ZEB – Shifting Power Consumption in Zero Energy Buildings

Today’s building is unable to recognize congestion on the power grid, and so uses power without regard to its scarcity or abundance. Today’s power grid was designed in the 1930’s when there was no way to send signals across the grid. Tomorrow’s grid will know when power is scarcer than demand, and will be able to inform buildings. This information will come in the most traditional form: price.

In the post Zero Energy Buildings Explained, I described buildings able to buffer their demand for energy. We generally call electrical buffers “batteries”; many other technologies can be used. I know one installer of off-grid systems who stores energy in water in bath-tubs in the attic. Buffers require merely that we have some way to save energy for later, and some way to charge up that storage.

These innovative approaches are all driven by introducing actual instantaneous energy pricing. This is similar to the congestion pricing that is now used to reduce traffic in London, and is being discussed for use in New York. In simplest terms, when everyone wants power, it becomes expensive. When fewer people want power, it is cheaper. If you can shift when your building needs power from the grid to times when no fewer people are using it, you save money. If you can provide power to the grid when everyone wants it, you get more money.

There are three ways to you can shift energy consumption from the grid.

1. You can turn off things when power is expensive.
2. You can store energy for later use in buffers (batteries).
3. You can, if your building understands its occupants, push system usage around based upon your needs and current pricing.

We need little technology for the first option. A red light and a siren could tell you to rush around and turn off lights. You could let the power company turn off anything they chose when they choose. A lot of people are stuck at this point. The effect on power with this approach, and with today’s market structures is limited

Two-way communication with the power grid would enable (2) and (3). Live pricing would let you decide how you operate your office or home. If you have some way to talk to all the systems in your home, you can coordinate their performance. (Remember, although I have been obsessing on the grid, this is a blog about oBIX and intelligent buildings…) . Hourly, or better minute-by-minute, energy pricing is a necessary precursor to developing the markets that make these strategies worth pursuing.

An intelligent agent, negotiating on your behalf with the power company and with the building systems will make this less onerous for the consumer, whether home or business, to participate. This agent could run on your home computer, it could run in your data center, negotiating with all the enterprise operations in the office, or it could be outsourced to anyone, not limited to the traditional power companies.

Because there is money to be found with these approaches, there will be money in developing products to better serve these approaches. You, as the owner / operator of the home or office will be able to choose how you participate. Money plus choice means markets, and markets drive innovation.

Understanding the full costs of Corn Ethanol

Combining Sugar Protectionism with Corn subsidy created a product searching for a use. Corn syrup came out of nowhere to replace sucrose in thousands of products. Because it is metabolized differently than sucrose, its pervasive use is suspected by many to be a contributor to the diabetes epidemic.

Now this subsidized corn syrup is being priced out of the market amid huge distortions in productions of all crops, as farmers switch crops to take advantage of the subsidized corn bubble. Maybe it is time we just fixed the mess by ending sugar tariffs. Whatever benefits those domestic sugar producers were supposed to get from protectionism was lost when it priced corn syrup into the market in direct competition.

This would aid Caribbean and Central American foreign policy, reduce foreign aid requirements, and improve health (as producers switched away from corn syrup). It would also, of course, free up the crops dedicated to corn syrup for corn ethanol – without requiring subsidies. This might even change the economics of corn ethanol to make sense.

It still wouldn’t make Corn Ethanol useful as a Carbon / Fossil Fuel / Energy Independence policy. Corn production would still use a more fossil fuel than the energy produced. Ethanol would still generate more carbon dioxide per mile than the octane it replaces.

All of this leaves out the truly horrific effects of the spiral of corn and sugar subsidies.

Farmers across the country have switched crops to catch the corn subsidy wave. While the bad effects of Corn Ethanol policy on Mexican tortilla are prices are well known, the external costs of crop substitutions are less publicized. Among the crops that farmers have shifted from are Barley and Hops. There are now spot shortages in both of these markets

Barley and Hops. That’s right, the ingredients of Beer. Small brewers, especially microbreweries are expected to raise their prices across the board this winter to cover the increased costs for these basic supplies.

Bad economics and market interference are an American tradition. But they have gone too far when they mess with the price of beer.

Shedding old habits is the Hardest Task

We can't replace decades of "natural monopoly" regulation overnight without some effort to create new markets. We can’t replace decades of monolithic systems design without constantly re-examining our assumptions. It is going to be hard work to move to agent-based integration at every level. It will take continuing hard work at each transaction surface. The hardest part, though, will be changing the habits of thought.

