The commercial Internet was still in its infancy and was considered part of the information highway. It was only in the mid-1990s that the Internet emerged as the dominant disruptive force in this technological vision. Internet Protocol, the communications standard underpinning the Internet, allowed all sorts of information — text, audio, video — to be treated as packets of data that could be shipped at high speed across cable and phone networks, which were privately operated networks that had on-ramps and off-ramps to the public Internet. As networks became faster, as compression of data got better, as computing power and memory grew exponentially, it became technologically possible and economical to deliver phone, broadcast, e-commerce, Web surfing and e-mail over both the cable and phone networks. The result: network convergence. Suddenly technology was creating competition in these regulated monopolies, forcing regulators to adapt and establish rules that permitted regulatory forbearance when competition in a market was deemed acceptable. For the phone and cable companies, the gloves were off. It was game on. 

Why am I telling you this? Because I’m seeing the same thing happening in the energy sector. Electric utilities and natural gas utilities — in Canada at least — have operated in largely different worlds, each with their own rules and regulations, each with their own regulated monopolies and turfs. Actually, that isn’t entirely the truth. The electric utilities still offer electric hot-water tanks and electric heating, though this is slowly being phased out. But on the natural gas side, offering electricity directly to residential customers just hasn’t happened. Sure, in some jurisdictions there are parent companies that own both a natural gas utility and electric utility and offer services to customers on the same bill. But that’s not the convergence I’m talking about. I’m talking about using a natural gas pipeline network as direct competition against an electric transmission and distribution network.

I got thinking about this more after Bloom Energy announced its Bloom Energy Server. As far as technology goes, I didn’t see this unveiling as a big deal. Solid-oxide fuel cells have been around for decades. Today, there are several companies working on the same thing. What Bloom comes to the party with is good marketing, high-profile financial backing, and a great vision. By calling it an “energy server” it’s drawing parallels to the Internet, which gave us ubiquitous distributed computing, storage and delivery of information. Bloom is aiming to encourage distributed generation — the idea that power is efficiently produced and delivered close to the point of consumption, rather than generated far away from a central plant and transmitted long distances to the consumer. The latter sounds like mainframe computing from the 1970s and 1980s. We know what happened there. And yes, we do have distributed generation today in the form of rooftop solar, on-farm anaerobic digestors, industrial CHP and community wind farms, but for residential purposes there is nothing economical that can supply all our electricity and heating needs 24-hours a day.

An affordable Bloom Energy Server in every home, or something equivalent, would dramatically change the market landscape. It would allow natural gas to provide electricity, heating and hot-water heating with a single energy source, squeezing out the electric utility altogether. And even if it’s not in the home, large Bloom Energy Servers could be situated in the middle of subdivisions. Connected to a larger natural gas pipe, or better, to a local source of carbon-neutral biogas, one can envision district heat and power systems that are complemented by solar or geothermal. Sure, under this scenario, some wires would need to go into the home, but the community would be effectively off-grid. Again, electric utility gets the squeeze.

This changes the game, and presents challenges to energy regulators that have treated the natural gas and electric folks as distinct industries and markets. Suddenly these overlapping turfs mean something. Competition is possible. Regulation is out of date. This is a trend that will increasingly take hold over the coming decade.

K.R. Sridhar, founder and CEO of Bloom Energy, described his vision this way in the company’s first press release: “We believe that we can have the same kind of impact on energy that the mobile phone had on communications. Just as cell phones circumvented landlines to proliferate telephony, Bloom Energy will enable the adoption of distributed power as a smarter, localized energy source.”

I don’t agree with Sridhar. The cell phone analogy doesn’t work, because he conveniently ignores that you still need a natural gas pipeline. Mind you, if a small village in India wants to turn manure and other waste into biogas and use that to power itself, that would work and the Bloom Energy Server would enable it. Also, the fact that the Bloom box works in reverse means you can hook up a wind mill or solar panel and have it generate storable hydrogen, which can be converted back into electricity by reversing the process again. It’s possible, one day, but a lot of things are possible — let’s stick with what’s practical, economical and likely.

Another reason the cell phone anology doesn’t work is because the compelling part of cell phones is that you can carry them wherever you go. Unless Sridhar has plans for a pocket-sized Bloom Energy Server that operates on the sweat from your body, this won’t have the same impact as wireless portable communications.

