Wednesday, February 04, 2015

Technology Scouting for Fun & Profit

The rapid pace of technological change has technology managers in all industries concerned with how they can keep abreast of developments in related – and unrelated – fields that may create new opportunities or pose threats to their business.  No longer can a manager simply look to the firm’s internal R&D effort or its business partners to provide access to all of the technologies and skills the company needs.  For one thing, over the last 30 years, much scientific research and radical innovation has been pushed upstream into academia and government research centers as corporate R&D centers focus their efforts on supporting current and next generation products.  Furthermore, innovation is increasingly the product of the fusion of two technologies – think bioinformatics, for example – or the application of a known concept to a new field (such as laser printers which were developed from existing copier technology).  No internal effort could possibly hope to master it all – not even in the largest of companies.  So how do these businesses maintain an awareness of emerging technologies and the opportunities (or threats) they may portend?

One approach is to maintain a high enough profile and hope that tech transfer managers, entrepreneurs, and other developers of new technology come to you with their developments.  This may work in some cases, but no business can afford to sit back and hope that important components of its technology portfolio will just walk in the door. Maintaining an awareness of new technological developments has traditionally been the purview of scientists and engineers in the lab whom, it was believed, lived on the front line of S&T development and thus would be familiar with new technologies.  This is a bad assumption.  The short comings of this approach are the same as those noted above that afflict the business more generally – that is, no one can know it all.  Besides, that is not their job.  They have their own projects to look after.  Today, leading technology companies resort to a systematic process of Technology Scouting to proactively search out and acquire new technologies.

Technology scouting doesn’t require a massive effort, but it does call for thoughtful organization.  And, it is not competitive intelligence per se though there is some overlap in research skills. (Competitive intelligence seeks to maintain an early warning system of competitors’ actions while scouting seeks out new technological developments for incorporation into the firm’s technology portfolio.)  Today, technology intensive firms from virtually all industrial sectors including IT, pharmaceuticals, automotive, electronics, chemicals, oil& gas, and more rely on a variety of sources to keep abreast of new developments of interest to the firm.  Even businesses that we seldom think of as technology companies have climbed on board.  For example, low-tech products from toys to food increasingly rely on a variety of technology intensive processes to manufacture them and which impact their competitive position.

So now you’ve decided that your firm needs to scout for new technologies – in self-defense if nothing else.  Where do you start?  The figure below shows the basic elements of a technology scouting program.


First, you must determine precisely what you want this scouting effort to achieve.  And, as we’ve said, this often comes under the general heading of finding opportunities and identifying threats.  In this effort, do not fail to consider the possible societal responses to new technology (Monsanto and Unilever, to name just two, now wish that they had more carefully considered the potential societal resistance in Europe to genetically modified crops). 

Next comes the scouting plan which details the various roles and responsibilities of those in the group.  Who will be responsible for which sets of technologies?  While the focus is clearly on emerging technologies, be careful to ensure a proper alignment between scouting activities and corporate goals and objectives.  To what extent will you manage this effort with in-house resources and will there be a need to go outside the organization for additional expertise? And, as shown, it is often just as important to be aware of what is not happening in the environment as what is happening.

Third, a complete listing of data sources – both secondary and primary – to support the effort must then be developed.  Obviously it is less costly to comb through previously published materials, but figure on obtaining the real nuggets from discussions with other people – internal and external.  There is a skill to doing this.  And don’t fall into the trap of assuming that patent searches will completely reveal the technological landscape.  

Fourth, consider the methods of observation that you expect to employ.  Although the three categories of surveillance are often used interchangeably, I regard scanning as a broad look at the technological landscape to identify areas for more detailed study, monitoring as a continuous look at a specific field or technology to identify new developments of interest, and tracking as a detailed look at advancements in a specific technology or technological approach.  Often, tracking provides the time series data that you will use to conduct a trend analysis (such as Moore’s Law, for example). 

