Klaus Heimann espouses SAP’s smart utility of 2020 at International SAP for Utilities conference

I attended the 7th International SAP for Utilities event in Munich last week.

Having attended the SAP for Utilities event in San Antonio last year, I had reasonably high expectations from this conference and I wasn’t disappointed. At the San Antonio event SAP talked very much about the ‘State of the Now’ talking up their, then recently launched, Energy Capital Management software. At this event however, Head of SAP Service Industries, Klaus Heimann keynoted introducing SAP’s vision for the utility company of 2020!

In what was a very forward-looking address, Klaus confidently predicted that:

In two years time this will no longer be a Utilities conference, it will be en Energy conference

This must have had a lot of the people in the room squirming in their seats because, as Klaus himself said, “Utilities are not known as being good at change!”

But change they must.

Just a few of the upcoming major changes utility companies are going to have to cope with include the growing imperative to move to a greater penetration of renewables in the generation mix, the impending explosion in the numbers of electric vehicles to be charged, and the need to roll-out smart grids and take in distributed generation.

Klaus’ vision for the utility company of 2020 is summarised in the video interview I conducted with him above, but briefly he talked of an energy market vastly more complex than today’s. An energy market:

  • where customers can be consumers and producers (via micro-generation)
  • where customers may have shares in a wind-farm which sells electricity to the local utility
  • where customers receive rebates on kWh’s saved during times of peak demand (compared to avg previous day’s use at same time, for example)
  • where utilities will have special renewable-only power offerings (I wish they had that now)
  • where utilities will need to be able to bill customers for energy used to charge electric vehicles, away from home (at the office) or even in different countries and
  • where utilities will need to be able to offer real-time consumption information, generation data and a control interface to the customer’s appliances

Nothing too earth-shattering in that list to be honest. But, when put against the types of changes utilities have gone through in the last 100 years, this is an enormous upheaval. This is probably a good time to be a change management consultant in the utilities sector 😉

For this vision to become real (and any utilities who don’t start to move in this direction can start writing their own obituaries now), there needs to be massive changes in utilities communications infrastructures and their data handling capabilities.

With big change, comes big opportunities so it is not surprising to see SAP are all over this and helping the utilities visualise where they need to go.


IBM’s Drew Clark on electricity, water and trends in sustainability

I had the good fortune to have a chat with IBM Director of Strategy Drew Clark recently. We had a great talk covering how to get noticed by the IBM Venture Capital group, water and energy projects and trends in sustainability globally.

We even speculated on the likelihood of demand response systems being rolled out for water management.


Not so Smart Grids, doomed to fail?

Command and control

Photo credit Mikey aka DaSkinnyBlackMan in Iraq

I was invited by James McClelland and Maureen Coveney to participate in a panel at SAP’s Sapphire conference earlier this year discussing Smart Grids.

One of the key points I made was that utilities are not used to having to deal with customers. The only real interactions utilities have with customers are 1) sending out bills and 2) when the power goes and customers ring up to complain. It is highly unusual to have a utility company poll its customers when rolling out a new product, for example (for that matter, when was the last time your utility rolled out a new product?).

With the requirement to roll-out smart grids and the increasing empowerment of customers using web 2.0 technologies, for example, utilities are now going to have to learn to listen to their customers very quickly. Any roll-out of demand response programs which doesn’t take customer concerns into account is almost certain to run into serious difficulties. I have heard several utilities talk about using smart grids to come into customers houses and turn down their air conditioning at times of peak demand. Wrong! This kind of message will not sell easily.

A recent example of a not-so-smart grid was highlighted by 3News in New Zealand recently when they reported that the smart grids being rolled out there were ones where:

the benefits from smart meters almost entirely accrue to the retailer… Consumers will end up paying for meters that provide them with minimal benefits

Utilities are going to have to radically change how they deal with their customers, and quickly or they risk having spectacular failures when they launch their smart grid initiatives!

post gives realtime CO2 intensity of electricity generation in the UK


If you actively select for cheaper electricity, you are de facto selecting for greener electricity because cheaper electricity has a higher % of renewable energy in the mix.

I wrote previously that it would be great if utility companies were mandated to publish realtime generation mix (% from coal, % for nuclear, % from wind, etc.).

Then if you had a truly open market for electricity, it should be possible to dynamically switch suppliers on the fly, based on the price and the realtime generation mix. If people were actively selecting for greener electricity (and given that cheaper electricity typically has a higher % of green, why wouldn’t they?), imagine the demand signal that would send to the suppliers! There would be an enormous rush to build more renewables and Kingsnorth would be shelved quicker than you can say “dirty coal”.

That idea is a step closer to reality today with the launch in the UK of This is a site which gives a realtime feed of just how “carbon intense” UK electricity is at any given moment. The data behind the real time feed comes directly from the computer systems that manage the UK’s electricity trading market. This data tells how much electricity each type of power generator (e.g. coal power stations or wind farms) are currently producing during any particular 5-minute interval.

