Energy efficiency paradigm shift

Energy efficiency looks like restructuring

investCompanies invest to increase their revenues, to grow. Sometimes they invest to reduce production costs, into more modern machine tools for instance. Generally, such investments aim to increase production capacity at the same time, in order to get more revenues.

Energy efficiency does not match this business model. It corresponds to investment to reduce overhead costs in particular. It can also reduce production costs, when energy consumption is a main cost factor.

Reducing overhead costs… does it remind you of something? Yes! Restructuring a company, thanks to eliminating and scaling back production, employee layoffs, and salary and benefit reductions, for instance.

Wrong message to investors

reduce_billTherefore, on the balance-sheet, energy efficiency does not show a good image of the company. Communication efforts from management have to be deployed to explain to shareholders the interest of energy efficiency and its advantages over other possible investments. But, as shareholders want more, not less, they generally prefer growth. Energy efficiency then competes with difficulty against other type of investments.

The word to spread to shareholders

Spread_wordOnce an investment in Energy Efficiency is done, energy costs directly decrease without harming incomes and results, thus enabling more financial resources to be made available every year, for many years to come. Energy Efficiency is a mark of confidence in the future, providing a good basis for sustainable growth.

Return on investment is higher for the companies which are the worst in energy efficiency. With high specific consumption, it is easy to significantly reduce energy consumption with simple and cheap solutions. Oddly, it is then economically less interesting to invest in Energy Efficiency in environmentally conscious companies than in energy guzzler ones. It is then normally easier to convince the later. Then, just do it!

Gauthier Dupont
Dupont Energy Consulting GmbH

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Filling the power engineering skills gap

During the next decade, about half of power engineers in the United States are expected to retire

ieeeSeveral fund programs help educate the next generation of engineers. For instance:

  • The multimillion-dollar IEEE Power & Energy Society’s Scholarship Plus Initiative encourages undergrads to pursue careers in power engineering by awarding them scholarships and providing career experiences as undergraduates.

More on IEEE publication.

The first NAS batteries project after the fire incident of Sept. 2011

NGK resumes NAS batteries projects

In a previous post in last August, we have predicted that NGK Insulators‘ NAS batteries production shall resume in October 2012. The prediction is relatively correct: NGK has just announced the launch of its first implementation project since the fire incident that occurred on September 21, 2011.

Smart Grid Demonstration Project

1 MW of NAS batteries will be part of a Smart Grid demonstration project in Los Alamos, New Mexico. The information was simultaneously released on September 18th, 2012, by NGK Insulators and New Energy and Industrial Technology Development Organization (NEDO).

We have updated the list of NAS Battery Storage Systems accordingly.

The project aims to:

  • Expand the introduction of new energy
  • Promote energy conservation efforts and leading-edge technologies based on Japanese know-how, including large-scale stationary batteries for power grids and energy management systems
  • Contribute to international standardization activities for smart grid systems, which are steadily progressing on a global scale
  • Further promote the dissemination of Japanese smart grid technologies throughout the world.

The silver lining in the fire incident

Like for any incident, there are positive aspects afterwards.

Now, NAS batteries systems are safer. Not only thanks to a reinforced design, but especially because of the increased awareness of the real danger of such technology. They were neither an explosion, as many opponents predicted, nor toxic gas emissions, nor toxic liquid release. On an environmental point of view the fire incident proved that NAS batteries have a low impact.

“Only” a big fire, destroying the complete plant, but without any casualty. So the worst case is to lose the assets. This risk can be covered by a good insurance. As explained in a previous post, in order to prevent the spread of fire, NGK improved the design, the safety measures and the facilities organisation. When the next fire will take place, it is likely that the fire would be contained to the failed module or to a few, but the rest of the plant would be saved.

Prediction

Please do not misunderstand us. When we write “when the next fire will take place”, we are not pessimistic, but realistic. Fire incidents will occur, for sure. The risk zero does not exist. NGK did understand that, and reacted accordingly by concentrating their efforts on fire spread prevention. A clever move.

Now that NGK’s NAS batteries are back in business, it is time to turn the page and look at the future. It is the last time we mention the fire incident,… until the next one (we hope as late as possible).