I think a more accurate comparison is the impact of the Internet and Internet protocol. Before IP the phone networks and the cable networks operated in their own worlds. With IP they now invade each other’s worlds. We’re seeing something similar unfolding in the energy market. We’re seeing energy convergence.

On the acquisition front, two more promising Ontario cleantech ventures have been plucked up by U.S. firms. On Tuesday Toronto-based biogas maker Stormfisher Biogas announced it had been acquired by Virginia-based Greenhouse Gas Services. Despite having one of the most boring and uninspiring names, Greenhouse Gas Services is a venture of GE Energy Financial Services and AES Corp., so it has some serious backing. The company invests in and develops projects that reduce greenhouse-gas emissions, and it then sells the carbon credits. So here’s my question: If some of the biggest Stormfisher projects are expected to be in Ontario, and since the Ontario Power Authority doesn’t appear to be letting biogas projects keep carbon credits, then what’s in it for Greenhouse Gas Services? I can only speculate that the power authority has quietly decided to let developers keep credits from methane destruction. Something I’ll have to follow up on.

And just today, Sunnyvale, Calif.-based Calisolar announced it had acquired Vaughan, Ontario-based 6N Silicon, a maker of solar-grade silicon that will operate as a wholly owned subsidiary. “In addition, $22.5 million in funding was raised from existing Calisolar and 6N investors,” the companies said in a statement. “The new funds will be used to increase capacity at the Sunnyvale, California cell manufacturing facility and expand silicon purification operations in Vaughan, Ontario.” It’s sad to see 6N fall under foreign ownership so early in its life, but the good news is that Calisolar is likely to set up some module assembly in Ontario to take advantage of the feed-in-tariff program here. Given that its solar cells will contain 6N’s silicon, the company will be well positioned to meet Ontario’s local content requirements and even supply other cell/module makers.

Finally, I have a follow to my story about Vestas and the possibility it will lay roots in Ontario. I spoke Wednesday to the company’s head of global offshore markets, who spoke highly of the Trillium projects and called the opportunity to develop offshore wind in the Great Lakes “fantastic.” He wouldn’t say if Vestas plans to establish manufacturing in Ontario — which isn’t surprising — but given the potential in the Great Lakes, the liklihood of Trillium’s projects moving forward first, and the positive policy and regulatory environment in Ontario (including the feed-in-tariff program, which offers 19 cents per kilowatt-hour for offshore wind power), all the stars are aligned and it’s only a matter of time before Vestas makes its move.

After three and a half years of extensive study, which included exhaustive consultation with industry experts and review of peer-reviewed literature, the policy think tank released a report yesterday that says the nuclear industry will have a hard enough time just replacing older reactors in the existing global fleet. Fact is, nuclear’s contribution to the global power mix since 2000 has fallen, as has the number of reactors in the fleet. Meanwhile, 2008 was the first year since the mid-1950s that no new nuclear reactor was connected to the grid. There have been refurbishments and life extensions, and there has been a lot of talk about building new reactors, but so far the massive, fast-paced expansion the industry has touted simply isn’t materializing. There will be some modest growth, but CIGI doesn’t expect nuclear will play a major role in combatting climate change before 2030. Between now and then, it also says alternatives — solar, wind, energy efficiency, conservation, smart grid technologies — will gain momentum and may ultimately prevent nuclear projects from getting a foothold. “Research and development is proceeding at such a pace for most of these alternatives that improvements in performance and cost will likely arrive faster than for nuclear technology,” the study concluded.

Think about it: by 2030 it’s quite possible we’ll have energy storage breakthroughs that give intermittant renewables baseload characteristics, but instead of deploying them in massive multibillion-dollar chunks, they could be part of a distributed energy system that locates power closer to consumers, and deploys it quickly and when needed.

CIGI lists a number of issues that have held back expansion of the nuclear power market:

• High upfront cost — reactors that can cost up to $10 billion a piece.
• Labour shortages resulting from boomer retirements and lack of investment in training and education.
• Long construction lead time.
• High risk of cost overruns and delay.
• High reliance on government subsidies and public backstopping.
• Ongoing concerns with waste management.
• Alternatives becoming increasingly more competitive.

