How Energy is Like Web 2.0

Web 2.0 and Alternative Energy Sometimes Share a Stage

If you travel in Internet circles and are tracking developments in clean tech or alternative energy, you have noticed that Web 2.0 and energy have sometimes shared a stage.

We had, for example, climate change fighter Al Gore speaking at O’Reilly’s recent Web 2.0 Summit (update: produced with TechWeb). At least one energy-related play took the stage there as well. Elon Musk, founder of electric-car maker Tesla was there as well.

The Link Between Energy and Web 2.0 Seems Tenuous

Al Gore and others have cited the potential of Web 2.0 to reach, connect, galvanize and organize consumers and social entrepreneurs to fight climate change.

And Web 2.0 and energy technology have both attracted lots of investment in recent years.

Nonetheless, the link between Web 2.0 and energy would seem to be tenuous. Indeed, as Michael Arrington of TechCrunch noted about Musk’s appearance at the Web 2.0 conference, “What do space flights and electric cars have to do with Web 2.0? Absolutely nothing.”

Future of Energy Depends on Some Principles at the Heart of Web 2.0

But Arrington missed an important connection between energy and Web 2.0 at the level of the principles that are driving both.

Web 2.0 means different things to different people but at its core there are a few phenomena that underpin the success of some of today’s biggest internet businesses and have accounted for a large changes in consumer behavior. These phenomena include

  • The long tail
  • Broadcasting to consumers gives way to dialog
  • User participation & empowerment; the rise of consumer-created content

(Here I face an audience problem. If you are a reader from the Internet world—the types of folks I talked to every day at Jupiter and Forrester, the list above needs no explanation. If you are a reader from the energy world, this may seem like impenetrable jargon. Sorry about that I hope that what follows clears things up a little.)

You can see these phenomena at work in the coming energy environment.

The Long Tail. The premise of The Long Tail is that blockbuster products are not the only interesting ones. With the Internet reducing the cost of discovery and distribution, viable marketplaces can be created by aggregating a large number of niche products which collectively attract a large number of consumers.

What we see in the energy world is a gradual expansion beyond blockbuster sources of energy (coal, gas and oil) to a more diverse set of energy sources including wind, solar and biomass. According to the US Department of Energy, 87% of energy production in 2006 was from top 4 sources but that will drop to 82% by the year 2030. Niche sources of energy are arriving on the seen that complement the dominant sources and may create a Long Tail energy market. The New York Times recently reported one whimsical but technically feasible example: biodiesel made from coffee grounds.

The Internet is an enabling technology for Long Tail markets and no real analog exists in the energy sphere. But visions of an upgraded electrical grid will certainly lower electricity distribution costs and create more liquid markets for electricity that could make small-scale providers viable.

From Broadcasting to Dialog. In the old world of media and marketing, marketers and media companies broadcast their messages to passive consumers. In the Web 2.0 world, consumers are understood to be active participants in the creation of brands and of media itself. Utilities today have a broadcast relationship with their customers. Utilities provide power and opaque monthly bills and expect nothing but payment from their customers.

But we are moving toward a world in which power customers will be in dialog with their suppliers. They will receive regular or even real-time information about electricity pricing and demand, and will be able to manually or automatically adjust their energy demand to take advantage of variable pricing. Utilities are deploying smart meters with this scenario in mind. (A recent post of mine discusses this.) Consumers will also be able to see how their power consumption compares to the averages in their area and with the power of this collective intelligence modify their demand. A startup called Greenbox is working on this.

User Participation. Online user participation this can refer to user comments and ratings, blogging and user-generated advertising, among other things. In the energy sphere it includes phenomena like user-generated power sources—such as rooftop solar panels or personal wind microturbines–being connected not only to homes but back to the power grid, so that consumers can sell excess power back to utilities when they don’t need it themselves.

Overall, a lot of what I see happening in energy involves exploiting connectivity, communication, decentralization, and the aggregation of small-scale inputs. Another one that has been theorized along these likes has to do with plug-in electric cars, whose batteries, by the millions, could be used as a distributed form of electrical storage available to local or even regional power users when cars are idle, fully charged and connected to the grid in their garages.

Power at an Intimate Scale

Some of these ideas were explored a few years back by Rebecca Willis, an independent researcher and Vice-Chair of the UK Sustainable Development Commission, in a great “pamphlet” titled “Grid 2.0: The next generation”.

Her vision of how electric power generation will change in the future can be captured in a couple of quotes from the document:

In Grid 2.0, much more power will be generated at community and household level through renewable and low-carbon technologies like solar and wind power, small-scale combined heat-and-power, heat pumps and biomass boilers.

Microgrids, peer-to-peer networks linking generators within a village, housing estate or university, for example, will allow efficient use of smallscale generation

I have not seen her ideas cited much over here, perhaps because they were locked up in a PDF file; perhaps because she’s UK-based. But her work is worth reading.

Do you buy the idea that the future of energy will exhibit some of these Web 2.0 characteristics? I’d love to hear your thoughts.

Advertisements

3 Comments

Filed under energy storage, grid, oil, solar, transportation

3 responses to “How Energy is Like Web 2.0

  1. Hi David — Like the above article and appreciate the mention of Web 2.0 Summit. I just wanted to flag that this event is co-produced by TechWeb, the company that I work for. I was hoping you could update your post to reflect that. Additionally, I recognize your interest in alternative energy and green research and wanted to encourage you to check out Energy Camp (http://www.energycamp.org/) – it’s an open discussion format for anyone interested in reducing IT-related carbon footprints.

  2. Better to be more simple. The smart grid is Web 1.0 for the power grid. Pre-web telephony relied on centralization of systems (voice mail, three way calling, directory assistance, centrex) where the distribution network “owned” the services that ran on the network.

    Open IP accessibility and the availability of symmetrical bandwidth allowed any node of the network to provide services. Net neutrality prevented the carriers from confiscating profits from edge-based applications.

    As a result, enormous economic potential was released, drawing investment and creating large, profitable entities that could not function without the underlying transport infrastructure.

    What is needed is a similar “grid neutrality”. The edge of the power network would be engineered to be perfectly two-way, and all nodes would be addressable to identify use and production. Any organization could create a “power site” and sell there electrons on the open market. The grid would charge for carriage based on volume alone, with tiered pricing for larger production to encourage some level of clustering in cases with larger potential like solar fields.

    The power companies would likely sell their production assets like dams and plants as the greater supply and availability of capital would expose their inefficient use of capital. Some plants would be unsalable.

    A few things would result:
    1. Energy production economics would be exposed as relatively poor uses of capital. Like “content” on the net, most would generate little profits, and many would be poor uses of profits. However, some companies would figure out how to capitalize, and they would get disproportionate returns.
    2. The “killer app” on the grid would likely be storage, not production, at first. Companies would arise that would use clever forms of demand balancing to arbitrage the market. They might use dams and pumps, compressed air, supercapacitors, or otherwise, or they might just find ways to use energy that was super-cheap at points when demand was low to produce products that require vast, cheap energy (aluminum smelting).
    3. The ebay of power will be an unbelievable company, but the paypal will be better.
    4. The grid will be used as a telecom network by some of the edge-based vendors.
    5. Power recapture devices (recapturing energy loss from water heaters, etc) will be common features in homes.

    Most importantly, WE CANNOT PREDICT WHAT WILL HAPPEN! No one could predict what came out of the web (except that there would be porn…). Opportunity draws capital, and ideas. In addition, the transport carriers will always try to close the network, like cable or cellular, but will be stronger, more profitable companies if it is open.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s