Smart grid device update

Lynne Kiesling

Here’s a roundup of some developments in smart grid end user devices (in other words, I had a bunch of cool articles open about nifty innovations, so let’s round ‘em up so I can clear tabs in my browser!) that I hope you will find as interesting as I do:

  • From the NYT Gadgetwise blog, how to keep a green home, remotely. This post focuses on Tendril’s TREE service and the ability of homeowners (not the utility, homeowners) to alter the settings on their devices remotely. Think about how you can log in and set your DVR to record something that you forgot, or how Slingbox allows you to watch your DVR from a remote location. Same concept. Love it. For more on Tendril, here’s a really good CNet interview with Adrian Tuck, Tendril’s CEO; this interview indicates that Adrian, and Tendril, are thinking about the potential value of transactive capabilities in appliances and energy management systems. Another energy monitoring device profiled in this article is TED, The Energy Detective — simpler, and not as obviously extensible as Tendril’s devices to transactive capabilities like programming your appliances to be price responsive.
  • A neat little article from ecohome about home energy management, the value of real-time feedback, and some of the technologies that can make it happen. Again, focused only on the behavioral changes from making the information feedback more timely and more transparent; nothing specific about transactive capabilities or price-responsive devices. Still, a decent summary.
  • Geared mostly to commercial-sized electricity consumers, Cisco’s EnergyWise is a developing product and service category for Cisco. They have been getting quite a bit of attention over the past few months for their increasing interest in the smart grid and intelligent end-use device area. See also this GreenMonk post on Cisco. Energy information products and services targeted at commercial and office customers can give good bang-for-the-buck in terms of increased energy efficiency, reduced costs, and reduced emissions, because buildings consume almost 50% of the electricity consumed in the US, and there’s quite a bit of low hanging fruit. If the energy information feedback system identifies those low hanging fruit, it pays for itself quickly, to the benefit of everyone.
  • Also from GreenMonk, Tom Raftery talks to Jonathan Gay of Greenbox about their home energy management product and, happily, dynamic pricing! However, the rollout they are doing in Oklahoma uses only time-of-use pricing and is therefore not truly dynamic in the sense of being able to change as market and system conditions change. This is why I only gave Greenbox a D+ on my transactive test last September, which I should revisit soon …
  • GE is testing, and will start selling, intelligent appliances including heat pumps, water heaters, washers, dryers, and dishwashers, from earth2tech’s Katie Fehrenbacher. [A slight aside here: Katie Fehrenbacher is my favorite green tech writer right now, by far. She totally rules. As far as I'm concerned, she hits all of the important angles of the technologies and policies she covers.]
  • Finally, inhabitat reports on a neat device from the Greener Gadgets Competition — Tweet-a-Watt! Take an off-the-shelf Kill-a-Watt, hack it with some wireless technology and a receiver for it on your computer, and voila! The device to which you’ve connected the Tweet-a-Watt can report its daily electricity consumption to its Twitter account.

The more we can remove barriers to all of this kind of creativity, the better!

Hohm, and cloud computing

Lynne Kiesling

Last week I wrote about Microsoft’s Hohm energy management product announcement. Yesterday at earth2tech, Katie Fehrenbacher elaborated on the cloud computing angle, and how Microsoft’s Azure cloud computing service might change energy data storage, computing, and business models. Microsoft, Google, and others are all exploring cloud computing, for good reason:

The trend of turning to cloud computing as a more efficient way to utilize computing power will only grow, too. At the Structure 2009 conference, held by our sister site GigaOM, the CEO of content delivery network company Akamai, Peter Sagan, said that cloud computing was a much more efficient and green way to do computing, a sentiment that was echoed by executives from web companies, telecom firms and Internet infrastructure makers.

Transparency and representation in the Waxman-Markey vote

Lynne Kiesling

In his usual trenchant way, Jonathan Adler has hit upon the two things to which I object the most in the Waxman-Markey bill and vote. The first is the one about which I wrote in May: despite all of the tooth-gnashing and knicker-twisting about the cap-and-trade portions of the bill, the really egregious aspects of it are its old-school command-and-control characteristics.

The second is the implications of the quick, ramrod process for bringing the bill to vote before any of our so-called representatives could have physically been able to read the bill, or even to have their staff read it and analyze it for them. With so much horse trading and jockeying happening at the last minute, and without any actual physical copies of the actual final version of the bill upon which they were voting, how can the members of Congress really retain any shred of an argument that they are indeed representing their voters, and that there is any room for public involvement or discourse in debate? Sure, they are representing some of their constituents, the ones who have concentrated enough economic interests to engage in the wasteful rent-seeking that leads to things like last-minute 300-page amendments to appease ethanol producers. If you try to tell me that ethanol rent seeking is on balance value-creating, I will guffaw directly in your face. And this is not the first time this Congress has used this ramrod; the energy bill debate back in February had the same type of process, with House members voting on a bill that they clearly had not had time to read and process.