Now, the nuclear industry isn’t oblivious to these issues, and indeed, there is a move underway to build smaller reactors that can be built more quickly, on time, and at a more manageable cost and pace. Also, these mini reactors would fit better into a distributed generation model, and attempts at developing small thorium-fuelled reactors would address waste management and nuclear proliferation concerns. CIGI acknowledged these developments, but said we’re not likely to see thorium reactors or mini-reactors being adopted in any significant way before 2030 — again, too late to be relied on for climate-change mitigation.

All this said, there will be growth — in China, in India, and a handful of other countries — and there will be refurbishments. This should keep the industry busy for the next couple of decades. No jobs are likely at risk here. Over the long term, however, the future of the nuclear industry would appear more uncertain.

Most media coverage has highlighted the growth in laptops, mobile devices, servers and routers, but more eye-opening is the coming wave of “smart” grid devices that will need to have their own IP addresses. Thermostats, smart meters, dish washers, laundry machines/dryers, intelligent lighting (in homes and buildings), electric cars — really any appliances or devices or machine that will be controlled remotely through the Internet. Here’s a question I honestly have no answer to: Are energy management and smart grid/appliance companies — General Electric, for example — aware of this coming shortage of IP addresses, and have they taken the necessary measures to avoid the crisis?

Network World had an informative article on this issue in October.

Apparently it’s not difficult to migrate from IPv4 to IPv6, but it does require a lot of investment in software and hardware upgrades. Will the energy sector be caught off guard by this? I’d love to open this up for discussion from some more knowledgeable people… please enlighten us.

Are we being paranoid? Maybe — but then again, the privacy erosion that came rapidly with the Internet caught many consumers and businesses off guard. Certainly, it’s worth learning from past mistakes and thinking about these privacy issues before, rather than after, the infrastructure and supporting applications for the smart grid are rolled out. Cavoukian co-authored the paper with Jules Polonetsky and Christopher Wolf, who are co-chairs of the Washington-based Future of Privacy Forum. Polonetsky, it should be pointed out, is former chief privacy officer of AOL and, before that, online-advertising pioneer DoubleClick, which was acquired by Google in 2007 for $3.1 billion (U.S.).

Disclosure: I co-authored a consumer privacy book with Cavoukian back in 2002 called The Privacy Payoff.

By positioning smart meters as more of an infrastructure play the cost of deployment can be simply incorporated into annual capital budgets and households are more resigned to the fact that getting the new device is mandatory. Let’s face it, initially smart meters are about helping utilities manage their networks better — i.e. they can pinpoint problems and do more detailed analysis of individual household, neighbourhood, and community power consumption, improving system planning and maintenance operations and preparing utilities for increased distributed generation in their service territories.

By making this seem like some gift to consumers, as has been done, utilities open themselves up to consumers expecting certain results and wanting the option of getting or not getting the smart meter. I witness this every day in the e-mails I get and conversations I have with disgruntled Toronto Hydro customers. Later, once the smart meter infrastructure is in place, the utility can begin deploying the in-home monitors and Web applications that allow customers, on an optional basis, to better take advantage of time-of-use pricing and demand-response programs. This, of course, needs to be preceded by gradual price hikes that are blamed on the rising cost of new generation and grid renewal so that consumers more clearly see smart-meter-enabled applications as a way to offset those inevitable increases (which are simply the reality of our times, not the cause of smart meters).

So how, as my subject line hints, does time-of-use pricing potentially undermine programs that promote the uptake of domestic solar hot-water systems? I have one of these systems on my roof, and I like it. It works well. I’m not sure I use enough water every month to justify the payback (disclosure: I’m part of a pilot program, so when I say “payback” I’m referring to the typical installed cost of these systems), but it’s nice to know the hot water we use for our dishwasher, showers, and occasionally our laundry can come from the sun, not natural gas. But here’s the problem with time-of-use pricing. If I want to run the laundry or dishwasher when the hot water in my house is completely heated by the sun, I must do it during what are typically peak times under time-of-use schedules. It means I pay double for the electricity so I can save on the natural gas. Alternatively, I can do the laundry during off-peak hours when power is cheap, but the sun is down and my water tank relies more on natural gas.

So, it seems, this is a classic case of the law of unintended consequences — two programs aimed at reducing our use of non-renewable energy that end up undermining their respective objectives. This is a good argument against mandatory time-of-use pricing. At the very least, it’s a good argument for retail electricity providers such as Direct Energy, Bullfrog Power, and others who offer fixed-rate pricing. Using green-energy retailer Bullfrog Power, for example, is a nice complement to solar thermal because you pay the same rate for green electricity at any time of the day so are not penalized for running your dishwasher or laundry machine in the afternoon on a sunny day.

