A recent Leadership Conference hosted by eMeter (a smart meter company purchased by industrial giant Siemens in December 2011) in south San Francisco, revealed how entrepreneurs are trying to bring the staid electric utility industry into the 21^st century.  Under the theme of “disruptive technology,” six different companies were featured in an eye-opening panel on May 23.

The stage for this panel discussion was set by eMeter co-founder and CTO Larsh Johnson and Chris King, a longtime consultant and expert on emerging competitive markets.  They focused their opening remarks on solar photovoltaics (PV) and demand response (DR), two technologies that are turning fundamental assumptions about the electric utility industry upside down.

How? Solar PV can be installed on customer rooftops, generating power in a distributed manner without any air emissions.  Within the next few years, the cost of solar PV will be at parity with large centralized power plants in the United States, and throughout the world.  DR, one could argue, is even more radical.  When coupled with dynamic pricing, DR can meet up to 20% of the total peak power needs of the United States by simply shifting demand at the customer site, creating value without any power generation at all!

Not surprisingly, the panelists echoed similar themes of “disruption.” For example, Asim Hussain, director of product marketing for Bloom Energy, described the virtues of his company’s fuel cell, a 200 kW device that he claimed is the most efficient power plant in the world, converting 60% of natural gas or biogas fuel into power.  These devices also have islanding capability, which enables commercial customers such as Walmart, Apple, and AT&T to create microgrids.

Energy Hub is tapping the hidden power of thermostats.  It offers software that can transform ordinary thermostats into smart devices in a cloud network that then allows ordinary residents to participate in DR programs.  According to Energy Hub CEO Seth Frader-Thompson, 90% of installed thermostats today are programmed incorrectly, whereas 85% could meet the U.S. Environmental Protection Agency’s Energy Star energy efficiency standards.  The 100,000 thermostats the company is currently managing are being sold by under a white label strategy by original manufacturers, cable, and telecom firms – and yes, even utilities.Demand

Nest takes a different approach to thermostats — but is aiming for the same end result.  The company is selling a super-premium thermostat that costs $250 and first came on the market last October.  Designed by some of the folks that brought us the Apple iPod, the sleek look of this thermostat is meant to make efficiency cool and fun.  This “smart” thermostat actually adjusts its settings as it learns your lifestyle and preferences.  According to the company’s Scott McGaraghan, these Nest thermostats have sparked new owners to hold installation parties that they then posted on Facebook.

Speaking of Facebook, Simple Energy is focused on tapping social media and social game mechanics to increase participation in utility demand side management (DSM) programs.  Today, most consumers spend roughly 6 minutes per year interacting with their utility.  This compares to the more than 14,000 minutes consumers spend on average with Facebook, a dramatic difference that this company is trying to exploit.  “We want to meet the customer on a platform they are already using, engage with them, and help drive energy savings up,” said Justin Seagall, the founder and executive vice president of the firm.  The company is seeking to fill a niche in the smart grid movement that utilities have so far been unable to fill.

Ed Cazelet, founder and CEO of TeMix, Inc. and VP of Megawatt Storage Farms, spoke about two disruptive concepts.  The first was advanced energy storage, which he claimed was the cheapest way to integrate variable renewables such as solar and wind power.  So, what then is the problem? The value of storage has not been monetized yet, highlighting the importance of market designs.  His second (but related) concept was “transactive energy,” his push for consumers to purchase energy subscriptions.  He claimed that this approach would solve verification issues surrounding DR, which are currently measured against an assumed (and imaginary) baseline of consumption.  “Our current DR programs are too complex since we have to pay for something we haven’t used yet,” said Cazelet.

Perhaps the best summary of disruptive technology came from the last panelist, Ethan Sprague, director of business development for SunRun, which sold one out of every three solar PV systems last year in California, the largest U.S. market for solar PV.  “What utilities want is control and data,” he said.  “Utilities are nervous about whether the subsidies afforded solar PV are really worth the benefits.”