Jonathan notes:

If legislation of this sort, which establishes the first-ever regulatory controls on the most ubiquitous byproduct of modern industrial society, imposes new efficiency requirements on all-manner of appliances and consumer products, could trigger the imposition of tariffs on foreign products (likely in violation of U.S. trade commitments), furthers the federal government’s environmentally destructive love affair with corn-based ethanol, contains numerous provisions drafted or urged by various special interest groups, and (at least in one version) contained provisions designed to create a national housing code, can be adopted by a House of Congress within hours of being written (let alone becoming public), then any claim of transparency in government is a farce.

This is depressing. With this Congress, have we finally met Ben Franklin’s curse?

“Well, Doctor, what have we got—a Republic or a Monarchy?”

“A Republic, if you can keep it.”

Is either Google or Facebook the model of the Internet’s future?

Lynne Kiesling

Mark Zuckerberg, Facebook’s founder, claims that Google’s information and relationship model is top-down, Big Brother, while Facebook’s is bottom up and organic means of creating and gathering information based on social networks. He’s been making this claim quite vocally lately, and this Wired article provides a detailed discussion of the issues raised in the competition between Facebook and Google “for the future of the Internet” <doom music>DAH DAH DUH</doom music>.

I think Zuckerberg has a point in one area, and that is searches that arise from recommendations from your friends.

Today, the Google-Facebook rivalry isn’t just going strong, it has evolved into a full-blown battle over the future of the Internet—its structure, design, and utility. For the last decade or so, the Web has been defined by Google’s algorithms—rigorous and efficient equations that parse practically every byte of online activity to build a dispassionate atlas of the online world. Facebook CEO Mark Zuckerberg envisions a more personalized, humanized Web, where our network of friends, colleagues, peers, and family is our primary source of information, just as it is offline. In Zuckerberg’s vision, users will query this “social graph” to find a doctor, the best camera, or someone to hire—rather than tapping the cold mathematics of a Google search. It is a complete rethinking of how we navigate the online world, one that places Facebook right at the center. In other words, right where Google is now.

But here’s the challenge: one core feature that is a key to Facebook’s success may also be its biggest limitation, and that’s what its users will and will not allow Facebook to do with their private information. There are plenty of Facebook users who, like me, are fairly specific about the breadth and depth of our information sharing, and how far down the social network web we allow that information to go. Facebook settings allow us to control that, and if they didn’t, lots of folks (including me) would not use it.

Similarly, Google is very clear in its position about how it treats private information that is “in the cloud”, but I don’t think its business model is going to be as constrained by privacy concerns as Facebook’s will be.

My answer to the question heading this post is “who knows?” Not having a crystal ball, I suspect that both approaches can probably coexist, and will interact in ways that morph into some other model. I don’t think Google v. Facebook is like VHS v. Betamax, or railroad gauges, or Blue Ray v. HD. There’s enough heterogeneity among individuals using the Internet, and enough plasticity among platform models, that coexistence and synthesis are possible.

Oooh, that’s way more abstract than I meant to be this early on a Monday …

Sunday recipe post: Lynne’s perfect pancakes

Lynne Kiesling

I’ve kind of gotten out of the habit of posting about non-economics things (except for the occasional concert report); a couple of years ago I probably paid too much attention to some reader’s snarky comment about it, so I’ve not shared much about cooking, cycling, triathlon, wine, house renovation, etc. since then. Like me, this place is primarily, but not solely, about economics ideas, analyses, and discussions.

So I’m going to celebrate a gorgeous, sunny Sunday in Chicago by sharing a regular Sunday brunch item in the KP household, one that I’ve been tweaking for a long time. Based on a widely-available recipe for IHOP buttermilk pancakes, here’s my tweaked, and yummy, version:

Lynne’s Perfect Pancakes (makes 2 servings)

1 egg (I prefer extra large)
2 T Splenda
2 T sugar
2 T butter, melted
2 T canola oil
Fresh grated nutmeg to taste
1/2 t salt
1 t baking soda
1 t baking powder
1 1/4 c buttermilk
1/4  c ground flax seeds
1/2 c white unbleached flour (I use King Arthur unbleached)
1/2 c King Arthur white whole wheat flour
3/4 c frozen blueberries, still frozen

Whisk together the egg, Splenda, and sugar. Add butter and oil while whisking to emulsify. Whisk in salt, nutmeg, and leavenings. Pour in buttermilk and blend. Fold in ground flax seeds and both flours; combine just until wet. Fold in frozen blueberries. Cook as you like on a griddle.

