Smart-grid techwill bring huge savings to companies, but who foots the bill?
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By Rachael King
updated 9:50 a.m. ET, Thurs., Oct . 15, 2009
Food producer Cargill is taking a carving knife to its electricity bills. At a plant in Springdale, Ark., where the company handles about 50,000 turkeys a day, electricity bills run more than $2 million a year. But Cargill thinks it can cleave $680,000 from the total by using its own generators on high-demand days.
The secret behind this money-saving plan lies in what's known as the smart grid — a wholesale revamp of the system that distributes energy to homes and businesses around the country. Government bodies and utility providers are in the early stages of this multibillion-dollar upgrade to transform the existing grid into a two-way network where power and information flow in both directions between the utility and the customer, not just from the provider to the user.
Done right, the revamp will cut bills, reduce consumption, give users more say in the kinds of energy they use, and even let customers produce their own energy and sell it back to power providers. "What's going to happen with the smart grid is that we're going to create a network that's larger than the Internet," says Guido Jouret, chief technology officer for the emerging-technologies group at Cisco Systems (CSCO), one of the many companies working on the technology needed to modernize the electric grid.
A $20 billion market in five years
The Electric Power Research Institute, a nonprofit research and design group, estimates that it will cost $165 billion, or roughly $8 billion a year for 20 years, to create the smart grid. The market for the gear needed to overhaul smart-grid communications alone may reach $20 billion a year in five years, Cisco estimates. Other technology companies developing smart-grid software and hardware include IBM (IBM), Oracle (ORCL), Google (GOOG), and Siemens (SI).
The tech sector's interest is fitting considering the similarities between the energy-grid upgrade and the computing revolution of the 1980s that saw hulking, centralized mainframes give way to PCs. The existing U.S. power grid dispenses electricity but is limited in its ability to gather intelligence from end users—hence the monthly visit from a meter reader. Now utilities are replacing outmoded meters with so-called smart meters that foster a back-and-forth between customer and utility. In much the same way PCs opened the door to third-party software and services and use of the Internet, smart meters are paving the way for tools and services that make the system more responsive to shifts in energy demands.
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Cargill is counting on smart-grid tech to lower its bills. Many utility vendors set rates for industrial customers based on peak-use patterns. So in a common practice known as peak-shaving, Cargill taps its own generators to keep its 365,000-square-foot Springdale plant cool on summer's hottest days rather than use energy from its electricity vendor, PowerSecure (POWR). The challenge is determining when peaks occur. PowerSecure keeps close tabs on Cargill's generators, as well as fluctuating electricity prices, and when it can tell that rates are on course to pass certain preset thresholds, it fires up Cargill's generators remotely.
Easier to opt for solar or wind
In the future, Cargill may choose to run its generators more often and sell power back to the utility when prices are high, says PowerSecure CEO Sidney Hinton. While Cargill's utility provider doesn't currently purchase energy generated by customers, other utilities, including PG&E (PCG) in California, have begun buying solar energy generated by customers on corporate campuses and residential rooftops
Showing posts with label smart-grid programs. Show all posts
Showing posts with label smart-grid programs. Show all posts
Thursday, December 3, 2009
Thursday, October 29, 2009
Government funds, VCs boost green-tech start-ups
October 29, 2009 8:54 AM PDT
by Martin LaMonica
Data on third-quarter venture capital shows that green-technology companies are attracting dollars from both investors and government programs.
Ernst & Young on Thursday said that venture investing in green tech rose 46 percent compared to the prior quarter to total $965 million in 50 deals. Solar, auto, green buildings, and biofuels continue to be fast-growing segments within the overall category, according to the Ernst & Young analysis of data from Dow Jones VentureSource.
The numbers show that companies shipping products are garnering more money and that a mix of investors, including private equity firms and corporations, are increasingly part of the picture. Because energy-related businesses are expensive to scale up, venture capital companies need to invest with large corporations, such as GE and Siemens, or late-stage equity companies.
Money from the federal government stimulus program is starting to be disbursed which is also aiding new green-tech companies. On Tuesday, the Department of Energy announced $3.4 billion worth of grants for smart-grid programs. The money is aimed primarily at utilities, but they then contract with smart-grid companies such as meter manufacturers or software providers which do in-home energy management systems.
Another large program is $2.4 billion in grants to promote plug-in electric-vehicle battery manufacturing. New Energy Finance estimates that $9.5 billion in stimulus money has been already spent and that government money will continue to enter the market for two more years.
These programs, including state-level efficiency mandates and ARPA-E research grants, add to the confidence in the overall market, according to Ernst and Young.
Investors and entrepreneurs are also keeping an eye on an energy and climate bill which is now being debated in Congress. One of the key pieces of the bill is a cap and trade system for regulating greenhouse gases. Under this system, large polluters, such as utilities, have a certain number of permits to emit carbon dioxide. To stay under a government-set cap, they can buy and trade these permits.
A survey by law firm Cooley Godward Kronish of green-tech executives found that 80 percent believe that cap and trade would help the U.S. economy. But investors and entrepreneurs are not expecting passage to affect business plans in the short term, according to the survey which was released on Tuesday
by Martin LaMonica
Data on third-quarter venture capital shows that green-technology companies are attracting dollars from both investors and government programs.
Ernst & Young on Thursday said that venture investing in green tech rose 46 percent compared to the prior quarter to total $965 million in 50 deals. Solar, auto, green buildings, and biofuels continue to be fast-growing segments within the overall category, according to the Ernst & Young analysis of data from Dow Jones VentureSource.
The numbers show that companies shipping products are garnering more money and that a mix of investors, including private equity firms and corporations, are increasingly part of the picture. Because energy-related businesses are expensive to scale up, venture capital companies need to invest with large corporations, such as GE and Siemens, or late-stage equity companies.
Money from the federal government stimulus program is starting to be disbursed which is also aiding new green-tech companies. On Tuesday, the Department of Energy announced $3.4 billion worth of grants for smart-grid programs. The money is aimed primarily at utilities, but they then contract with smart-grid companies such as meter manufacturers or software providers which do in-home energy management systems.
Another large program is $2.4 billion in grants to promote plug-in electric-vehicle battery manufacturing. New Energy Finance estimates that $9.5 billion in stimulus money has been already spent and that government money will continue to enter the market for two more years.
These programs, including state-level efficiency mandates and ARPA-E research grants, add to the confidence in the overall market, according to Ernst and Young.
Investors and entrepreneurs are also keeping an eye on an energy and climate bill which is now being debated in Congress. One of the key pieces of the bill is a cap and trade system for regulating greenhouse gases. Under this system, large polluters, such as utilities, have a certain number of permits to emit carbon dioxide. To stay under a government-set cap, they can buy and trade these permits.
A survey by law firm Cooley Godward Kronish of green-tech executives found that 80 percent believe that cap and trade would help the U.S. economy. But investors and entrepreneurs are not expecting passage to affect business plans in the short term, according to the survey which was released on Tuesday
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