Technology is moving us to a world where energy is cheaper, smarter, and less carbon intensive

More and more variable electricity generation sources (wind and solar) are being added to the grid. Can technology help bed these in without making the electricity grid more unstable?

Screen Shot 2016-05-03 at 11.51.40

The graph above is a graph of electricity demand on the Spanish electricity grid taken from the demand page of the grid management company Red Electrica de España.

The data comes from April 26th this year through to Mar 3rd. The sever small graphs along the bottom are daily demand curves, going from Tuesday April 26th on the left, through to Monday May 3rd on the right. You can see that the demand curves for each day are virtually the same.

Saturday and Sunday are however, obvious due to the lower demand on those days, and if you are wondering why Monday the 3rd looks to be lower than the rest of the weekdays, it is because that Monday was a holiday in Spain.

The large graph on top is a zoomed-in look at the demand on one of those days – Friday April 29th. From that you can see that the demand starts to rise early in the morning with the peak occurring between 8-11am. Demand then falls off until late afternoon when people are cooking their evening meals, peaking around 9pm, and then falling until it starts again the following day.

The pattern varies slightly by day of the week, as well as by season, but overall while it is variable, it is also highly predictable.

Graph of predicted energy demand vs actual demand on Spanish grid on April 29th
Graph of predicted energy demand (Green) vs actual demand (yellow) on Spanish grid on April 29th this year – graph from REE

This can be problematic though when you have high penetrations of variable energy suppliers, such as wind and solar.

Here is the energy supplied to the system by wind, for example on April 29th

Energy supplied by wind on the Spanish grid on April 29th this year
Wind energy on the 29th of April on the Spanish grid

As you can see, it doesn’t map well with the demand, and this is challenging for grid management companies, especially with increasing pressure on them to decarbonise.

That can lead to circumstances where wind power ends up supplying 140% of your demand, as happened in the Netherlands last summer. Fortunately, the Netherlands has good interconnects, and so was able to sell this excess energy to its neighbouring countries. This won’t always be the case though, and will become a more common issue as the penetration of wind and solar increases globally.

 

Obviously, if you can’t manage the supply side of the grid, what about managing the demand – how achievable is that?

Interestingly, this is now becoming a real possibility. Already there are companies who aggregate the demand of large organisations with facilities for reducing demand, if required, and sell that reduced demand to utility companies. This can save the utility from having to build new generation sources to meet the increased demand at times of peak load.

Demand flexibility graph
Demand flexibility

What if this were more widespread?

Looking at the chart above, if we could shift the yellow demand line up during its overnight dip, and then reduce the yellow demand line during the morning and evening, this would make the grid more stable, and allow for the introduction of more variable generators (solar and wind) onto the system, as well as reducing the requirement for expensive ‘peaker plants’.

Sounds great Tom, how to do that?

Well price is always a great motivator. In Germany last week where there was an excess of energy on the system, so pricing went negative, meaning large customers were being paid to use it.

Negative pricing on the German energy market
Graph of negative pricing on the German electricity market

Reduced, or negative pricing is a better option than wind farm curtailment because curtailment lowers the income for the wind farms, making them a less attractive investment for renewables developers, while reduced pricing moves the demand to a more suitable time.

Now, with the advent of the Internet of Things, everything starts to be smart and connected. If our electricity devices can listen for realtime electricity signals from the grid, they can adjust their consumption accordingly.

Of course, not all loads in the home are movable  – not many people will decide to cook their evening meal at 3am just because the wind is blowing and energy is cheap.

However, many loads are eminently movable. Pool pumps, are a good example. And also many loads that have a heating or cooling component associated with them, such as an electric hot water heater. When it is well insulated it doesn’t matter when it heats the water. Similarly for fridges, freezers, ice bank air conditioning, and so on. These are straightforward and affordable forms of energy storage.

Dish washers, washing machines, clothes dryers can also be made to listen to electricity pricing, and adjust their behaviour accordingly. Often, when you put the dish washer on in the evening, you don’t care when it comes on, as long as the dishes are clean and dry when you get up the following morning.

As more of our appliances become connected and smart, this will become the norm. Obviously, for widespread adoption, this kind of behaviour has to be totally automated. If the device owner has to think about it, it won’t happen.

Smart grid appliance

And then there are the real storage options, using batteries. This can be in the form of batteries in electric vehicles using vehicle-to-grid technologies, in-home batteries such as the ones Tesla, and others sell, or reconditioned electric vehicle batteries – a market that is just starting to get going.

So, good news, technology is moving us inexorably to a world where energy is getting cheaper, smarter, and less carbon intensive.

I have joined The Futures Agency

TheFutureIsSoBrightIGottaWearShades

Those of you who are connected to, or are following me on LinkedIn may have noticed an update to my profile there the other day. I have joined The Futures Agency.