He acknowledged that solar PV is not new, but what is new is the SunRun financing model, which allows consumers to have solar PV with little or no money down, and enjoy lower priced electricity that that offered by utilities.  “We are selling control and price certainty to our customers, Sprague said, noting that SunRun’s solar lease model is flourishing in the United States, but has not spread to other parts of the world.  What is his bottom line for utilities?

“Instead of focusing on control and limiting what gets on the grid, it is time to evolve.”

Just about anything to do with the tech company Apple gets a lot of press attention. But for some reason Apple and fuel cell patents in the same sentence tend to have a multiplier.

In January 2011, the company was granted a patent for the use of liquid metal in bipolar plates. (Please don’t ask me why this is important, as I really don’t know.) OK great, one patent. Then in October 2011 Apple was “rumored” to be patenting fuel cell stack designs for the MacBook. After all, as we all know, sizes counts, for fuel cells as with everything else. Published by the United States Patent and Trademark Office, the applications were “Parallel Fuel Stack Architecture” (US 2011/0256463) and “Reduced-Weight Fuel Cell Plate” (US 2011/0256465). Now in December, it has come to light that Apple has applied for two more patents: “Fuel Cell System to Power a Portable Computing Device” (US 2011/0311895) and “Fuel Cell System Coupled to a Portable Computing Device” (US 2011/0313589).

So, one patent granted and four more we know of that Apple has applied for. If Apple gets them that makes five – five patents in the United States for the use of fuel cells for portable Apple devices.
According to the recent FuelCellToday Patent Survey, 2010 saw a global total of 1,801 patents granted on fuel cell technology. Looking at the top 10 assignees in 2010, companies with an active portable fuel cell program include Canon with 20 granted patents, Toshiba with 21, and Samsung with 140. Each of these companies has been working on integrating fuel cells into portable electronics for a number of years and each has amassed a patent portfolio in many areas. None of these companies has yet to release a commercial product.

So what does this mean for Apple? Apple is one company in a number working hard on developing a fuel cell system that can be integrated into a portable electronics system. If Apple’s patents are granted next year then expect to see another slew of headlines purporting to show that Apple will make fuel cells sexy. They won’t. They haven’t made batteries sexy so why should they make fuel cells sexy. Will Apple release a MacBook with an integrated fuel cell? Probably. When? Heaven only knows. The commercial launch dates for integrated fuel cells into laptops have been missed time and time again by other large electronic developers, so there is something holding up this market. Once that something is removed, or cleared, then we can expect to see a rush to market for many companies, and yes, probably including Apple.

Last week, I served as a moderator of a panel entitled “State Policies: Cross-Cutting Issues” at the 3^rd Annual RETECH Conference in Washington, DC.  Some surprising state-level developments emerged during the session.

Melissa Ritter, with Pace Global Energy Services, summed up the status of various Renewable Electricity Standards (RES), Renewable Energy Credits (RECs) and other key drivers of both wholesale and distributed renewables.  (RES is now the preferred term for what was formerly known as Renewable Portfolio Standard (RPS).) Ritter’s most interesting chart showed that if one compared the level of total renewable energy developed from each of the state RES targets to the proposed Bingaman federal RES (which was a 15% standard), the total amount of renewables to come online by 2030 was about the same. 

Ted Ko, executive director of the San Francisco-based CLEAN Coalition, supports a greater reliance on wholesale renewable distributed generation such as solar photovoltaics (PVs) with Feed-In Tariffs (FITs).  The term CLEAN ‒ which stands for “Clean Local Energy Accessible Now” ‒ is being used instead of the term of FITs because focus groups found that “tariffs” sound too much like “taxes” to American ears.  CLEAN goes beyond the FIT concept by streamlining the interconnection procedures between utilities.  Cumbersome interconnection procedures have been found to be an even bigger hurdle to successful projects than financing in today’s depressed economy.  The CLEAN Coalition focuses on solar PV systems between 1 and 20 MW that feed into the wholesale distribution grid. 