Finally, not to be overlooked are the mechanisms that you will use to convey the results of your scouting activities to senior management and other decision makers.  There are roles for both reports and alerts that the group may issue as well as monitoring databases that may be accessed by employees when they need information on a topic.  But then, the really hard work begins – due diligence on the target technologies of interest and assessing the strategic and operational fit will be critical to moving forward and must not be taken lightly.  But, if done well, the benefits can be enormous.

Ready to get started?  Emerging technologies are everywhere and only a systematic effort will help ensure that you keep abreast of those of most interest to you.  If you need help, contact me at Rich@TEMI.us.

Friday, January 30, 2015

New Renewable Energy Proposals in Colorado's 2015 Legislative Session

No sooner did the new legislative session begin than we saw some proposed changes to -- some would say attacks on -- Colorado's renewable energy standards.  Three bills were recently introduced in the legislature in the new session -- all by Republicans -- and they truthfully could be considered an attack on the RPS. First was a bill introduced in the state Senate (SB15-044) that would reduce the RPS obligation for IOUs from 30% to 15%. I don't see this bill having a snowball's chance in hell of passing. Even if it did survive the Republican controlled Senate, it would surely die in the Democrat controlled House and/or be vetoed by the governor. Moreover, it seems unlikely that Xcel Energy, the state's dominant utility which supported the increase to 30% and has already met the RPS for 10 years out, would support it.  Only Black Hills Colorado Electric, the smaller IOU serving the Pueblo area, would benefit. But, with that said, SB15-044 was just passed out of committee without amendment, predictably on a 5-4 party line vote, and sent on to the full Senate for consideration there.

Another bill introduced in the Senate (SB15-046) would classify solar gardens in coop territory as retail distributed generation and grant a 3x multiplier for coop compliance with the RES (see my 2013 posts on this topic here and here).  My intel says that the 3x multiplier will probably not survive but, given the controversy over the increase in coop RES obligation back in 2013, classifying solar gardens as "retail DG" as it is defined in the Colorado RES could be OK.

In the House (HB15-1118) would expand hydro for compliance with the RES from new hydro less than 30MW, as presently defined, to all hydro regardless of size or vintage. It would also add pumped hydro to the list of resources eligible for compliance with the RES. Back when I worked for the PUC, we seemed to come across this bit of nonsense every couple of years or so and had to go through the drill of explaining why pumped hydro is not considered renewable energy. But, it keeps returning. Simply put, if the water is pumped uphill at night using fossil generated electricity, releasing it in the afternoon doesn't make it renewable energy.  If the water is pumped uphill using wind energy, then it is the wind generator that gets the RECs.  Awarding the RECs to both would amount to double counting which is generally considered verboten.  Moreover, the water is pumped uphill using undifferentiated grid power. This bill was assigned to what is typically regarded as a "kill committee" in the House so I expect it will die an early death.

More recently, SB15-120 was introduced in the Senate by Sen. Matt Jones (D) that would require each provider of retail electric service in Colorado to develop an electric grid modernization plan. This is an interesting bill, the stated goals of which are to  1) Optimize demand side management, 2) Optimize supply side management, and 3) Achieve advanced metering infrastructure (AMI) functionality within 5 years.  Certainly it is difficult to argue with optimizing supply side and demand side management (which refers to enabling energy efficiency and renewable energy integration) but the goal to advance AMI is likely to be controversial -- and potentially costly to ratepayers.  With AMI, more commonly referred to as smart meters, utilities could implement time of use (TOU) rates. AMI is also the foundation for building out the "smart grid."  This bill has been assigned to the Senate Agriculture, Natural Resources and Energy Committee and it will be worth watching to see how it fares.

UPDATE 01FEB2015: I see that the Denver Post has now waded in on this with an editorial that you can find here

UPDATE 11FEB2015: As of this morining neither SB15-046 nor HB15-1118 had been taken up in their respective committees.  On 05Feb, SB15-044 sailed through the full Senate and passed out of the Senate on an 18-17 vote (presumably party line vote though I didn't check the party affiliation for each of the votes) and was sent on to the House.  On 10Feb it was assigned to the House State, Veterans, & Military Affairs Committee (kill committee) where it will presumably languish until the end of the session.

