One of the many smart young people who orbit my kitchen table at dinner time explained what he was doing at his last job. It involved “peak shaving.” No. It had nothing to do with a barber shop. Instead, it was a tech gig that managed energy consumption for private clients.
California’s state energy policy is structured around improvements in energy efficiency rather than creating more generation capacity. This is the “negawatts” principle of doing more with less instead of building more power plants and burning more fuel. The primary mechanism for driving down demand is dynamic pricing. When demand is high electricity is more expensive. When demand is low it’s cheaper.
Creating more power during relatively short bursts of heavy demand is very expensive because peaker plants need to be revved up and then shut down quickly. Those peaker plants have to be built at great cost, but they sit idle most of the time. That cost used to be bundled in to the overall flat price of power. By charging more – a lot more – for electricity during peak periods consumers are encouraged to use less or pay a high premium. The goal is to clip – or shave – those peaks in energy demand.
Smart meters record usage of electricity, gas, and water in real time. These meters are primarily a labor cutting system, but the same data stream can be used for pricing structures too. Ever more fine grained metering systems facilitate aggressive demand management.
In addition, there are different kinds of bill structures for residential vs. commercial customers. Larger energy users like office buildings are on a shorter leash. If they use more than a certain prescribed amount of power they not only pay the premium for the peak period, but their entire energy bill for that whole month is recalculated upward. The state really wants these particular electricity users to figure out how to cut back.
As a result enterprising tech start ups have created systems that actively monitor consumption, store extra power in off peak times, and draw on that reserve during peaks. By leveling out demand punitive payments are avoided. As little as a half hour of supplemental power at a critical period makes an enormous financial difference.
Individual households are doing something similar with smart thermostats that actively manage home heating, cooling, and lighting for both comfort and efficiency. Smart appliances can interact with the smart grid to optimize energy conservation and contain costs. The Internet of Things has already reached the point where more objects communicate with each other than humans communicate with other humans.
But there’s a paradox here. All these Interweb enabled energy management devices – manufactured by the tens of millions – create their own invisible energy demand. The Net itself is tremendously power hungry.
Your smart meter, Nest thermostat, and cell phone monitoring interface may take tiny sips of electricity, but attached to each of them is the equivalent of a Volkswagen inside a distant server farm. The “Cloud” is just a collection of giant warehouses full of big machines all sucking up huge amounts of juice. They all need to be air conditioned 24/7 to keep the servers from cooking in their own heat. Not surprisingly these warehouses are strategically located in remote locations in other states and countries where electricity is cheap. Coal, nuclear, hydro, wind… it’s all power one way or another. Lots of it.
And let’s not forget my friend who works on the peak shaving technology. Armies of tech workers in big office buildings use plenty of power. They also enjoy high salaries that they spend on all the usual perks of a good life – like nice cars and frequent international flights. The San Francisco skyline is a material reflection of the amount of physical stuff that goes in to supporting all these innovations in efficiency promised by technology. It’s a bit of a shell game that attempts to use new layers of complexity, cost, and consumption to address the problems created by previous layers of complexity, cost, and consumption. This is the preferred process because it creates new ventures, generates taxable revenue, and keeps the economy churning.
Meanwhile Arizona, Nevada, and Hawaii all recently reversed their state energy policies that had rapidly ramped up distributed electricity production from renewable sources. The incentives for rooftop solar were eliminated or drastically reduced, and the price paid to individuals for their power was slashed. In theory those three states should enjoy a natural advantage for solar installations, but the devil is in the bureaucratic details.
The underlying structure of these distributed energy programs was flawed from the beginning. The primary argument in favor of ending them involved the cost of maintaining the infrastructure that carries and manages power from Point A to Point B as well as the very expensive sunk costs of existing power plants and substations. As soon as a critical percentage of power started to come from non centralized sources the traditional system was threatened and successfully lobbied the legislature to dismantle the programs. Fair enough.
What the utility companies want – if they are to switch to renewables at all – is to build large scale concentrated facilities that mimic the traditional coal, natural gas, and nuclear model. It’s what they know how to do and are good at. A highly centralized system also protects their monopoly and ensures their continued existence. Remember what happened to land line telephones when cell phones arrived? Remember the death of chemical film when digital photography came along?
The aging grid is in need of serious and hideously expensive maintenance and upgrades. Most of it is now fifty to one hundred years old and at the end of its useful lifespan. Rebuilding it is going to be a massive undertaking and I’m not convinced we’re up for the task given our present political environment and fiscal condition.
I’m a pragmatist. When I hear people talk about the future of energy I reject the green techno fix crowd who think solar and wind will replace fossil fuels. That’s not an option. It simply can’t scale in a way that will allow business as usual to continue.
Renewable energy is coming on strong, but from a very low base. And it’s at odds with our current set of living arrangements. The scale of the big box stores and their imported goods from the other side of the planet – not to mention the thousands of customer and employee vehicles – suggest a disconnect. The people in this neighborhood are utterly dependent on liquid fossil fuels for every aspect of their existence. They don’t need to be, but at the moment they are. “Drill Baby Drill” has its own physical and financial limitations along with endless environmental side effects regardless of what supporters of more coal, oil, and natural gas insist.
How do individuals respond while all this Big Picture long term stuff unfolds quietly over the next several decades? Here’s something that’s simple and scalable. Individual households can – and sometimes do – heat their own water from basic components that a seventh grade shop class could build for a few hundred dollars. This kind of thing can be implemented without government subsidies or corporate manufacturers with global supply chains and “innovative” financing. It might all be easier with societal support, but it’s not a fundamental requirement.
The United States may or may not pursue a national energy policy that supports renewable power, but other countries such as Germany, Japan, South Korea, Israel, and China are busy ramping up production and promoting their own export industries. Individual Americans can purchase these products at ever lower prices in the absence of local subsidies. Foreign governments subsidize them for us – at the cost of domestic jobs. If grid tied systems aren’t supported by the public utilities then private households can install modest off grid parallel systems with a few batteries for emergency back up. This will be especially advantageous as the aging grid becomes increasingly unreliable along with our political system.
The best source of alternative energy is the power we no longer need to use. Insulating our homes dramatically reduces the amount of fuel used regardless of the source. And insulation is substantially cheaper than the high tech mechanical equipment that would be required if this space wasn’t insulated. Government programs that encourage this sort of thing would be nice – particularly for rental accommodations – but we don’t need to wait to do it as individual homeowners.
We could all go out and buy electric cars that run off solar panels mounted on our roofs. In theory. Except most of us don’t have that kind of money. And the national industrial scale transition would take decades and involve massive public and private investment that is unlikely to occur given our present culture. I’m not convinced the build out of this kind of system makes any environmental sense either since we’d be using a tremendous amount of fossil fuels to build all the renewable equipment.
The simpler solution for most people at a very manageable price point is to live in a place where owning a car is a discretionary option rather than an absolute necessity. A walkable neighborhood and a bicycle do all the heavy lifting in the absence of new technology and a radical shift in national industrial policy. Put it all together and a great deal of household “peak shaving” can unfold quietly without anyone higher up even noticing.