Despite the fact that California has 70 times the solar resource as Germany, Germany has added 28 times the amount of solar PV capacity of California.  All of the U.S. states (save Alaska) have better solar resources than Germany.  Despite the impression that FIT programs in Germany are high-priced, Ko claims that installation cost savings in Germany (due to a more robust and experienced workforce) actually result in equivalent or lower installation costs for solar PV systems than in the United States.

The other interesting presenter was Alan Nogee, former director of the Union of Concerned Scientists (UCS) campaign to pass RES legislation at the state and federal level.  He has become an independent consultant due to his disillusionment with Congress’ failed efforts to pass carbon and renewable-energy legislation.

Nogee’s main message: Maybe compromise is not such a bad thing.  Even watered-down standards that include nuclear, clean coal, and natural gas would still add significant renewable capacity.  He disagrees about just relying upon state RPS, since a federal law would send a better signal to the global marketplace that America is committed to cleantech.  He noted that over half of the states that passed relatively modest RES/RPS goals increased these targets once renewable energy programs picked up momentum.  Furthermore, two states with some of the weakest goals on paper – Texas and Iowa – are now the two top states for wind power in the United States. 

It’s the fall, and the discontent of American billionaires, like that of New York Mets fans, is rising.  Not only has laconic investment guru Warren Buffett demanded that the U.S. levy more taxes on the privileged, i.e., super-wealthy people like him; but also another group of billionaires (or at least hundreds-of-millionaires) has stood up to demand a more active role for government in creating a cleantech energy economy for the 21^st century.

 In Washington, D.C., a group calling itself the American Energy Innovation Council unveiled a manifesto calling for “energy innovation and proposed reforms of government programs to yield greater economic benefits.”  Among other things, the report calls for sharp increases in federal funding for cleantech R&D and a Quadrennial Energy Review that will identify “market failures and technology choke points in order to better orient federal programs and resources.”

The AEIC is headed by Bill Gates, legendary Silicon Valley investor John Doerr, former national security adviser Gen. Jim Jones, GE CEO Jeffrey Immelt, and other luminaries.  “Unfortunately, the country has yet to embark on a clean energy innovation program commensurate with the scale of the national priorities that are at stake,” the group declared in a briefing hosted by the Senate Energy and Natural Resources Committee.  “In fact, rather than improve the country’s energy innovation program and invest in strategic national interests, the current political environment is creating strong pressure to pull back from such efforts.”

Another group created by wealthy individuals, called Advanced Energy Economy, is calling on business leaders from the cleantech sector as well as “other industries that are committed to American leadership in advanced energy” to catalyze regional and state efforts to expand clean energy business opportunities and R&D.  The group was founded by Tom Steyer, the founder of Farallon Capital Management in San Francisco (disclosure: Steyer was a college classmate of mine and remains an acquaintance), and Hemant Taneja, a managing director of General Catalyst Partners, a tech VC firm in Cambridge, Mass.  AEE’s mission is “to usher in an advanced energy economy driven by America’s business leaders and entrepreneurial thinkers.”

Besides the prevalence of billionaires, there’s another common thread to these fledgling efforts: the conviction that the United States, specifically the U.S. government, is not doing enough to promote cleantech innovations and maintain American competitiveness in the clean-energy sector, which will attract $2.3 trillion in investment worldwide by the end of the decade, according to The Pew Charitable Trusts.  The U.S. government should invest $16 billion a year in clean-energy innovation, the AEIC says—more than three times the level of current funding.

 “A group of business leaders came together to say that the investment in energy research is much lower than it needs to be,” Gates told the Marketplace Morning Report.  “Whether it’s for getting low-cost energy or securing our energy supply or reducing environmental damage, we need breakthroughs. And the government funds research in a lot of areas, but in the case of energy, it’s very low.”

How realistic a three-fold increase in clean-energy investment is at a time of poisonous showdowns in D.C. over budget deficits is an open question. There’s no question, though, that an increasing number of people at the very pinnacle of capitalism see such investments as not only critical to building a sustainable energy regime, but also fundamental to keeping the United States competitive in the 21^st century.