Gauthier Dupont
Dupont Energy Consulting GmbH

The Smart Grid is dead. Long live the ICET !

The term Smart Grid is too controversial, then forget it

Since years we didn’t succeed to properly define what the Smart Grid is. There is not agreement about its definition. I’ve started to collect some reference to illustrate here my point of view, but they are so numerous that it would be unfair to select just a few. Crawl on internet, read books, articles and blogs on the subject and you will observe it from your own eyes.

When a term is too difficult to define, it means that it does not correspond to something real. It is a vague concept, a dream, or a vision as I’ve personally defined in a previous post.

Why should we continue to use this fuzzy concept? Just drop it!

We should say ICET instead

One tendency is clear in the Smart Grid nebula: the concept always includes the use of Information & Communication Technologies (ICT) in the electricity sector (as defined in Wikipedia for instance). In fact it is more than that. The right word should be integration instead of use.

Let’s consider the communication system needed to allow Smart Meters to communicate with utilities’ control centres. Thank to Power Line Carriage (PLC) the same cable can be used to transmit electricity and information at the same time. If going wireless, utilities have to invest in GPRS/3G/4G (or similar technology) infrastructure, or to be a client (a big one) of a telecom Co.

If Smart Meters’ full capabilities are exploited, they have to continuously communicate with utilities’ control centre, exchanging huge amount of data. The need for communication is then so high that utilities and telecom Co’s will have a strong economic interest to develop intense synergies. On the long-term, synergies will lead to merger, then forming a company delivering both electricity and communication services (wireless and/or through electric cables). Integration of electricity into the ICT sector shall form the ICET sector, for Information, Communication & Electricity Technologies.

There is also another advantage of not using anymore the term Smart Grid: there will be no discussion anymore to know if a grid is dumb or smart. There are so many useless discussion about this. It is a shame to lose so much time in futile debates.

Prediction 

Electricity and information will flow in the same cable everywhere, like it is already the case with USB cables for instance. Internet connection will be ubiquitous not only thanks to wireless technologies like Wi-Fi, but also via electric cables. When you will plug your laptop in the wall socket, it will not only get electricity to recharge, but also an internet connection.

The owner of the socket will not charge you for internet, like he already doesn’t for charging your laptop. Today everybody has everywhere access to electricity (expect in poor region in developing countries). Tomorrow everybody will have everywhere access to internet (I hope even in poor region).

Call for support

I then propose that we all use the new acronym ICET instead of Smart Grid.

If you like the proposal, then do it. Don’t say anymore Smart Grid. And tell you colleagues and friends to do so.

If you disagree. Please explain us why. Feel free to comment.

Thank you all in advance for your active contribution to the debate.

Gauthier Dupont
Dupont Energy Consulting GmbH

Smarter smart meters from Belgium

Belgium innovates

On 1st of March the Belgian utilities Electrabel launched in collaboration with fifthplay a new kind of smart meters. The basic idea is simple, but great and innovative. The proposed system enables end consumers to individually monitor, visualize, analyze and control the consumption of their electrical devices. Compared to common smart meters, which measure the total household consumption, it creates real added value.It is not strictly speaking a smart meter because it does not

replace the existing meter (analog or digital); it does not meter total household consumption and measures cannot be used for invoices. Functionally it is a domotic installation. But its use is smart grid and energy efficiency oriented. As it smartly meters consumer’s consumption, it deserves the title.

Electrabel is the historical utilities in Belgium, now part of the french holding GDF Suez.

Fifthplay is a tech co fully owned by Niko Group, a Belgian holding owned by the family De Backer. The original company Niko founded in 1919 and led today by the third generation is specialized in domotic solutions.

A new kind of smart meter

The design is nice and actual. Inspired by Apple? Anyway, it’s a good reference.

Gateway

The system includes:

  • Smart energy plugs
  • An internet gateway
  • A web application (for computer, tablet and smartphone).

This video clearly explains the concept, in French, sorry. Or check this one, in Flemish, if you prefer. Some info in English can be found here. More videos in French and Flemish here.

