI pilot this summer will focus on open standards approach — regardless of vehicle manufacturer, the utility or third-party provider will be able to communicate with all the electric car manufacturers. must be a standards based solution — can’t only work with Nissan, Renault, etc. Will involve multiple technology providers, EV makers and utilities. Looking to design an ecosystem: hardware designers, software layer that does fucntionality to help load-serving entity know what the load is, and eventually, what the grid is capable of doing to respond.
- making this real for the customer: This is an umbrella category for stuff that exists within the home area network — need to move these from a Technology Solution to something that is Part of Customers’ Lives. Some of the high-bill issues in the Central Valley have accelerated PG&E’s urgency on this (see a Pro weekly update on this topic here). How do we offer customers the opportunity to understand their usage patterns — if you don’t change your patterns now (early in the month), your end of the month bill is going to be high. We’re pushing on customer energy-efficiency and demand-response programs to integrate with these kinds of initaitves. Collectively in 2010, we need to bring these programs together — an integrated way to bring demand-side techniques to our customer in an easy way to understand and implement.
Katie asked him to further discuss Central Valley issues:
Tang: We’re deploying meters with HAN capability, but the software stack isn’t in place. We are installing meters that can flash download the software once the standards are in place. We were reluctant to talk openly about what the future looked like, because we didn’t want to promise too much of the future, too far in advance; but customers need more information. Imagine if your credit card bill wasn’t itemized, wasn’t detailed enough to help you understand how to change your usage patterns.
Tang also discussed some examples of what went wrong for specific customers — one example, a family replaced an old refrigerator with a new, energy-efficient one. However, they had taken the old one — with its leaky seals — and put it in the (uninsulated) garage as a secondary storage (i.e., not a lot of food providing thermal pace. That meant it was consuming a maximum amount of energy, which wasn’t something most homeowners would have thought of.
Interoperability and Standards:
PG&E has 7 home area network vendors engaged in its lab, and Tang says they’re working to make sure there’s higher levels of interoperability, to support the development of an ecosystem.
The HAN standards are on a fairly aggressive track; the interoperability standards are due by end of summer/early October time frame. We should see devices by the middle of this year. The “open automated data exchange” (ADD) standard, which will allow utilities to bring data out of back office systems, is the other high priority issue. The biggest challenge for utilities: “We’re not IT development shops. We can’t be asked to build multiple APIs to get data out of the back end.”
Question: Built an alert on tiered rates, btu without billing cycle, that’s useless. Would you be willing to provide some kind of integration with vendors like us that we need to do these kind of things?
Tang: That’s what we want to do. We want to do it once, though, and have it available to all partners. ADD standards are
Utility Question: Thought about bandwidth for the HAN?
Tang: We believe pretty strongly that the AMI pipe is not a broadband pipe, and we’re movign toward a distribtued logic, a distributed computing platform. The utility’s role should be to provide pricing signals that vendors can incorporate to their devices. If those partners choose to use other networks to get more rich data — the Internet — …
PG&E is looking into a mobile workforce deployment, but we’re looking to leverage AT&T, Sprint, Verizon, Clearwire networks. The issue isn’t as much bandwidth as it is latency. Broadband networks have low latency currently, but latency and badnwidth are not necessarily the same thing. The speed of getting information out for real-time decisions is what’s important. Syncrophasors, for example, they take measurements 60 times a second, and the data requirements get into the gigabytes very quickly — not cost effective to transmit over any wireless network.
Michael Terrel, Google: Re: question about when will meter data be made available to customers. CPUC requiring IOUs to make backhaul data to customers by the end of this year; and meter data by the end of 2011.
Question: How are IPv6 and ZigBee going to be made to talk to one another?
Tang: Utilities can’t really manage multicomm environments. Getting data off the meter is one challenge; getting data out of the utility back office is another.
Peter Wagner with Accel: Identifying the sources of load in the home — waht’s using the power and when, and needing to provide that to yourself and users. Approaches that we’ve found have all required hardware in the home. That’s unattractive business model for entrepreneurs. Is there any thought about installing this equipment on YOUR end? It’s sort of hot potato, but will that buck get passed back to PG&E
Tang: I would like that model myself — especially if I got a return on that equipment — but the legislative reality is that there needs to be a level playing field. It’s currently a regulatory issue. We’re running a pilot on home energy displays, but I’m currently barred from getting into this space.
Session Two: Infrastructure
- Warren Weiss, Foundation Capital: Investors in Silver Spring, thinks its time for utilities to come out of the darkness and into the sunshine.
- John O’Farrell, Business Development for Silver Spring: Based in Redwood City, focus on providing advanced communications platform for utilities around the world.