Just days before the Ontario government is expected to officially launch its much-anticipated feed-in tariff program (FIT), Energy and Infrastructure Minister George Smitherman announced that the province — through crown-owned utility Hydro One — will spend $2.3 billion on 20 projects designed to expand and upgrade its transmission system. The investment is expected to take place over three years and create 20,000 “green-collar” jobs in the process. Many of the projects are aimed at expanding capacity along existing corridors to carry more power from the Far North where there remains an abundance of untapped wind and hydroelectric projects. But some of the money will also go toward constructing enabler lines for areas of the province where renewable-energy development clusters have been identified. It’s being called an historic investment in transmission, the largest single commitment in decades, and the government said it was important to make this commitment to signal to the market that Ontario is serious about accommodating development of green-energy projects. Indeed, it’s a wise investment to announce just before the launch of the FIT program, and just after announcing a $250-million loan guarantee program dedicated to aboriginal-owned renewable generation and transmission projects.

A description of each projects can be found here. The province has also supplied a map showing where existing lines will be reinforced and where enabler lines will be built.

While it’s a shame to see another promising Canadian venture scooped up by a foreign company, it seems GridPoint is serious about building up its Canadian presence and plans to more than double Lixar’s numbers in Ottawa. Lixar has built up quite a following within the industry, and it has done so quietly. Again, I’ll have more on that in a few days… stay tuned. But for background on what Lixar has done in Ontario, click here.

UPDATE: Wrote an article last week that mentions more details on Lixar and its acquisition by GridPoint. Among the insights: “Back in November, few would have noticed that Lixar signed an exclusive distribution deal with HD Supply, which sells wholesale supplies to utilities, construction companies and other industrial customers. (Home Depot sold off HD Supply in 2007 for $10.4 billion). Through that relationship, Lixar has landed substantial smart-grid pilot projects with major U.S. utilities Xcel Energy and Progress Energy. Industry sources say the company is also working with Duke Energy, Florida Power & Light and National Grid, as well as Cisco. Neither GridPoint nor Lixar would confirm those relationships.”

It’s with great delight that I read about the handful of U.S. utilities that are seriously testing out various conservation, smart grid, storage and renewable technologies in an effort to extend greener offerings to customers. The latest is Duke Energy’s McAlpine Creek project, part of which involves the deployment of a 50 kilowatt solar PV array, consisting of 213 solar panels, at a substation that feeds the grid or, alternatively, can charge up a 500-kilowatt zinc-bromide battery system.

Duke hasn’t revealed any detail of the specific vendor technologies it is using, but I’m betting that the battery system for this particular pilot comes from Mass.-based Premium Power, which is largely operating in stealth mode at the moment. For one, the company’s TransFlow 2000 product fits the bill. It has 500 kilowatts of power and stores up to 500 kilowatts  2.8 megawatt-hours, is UL and CSA certified, and one of its main applications is for the time-shift of renewable generation energy. Boston Power, backed by VantagePoint Venture Partners, claims its storage product costs the same as pumped storage over the long term, or about 2 cents per kilowatt-hour. I also remind that last October, when Robert F. Kennedy Jr. spoke at an event in Toronto, he mentioned that Duke Energy had ordered $100 million worth of Premium Power’s batteries. An advisor and partner with VantagePoint, Kennedy also said a Canadian utility had ordered $100 million of the batteries as well.

Still haven’t nailed down who the Canadian utility is, but clearly Duke’s latest pilot project involves the TransFlow system. I spoke briefly with Bic Stevens, senior vice-president of business development at Premium Power and he remained cagey about the relationship with Duke. He would neither confirm nor deny that Duke was using the company’s product, though acknowledged it’s only a matter of time before details emerge. “As units get shipped out to big utilities they’re going to choose to advertise it or not advertise it, and eventually word will get out,” he said.

I would love to learn that it’s an Ontario utility (Ontario Power Generation, or Hydro One) testing out the Premium Power product, but I’m guessing — and this is purely a hunch — that Alberta’s EPCOR Utilities is the buyer. If there’s anyone reading this who has the scoop, please tell — I promise to keep a secret