Wednesday, December 17, 2014

Technology Substitution Requires Forward Thinking

Several weeks ago I wrote about some of the basic considerations in evaluating technology trends. (see here and here),  In those posts I discussed some of the dynamics of technological advance and offer some initial guidance to get you started in technology trend analysis.

One of the points I emphasized in those columns is that it is imperative to assess the performance of technologies, not at their present level of performance but at where they will be in the future.  Similarly, when evaluating the substitution of an incumbent technology by an emerging one, we make the case that it is less important to compare the present performance of the two technologies than their future potential.

To illustrate this dynamic, the figure below shows two technology s-curves – one for an incumbent technology and the other for an emerging technology destined to eventually replace it.  On the y-axis we plot some relevant performance measure of the technologies in question.  Note that this is not sales or market share but rather some performance parameter of interest.  For example, in computing it could be the clock speed of a chip (as was done for the original Moore’s Law) or the storage density of disk drives.  In the energy arena, we may track the energy conversion efficiency of solar photovoltaic cells, the heat rate of thermal generators (either fossil or biomass), or the efficiency of wind turbines. 



Note that, in the figure, the new technology begins life at a lower level of performance than the incumbent technology.  This phenomenon, which is all too common, often leads one to mistakenly dismiss the emerging technology as inferior to the incumbent.  But, in fact, those who do are asking the wrong question.  Rather, it is important to look at the potential of the new technology to surpass the performance of the incumbent which occurs at the cross over point shown in the schematic.  Equally important is the difference in performance limits of the two technologies, for if the difference is sufficient, the new technology will sustain its inexorable march to overtake the incumbent. 

Even if we do not have sufficient data to plot precisely where we are on the s-curve, it is crucial to know whether the technology is just beginning its upward trajectory or is nearing its performance limit. This is well demonstrated in a recent Washington Post article describing a prototype US Navy laser weapon system which quotes one naval analyst: “’Naval guns are near the theoretical limit of their performance envelope now,’ [he] said. ‘We can only expect very minor improvements in the future, whereas with lasers we can expect significant improvements in range, lethality, and accuracy.’"


Laser weapon on the USS Ponce

Were we plotting the s-curves for naval combat systems, as the quote implies, we might employ range, lethality, and accuracy as the performance metrics of merit.  In this case, even without quantitative data on these measures, it is apparent that this new weapons technology holds great promise to overtake existing systems and substitute for conventional weapons technology.

Monday, December 08, 2014

Surprising PUC Decision in Colorado Solar Case

Back in May, I wrote in Solar Industry Magazine about Xcel Energy’s application to the Colorado PUC to implement a solar-based green pricing program called Solar*Connect.  This proposal was of great concern to both the solar industry and consumers for a number of reasons – the industry because it represented a direct competitor to net metering and community solar offerings and ratepayers because they were being asked to subsidize a program that would primarily benefit the utility.

This proceeding drew many intervenors including several from the solar industry.  Not one of them – not the industry, environmental groups, consumer groups, or the PUC staff – supported the proposal.  A few of them suggested modifications to the proposal, more I think to avoid being labeled as anti-solar than because they thought the proposal had any merit.

 Solar Industry Magazine

This proceeding was as contentious as any that I have seen recently at the PUC.  In November there was a four-day hearing presided over by the full Commission which gives some indication of the importance of the policy issues raised by this proposal.  This afternoon, the Commission deliberated on the proposal and issued its decision.  Certain that this would be a long deliberation because of the myriad policy issues at play, I settled in, notepad in hand.  Much to my surprise, it was over before I even got comfortable.

Months of testimony and competing motions followed by four days of hearings settled in a 10-minute deliberation!  As is typical, a member of the Commission’s advisory staff set the stage and then gave his simple recommendation – deny the application.  In providing their recommendation, commission advisors cited:
  1. no need by the utility for the solar RECS (which incidentally the utility planned to keep even though subscribers would be paying more for them) for compliance with the renewable standard,
  2. no need for the capacity provided by the proposed 50 MW facility,
  3. no need for the energy that would be produced from the system,
  4. no consumer demand shown for the program, and
  5. concerns with it being subsidized by general class of ratepayers.