One of the beauties of this site is that they provide an xml feed of the realtime carbon intensity data (see the pdf on how to access the feed for more info). The xml feed will allow organisations to programatically monitor the CO2 emissions associated with electricity generation in the UK. Thus it will be possible to have devices programmed to automatically respond to realtime CO2 intensity signals coming from i.e. shutting down when highly carbon intensive and starting up when carbon-light. This will be a big help in reducing the organisation’s carbon footprint. also has a forum where people can get involved suggesting methodology improvements, ways to improve the numbers (calculation or display) and how to use the data.

Now they just need to build this out for every other country on the planet!

[Disclosure – one of the companies involved in this project (AMEE) is a GreenMonk client]


Rich Lechner on Smart Transport June 09

I talked to Rich Lechner, IBM’s VP of Energy and Environment, the other day about the global problem of getting transportation right. According to Rich, in the US alone, congested roadways cost about $78bn per year so this is very much an economic as well as a sustainability-related issue!

We had a wide-ranging conversation about all kinds of solutions, including using demand response to manage traffic flows!


Electricity 2.0 talk at ETech

I gave a talk at the O’Reilly Emerging Technology Conference (ETech) in San Jose earlier this year. The title of the talk was Electricity 2.0 – applying the lessons of the Internet to our Energy networks. I uploaded my slides to SlideShare shortly after the talk and yesterday I was contacted by the O’Reilly team to let me know the video of my presentation was online so here you go.

It is similar to other Electricity 2.0 talks I have given with a few updates and new slides. Enjoy!


Get Rich Quick: a green roundup from IBM’s VP Energy and Utility – Show 1: Water

Rich Lechner is IBM’s VP Energy and Environment.

I first met Rich at the Pulse 09 event in Las Vegas earlier this year where he gave a great talk on Sustainability & the role of IT.

Rich has agreed to come on the GreenMonk show monthly to give us a state of the ‘sustainosphere’ from an IBM perspective!

This is month one and we are talking Water – among the many interesting water-related items, watch out near the end for Rich’s alluding to using Demand Response for water flow management!


Why Smart Grids are good!

I have made no secret of the fact that I am a big fan of Smart Grids and Demand Response programs (properly rolled out, of course!). I have also spoken at various international conferences propounding the benefits of Smart Grids and Demand Response for quite a while now.

You can imagine my disappointment then when I read an article entitled Outsmarting the Smart Grid which was strongly anti-Smart Grids, on The EnergyCollective site by William Tucker, a pro-nuclear writer.

William sets a facetious tone for the article in his opening paragraph:

The latest delusion about energy is the “smart grid.” This bright new technological miracle will once again help us overcome the realities of physics and allow us to live in a world run on wind and sunshine.

The genesis for Mr Tucker’s displeasure appears to be the above GE ad informing people of the benefits of Smart Grids.

He says

It’s fitting that the girl is standing in front of a clothes dryer because that and washing dishes are the only examples anyone has ever been able to come up with about how residential users are going to “redistribute” their energy consumption.

What else can they do? Are they going to wait until after midnight to watch prime-time television? Are they going to heat up dinner at 4 a.m.? Are they going to turn on lights at sunrise instead of sunset? And how about air conditioning, that most voracious consumer of electricity?

Again with the unhelpful sarcasm.

While it is true that not all loads in the home are movable – I use the example that I am highly unlikely to get up at 3am to cook my dinner just because energy is cheaper – there are more than just the dish washer and the dryer. Mr Tucker neglects to mention here air conditioning (though he does mention it elsewhere in his post so he is aware of it). Nor does he mention heating water in an immersion, refrigeration, PHEVs or storage heaters for example – all very movable residential loads. Of course, he neglects to mention industrial scale demand response altogether!

Mr Tucker then re-defines the Smart Grid to suit his argument

the underlying presumption of the smart grid is that it will somehow help us conserve significant amounts of energy

Uh, no it isn’t. The presumption of the Smart Grid is that it will more closely align demand with supply, thereby stabilising the grid and facilitating the further penetration of renewables onto it, thereby lowering our carbon footprint. The Smart 2020 report (7mb pdf) estimates that Smart Grids will reduce CO2 by 2.03 GtCO2e by 2020.

Mr Tucker seems hell-bent though on criticising Smart Grids for not reducing consumption quoting from the Electric Power Research Institute (EPRI) “The Green Grid,” study published last June

its most optimistic prediction was that by 2030 we could reduce electrical consumption by 7 to 11 percent below what is now being projected. That’s not an absolute reduction in consumption but only a slowing of its anticipated rise. Second, as the study concludes, “shift[ing] load from on-peak to off-peak periods may not necessarily save energy.” It will only save money. And when you make electricity cheaper, people may consumer more of it.

