Software is Sustainable
By Ed Carroll, director of sales & marketing, Online Business Systems
On July 26th, Governor Kulongoski signed the 2007 Oregon Innovation Plan, marking the state’s largest investment into innovation-based economic development and increasing Oregon’s innovation capacity and ability to compete in the global economy. Keys to this plan are two funded initiatives in sustainable energy innovation (ocean wave and bio-economy research). Additionally, the agendas for a number of industry and association-led conferences are focused on sustainability and several associations specifically targeted at sustainability have been created.
Many of the software engineers who are members of the Software Association of Oregon have expressed their interest in the sustainable energy and/or the so called ‘Green’ movement. But what is sustainable, or green, about something as intangible as software? As it turns out, many of the advances promoted by both movements are derived from or driven by software.
Clean energy – the foundation for tomorrow’s economy?
The primary topic of sustainability involves energy exploitation. As energy consumption rises, so does awareness of the devastating effect energy production and consumption has on the environment, our personal health and our economy on a global level. The reported potential for crisis is huge – ranging from global economic recession(s) to catastrophic global warming and scenarios that include the extinction of life on Earth. If the threat of extinction does not instill a sense of urgency, well …
Whether people believe the doomsday scenarios or prefer to keep their heads buried in the sand does not really matter. What is interesting is that there is enough sense of urgency by enough people to quite possibly achieve what Glen Hiemstra predicted in his book, “Turning the Future into Revenue.”
“All signs point toward nothing less than a re-invention of our energy future within the next quarter century or so. The innovations and alternatives that will be needed will probably represent the largest business revenue opportunity ever.”
I reviewed Mr. Hiemstra’s book in my previous article “Turning the Future into Revenue – a Software Perspective Review” (click here to read the article).
If you think about our current global economy and realize the extent to which that economy is based on carbon fuels (oil, coal and natural gas), then perhaps you can grasp the extent of the sustainability opportunity. The sustainability movement is about, among other things, creating a new basis for the future economy of the world. Just as carbon fuels are a foundation of today’s economy, the future economy could be based on clean energy sources that do not hurt the environment, that have a sustaining effect on our planet, and that can grow or shrink as an area’s population grows and shrinks. Energy sources that might fit this need and that are being pursued today include expanding the capabilities of solar, wind, bio-fuels and hydrogen fuel cells.
Clean technology drives energy innovation
Fundamental to all of the sustainable energy sources is the use of new technology to drive the management, distribution and optimization – as well as exploitation and consumption – of energy; and fundamental to these “clean technologies” is software.
The excitement behind the movement is fueling a surge in the investment community much like the hype of the Internet investment craze of the late 1990s. While some investments are seed money into solutions that look far off into the future, many investments are into technologies that are being implemented today. But the excitement is heating up, even though the switch from a carbon-based energy source to sustainable, alternative sources will not happen for a decade.
The utility industry is notoriously conservative and penny-foolish when it comes to investing in new technologies. Major players such as oil companies have little incentive to push for new fuel sources when they can pull in $10 billion in profits within a single quarter by selling oil. Therefore it is unreasonable to expect “clean technologies” to change the world anytime soon. A more reasonable expectation might be that this technology shift will happen slowly over the next 20 years. This actually might be a good thing, because some of the better ideas (in my opinion) will require significant grass roots growth before they will be accepted by the utility and big oil companies.
Software as the basis for clean technology companies
There are some interesting technologies being developed by and for utility company operations, and these clean technologies all rely on software. Apparently, many utilities are jumping on the business-automation bandwagon (installing ERP systems) in order to improve their internal business practices. One interesting component of these efforts is the use of business intelligence (BI) software to optimize the energy source supply chain. This is an example of something a utility company can do today to reduce carbon fuel consumption.
Software is the active ingredient in a number of other existing clean technologies. For example, Serveron Corporation, located in Hillsboro, Oregon, has a software-intensive product that monitors and reports on the health of electric power transformers for the electric utilities – greatly reducing maintenance and emergency repair cost by reducing the likelihood of a surprise outage.
Another example of existing products that interact with the current power grid is one that allows a utility customer to switch between a local power source and that provided by the utility (typically called net monitoring).
The concept of sustainability encompasses a broad spectrum of ideas. For example, software is the key controller that optimizes the fuel consumption of a hybrid auto engine. And it goes without saying that most clean technologies, facilities, products and systems are often designed with software tools.
One of the ways the sustainability movement is similar to the Internet bubble is in the hype about the movement. There is a plethora of blogs, articles and web sites dedicated to the movement. An interesting soon-to-be-launched site is “OsoEco” (www.osoeco.com). This site will position itself as a trusted source for accessing sustainable products, services and information, connecting the “ethical” consumer with the eco-conscious vendor. OsoEco’s mantra will be to “make sustainability fun and approachable,” therefore a key differentiator from other eco-shopping portals will be its combination of “social shopping” with fun social networking tools that will enable users to research, rate and talk about how truly “green” a product or company is.