In agreeing with the recommendation, the three commissioners each expressed somewhat different rationales for denying the application (in addition to the above) including:
  1. unspecified profit by the utility,
  2. revised testimony during the hearing which left it unclear just what the utility was proposing,
  3. such proposals should be included in the 2015 ERP filing rather than filed separately (an issue that the Chairman was most adamant about), and
  4. the application was premature given that the Commission has yet to rule on its net metering policy in a separate docket.

With the denial, the Commission never discussed any of the proposed modifications or the concerns about whether such a program was legal under Colorado statutes leaving unanswered many underlying issues.  As usual, we'll have to wait for the written decision but I'll be surprised if there is much more in it than what we heard during the deliberation.


UPDATE 17 DEC 2014: The written decision from the PUC came out today and is available for download here.  Notably, in addition to denying the utility's program, the Commission also placed 100% of the risk for the so-called "start-up energy," which the utility contracted for after its request for an early RFP was denied, solely on Xcel.

Monday, November 10, 2014

Electric Vehicle Car Sharing Comes to Colorado

Last Saturday, a new entry in the Colorado car sharing market opened its doors, right here in Golden no less.  eThos Electric Car Share bills itself as the nation’s first all–electric vehicle car sharing service.  I'm not sure it's the first in the nation but first in Colorado will do.  eThos, which opened its doors in a converted service station at the corner of 19th Street and Jackson Street runs much like most other car sharing services, except for its 100% EV fleet.

For those who are not familiar with car sharing, think auto rental but on an hourly basis.  There are two basic types of car sharing services: business-to-consumer (B2C), which provides cars on an hourly or daily basis to business or individual consumers, and peer-to-peer in which an individual provides access to his or her personal vehicle to the renter, much like you might rent a vacation home from an individual owner.   There is one other important distinction to be made between types of car sharing services and that is whether the vehicle must be returned to the point of rental (aka round-trip) or may be dropped off at a designated parking location (aka point-to-point, free floating, or one-way) whereupon it may be rented by another customer.  eThos is a B2C, round-trip operation.




The Denver market has three B2C round-trip car sharing services – eGo CarShare (a nonprofit), Zipcar, and Enterprise CarShare – and one point-to-point service, Car2Go.  Generally, their rates are similar starting at about $5 per hour at the low end and increasing from there, depending on the specific vehicle make and model.  Hourly rates typically include gas, maintenance, and insurance though you can pay more for a waiver to cover the company’s deductible, just like with any car rental.  Depending on the rate plan the customer signs up for, there may also be mileage charges and a membership fee.  The three round trip services have a number of access points throughout Denver and a variety of different vehicles.  Car2Go is unique in that its vehicles may be found parked at meters or other public parking spaces throughout Denver – wherever the prior renter leaves it.  Car2Go apparently is intended to provide transportation only within Denver and has only Smart Cars – those little two-seaters sold by Mercedes Benz.  The location of its 372 vehicle fleet can be found by checking their website or smart phone app.

So, how is eThos different?  As noted, eThos requires that the vehicle be returned to its home base which, for now, is its sole location in Golden.  None of the other car sharing services come out this far from central Denver or Boulder.  But eThos’ main difference is that its fleet consists of only electric vehicles which, at the present time, includes 8 Codas (more on that in a minute) and one Tesla.  Pricing is competitive with the other services at $7 per hour for up to 250 rental hours (for a Coda) down to $5 per hour for over 500 rental hours.  The Tesla rents for three times the hourly rate of the Coda. Would I pay $21 an hour to drive a Tesla?  No. Let me know when you've got an i8 and we can talk about it.

