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Rethinkig Energy: National Power Grid Infrastructure in Mercury News
Sep 20, 2005 (From the CalCars-News archive)
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http://www.siliconvalley.com/mld/siliconvalley/business
/financial_markets/venture_capital/12685962.htm

Posted on Mon, Sep. 19, 2005

Rethinking energy
IN KATRINA'S WAKE, VCS SAY COUNTRY
NEEDS TO OVERHAUL INFRASTRUCTURE
By Matt Marshall
Mercury News

The nation's electrical power grid was aging badly even before Hurricane Katrina brought it to national attention.

Now, with regional energy bottlenecks and spikes in the cost of oil and natural gas, some Silicon Valley venture capitalists and technologists are saying the country needs to radically overhaul its energy infrastructure.

``Our culture is crisis driven,'' said Scott Mize, president of the Foresight Nanotech Institute, a Palo Alto technology think tank. ``We go from event to event, waiting for something to push us over the tipping point.''

Built on a technology and platform set in the 1950s, the current grid remains unable to store energy, is too centralized -- and thus prone to bottlenecks -- and cannot efficiently transport electricity without huge losses in power along the way, he and others say.

One solution: the ``Intelligrid.''

Proposed by Mize and others, this new decentralized grid would rely less on mega power plants. It would potentially allow millions of residents with solar panels on their roofs to easily feed excess power back to the grid. It would offer a more open system for buying and selling electricity. And it might use a cutting-edge ``quantum wire,'' or fiber made of billions of carbon nano-tubes, which would be low-resistant and able to transport power much more efficiently.

This would, of course, mean significant investments in new technologies -- many of which would further the interests of Silicon Valley investors and of groups like Mize's, which promotes nanotechnology.

The non-profit Electric Power Research Institute in Palo Alto has been actively pushing the idea of the Intelligrid for four years, and it has gained some adherents. It's even being tested by the Long Island Power Authority. Part of the idea is to make utilities agree to standards of buying and selling electricity -- not in complicated, opaque long-term contracts but on an open-standards system with real-time pricing, and software that would monitor usage.

When electricity is more expensive to consume, say at midday, the prices on the grid would reflect that, and consumers would have incentives to turn off usage at those times.

Raising awareness

Don Von Dollen, EPRI's program manager for the Intelligrid, says he's making progress on raising awareness among state regulators, and several state agencies expressed interest in the concept at a conference last week. ``It's not that they're opposed to us. It's just that they don't know about it,'' he says.

Then there's the quantum wire, a project of Richard Smalley, a Rice University chemist. The lightweight, high-capacity wire would provide more efficient transport because it would not lose as much electricity in the form of heat.

But even adherents of the Intelligrid acknowledge that significant regulatory reform is required first. States and utilities would need to open up their fiefdoms and make their costs and pricing more transparent. And the powerful utility industry is resistant to change. A reformed grid would have to include utilities, letting them get paid for running the more transparent grid network.

And then there's the problem of money -- who would pay for the grid, and how expensive would it be? Government is always short on money, and private investors -- including those from Silicon Valley -- may not see potential returns until regulations are changed.

``We represent money, and money looks for a return,'' says Marty Lagod, a venture capitalist at Firelake Capital. ``We're not investing in the electrical grid because we don't get returns.''

Still, Lagod may be one of the best-placed to understand the potential for Silicon Valley companies if such regulatory reform is implemented. He helped draft a proposal to show regulators about how to structure such an Intelligrid. And for good reason: He toiled for four years to launch a micro-turbine company -- part of his vision for a more decentralized power system. But in 2001 it ran out of money and he was forced to throw in the towel, letting go about 22 employees.

``I cratered my own company,'' Lagod says. ``I've got scars and blood all over me.''

So far, on the energy front, venture capitalists have focused instead more on small-step, prudent investments in alternative energy sources.

For example, Erik Straser, a venture capitalist at Mohr, Davidow Ventures, recently invested in Jadoo, a company near Sacramento that makes fuel cells to power portable devices. The need for alternative energy became clear in the wake of Katrina, when the Superdome almost ran out of diesel gasoline, water threatened to overwhelm an energy generator and local police were running out of portable power for communications.

``They didn't run out of fuel,'' he said of the Superdome, ``but you wouldn't want to try to guess what would have happened there if they had.''

Other investors are looking for more, like Ray Rothrock, a venture capitalist with Venrock Associates in Menlo Park, who co-invested with Straser in Jadoo.

Power losses

Rothrock was trained as a nuclear engineer. He bemoans how the existing grid loses about half of its power in transmission due to heat loss on the lines, and how failures disrupt entire portions of the grid.

``A simple failure turns into a catastrophe as it cascades through the network,'' he says.

EPRI estimates that the economic costs of failures across the United States total $100 billion a year.

A much more efficient system, Rothrock says, would be to have thousands, if not millions, more power sources -- such as solar-powered homes -- freely connected to the grid.

``The model is the Internet,'' he explains. ``It would be like Cisco routers -- if one data line fails, you reroute it with switches.''