Smart Energy Plug

Smart energy plugs placed between the wall socket and the plug measure the consumption of individual electrical devices. Measurements are wirelessly sent to the internet gateway, which stores info and send it periodically to a remote server via internet (every 15 min). Through a web application or App, the end consumer can then:

  • Remotely monitor real-time consumption (15 min)
  • Program smart energy plugs (timer)
  • Remotely switch on and off smart energy plugs
  • Receive a warning via sms or e-mail in case of a sudden, unforeseen change in consumption.

An expensive gadget

Nice new tech, isn’t it? Now let’s look at economics of energy efficiency devices: investment and savings.

Investments. Electrabel is offering the Smart Energy Box at €139. Throughout the launch month of March 2012, customers will benefit from an introductory discount of €30. Add €3.50 for monthly subscription, i.e. €42 per year. Given a 3 years amortization of the initial capital investment, with the discount, and an average tariff of €0.18, one should save 435 kWh per year to cover the investment, plus the own consumption of the system, i.e. 10 to 20% of the yearly consumption of a benchmark family in Belgium. That’s quite a lot.

Savings. Marketers pretend that thanks to the tool end consumer can control and manage his own energy consumption. We all already do it without tools: we switch on and off when needed. One should neither be a genius nor being advised by a computer to know that consumption is reduced by switching off the light in an unoccupied room. I have no idea neither how much savings one can achieve thanks to the new tool, nor how to estimate them. do you? But I can tell it is peanut compared to the investment.

Market opportunity

The tools look great and functionalities are attractive. But fifthplay is not alone on the market. For instance Ijenko is proposing a similar solution, even broader as it includes also heating systems and security (smoke, motion and doors/windows opening/closing detectors).

Fifthplay’s long-term agreement with Electrabel is of course a good move to secure a big share of the Belgian market, to gather experience and a strong reference. But the international market is open and moving. Necessary technologies are not new and competitors would encounter no issue to develop similar devices. it will be a tough competitive market.

Not to mention there are cheaper solutions that can help you to optimize your electricity consumption (but without internet remote control): standby savers combined with power consumption data loggers offer a cheaper solution, without monthly subscription.

Prediction

Many similar solutions will shortly appear on the market (this prediction is an easy one: it is already the case). Marketers will pretend this is the new tool you need, that you will save money on your consumption bill. Journalists will be enthusiastic.

Few people like me will explain that it is too expensive and it doesn’t worth the investment. We will be criticized, for sure. Here, I hope. I would like to read your opinion. Do not hesitate to comment.

But at the end, it will end like smart meters today: far away from the foreseen success. Not so many end consumers will acquire the system. Enough to officially mention it is not a failure, but not enough to revolutionize the way we live. Criticisms will be voiced. For instance, that it inundates our house with even more wireless com, raising real or fanciful health issues. Until then, first movers companies will gain enough earning not to lose everything (pioneer advantage). Some will even make good money. But followers will lose, except the cheapest ones who will supply the tail of the life-cycle pattern (Growth-Slump-Maturity Pattern, see for instance chapter 14 of the book Marketing Management).

Finally, such tools will gently survive on the market thanks to tech fans not looking at economics. And tech companies will come with a new tool you and me cannot live without. The same story again…

Gauthier Dupont
Dupont Energy Consulting GmbH

The price to phase out nuclear power

Bold political decision

On March 15th, 2011, Germany halted operations at eight of its oldest nuclear reactors. Two months later Chancellor Angela Merkel announced the end of the country’s nuclear program: All of the country’s reactors will shut down by 2022. As a direct consequence, the utility company Mainova supplying the City of Frankfurt am Main will raise its kWh tariff by 9% on March 1st, 2012.

Globally, many welcome the decision to definitively phase out nuclear energy. And Germany is well prepared. German’s companies are amongst the world leader in renewable energies (in particular wind, waste-to-energy, and to a less extent photovoltaic). Relation with Gazprom is excellent (just ask former German’s Chancellor Gerhard Schröder). Siemens and others are ready to build more gas and coal fired power plants.

I am not worried about the sector ability to massively build new plants of any type, or about any energy shortage. It is highly unlikely to see any load shedding in Germany for the next decades. The issue is elsewhere.