OK, so what’s a Coda?  Coda Automotive was a California based EV manufacturer that had a short, inauspicious life.  The company produced 5-passenger, 4-door EV sedans in 2012 and 2013 before succumbing to bankruptcy in May 2013.  Built on a frame imported from China, the Coda includes a 31 kWh battery pack and a drive train supplied by Colorado’s own UQM Technologies (which coincidentally also started out in Golden as Unique Mobility, Inc. before moving to Longmont).  At the time of its bankruptcy, the company had reportedly delivered only 117 vehicles.  The remaining stock of 50 vehicles and 100 gliders (no powertrain) were purchased by a couple of remarketers and sold at deep discounts from the $38,000 MSRP (you can read more about them on Green Car Reports.  Coda’s restructuring plan calls for it to morph into a provider of grid storage solutions.



eThos apparently acquired a dozen Codas (8 available and 4 awaiting delivery) and the one Tesla which comprise its current fleet.  At the Grand Opening, I went down and took a short test drive in a Coda (I’m not yet cleared to drive the Tesla).  It is a quiet, reasonable vehicle for getting around town though with a range of 100 miles or less and a 6-hour recharging time (Level II), you’re not going too far in it.  So the market appears to be people who have a need for a vehicle to tool around for a half day or so which is pretty much the market for any other car sharing service.  And, since my aging Vehicross seems to be giving me increasing trouble lately, I may need access to a car share so I signed up for an account ($50 membership fee that was waived on opening day plus a $25 DMV license check fee).

I had a chance to speak briefly with the firm’s two principals, founder Tim Prior and Assistant Manager Kathryn Saphire and wish them the best of luck with their new business. I think that Golden is going to be a challenging market for them, one that will be easier to access if they offer to pick up customers and bring them home after the rental (hint). On the other hand, Golden is a pretty techy community so hopefully it works as a launch point. Alas, it isn’t clear how they’re going to expand or replenish their fleet… unless there are more discounted Codas sitting around out there to be had.  If so, they need to find a red one.

Friday, November 07, 2014

A Message to California About Collecting Solar System Data

California, you will soon be deciding an interesting debate about who, if anyone, should be collecting data about the state’s distributed generation installations.  Under the California Solar Initiative (CSI), information about all of the systems that took advantage of the CSI incentives has been collected and published on the California Solar Statistics website.  One would think that such transparency that allows an agency and other interested parties to track the success of a program funded with public money would be a no-brainer.  Apparently, it isn’t.

California Public Utilities Commission, you will soon be issuing a final ruling on minimum reporting requirements that, with the phase out of the CSI, would now fall to the utilities.  This was reported recently in Solar Industry Magazine available here.  According to the article, unsurprisingly, certain large developers and the utilities oppose these eminently reasonable reporting requirements citing such specious arguments as the cost of providing this data ($7 to $22 on systems costing tens or hundreds of thousands of dollars).

For years, California and CSI you got this right.  As noted in Solar Industry Magazine The information is supposed to let manufacturers, contractors and investors know which equipment is being installed and where, provide academics and journalists with industry information, and help utilities understand more about their distributed generation fleet.”  This debate brings to mind a similar one that existed in Colorado back in 2006 concerning the collection of information on that state’s solar incentive program.
 
At that time, a Colorado PUC staffer was assigned to assess a utility application to implement a forward-looking tariff that would fund the nascent solar incentive program under Colorado’s new Renewable Energy Standard (RES).  That new tariff came to be known as the Renewable Energy Standard Adjustment (RESA) and it now collects a bit over $50 million a year in customer money from that one utility and a lesser amount from a second, smaller utility (the fact that the utilities have been allowed to be the administrators of those accounts raises other concerns but that is a different discussion).  At the time, the requested tariff of 1% of customer billings was projected to raise approximately $20 million per year.  The PUC staffer was charged with recommending to the Commission whether the tariff should be allowed to go into effect unopposed or should be suspended and set for hearing.

Ever the dutiful public servant, and having not inconsiderable experience in major industrial project management in the private sector, this staff member requested from the utility a pro forma budget indicating how the funds were to be spent.  He was told there was none.  The rest of the conversation was brief:

PUC Staff: Then why are you asking for $20 million?

Utility: Because we can.

The tariff was suspended and set for hearing initiating Colorado PUC docket 06S-016E.

