Category: energy

New business models for utilities

Several months before joining SAP, I was asked if I would give a talk (and be on a related panel) at the European Utility Week conference in Barcelona this year on the topic of New Business Models for Utilities.

The event is the premier utilities event annually in Europe with 12,000 attendees, and 600 exhibitors. I was honoured to be asked, and of course accepted, without hesitation.

The talk wasn’t video’d but you can check out the slides I used above. In slides 3-29 I outline why utilities need to adopt new business models (revenues are falling due to factors like falling costs of generation, the rising popularity of renewables, climate change, etc.). In slides 33-40 I discuss some of the evolutionary business models open to utilities. While slides 41-60 outline some of the more revolutionary opportunities open to utilities – many being enabled by the Internet of Things, and utilities digital transformation.

With all the changes occurring, utilities need to disrupt, or they themselves will be disrupted.

Will the price of oil ever increase again?

What is going on in the oil industry?

Graph of oil price from 2012 to 2016The price of oil has cratered. In 2012 it was over $120 a barrel. Today, 2016, it is at $42 a barrel, and this is an improvement from January and February of this year when it went under $30 a barrel.

Previously, when the price of oil fell, OPEC would meet, they’d agree to cut the output, and the constrained supply would ensure the price would rise once more. Why isn’t that happening now?

Most commentators are putting it down to the fact that Iran, who were under sanctions until very recently, understandably don’t want to cut production, and with Iran not cutting back, Saudi Arabia won’t either.

However, there’s another thesis which I think is more likely, and if true, oil prices will remain low for the foreseeable future. That thesis states that Saudi Arabia has realised that we are at the end of the Oil Age, and that a large percentage of the world’s fossil fuel resources will have to remain in the ground. With this in mind, it makes sense for Saudi Arabia to make sure they can extract, and monetise as much of their fossil fuel resources, as possible, while they still can.

What is the evidence for this?

First off, consider that last Friday 170+ countries signed the Paris Climate Accord whose aim to to limit global warming to 1.5-2C. Now that we have an upper limit on the temperature increase we are willing to accept, we also know how much CO2 we need to put into the atmosphere to achieve this amount of warming. It comes in at 1,100Gt CO2 [PDF] (1Gt = 1 gigaton = 1 billion tons).

On the other hand, the total proven reserves of the fossil fuel companies, and countries comes to 3,300Gt CO2. Notice the problem? 70-80% of the world’s proven reserves of fossil fuels will have to stay in the ground if we are to keep global warming below 2C.

Now Saudi Arabia has known about this issue for quite some time. As far back as the year 2000, Sheikh Yamani famously predicted that

Thirty years from now there will be a huge amount of oil – and no buyers. Oil will be left in the ground. The Stone Age came to an end, not because we had a lack of stones, and the oil age will come to an end not because we have a lack of oil.

In fairness Sheikh Yamani’s reasoning didn’t have to do with climate change, but better drilling and exploration technologies, but still it has come to pass, and in this scenario Saudi Arabia has to race to produce as much oil as it can, no matter what the price, so as little Saudi oil as possible is left in the ground. Consequently Saudi Arabia is now producing somewhere between 10.3m-11m barrels per day – an historic high.

And then at last week’s OPEC meeting in Doha to try to stabilise oil production, Saudi Arabia scuppered the talks, ensuring no freezing of oil outputs. This has the added advantage of squeezing the other producers, few of whom can produce oil at the same low cost as Saudi Arabia.

total-cost-of-producing-oil

On the demand side, the International Energy Agency (IEA) has admitted that for 2016 global demand trends are not as positive as they were. The IEA is counting on demand from developing countries where India recently announced that it is going to install 100GW of solar by 2022 (in large part because solar is now cheaper in India than coal), while China is aiming to increase its installed solar by over 100GW by 2020.

And if news of the 400,000 orders for the Tesla Model 3 are anything to go by, there is no love amongst consumers for fossil fuel spewing vehicles.

Then yesterday comes the announcement that the Saudi cabinet approved a set of reforms aimed at moving the country away from its dependence on oil profits. They have seen the writing on the wall, and so while on the one hand they are going all out to maximise the amount of oil they can extract and sell, they are at the same time setting up a sovereign wealth fund of $2tn to ensure they, in the words of Deputy Crown Prince Mohammed bin Salman

can live without oil by 2020

So, with Saudi Arabia diversifying away from oil revenues, and unlikely to reduce output any time soon, there is no obvious reason why oil prices will ever rise again. And Sheikh Yamani’s prediction about a huge amount of oil being left in the ground will come to pass.

Apple puts its environmental initiatives front and centre at its spring event

 

LisaJacksonAppleRenewableEnergyApple held it’s annual spring event yesterday in Palo Alto to make iPhone, iPad, and iOS related announcements (amongst others).

However, this year for a change the first executive invited to address the audience was Apple’s vice president of Environment, Policy and Social Initiatives, former EPA Administrator, Lisa Jackson.

Lisa was greeted by warm applause which became more enthusiastic when she announced that 93% of Apple’s facilities worldwide are now powered by renewable energy. This means Apple is now well on its way to achieving its stated aim of being fully renewably powered globally. And in 23 countries, including the United States and China, Apple is already 100% renewably powered.