What is The Futures Agency?
The Futures Agency is like a speaker’s bureau except that it specialises in futurists – people who are looking at trends in technology and society and who attempt to predict from that where we are headed.

Is this a full time gig?
No, this is a non-exclusive arrangement – The Futures Agency prefers to call us Members, so I can continue to work with other organisations, as before.

How did this come about?
TomAtCEPISI was invited to be one of two keynote speakers to address the 56th CEPIS Council Meeting in Athens recently. The other keynote speaker was Gerd Leonhard, Futurist, and CEO of The Futures Agency.

Gerd and I got to talking over lunch and he was interested in some of the things I had to say.

After lunch Gerd gave his keynote first, and I presented my keynote (The Future of IT should be Green), immediately after.

Gerd was seemingly impressed by the talk, and so he invited me to join his agency. And I was honoured to accept.

You’re a Futurist, what are next week’s winning lottery numbers?
Good question – that will take a little time to think about. How about you leave that one with me, and I’ll have an answer for you, oh I don’t know, say… next week?😉

If anyone has any more questions for me, feel free to leave them here in the comments, to email me, or hit me up on Facebook, Twitter, LinkedIn, or whatever is your preferred chat app.

Elon Musk has two more Secret Master Plans

Tesla CEO Elon Musk published his “Secret Master Plan” back in 2006 to bring the Model 3 to the market. However, hidden in that are two other Master Plans to completely disrupt other ancillary industries, all the while making electric vehicles more sustainable and attractive.

In August 2006 Elon Musk first published his Secret Master Plan for Tesla:

Build sports car
Use that money to build an affordable car
Use that money to build an even more affordable car
While doing above, also provide zero emission electric power generation options

And with the launch (for pre-order) of the Tesla Model 3 last month, the Secret Master Plan is now well under way (if a little behind schedule!).

However, I’ve long suspected that Elon Musk has even greater ambitions than moving the world to electric transportation. I think he has two more Secret Master Plans, and I’m going to lay them out below. See if you agree with me.

The first is the more obvious of the two – to disrupt Uber, public transportation, and other ride sharing operators, by allowing owners of fully autonomous Tesla vehicles to participate in a Tesla operated ride sharing scheme.

How would it work – well, when I drive to work in the morning in my Tesla. I park the my car, and engage the Ride Share mode. The car then broadcasts its location and availability to the network, which assigns it rides as and when they are needed. At the end of my work day, my car knows to meet me back at my place of work to take me home, and I can choose once more to set it to Ride Share mode, or have it charge (or both if I have the Tesla robotic charging arm).

DrivingATeslaThe trips would be undertaken on a revenue sharing basis, so money made could well be put towards the car loan/lease costs. In this way, the car could go a long way towards paying for itself, while also reducing traffic congestion, reducing global emissions, and making the roads safer.

And in case you think this is just the voices in my head (!), Elon Musk himself strongly hinted that he was planning something along these very lines last week.

The second Secret Master Plan is less obvious – it involves disrupting the utility industry. How?

By using the batteries in the electric vehicles to buy and sell energy. I know this may sound totally outlandish, but bear with me.

Most home energy storage systems store somewhere between 4-8kWh of electricity (with Tesla’s PowerWall coming in at 6.4kWh). But if you own a Tesla car, your battery is 70-90kWh (for the Model S, it may be as low as 50kWh for the Model 3). That’s still a lot more than a home energy system.

Now consider, Elon Musk’s stated aim is to sell 500,000 cars a year by 2020. That may sound very ambitious given Tesla are currently selling a little over 50,000 cars per annum. However, Elon Musk is nothing, if not ambitious, and orders for the new Model 3 are approaching 400,000 according to Tesla Vice-President of Business Development, Diarmuid O’Connell.

But let’s be conservative and say that Tesla manages to deliver 200,000 cars in 2020 with an average battery of 60kWh. A quick bit of maths tells us

60KWh x 200,000 = 12,000,000KWh

12,000,000kWh = 12,000MWh

12,000MWh = 12GWh

12GWh is a lot of storage. For context, that’s the ability to store an hour’s output from 12 typical modern nuclear reactors.

Indian Point nuclear power plant
Indian Point nuclear power plant – Photo Tony Fischer

Now, add to this the fact that every Tesla sold has an always-on data connection.

Suddenly you realise Tesla has the ability to control dozens of virtual nuclear power plants worth of storage, and Tesla will be selling at least 12 more nuclear power plants worth of storage, every year. Conservatively.

So the business case – Tesla can sell usage of this distributed storage to utility companies to use as backup, or for frequency regulation, to help smooth the demand curve on the grid, and remove the instability introduced by the addition of variable generators (wind and solar). If utilities can buy energy from Tesla at times of peak demand, it can mean they avoid having to build a power plant (or 12), which is a huge cost saving for them, and also reduces their emissions because peaker plants are invariably powered by burning fossil fuels.