Through subsequent negotiations, the initial RESA tariff would be set at 0.6% of customer bills on the condition that the utility provide the PUC with a monthly report from its database that included much the same data that CSI has been collecting.  That too took a strange twist.  That conversation went something like this:

PUC Staff: We’re interested in tracking the growth of the program and how the incentives will contribute to the development of the solar industry in Colorado.  So, we would like a monthly report from the solar registration database.

Utility: What database?  We’re not going to have any database.

PUC Staff:  Well, how are customers and installers going to apply for the rebates?

Utility: They’ll submit an application with all of the interconnection data and rebate information on it.  But, there won’t be a database.

PUC Staff:  Really?

Utility: If you want that information, we’ll send you paper copies of all of the applications each month and you can create your own database.

PUC Staff:  Oh, well.  OK.

And so for the next 6 months the utility dutifully submitted seven copies (as required by PUC rules for all paper submittals) of all of the solar rebate applications which an intern working for the staffer gleefully compiled into a database of system level data using Microsoft Excel.  That is, until the utility representative’s successor came back to the PUC staffer and said:

Utility: Look, we’re really tired of copying all of these applications and hauling them over every month.  How about we just send you a copy of the database on CD each month?

PUC Staff:  You mean the database that you don’t have?

Utility: Yeah, that one.

And so, the PUC staffer ultimately used this data to report to the public on the success of the solar rebate program, where the incentive payments were going county by county, how system costs were falling, the level of economic activity generated by the program, and many other statistics that the public and policy makers would (or should) want to know about how hundreds of millions of dollars in support for the renewable program was being spent.

The first publicly issued report of this data showing four years’ worth of data on solar installations in the state was welcomed by many and was especially of interest to the installer community.  Curiously, the report was not welcomed by certain PUC bureaucrats and the utilities who together sought to quash the report because they felt that it reflected negatively on their administration of the solar program. It didn’t but the report did contain some policy recommendations to manage the program more effectively in the public interest.  The agency even went so far as to deny an open records act request by the industry trade association seeking a copy of the report.

Ultimately, the report became the focus of a Whistleblower complaint and was released by a state personnel department administrative law judge who soundly rejected agency and utility arguments for a protective order that would bar disclosure of the information contained in the report.  Sadly, by the time all of this had occurred, much of the information contained in the report had become stale. Today, the arguments in many states are no longer over solar subsidies per se, but whether net metering and distributed generation itself provides a subsidy that disadvantages a utility and the general body of ratepayers.

The end of this story is that docket 06S-016E is still open and utilities still contribute monthly reports of their collections and expenditures of RESA funds. However, neither the utilities nor the agency appear interested in a comprehensive analysis of the systems installed using those funds and the policy implications thereof.  

The moral of this story for you California is that you’ve been doing the right thing in the collection and publication of this system level data all along and should continue to do so to foster transparency in the administration of programs in the public interest.

Friday, October 10, 2014

Analyzing Trends in Solar Cell Efficiencies for Fun and Profit

In Future Solar Cost Reductions Hinge on Raising Solar Cell Efficiencies (Solar Industry Magazine, October 2014), Michael Puttre suggests that understanding trends in the efficiency of PV cells is instrumental to understanding the future economics of solar energy.  This is unequivocally true, but it is often accompanied by the implication that one can do little more than track such developments after the fact.   Fortunately, a small cadre of specialists in the fields of strategic technology planning and technology intelligence have invested careers studying the dynamics of technological advance and have honed analytical approaches to characterize the state of the art (SOA) and predict the future direction and rate of advance in technologies of interest to their businesses.  This field of endeavor, often known as technological forecasting, consists of numerous extrapolative and normative techniques for predicting the direction and rate of technological advance in a given field and for assessing emerging technologies.  Importantly, for our purposes, these approaches have been shown to be particularly amenable to analyzing advances in renewable and alternative energy technologies, and the growth in PV cell efficiencies presents us with an ideal application.

Mr. Puttre’s article makes clear the need to understand advances in PV cell efficiencies and their importance to reducing the cost of solar energy.  But, with the plethora of PV technologies available, understanding the landscape can be difficult.  Particular varieties of silicon and thin film dominate the landscape now, but for how long?  The history of technological advance is replete with competing technologies vying for dominance in the marketplace and the current energy arena is no different.  For example, perovskites have recently garnered much attention in the press and appear to be on a steep upward trajectory.  How do we assess their potential in comparison, not to where the incumbents are today, but to where they will be in the future?