- Andy Tang stayed on stage
O’Farrell: There are a lot of parallells with the Internet — started out with very basic applications, but they were valuable enough that we’ve been able to create today’s Internet application ecosystem, based on simple open standards. In part, thanks to a growth of users on the network — ubiquity for the smart grid will enable application and device developers to innovate.
Weiss: 3,000X more data is coming — will require and allow a new way of doing business. We’ll move from being a ratepayer to a customer. There has to be a transparent system on the web that allows you to access this data as a user — need to work in a seamless way.
Katie asked about differences between smart grid and Internet build outs.
O’Farrell points out that customers aren’t the ones going out and driving the purchase of smart meters the way they were purchasing dial-up modems and such during the Internet growth. If we were relying on consumer interest, it would be spottier and smaller, in that energy management is probably pretty low on Maslow’s hierarchy of needs.
Tang — for us, smart metering is the easiest aspect. The utility industry is regulated very differently than the telcom industry. We don’t make incremental revenues on incremental sales of electricity in California, but mostly there’s a misalignment. Our pilot is actually cost neutral, but if you move away from smart metering, it gets much more complicated. Renewables get much more complicated — they’re intermittment, they have a cost to build, and that puts pressure on the rates — there’s no new revenue source coming in to pay for it.
Weiss: Smart grid companies like Silver Springs have to tell utilities how to sell less energy, and that seems crazy.
Katie: Do you see utilities trying to build their own networks, or rent space?
Tang: Our view, based on the decision we made, is a mixed-network environment. Did I want us to get into becoming a network operator? No, but this is our cash register. We have equipment that’s been on the ground more than 40 years, that’s like 8 design cycles in the technology world — the fundamental problem we have with cellular is that they’re constantly upgrading their networks. I can’t switch out my meter ever few years. Utilites can’t even move to a five-year cycle on switching out.
O’Farrell: The assumptions in some markets is that cellular networks will play The Major Role in connecting energy information devices. Also, how could we possible need another network in the home? However, the demands from PG&E are big: ubiquity, longevity, inexpensive, and enough bandwidth for future innovation. Stack a cell network and you could run into some issues: coverage, obsolesence (supporting an aging network), etc. There is in many utility cases a need for dedicated networks.
Katie noted that Silver Spring has partnered with AT&T recently and asked why.
O’Farrell explains that AT&T provides backhaul of SSN’s neighborhood-scale mesh networks. To hook up those mesh networks with utility, using AT&T’s network for backhaul.
Katie asked about WiMAX as taking a place in the smart grid WAN, and Andy commented that this is another usable network. Overall, all of the speakers said that the WiMAX network might be important, but it will depend on where meters are deployed and what’s available there.
Jason with Telconet (?) asked about the relationship between smart grid and peak power generation needs. In the PG&E rate case for the smart grid, there were savings from labor force reduction, but the rest came from demand response benefits: the ability to defer the building of peaking resources.
Clint Wheelock asked where there are unmet needs, gaps or opportunities in the market, outside the crowded HAN and home energy management.
- Weiss: Applications servicing utilities needs for applications: pre-pay applications, meter on/off, back-end billing systems, and more.
- O’Farrell: Applications that make it exciting and enjoyable for consumer to interact with all this new information. You don’t have to encourage your kid to get on the iPhone and use it; how will energy get there? There’s a lot of room for intelligent devices and software that make it entertaining and engaging to manage your energy use
- Tang: Applications that are utility facing. Load management, data management and devices. In other words, he said there’s a need for M2M systems that take in data and manage devices that can respond to what that data means.
Audience question: Will smart grid encourage people to use more energy?
- Tang: Potentially, especially with demand response, but we’ve got tiered price signals that help send a strong message (in some cases too strong).
- Weiss: We’re all going to have to get into the role of becoming energy producers. (Foundation is an investor in SunRun, a third-party solar financing startup.)
- O’Farrell: The goal isn’t to reduce energy use in much of the world; it’s to make sure it’s produced cleanly and efficiently. The U.S. may be a special case.
Greg from Intervolt: What are the challenges for energy storage and the opportunities.
- Tang: I’m excited by storage — it could be holy grail. The question is how far down the network we can put storage. We have a 5MW battery that we’re deploying at large industrial customer location — that allows the customer to easily participate in demand response. In East Coast DR, there’s a lot of use of back up generators, not storage, but this is similar. The issue for greater deployment is economics. Batteries are expensive, but we will probably get to a point where batteries will become more prevalent in the network.
- O’Farrell: We’re about to get to a point in which EVs are quite common — they’re basically local energy storage devices that we drive around in every day.
An audience member working in DR asked a question about opportunities and interest in that space. Tang noted that the big opportunity in DR is the residential space, but that right now that’s a complicated proposition.