This is why many of the “lessons” learned from the last round of electrical de-regulation are not very useful. A little de-regulation of the wholesale markets power without allowing new market entrants as buyers accomplishes just a little. A mix of regulated and un-regulated markets just creates gray markets for the pre-existing products. Today’s technologies, when brought to bear on power generation, distribution, and consumption, give us new opportunities, opportunities for markets and opportunities for innovation.

Today, at every surface of electrical transaction, the technology could easily handle open markets. The surfaces are the borders between Generation / Transmission / Distribution / Consumer. With today’s technology, there is no reason why individual consumers should not be able to contract with any generator they wish, whether individually, or through third party aggregators, the equivalent of mutual funds. With today’s technology, there is no reason for local distribution to be owned by the same company that owns the transmission lines – and some good opportunities to be had by separating them.

In the early PC era, common practice and ITS guidance was that computer equipment must be fully depreciated over 5 years. Looking backward at cost instead of forward at value prevented companies from realizing benefits from technological change. By some accounts, the moment when Microsoft seized control of the PC industry from IBM was when Gates realized that IBM was maintaining 286-based systems until fully depreciated. Utilities, with their focus on regulated cost recovery and static efficiency are stuck in the same trap. Until this changes, the electricity industry in the US will never be focused on the value creation and dynamic efficiencies that are the hallmark of every other engineered business in today’s world.

The old model for power markets was vertical integration from generation to consumer regulated as a natural monopoly. Economical microgrids integrating heterogeneous sources and storages methods cast doubt on how natural the monopoly is. Live metering technology with two way communications enable a market at each transition. Intelligent building systems let end users manage their power consumption, in response to their internal needs and to live pricing from the grid. The operations assumptions based around integrated operation, dumb metering, and lack of information are no longer valid.

We will recognize true deregulation of power markets by an increase in end user autonomy and an accompanying increase in innovation. It will enable market models that are nimble, looking to future value rather than back to sunk cost. Future value is dynamic, as it reflects changing consumer tastes in environmental policy, social environment, and in technology. True markets will let new entrants in, seeking to create value in novel ways. The last round of deregulation focused more on freeing up rent seekers, and, for some, escaping from poor [nuclear] plant decisions more than it did on creating any actual markets.

The technology is hard, and will be hard. Skilled engineering will be needed to find the value in new approaches. Great patience and public communications will be required to convince the public and utilities commissions to stay out of the way. But what we will need most is nimble vision to discover the new business models that will unlock innovation.

And the lenses that cloud the vision the most is seeing the way we have always done it.

Something’s Gotta Give

Changing business models is hard work. All the new approaches discussed in this BLOG seem not quite justifiable today. They would offer great benefits if they were already set up, but the change, to many, doesn’t make sense. History, and the installed base of markets and technologies, seems to block change.

I work from the precept that long term historical trends do not easily change. The things that drive decision makers will not change. Economic principles are as certain as gravity. We must find solutions to the problems of Energy and Sustainability that acknowledge the reality around us.

I make three assumptions about energy, the use of energy, and the need to deliver energy.

Energy Use per person has been increasing through all of history. It will continue to increase. The number of people using energy will increase. This means that the end-user demand for energy will increase.

Legacy energy sources will get scarcer. The difficulties associated with siting traditional energy generation will increase. The costs of remediating energy siting will increase. This means that the costs of central generation of energy will increase.

Utilities will be unable to build sufficient transmission capability for the needs of the future using current technologies. (Transmission refers to the long distance, high voltage tall towers you see bringing electricity to the fenced-in gray objects at the edge of a neighborhood. From the fenced in area to your house is referred to as Distribution.) Siting new transmission corridors is getting tougher and the lead times longer. One reason that the grid is fragile is that Utilities have been unable to afford adequate transmission expansion; they will be less able to afford it in the future. Increasing energy use will make demands on an infrastructure that cannot keep up with the growth will lead to decreasing reliability.

These three trends, increasing demand, higher cost of generation, and decreasing reliability or transmission, will shake end users, whether in homes, offices, or factories, out of their complacence about current energy provision. This will create the market conditions for technologies and approaches that seem “too risky” today. The risk of standing pat will be seen as larger than the risk of innovation.

I believe innovation will include building systems responsive to enterprise needs and current pricing. I believe innovation will include on-site generation and storage. I believe this innovation will require approaches that accept the heterogeneity of systems legacy and new, of generation systems appropriate to each site, and of storage appropriate for the needs of each business and home. To accomplish this, the underlying processes of each system need to be exposed as discoverable services to agents that are responsible to the owner or tenant for running the building.

Any other approach will take too much customization to ever really grow into a market. Anything that does not grow into a market will leave the needs unmet.