Most people have heard of Moore’s Law which describes the exponential growth in computing power over time but few know that Moore’s Law is merely a singular application of a broad class of growth models that apply to technological advance in general.  Fewer still know how to apply such models to the vast quantity of technology trend data that has become available in photovoltaics, wind energy, energy storage, and a host of technologies of interest to energy planners, utilities, developers, manufacturers, researchers, R&D managers, strategic planners, venture capitalists, and investors in emerging technologies.

Is there a Moore’s law for energy in general and PV in particular?  Of course there is.  The problem is there are many, and the first order of business is to adequately define the technology of interest – think silicon vs CdTe vs CIGS vs organic PV vs etc., etc., etc. – and the metrics that will allow you to assess their performance over time.

But, there is more to it than simply turning such technology assessments into a data dredging exercise.  It is common to consult with individual “experts” but unfortunately their biases often limit, albeit unintentionally, their ability to provide an objective picture of technological advance in a given field.  More worrisome, perhaps, would be relying on overpriced reports from the big market research houses whose generally optimistic growth projections are typically unsubstantiated.  Fortunately, more rigorous approaches for aggregating the diverse opinions and experiences of multiple experts are available to help arrive at a more complete picture of future advances in technologies of interest.  And, combining these qualitative approaches with the aforementioned trend analyses can equip technology planners with a fairly robust suite of methods to analyze emerging technologies and plan technology investments.

It is incumbent on those who are making and managing investments in new technology, as well as those who are at the heart of contributing to such innovations, to have at least some understanding of the dynamics of technological advance to help guide their decision making.  The tools to achieve this are available.  And, it is not so much that a given forecast must be proved accurate, but it is the learning gained from engaging in the exercise that enables better decision making.

So where do you start?
  1. Determine the technological performance parameters that can help you describe technological advance (hint: sales growth is NOT a technological performance parameter).  For PV, cell efficiencies are a good place to start but there are others.  For wind energy, rotor diameter, hub height, and turbine nameplate capacities are also a good starting place.
  2. Obtain trend data on the metrics of interest but be careful not to mix different technologies.  For example, if looking at trends in the speed of aircraft, do not mix propeller driven aircraft with jet aircraft as they are fundamentally different technologies and this will only make a mess of your analysis.
  3. Understand where you are on the technology s-curve of the technology you are researching.  There is always some physical limitation to the performance of every technology.  Are you close to it? (See the figure below).  Know how and when to apply the proper growth models (Gompertz, Pearl-Reed, Fisher-Pry, etc.) to complete your analysis.
  4. If looking at the substitution of an emerging technology for an incumbent one, consider that such substitutions often take longer than expected – in spite of what you may read in the press about “game changers” – and it is not uncommon for such an attack to motivate improvements in the incumbent technology.
  5. Last, the use of such analyses in planning your technology strategy is only a starting point.  Work to understand what the data is telling you.  Most importantly, understand that trend is not destiny.


For years, as principal in Technology/Engineering Management Int’l (TEMI) I have taught the principles of technology forecasting and technology intelligence to researchers, planners, analysts, R&D managers and others charged with strategic technology planning, competitive analysis, technology roadmapping, technology scouting, technology assessment, and technology transfer.  On November 13-14, I will be teaching a 2-day workshop in Colorado to introduce other professionals in renewable and alternative energy (and other technologies) to the methods for characterizing and forecasting technological advance.  Course information is available at www.temi.us or by contacting me personally at rich@energystrategies.co.

Monday, September 15, 2014

Electrically charged tortilla chips?

OK, now for a light-hearted look at greenwashing with wind RECs that I just couldn't resist.  As a fund raiser, my judo club manages a concession stand at Denver Bronco games.  Sunday, upon arriving at the stadium, I found several boxes of the tortilla chips used for nachos which, as you can see from the photograph below, advertised "Now energized with 100% Wind Electricity."



