Viridian Note 00394: The Smart Energy Industry
- Key concepts
- smart energy, Pacific Northwest, Patrick
- Attention Conservation Notice:
- of primary interest to
clean energy wonks. Lots of irrelevant but entertaining
Viridian List, proudly brought to you from Austin, Texas,
the newly-proclaimed "Clean Energy Capital of the World."
Christmas came early for the Texas solar biz.
This whimsical Thai elephant skyscraper is
not quite what we had in mind when we were
rhapsodizing about zoomorphic Tech Nouveau.
Biomimetic structures out of digitized tumbleweeds.
And other bio-structures, too, and in Barcelona,
the home of Gaudi, wow.
The Artificial Life Awards in Madrid. What gives
with the Spain theme lately?
This 3-D airborne computer-mouse "bat" is either really
cool or just nuts. One of the things I like best
about Tech Nouveau is that it's so much fun to criticize.
It's the holiday season. Let the kids play with the
drumset. So what if they're a little noisy.
The Majestic Windmills of Native America.
(((I can't exult about the lavishly underwritten
Austin solar industry without allowing Patrick Mazza
to lay it on the line about the scale of what is going
on up in the Pacific Northwest. It's a complex story,
but it repays some attention to the details, because
it's basically the same development that is happening
here, or trying to happen. Move that wind and
hydro, companeros, we sun-dazed Austinites are with
you all the way.)))
- Patrick Mazza, climatesolutions.org
Smart Energy Bulletin #5
Northwest Positioned to Lead Global Smart Energy Industry
(This is the final installment of the Smart Energy
Bulletin series. All rights to publish and reproduce are
granted. The full series is available at
By Patrick Mazza
It is a budding Northwest tech sector composed of at least
225 firms with $2 billion in yearly revenues. It is a
globally significant player in a rapidly growing new
industry that has now reached $15 billion annually. It
counts among its ranks world leaders and a host of
innovative start-ups. Within 20 years it could rival such
other major Northwest sectors as aerospace and
microprocessors in terms of employment and revenues. It is
Smart Energy, the application of computer technology to
the electrical power grid.
Over recent decades microprocessors have spread throughout
economic sectors ranging from retailing to
manufacturing. Electrical power is "one of the few
industries yet to feel the full impact of
computerization," notes Prospects for the Smart Energy
Sector in the Pacific Northwest, a new report from the
Athena Institute's Center for Smart Energy, developed for
the Poised for Profit Partnership. But the power industry
is rapidly catching up. In essence, the entire electrical
network from power plants to substations to home
appliances will be smart and software-driven.
One of the strongest drivers for Smart Energy technologies
is the need to modernize an aging and overstressed power
grid for reliability, dramatically underscored by recent
blackouts in the Northeast and in Europe. From 1988-98,
electricity demand grew twice as fast as transmission
capacity. The Electric Power Research Institute estimates
that the power delivery piece of the grid has been running
an investment deficit of $20 billion per year and will
require $100 billion over the next decade to catch up.
Much of this investment will involve upgrading 1950s and
60s technology with modern digital systems, spelling
tremendous opportunities for the Northwest.
"The region has quietly become one of the world's leading
centers of Smart Energy research, products and commercial
activity," the Athena report notes.
As Athena inventoried the Northwest Smart Energy sector,
this picture emerged for the first time.
"We did not realize the magnitude of what is here until we
started this study," says Jesse Berst, one of the lead
To comprehend the region's global stature, consider these
- Itron, an annual $600 million firm based in Spokane, is
the world leader in advanced power metering and also has a
strong presence in utility software.
- ALSTOM EAI, with 400 employees at its Bellevue
headquarters, creates software used by 40% of the world's
major utilities, and the software programs on which 80% of
the world's wholesale electric markets run. It grosses
$130 million annually.
- Schweitzer Engineering Labs of Pullman, Washington makes
compact solid-state power electronic switches that replace
bulky electromechanical systems. It draws $140 million
- Xantrex, based in Burnaby, B.C. with a manufacturing
plant in Arlington, Washington, makes a substantial share
of the power electronics that control solar panels and
other small scale power generators. It grosses $135
million a year.
That a Northwest Smart Energy sector is emerging is not
surprising considering the region's assets. Smart Energy
plays to existing Northwest technology strengths.