I used to use only Splenda and only canola oil because my blood sugar’s a bit wonky, but the sugar and butter really are crucial to the mouthfeel and flavor and appearance of the pancakes, so this is the compromise.

Happy eating!

Blog: The Next 100

Lynne Kiesling

The Next 100 is an interesting blog from some folks at PG&E; check it out and see what you think. They cover a range of energy, technology, and environment topics that will resonate with readers of Knowledge Problem, Environmental Economics, and the Wall Street Journal’s Environmental Capital. Although they do seem, at least in the current posts, to be staying assiduously away from policy analysis …

In particular, I am grateful for their post on the life cycle emissions profiles of different ways of transporting people. This study cited in their posts suggests “Rail buffs, gird your loins: travel by train can actually produce more greenhouse gas emissions than flying.” I’d like to see this analysis repeated for freight, to see if my thought that rail generates fewer emissions than trucks carrying equivalent tonnage an equivalent distance is correct.

Fixing airport security

Lynne Kiesling

Having just returned from a 1.5-week, three-conference trip, I am having my now-usual visceral reaction to the thought of another airport experience — nausea, which I hope diminishes by the time of my next trip in early August. Thus I’m in violent (irony intended) agreement with a post on Bruce Schneier’s blog today entitled “fixing airport security“, which I recommend reading. Schneier reiterates what we all realize by now: “Airport security is more about CYA than anything else: defending against what the terrorists did last time.”

But he also delves into another aspect that is well worth our attention — the lack of transparency with respect to traveler rules, rights, and responsibilities is due to what I would call the murky legal status of airport security, and the effect of this on both traveling citizens and visitors to the US:

Let’s start with the no-fly and watch lists. Right now, everything about them is secret: You can’t find out if you’re on one, or who put you there and why, and you can’t clear your name if you’re innocent. This Kafkaesque scenario is so un-American it’s embarrassing. Obama should make the no-fly list subject to judicial review.

Then, move on to the checkpoints themselves. What are our rights? What powers do the TSA officers have? If we’re asked “friendly” questions by behavioral detection officers, are we allowed not to answer? If we object to the rough handling of ourselves or our belongings, can the TSA official retaliate against us by putting us on a watch list? Obama should make the rules clear and explicit, and allow people to bring legal action against the TSA for violating those rules; otherwise, airport checkpoints will remain a Constitution-free zone in our country. …

The Constitution provides us, both Americans and visitors to America, with strong protections against invasive police searches. Two exceptions come into play at airport security checkpoints. The first is “implied consent,” which means that you cannot refuse to be searched; your consent is implied when you purchased your ticket. And the second is “plain view,” which means that if the TSA officer happens to see something unrelated to airport security while screening you, he is allowed to act on that.

Both of these principles are well established and make sense, but it’s their combination that turns airport security checkpoints into police-state-like checkpoints.

Unfortunately, the line is blurry between security-enhancing search encompassed within “implied consent” and unreasonable search that borders on harassment and does little to enhance security and reduce terrorist threats. Injecting some transparency and creating procedures that limit the rights of the TSA and enable individuals to query and challenge the TSA would create some much-needed accountability, and would make airports less of a police state than they currently are.

I also wrote about Bruce Schneier on airport “security theater” in January 2009.

Microsoft’s Hohm joins the smart grid fray

Lynne Kiesling

Microsoft announces its new Hohm service:

Called “Hohm” (presumably, a play on the combination of “home and “Ohm”), the product will take advantage of smart grid data on energy use when it’s available. Even when it’s not, however, Hohm will allow users to input their own details and share the results of their efficiency efforts, adding a bit of a Web 2.0 sheen to matters. The move comes after a number of other major IT powers, including Google and Cisco, have announced their own efforts in the area, suggesting that a lot of people think this market is about to take off.

The Ars Technica article goes on to say that Microsoft will use their cloud computing service to store data, and that they will take advantage of increasing standardization as smart grid standards evolve (I must voice a little skepticism, because it’s not clear to me that Microsoft really buys in to interoperability with non-Microsoft products and services; any Mac user who has given a Power Point presentation with images on a Windows box knows exactly what I mean).

Another interesting “Web 2.0″ feature in Hohm is the ability to share and compare your use, your energy efficiency tips and tricks, and other information such as product reviews of smart appliances. Microsoft is not at the vanguard in this (the real leader in this space is Tendril), but their incorporation of this social media capability is a strong reinforcement of the use of such applications and communication models to change consumer behavior.