For Tesla car owners, they get paid on a revenue share basis for use of the battery in their car, and the increased grid stability allows for more variable generators (wind and solar) to be added to the grid, making the world a better place for everyone. And that sounds just like something Elon Musk would want.

After all, Musk is the guy who said, when he published his Master Plan back in 2006:

the overarching purpose of Tesla Motors (and the reason I am funding the company) is to help expedite the move from a mine-and-burn hydrocarbon economy towards a solar electric economy, which I believe to be the primary, but not exclusive, sustainable solution

So what do you think, will Tesla be the next ride-sharing platform, while also becoming the Uber of electricity?

Will the price of oil ever increase again?

The price of oil collapsed in early 2014, and hasn’t rebounded since then. With more oil in proven reserves than we can ever use, a softening demand, and Saudi Arabia getting off oil, will prices ever go back up 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.

Can blockchain and the Internet of Things mitigate supply chain reputation risk?

Supply chains are complex, unwieldy beasts, which are notoriously hard to tame, but a solution could be in the offing, using Blockchain, and Internet of Things technologies.

“Mommy, I want to be a supply chain manager when I grow up”, said no-one. Ever.

Supply chain management has to be one of the most difficult, thankless jobs in business. In this globalised age, it becomes increasingly complex, all the more so, the bigger an organisation becomes.

Getting a company’s supply chain right, can transform a company’s fortunes. Witness Apple Computers, a large part of Apple’s resurrection was due to having the best supply chain in the world (as ranked by Gartner for the last 5 years in a row).

Getting you supply chain wrong on the other hand can have serious consequences. Tesco saw €360m knocked off its value overnight when it was discovered that it’s beef burgers were found to be 29% horse meat. Investigations subsequently showed that the horse meat entered the supply chain without Tesco’s knowledge, but the issue still had significant implications for people’s trust in the brand.

In another famous example, taken from the Economist Intelligence Unit’s  Managing supply-chain risk for reward [pdf] report it noted

Nearly a decade ago, lightning struck a Philips microchip plant in New Mexico, causing a fire that contaminated millions of mobile phone chips. Among Philips’ biggest customers were Nokia and Ericsson, the mobile phone manufacturers, but each reacted differently to the disaster. Nokia’s supplychain management strategy allowed it to switch suppliers quickly; it even re-engineered some of its phones to accept both American and Japanese chips, which meant its production line was relatively unaffected. Ericsson, however, accepted Philips’ word that production at the plant would be back on track in a week and took no action. That decision cost Ericsson more than US$400m in annual earnings and, perhaps more significantly, the company lost market share. By contrast, Nokia’s profits rose by 42% that year.

And then there is the issue of conflict minerals. These are natural resources (such as cassiterite (for tin), wolframite (for tungsten), coltan (for tantalum), and gold ore) mined in a conflict zone and sold to help finance the fighting. These minerals are required for the manufacture of electronics such as tablets, laptops, and mobile phones. Coincidentally, Apple announced yesterday that it is now auditing 100 percent of its suppliers for the use of conflict minerals.

How best to gain and enforce transparency into supply chains? Traditionally this has been done with audits, a resource intensive process if carried out correctly.

However two more recent technologies may help significantly improve this procedure – blockchain, and the Internet of Things.

Blockchain, the technology which underpins cryptocurriencies like bitcoin, is basically a cryptographically secure, immutable record of transactions. And recently it has been used to set up and enforce smart contracts for things such as managing community energy exchange transactions in New York, to issue equity to drivers in a cooperatively owned ride sharing platform, and to authenticate users, and manage the billing process when charging electric vehicles in Germany.

If every item in your supply chain is part of a blockchain, then it has a proven provenance. Add to this always-on traceability using Internet of Things technologies, and you suddenly have a robust, transparent, virtually bullet-proof supply chain.

Has anyone rolled this out for their supply chain yet? Not that I know of, but it can only be a matter of time (did I mention supply chains are complex?).

 

Photo credit Neville Hobson

Sign up for my new newsletter here

I started a new newsletter last week.

It is quick and easy to read with 5-6 story links maximum. But the stories which will relate to the topics I regularly research (the Internet of Things, Energy, and CleanTech), will be the most important stories in these areas for that week.

I will be publishing the newsletter every Friday, so you can enjoy the stories, just as we head into (or during) the weekend🙂

You can check out my first newsletter here.

And if you wish to be included in the weekly mailing, you should sign up for it here.

Finally, if you have any feedback on the newsletter, please don’t hesitate to let me know either in the comments below, or you can email me on tom@tomraftery.com anytime.

Thanks.

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.