Smart grid: next-generation electrical power grid
However, the Holy Grail of sustainability where software is concerned is called the “smart grid.” The smart grid is the next-generation electrical power grid, fashioned after a computer network; or perhaps better said, coupled with a digital network. The idea is to use computing intelligence to optimize the movement of electrical power throughout the grid. The Center for Smart Energy defines in its recent report, “The Emerging Smart Grid,” the following seven key characteristics for a modern, optimized grid:
- Self-healing. A grid able to rapidly detect, analyze, respond and restore from perturbations.
- Empower and incorporate the consumer. The ability to incorporate consumer equipment and behavior in the design and operation of the grid.
- Tolerant of attack. A grid that mitigates and stands resilient to physical and cyber security attacks.
- Provides power quality needed by 21st-century users. A grid that provides a quality of power consistent with consumer and industry needs.
- Accommodates a wide variety of generation options. A grid that accommodates a wide variety of local and regional generation technologies (this is often called “distributed power”).
- Fully enables maturing electricity markets. Allows competitive markets for those who want them.
- Optimizes assets. A grid that uses IT and monitoring to continually optimize its capital assets while minimizing operations and maintenance costs.
Distributed power concept
One idea that is often combined with the hype around the smart grid is the concept of using power sourced from a large and wide distribution of sources. Imagine if the power collection capacity of solar cells was 5 to 10 times the capacity of current market products, and those high-capacity cells were mounted on the roof of every building in a community; perhaps 500,000 to 2,000,000 homes and businesses. Issues such as redundancy, peak load leveling and single-source security vulnerability go away. Of course other issues replace these, such as capacity storage, control of the grid, protection from hacking and optimization. Some people even dream of an abundance of energy use information from every appliance in a home or office building being sent to control software that would manage who gets what power when, in order to optimize consumption.
Some of these ideas may be far-fetched (I’m not excited about my refrigerator talking to the power grid), but a distributed smart grid could be a very powerful clean technology idea. This is because the idea does not rely only on selling software to utilities – a notoriously hard sell. Rather, an entrepreneur with an affordable, easily user-interfaced solar panel (or solar curtain) that is 10 times more capable than current market products could capture the market in a large way away from the utilities.
Conclusion – a clean energy revolution, from the grass roots (bio fuel?)
If Mr. Hiemstra is right, we should all be looking toward clean technology as our ticket for turning the future into revenue. But there are some important concerns with this bandwagon that are worth thinking through before jumping too far, or head first.
The current interest in the green movement is popular mainly due to the rapid rise in world prices for carbon fuels coupled with a growing concern about greenhouse gas emissions. This is problematic because there is an underlying assumption that carbon fuel prices will remain high. Although consumers seem to be absorbing the higher fuel prices (indicated by not reducing the number of miles they drive their SUVs), I maintain that consumers are greedy and will jump to whatever fuel source is cheapest. We might be in a window of opportunity with the current high carbon fuel prices, if we can ride this price curve long enough to sufficiently fund some real alternative fuel sources. However, I fear that the sustainability movement bubble will burst when one of these solutions breaks out from the rest with an easy, inexpensive alternative that does not require a fundamental paradigm shift for the general consumer. The danger becomes one in which the bubble elongates and the dream of a true paradigm shift toward clean, efficient and affordable energy sources is delayed for decades. What would happen to the entire movement if a new, major, untapped oil reserve were found? Will people stop driving their global-warming SUVs?
Selling to utilities is a hard sell. For me, the more interesting ideas are those that enable distributed power. Selling to consumers is much easier than selling to utilities, and there are a lot more consumers. A number of software products are being launched that will track water, electrical and gas utilization, which might be coupled to home-automation software that controls lights, media and security, or even water temperature in the bath. These products are being developed by both small start-ups and large conglomerates. The price of entry is good hardware (i.e., superior solar cells) and software (that gives the consumer control of their energy sources) with an easy user interface and that is affordable. An entrepreneur who can pull products together that meet these criteria might capitalize well in the current clean technology market climate. And just maybe there will be a clean energy revolution after all, from the grass roots (bio fuel?).
About the author
Ed Carroll has been building software products for more than 25 years, with particular expertise in automating economic analyses, decision support and supply-chain management processes. He has provided strategic technology leadership in roles such as the vice president of engineering for Egghead.com, director of technology at Nike and director of software engineering at Boeing. Ed can be reached at ecarroll@obsglobal.com.
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