Another Waxman-Markey blemish: reinforcing the obsolete utility business model

Lynne Kiesling

Over the past few days Josh Blonz at Common Tragedies had a couple of posts (here and here) about the permit allocation issues in the Waxman-Markey bill, and yesterday Tim Haab picked up the conversation thread. They are both focusing on the welfare and efficiency implications of the proposal to allocate permits to “LDCs”, local distribution companies — in other words, regulated utilities. The social engineering objective of the bill’s authors is, apparently, to use the economic regulation under which such companies operate as a constraint to prevent the utility from using carbon pricing as a justification to raise the retail price of electric power service to, in particular, residential customers.

The posts and the associated comments flesh out two of the pricing issues here. First, Josh focuses on the fact that even with the allocation of permits to LDCs, pricing carbon will increase the price of all goods that use carbon-intensive production methods, so that means that the prices of consumer products will rise (Josh’s “indirect” costs) even if their retail electricity prices (“direct” costs) do not. Second, Rich Sweeney’s comment on Tim’s post points out the distinction between using the allowance revenue to reduce the fixed portion of the retail electricity bill (the wires charge) or the per-kwh electricity price. I think the idea is that if a LDC’s activity is sufficiently low-carbon that it can sell some of its allocated permits, how will they return that revenue to their customers?

But this discussion, and the (extremely flawed) Waxman-Markey bill on which the discussion is based, take some pretty serious regulatory and industrial organization questions for granted. For an extreme example, let’s take Texas, which is the only state in the US that has created a successful and competitive retail electricity market. The only regulated entities in the Texas market are the wires companies (transmission and distribution utilities, or TDUs, in the Texas lingo). Thus in the Waxman-Markey formulation, the entities that would receive allocated carbon permits would be these wires companies — the TDUs are the LDCs in Texas (they are also LSEs, or load-serving entities; this industry suffers from acronym proliferation that only an engineer or a bureaucrat could love!). This implies that any financial impact of the revenue from selling permits would show up as a reduction in the wires charge, not the electricity price. So far, so good, for keeping marginal incentives intact.

There are still two questions here. First, exactly how can a regulated wires company increase its carbon productivity/decrease its carbon intensity? The decisions it can make within the firm don’t really have much carbon impact, unless the wires company is allocated some right to the carbon effects of building transmission out to isolated renewables locations. But I think that whoever is building that wind farm or solar thermal installation would want to claim all of those rights, so there’s room for conflict (and/or Coasian bargaining) here. Second, Rich’s comment presumes that the wires charge is fixed, which has been the case for decades — but it’s not at all clear that a fixed charge for the transportation service is economically efficient. In fact, there’s a substantial congestion-related argument that the wires charge should be a two-part tariff, with a fixed component and a volume component that reflects congestion (and provides the signal for investment in wires capacity). With such a wires pricing structure, it complicates the permit revenue rebate transaction, particularly since this is still all intermediated through the state regulators.

At the other end of the spectrum, the relationship seems to be more straightforward in the states that continue to be vertically integrated and fully regulated, at least in the short run. In that case, regulators retain firm control over all of the decisions and pricing along the entire value chain, from generation through end use. But that’s actually where my biggest objection to the LDC proposal kicks in

My biggest objection to the LDC proposal is this: by presuming that the existing utility industry structure is going to persist and by conditioning what are meant to be long-lived carbon permit transactions on the continuation of the LDC-customer regulated transaction, the Waxman-Market bill actually entrenches the utility business model even further than it already is. Despite the fact that retail service provision can be a competitive industry and the only remaining “natural monopoly” network cost structure features in this industry are in the wires portion of the value chain, the obsolete vertically-integrated business model persists in about half of the states in the US. Smart grid technology, particularly the meter and myriad end-use applications and devices, reinforce the potential competition in retail electricity markets. Consumers and entrepreneurs would benefit from reducing entry barriers in retail electricity service provision.

The Waxman-Markey LDC proposal stifles that evolution of the electricity industry away from its historical, regulatorily-embedded vertical integration. By presuming the persistence of a regulated LDC with a retail relationship with end-use customers, the Waxman-Markey bill reinforces and exacerbates that persistence beyond its already overdue obsolescence. It contributes to regulatory and organizational inertia.

If you expect/hope to see more product differentiation and more vibrant retail products and services involving electricity service, the Waxman-Markey LDC proposal will work in precisely the opposite direction. I sincerely hope I am wrong, but the history of politics and institutional inertia in this industry suggest that I am not.