Bold, that is all well and good, but it is also expensive

It’s not a mystery. Phasing ou nuclear power plant will turn to be a quite big financial drain. There is no miracle. Offshore wind farm investments are enormous. Not only the wind turbines have to be built, but also the transmission network necessary to transfer the power from windy areas to big load centers.

The price of natural gas will certainly continue to rise (just ask former German’s Chancellor Gerhard Schröder).

Big investments added to higher operation and maintenance costs is not a light recipe for our energy bills. They wilt get fatter.

The bill? No, thanks

Who will pay for it? You and me of course! End consumers, at the end of the commercial chain, are always there to cover costs increases. The impact is often hidden, in taxes or in eroded quality for instance. But in my case, it is quite straightforward and visible. 9% increase.

In a typical formal letter nobody likes to receive in his mailbox, Mainova gently explains “network use costs cover the maintenance of the existing network and to finance further network developments to enable, among other things, power transmission from wind farm to the consumers.” They continue, “we do whatever we can to maintain the price as low as possible”. Hum? Then further empty promises. And finally, bang! 9% increase. From 0.23 to 0.25 EUR/kWh. 0,02 EUR/kWh only for network development related to nuclear phase out. I can’t wait for the day they will ask us to pay for nuclear power plant decommissioning.

Electricity in Germany was already high compared to other countries. Now it beats the world record. Next time you come in Germany, you will think twice before turning on the light.

Welcome in the new world free of nuclear power. It’s just a matter of bold politic… and of ordinary people forced to pay for it.

The bill? Yes, please

To be honest, I do agree with this strategy. Less nuclear, more renewable energies is a good move. I just wanted to warn you it has a cost. And we have to pay for it. I am personally ready to do so. Do you?

My definition of “Smart Grid”

Why am I in the right position to define the terms “Smart Grid”

As explained in a previous post, nobody can boast about being the father of the Smart Grid concept. No organization, no expert, did succeed in imposing his own definition. I probably won’t, like my predecessors, but I cannot help but try my chance.

Three for the price of one

Not one, but three definitions are proposed. Each of them is adapted to different type of reader:

  • Catch phrase” or “tag line”: understandable by anybody and easy to remember.
  • One phrase definition: brief functional definition.
  • One page definition: detailed functional definition with Smart Grid’s key success factors, characteristics and domain of activity in which high performances have to be achieved. The format is purposely based on lists to make the reading easier.

Catch phrase definition

The Smart Grid is the vision of the grid of the future, optimally efficient, economic, reliable, secure, safe, flexible and sustainable.

One phrase definition

The Smart Grid is the vision of a highly automated and interconnected network where power, information and knowledge flow bi-directionally through intelligent systems to transparently serve all stakeholders and users, enabling high performances in planning, operation and maintenance with optimal efficiency and reliability, at lowest cost and in a reliable, secure and safe manner without harming the environment.

Detailed definition

The Smart Grid is the vision of a highly automated and interconnected network where power, information and knowledge flow bi-directionally through intelligent systems to transparently serve all stakeholders and users, enabling high performances in planning, operation and maintenance with optimal efficiency and reliability, at lowest cost and in a reliable, secure and safe manner without harming the environment.

Domains of activity in which high performances have to be achieved are:

  • Planning
  • Operation (normal mode, emergency and restoration)
  • Maintenance.

The key success factors of a well deployed Smart Grid are to make the grid more:

  1. Efficient
  2. Economic
  3. Reliable
  4. Secure
  5. Safe
  6. Flexible
  7. Sustainable.

A well deployed Smart Grid practically:

  1. Is self-healing (anticipate and respond to system disturbance)
  2. Enables active participation by consumers
  3. Is resilient against attack and natural disaster
  4. Provides power quality for the digital economy
  5. Accommodates all generation and storage options, including electrical cars
  6. Relies on transparent processes
  7. Optimizes assets
  8. Achieves perfect dispatch (Automated optimal operation)
  9. Is environmentally friendly.

The key technologies to allow the implementation of Smart Grid are:

  1. Integrated communications
  2. Advanced control
  3. Sensing and measurement
  4. Advanced decision support
  5. Advanced network components
  6. Integration with generation and end-use.

Gauthier Dupont
Dupont Energy Consulting GmbH