What Mr Tucker is again conveniently forgetting is that electrical consumption is not the problem, per se. The problem occurs when that energy is generated using coal, oil or some other non-renewable form.

In fact, there are times when we have too much electricity and you are increasingly seeing wind farms curtailed as a result of this phenomenon. Instead of curtailing wind energy when we have an excess, what we should be doing is demand stimulation – stimulating people to increase their demand at this time of excess supply. This can be achieved by dropping the price of electricity to 0 or even making it negatively priced and making that information available via Demand Response programs rolled out over Smart Grids.

Mr Tucker concludes by once more poking fun at the GE ad

In that light, it’s worth going back to that last little GE vignette where the girl says, “It’s sunny in Arizona.” She is standing at a window looking at a waxing half moon about three hours above the horizon. If she’s in the Midwest, that means the sun has already set in Arizona. If she’s on the East Coast, then it’s about to go down. She’d better get to bed because in another twenty minutes the lights, refrigerator, television, computers and everything else are going to turn off.

Meeting pointless pedantry with more pointless pedantry, the girl is looking at a street light, not a waxing moon.

Mr Tucker’s main argument is that Smart Grids won’t necessarily reduce consumption so we shouldn’t bother with them.

Energy is very abstract, no-one really cares how much they use. What they do care about is the utility bill at the end of the month and increasingly, the carbon footprint of that consumption. If I consume 10 TeraWatt hours in my home daily (not possibly obviously!), as long as it has a negligible carbon footprint, so what?

What Smart Grids and intelligent Demand Response programs will do is, massage the demand for electricity so that it lines up with the supply. This stabilises the grid for the ISO (the grid operator) allowing them to add even more variable generation sources (i.e. renewables) to the system lowering costs and carbon footprints. Win, win.

The discussion continues in the comments where Mr Tucker rails against Demand Response

Now that I think about it, here’s what’s going to happen if the utility can cut off 1/6th of its air conditioning load on a rotating basis. If people know this – which they will – they’re just going to run their air conditioning a little higher while it’s on in order to compensate for the 1/6th of the time it’s off. It’s like the low-flush toilets that you have to flush twice to do the job.

However, for once he has a valid point!

This is why when you roll out Demand Response programs, you put the control directly in the hands of the consumer. The top-down, command and control utility attitude of “we’ll turn off your aircon when it suits us” will only turn people against Demand Response.

Instead, you roll out home area networks and home energy portals where people decide themselves how they want their devices to respond to pricing signals. You’d be able to program your dishwasher to wash the dishes when electricity at 6c/KWh or 6am, which ever came sooner, for example. If you put the washer on at 8pm, for the most part, as long as the dishes are washed by 7am the following morning, you don’t care when it happens.

Similarly with your immersion, if it selectively heats the water when electricity drops below either a set price or a set temperature, as long as you have enough hot water, you are happy.

Obviously any home energy portal like this would allow the home owner full control over all the devices in the house because they belong to the home owner, not the utility!

Long term, what I want to see happen is, I want utilities to publish their generation mix (% coal, % natural gas, % oil, % hydro, % chg, % wind, etc.), as well their prices, in realtime. That way I should be able not only to control my devices but also have the ability to select the Greenest utility supplier dynamically at any time – now that’s a Smart Grid well worth having.


Grid 2.0 primer

I’m giving a talk at the O’Reilly ETech conference in San Jose next month (March 11th 2009). The title of my talk is “Electricity 2.0: Applying The Lessons Of The Web To Our Energy Networks“.

The talk will be about how to make the electrical distribution system more green and more resilient using demand response and smart grids in a consumer empowering way. I will also discuss my vision for an electricity system where you will be able to see the generation mix of all utilities and dynamically chose the Greenest supplier and other out there concepts!

In the video above, you can watch a primer to this talk I gave in a webinar for O’Reilly last night.


IBM hits the Green ball out of the park!

Al Zollar on Smart Grids

I attended Pulse 2009, the IBM service management conference, in Las Vegas during the week. To be perfectly frank, I didn’t know much about service management software before going to the event so my expectations of what to expect from the conference were low! However, IBM hit the Green ball out of the park at this conference. Almost every speaker who stood up to speak mentioned smart grids, energy or efficiency and Al Zollar, GM of Tivoli Software above, even had a slide on demand response!

The turnout for the event was around 5-6000 I’m told and I have no reason to doubt it as the general sessions were thronged.

It really is tremendous to see Oracle, SAP and IBM all heavily touting their Smart Grid software solutions – it looks like the dream of the intelligent energy network and the massive efficiencies which will accrue, is not far off.

I met a ton of interesting people there and video’d a couple of them so I’ll be posting more in upcoming posts.

[Disclosure: IBM paid my travel and expenses for this trip]