In China Jackson explained, Apple has a 40MW solar farm which has a minimal impact on the local environment, and allows for the local Yak farmers to graze their animals and grow hay under the panels (seen above). This solar farm produces more electricity than Apple uses currently in all of China.

Apple’s data centres are also fully renewably powered, and it has a policy of siting new data centres only if the site has access to renewable power. This was one of the reasons behind Apple’s choosing Ireland and Denmark for its two newest data centres last year.

In fact, since hiring Jackson away from the EPA, Apple has made some extremely positive moves in reducing its footprint, and greatly increasing its transparency. This focus on transparency may go some of the way to explaining Apple’s decision last week to move a significant portion of its iCloud storage business away from notoriously opaque Amazon to Google (although, it is as likely to do with diversifying suppliers, moving to a supplier more in line with Apple’s views on data privacy, and possibly easing the transition to eventually self-hosting the data).

Jackson also talked about Apple’s investments in forestry, and how Apple are using paper sourced from sustainably farmed forests for 99% of its packaging now.

Apple is demonstrating tremendous leadership in the energy and sustainability space (as well as the privacy space, but that another story!). Kudos to them, and interestingly Amazon appears to be finally getting around to supplying some of its operations with renewable energy too – though, it still shuns any kind of auditing or reporting on its energy and emissions. Sigh, maybe someday after seeing Apple put their environmental initiatives front and centre, Amazon will also see the value of doing this.

Reducing your Costs and your Carbon Footprint – presentation

I gave a talk at the it@cork Green IT event yesterday entitled “Reducing your Costs and your Carbon Footprint”.

The talk goes into some detail on how Cork Internet eXchange, the cork-based data centre I am a director of, achieves hyper energy efficiency.

It is also worth noting that tomorrow’s OpenCoffee session is in CIX. Hope to see you there.

Reducing your Costs and your Carbon Footprint – A Case Study

I am speaking at the it@cork Green IT breakfast event tomorrow morning (5th March ’08). My presentation is “Reducing your Costs and your Carbon Footprint – A Case Study” and I will be using CIX as a case study on how innovative thinking can lower your carbon footprint and your costs.

The event kicks off at 07:45 in the Cork International Hotel, at Cork Airport and the other speakers are James Governor of RedMonk, whose talk is titled “The Sustainability Imperative: Towards Greener Software” and Mike Hughes of Microsoft Ireland who is going to talk about Windows Vista energy conservation features.

Should be a good event (and you get breakfast!).

Shai Agassi's Better Place project explained

In my post about the DLD conference yesterday I showed the video of Shai Agassi’s presentation because I thought it was an amazingly good idea, well explained.

However, when I checked out Shai’s blog I found the following video of kids doing a far better job getting Shai’s idea across (sorry Shai!).

It is a three minute video. Watch it. You’ll be glad you did!

Then head over to Project Better Place, check it out and get involved.

DLD Conference Highlights

I spent the early part of this week in Munich for the DLD Conference in Munich. It was an amazing experience.

The conference itself is a free invite-only event. The speaker list is unbelievable. The speakers included politicians, business people and convicted criminals!

Apart from the usual tech rock stars (Clay Shirky, Marissa Mayer, Matt Cohler, Jimmy Wales, etc.) there were people from the world of biology (Richard Dawkins, J. Craig Venter), literature (Paulo Coelho), extreme sports (Karina Hollekim), politics (Paul Kagame, Viviane Reding), and unclassifiables like Naomi Campbell (super-model and business woman) and David Silverman (the original animator and director of the Simpsons!).

One of the most impressive talks was also one of the shortest. It was the talk given by Shai Agassi, the onetime next CEO at SAP! In this presentation he explains how he is going to get Israel off oil in 10 years. What is most impressive about this plan is that it is completely reproducible for other countries!

Don’t believe me? See it for yourself below:

Link: sevenload.com

My interview published on Channel 9

When I was in Barcelona for TechEd last year Charles Torre did a video interview with me. We had a wide ranging chat about data centre energy efficiency strategies, blogs/blogging and the Death Star!

Charles emailed me last night to let me know that the interview has now been published on Channel 9 (Channel 9 is a very high trafficked online forum where videos are posted and discussions on those videos take place).

It has already been viewed over 600 times!

The player is SilverLight and doesn’t appear to work on the Mac for some reason but there is a link to a .wmv version of the video so you can download and watch locally.

CIX on Intruders.tv

We held our Open Day in CIX a couple of weeks back. We invited local businesses to come in and have a look at the data centre infrastructure before we closed up all the ducts and hazardous areas.

We also invited Intruders.tv to come along and film the event. They did and they published the interview they did with Adam and I the other day.

http://new.intruders.tv/swf/flvplayer.swf

The Open day was the day after the it@cork conference so I was quite tired. Watching the video now I realise I messed up on some of the figures! Typical data centres operate at 30% energy efficiency (not 70% like I said in the video) and CIX is rated to operate at 80% energy efficiency due to the innovative technologies we outlined in this interview.

My Web 2.0 Expo Keynote presentation on reducing our carbon footprint

I’m back in Cork after giving one of the keynote addresses at the Web 2.0 Expo in Berlin on Wednesday and speaking on a blogging panel at Microsoft’s TechEd in Barcelona on Thursday.

I didn’t create any formal presentation for the blogging panel in Barcelona but for anyone who might be interested, I uploaded my Web 2.0 Expo Keynote presentation to SlideShare: