By Tyler Lancaster, Connexion Energy Team Intern

 

Most of the clean technology industry depends heavily on the political climates and the availability of subsidies or incentives to generate demand. As we’ve seen with the solar and wind industries, political squabbles and poor business planning create a logjam in the installed capacity increases of wind power and the rapid technological innovation of solar technologies. While solar and wind have faltered in recent months, one sector’s activity indicates a vast growth potential: the smart grid.

 

Whereas promises of renewable technology startups becoming hot commodities on the merger and acquisitions market haven’t come to fruition, smart grid companies and startups continue their hot streak. No transaction looms larger than Eaton’s recent $11.8 billion acquisition of Cooper Industries. Cooper Industries, an electrical equipment supplier, will augment Eaton’s ability to effectively manage modern electrical power, which becomes increasingly reliant on smart grid automation controls. The combination of these two companies will allow Eaton to compete with the likes of Honeywell and Johnson Controls in the smart grid arena. The question becomes, over the next 5-10 years, will smart grid business provide the incentive for continued investment and development, and can it prompt overall growth of clean technologies?

 

Perhaps the most immediate benefit of smart grid technology is the potential for energy efficiency savings. While many have focused for years on making appliances, computers, HVAC products and lighting more efficient, the potential savings of implementing control systems for electrical usage within a building present enormous potential. For example, computers sitting idle can be instructed to automatically shut down with smart control technology, thus drastically reducing the amount of energy wasted as a result of human inefficiency. The American Council for an Energy-Efficient Economy has released a new report suggesting a 12-22 percent reduction of energy usage by approaching efficiency from a systems standpoint. One case study on the industrial company Air Liquide indicated a payback time on smart systems of less than one year. Undoubtedly, the economic potential of smart systems is proven and significant.

 

Additionally, the cleantech industry is becoming increasingly aware of the need for a modernized power distribution infrastructure to better serve the vast array of technologies arriving to the energy marketplace. America’s approximately century-old power distribution grid simply isn’t built to handle the confluence of distributed and centralized power generation. While distributed power generation could prove exponentially helpful in managing the peaks and valleys of daily energy demand, the tools to optimize the interaction between renewables and the grid aren’t available today. In order to develop such tools, advanced monitoring of electricity usage by the virtue of smart meter and grid technology must become commonplace. Many utility customers are charged a premium for using electricity during peak hours.

 

 

The graph below shows the potential impact of solar PV on mitigating price peaks during peak demand. The smart grid could provide the means for distributed power generation such as solar PV to eliminate peak premiums by effectively managing the ebb and flow of electricity channels.

 

Image from Mills, Lawrence Berkeley National Lab

By driving growth of the smart grid sector, the cleantech industry will not only introduce a means for reducing energy usage with fast payback times but also prepare America’s infrastructure for the introduction of distributed power generation to the energy mixture. The smart grid presents a bright economic opportunity for both businesses and homes seeking to reduce their monthly energy bills. In addition, companies (like Eaton) who produce smart grid hardware stand to generate large revenues as smart grid technology becomes increasingly pertinent to infrastructure updates. Despite a bleak economic outlook for some sectors of the cleantech industry, perhaps the smart grid can carry the load during tumultuous political climates and shaky business schemes as renewables enter the commercial sphere.