"This sector has enormous synergies with software,
semiconductors and wireless telecommunications," points
out Berst, a veteran technology analyst and Internet
The Northwest also has a heritage of power engineering
expertise rooted in the development of the hydroelectric
system and a transmission network that exports hydropower
all over the west. One particular piece of that heritage
is the presence of two of the nation's finest power
engineering programs at University of Washington and
Washington State University, and a noted electrical
engineering program at Oregon State University.
"We're expanding here because of the base of expertise and
two great universities," ALSTOM EAI CEO J.D. Hammerly
notes. "Washington is one of the few states with
flourishing power engineering schools."
Those schools are part of a regional power technology
research and development base that also gives the
Northwest a significant edge. Schweitzer, for instance,
began with technology developed at WSU. Powertech Labs in
Surrey, BC maintains one of the few high voltage research
facilities on the continent. PNNL in Richland, Washington
is a national and global center for developing the energy
systems of the future, working on everything from smart
appliances to intelligent systems that make it possible to
manage networks of small-scale distributed generators.
"You have to have the intelligent grid for the full
benefits of distributed generation to take hold," says
Mike Lawrence, who heads up energy research at PNNL.
One of those benefits is cleaner air, since distributed
generation includes low pollution energy generators
including fuel cells, and zero-pollution technologies such
as wind turbines and solar panels. Generating power close
to where it is used improves efficiency as well since it
eliminates the standard 10% loss of electricity when it is
transmitted long distances.
The Athena report represents a milestone. Not only is it
the first identification of a substantial regional
technology opportunity == It also signifies powerful
support for fully catalyzing that opportunity. The report
is the product of the Poised for Profit II partnership
joining Bonneville Power Administration, City of Portland,
Leading Edge British Columbia, NW Energy Technology
Collaborative, PNNL, Oregon Institute of Technology,
Portland Development Commission, Portland Business
Alliance, Portland General Electric, Seattle Office of
Economic Development, and Washington Office of Trade and
Economic Development. The partnership was initiated and is
administered by Climate Solutions, a nonprofit that seeks
to make the Northwest a global warming solutions leader.
"As recent blackouts have shown us, there are economic,
safety and environmental reasons driving us to upgrade our
power generation, transmission, distribution and end use
systems," says Climate Solutions Co-Director Rhys
Roth. "Smart Energy offers a double dividend: cost-
effective solutions for the electrical grid and a major
job creation opportunity."
The partnership is the follow-on to the Poised for Profit
I effort in 2001 that overviewed Northwest prospects to
develop globally competitive clean energy technology
industries over the next 20 years. That study concluded
the region could create 32,000 jobs in this sector over
that timeframe if it plays its policy and economic
development cards right. The new partnership aimed to
identify the hottest growth prospects over the next 3-5
years and concluded that Smart Energy represents the
greatest near-term opportunity for the region.
The report recommends a series of steps the region should
take to build its Smart Energy sector. Among them:
- Give utilities regulatory incentives to use Smart Energy
technologies. For example, Smart Energy dramatically
improves efficiency, thus reducing the gross amount of
power delivered to customers. But that penalizes
utilities, whose earnings are tied to power deliveries.
Rules need to be changed to give utilities incentives to
deliver efficiency services to customers.
- Create testbeds to prove Smart Energy technologies. Most
utilities do not view themselves as early adopters of new
technology. Technology testbeds provide proven track
records that help build markets. The Northwest's leading-
edge Smart Energy companies, innovative utilities and
world-class energy research centers are capable of
mounting globally significant testbed efforts.
- Pull together regional Smart Energy research and
development efforts. Coordinate the region's research
centers to avoid duplication, and join in initiatives to
draw new funding to the region.
- Build regional markets for Smart Energy
technologies. Public agencies should incorporate them into
their buildings and operations. Individual consumers
should be financially assisted to buy regional Smart
Energy products in order to build the marketplace.
"The Northwest already has the beginnings of a Smart
Energy cluster," the report concludes. By supporting it
through concerted regional action "we can add fuel to the
flame." (((Fuel to the flame? What's with the combustion
metaphor? You really had me goin' there!)))
Prospects for the Smart Energy Sector in the Pacific
Northwestcan be downloaded from
Patrick Mazza is a Climate Solutions researcher. He can be
reached at 206-920-6393 or
610 4th Avenue E
Olympia, WA 98501
ph 360-352-1763, x101
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