Such a distributed system would also minimize exposure to security risks, he said. Three terrorist bomb detonations of the Bay Area's key switch-yards could take out the region's power for two or three days, he noted. And a more efficient grid would make it more feasible to plug hybrid cars into home power sockets.


http://www.siliconbeat.com/­entries/­2005/­09/­19/­katrinas_lesson_we_need_an_intelligrid.html
Silicon Beat (Blog)
Posted by Matt Marshall on September 19, 2005 07:13 PM | 0 Linking Posts

Katrina's lesson: We need an "Intelligrid"

Katrina showed that much of our infrastructure can be bottlenecked, from our electrical grids, to our telecom networks. Some said media coverage seemed to work best, but that was decentralized -- as exemplified by the vibrant work of bloggers.

On one of the failings, for example the electric grid, there's a worrying lack of urgency. Again, it is fertile Silicon Valley that has ideas about how rejig our grid. The problem is building the political case, to get approval in Washington, and the states.

Our story, published today in the Mercury News (free registration), is about how venture capitalists and technologists in Silicon Valley agree with the proposal, by Palo Alto's Electric Power Research Institute, for something called the Intelligrid. It makes sense. Instead of hundreds of power plants, such as giant 1,200 megawatt nuclear power plants, powering our needs, we should have millions of solar powered...

...residences and workplaces -- or at least a power source closer to their destination -- so that a good fraction of the power doesn't get wasted in transportation.

And that way, a single error at one plant, or cut in an electrical transmission line, doesn't shut down the power of 2 million people, as it did last month yet again in Southern California.

Utilities would have to buy into idea, which arguably is against their interests -- they'd lose control. So our politicians need to be pressured. And they're not feeling that pressure. We'd be interested in feedback on the Intelligrid, from other cleantech experts like Rob Day. Is it really just politically dead in the water?

Locally, it is significant because the California Independent System Operator, which oversees most of the state's electricity system, has just approved a $300 million transmission line that brings power into S.F. from Pittsburg under the S.F. Bay. That's a whopping-big line. Sounds like the opposite of the Intelligrid, but maybe we're missing something. Apparently, it still needs environmental approval.

Meanwhile, check out the idea of Felix Kramer, co-founder of the Palo Alto company, CalCars -- retrofitting the Toyota Prius hybrid to form an efficient decentralized electric generator grid. The raft of comments suggest he's on to something.

Felix informed us this morning, after reading our story, that EPRI has actually been pushing this idea of the Intelligrid for decades, but simply came up with the name 4 years ago. It is the brainchild of EPRI's founder, Chauncey Starr now 93, and still going in to work.

Related to all this, there's an Red Herring interview with Nancy Floyd, co-founder of the San Francisco venture firm, Nth Power, and note her answer to the question about where the next big opportunity in cleantech:

The big infrastructure problem is the aging grid, and the whole automation area. The average age of transformers is 38 years, and their design life is 40. Almost every week transformers explode, causing outages, costing money, even killing people. And how do they find out if a transformer is going to fail? They send someone out to take a sample of oil from the transformer and send it to a lab to get results a week later. It’s just one poignant example of how antiquated the system is. I think about my boys instant messaging for fun, and we still send meter readers out. It’s something that has to change

Meanwhile, the NYT fell on another "decentralization" story, about telecom. It notes the drawbacks of the incumbent phone network, and advantages of the decentralized nature of WiFi. If cities had lots of little WiFi nodes, their communications might stay up during a Katrina-like catastrophe. Note, too, how these networks could best be powered by distributed solar or other energy sources.

There'd be work for Silicon Valley companies, too. The NYT piece says the cost of the WiFi network is laughable. It refers to the Silicon Valley (Sunnyvale) company, Tropos:

Alternatively, a city could simply hire a mesh-networking company like Tropos Networks, which estimates a cost of $70,000 to cover a square mile with DSL-speed connections. These numbers are so low that they are virtually rounding errors in any city's budget.


Comments
Posted by: Felix Kramer on September 19, 2005 08:08 PM

The Intelligrid is something that we ought to get around to doing sooner rather than later. It's a critical part of a 21st century infrastructure. For what CalCars.org is promoting -- plug-in hybrids -- the current grid has off-peak capacity to charge tens of millions of cars. But a modernized grid would pave the way for the now futuristic "vehicle-to-grid" (described at the bottom of http://www.calcars.org/­vehicles.html -- millions of cars as active nodes on a two-way national power network), with many additional benefits.

In the original article, I was surprised to see Ray Rothrock's statement that "wheeling losses" could reach 50% -- I'm not an engineer, but I've seen numbers more around 10%, for example: http://www.memagazine.org/­backissues/­june01/­features/­reality/­reality.html .

Finally, I wanted to clarify that any hybrid, not just a Prius, could provide portable backup power, mobile for emergencies, in Silicon Valley driveways for local power outages. Comments especially welcome at my blog (Matt gave URL in his posting).

-- Felix Kramer, founder, California Cars Initiative


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