Note that they did not claim to be powered by wind energy (equally unlikely) or manufactured with wind energy (more likely) but that these chips are actually energized with wind electricity.  Wow!

Now, I know the difference between an energized circuit and a de-energized circuit, so I wondered what might really be the difference between chips energized with wind electricity and those energized with conventional energy (to the extent that you can actually energize a tortilla chip at all).  Well, I then searched for a box of the chips we used to sell and, sure enough, the difference was amazing.  Below, you see on the left a basket of chips energized with 100% wind energy and on the right Brand X (which I can't really tell if they're energized using fossil generated electricity or just not energized at all). Clearly, the wind electricity energized chips are bright and colorful and Brand X is, well, you can see for yourself.


So, proof positive.  Tortilla chips energized with 100% wind electricity are better.  If you want to see for yourself, come by and visit the Northglenn Judo Club concession at the next Denver Bronco home game just inside the United Club Concourse at Mile High Stadium.

Saturday, September 13, 2014

Colorado PUC Gets It Wrong on REC Ownership

On Wednesday, September 10, the Colorado PUC deliberated on docket 13AL-0958E in which the state's major utility, Xcel Energy, filed for a new method to determine the rate at which it would purchase power from small power producers defined in the Public Utilities Regulatory Policies Act (PURPA) as Qualifying Facilities (QFs).  Although net metering isn't mentioned in PURPA per se, it is widely credited with enabling net metering.  But, many utilties have required these small power producers to surrender RECs to the utility as a condition of interconnection and without additional compensation.  Xcel has maintained that net metering is an incentive and, just like rebates and other incentive payments under the Renewable Energy Standard (RES), the utility should be awarded the RECs associated with any QF generation.

In their deliberation on Wednesday, the PUC commissioners in fact awarded to the utility all RECs associated with any QF generation (could be PV, small wind, biomass, etc.) without compensation.  This was wrong for a couple of reasons. First, RECs are instruments created by the RES, not PURPA, and have financial value.  In the RPS world, or even in the voluntary market place, small generators under the RES receive either rebates or other incentive payments from the utility in return for the the RECs associated with renewable generation.  Thus, RECs are a financial asset that may be bought and sold and their sale is how the developer is compensated for the above market costs of building a renewable energy facility.  To take that financial asset from the small power producer simply as a condition of interconnection without compensation is plainly wrong.  Next, while the RES does require that RECs must be transferred to the utility when the developer takes advantage of RES incentive programs, there is no language in either the state RES or federal PURPA statutes that require RECs to be turned over to the utility as a condition of interconnection. Thus, the Commission got it wrong.

To put this in the context of a more concrete example, PURPA is the legislation that requires a utility to purchase power from a QF, such as a small hydro project, at the utility's avoided cost rate.  The Colorado RES is the legislation that created RECs and requires a utility to purchase them when it acquires renewable resources for compliance with the RES.  But, the PUC's recent decision awards the RECs from our hypothetical hydro project to the utility simply because it purchased the power at avoided cost.  But for that, the QF generator could have sold those RECs to any utility with a compliance obligation or even on the open market to people who want to make green claims.  Utility acquisitions made under PURPA do not necessarily imply a purchase made for compliance with the RES. When such a purchase is made at the utility's avoided cost rate, the PUC's decision effectively awards the associated RECs to the utility for free and without compensation to the generator.

Monday, July 28, 2014

DOE Quadrennial Energy Review Meeting on Gas-Electric System Interdependency

Today, the DOE held the 7th meeting in its Quadrennial Energy Review series at Metropolitan State University with the discussion focusing on the interrelationship between natural gas and electric system markets and infrastructure.  Click here for the DOE website.

The discussion of day ahead markets and the fact that electric market operating day begins at midnight while natural gas operating day begins at 9am (central time) may have seemed arcane to some.  The discussion also focused on how firm gas transportation is required to ensure electric system reliability.  This became a big issue last winter when tight natural gas supplies due to cold winter impacted electric generation in the northeast. Given that natural gas is the predominant fuel for home heating, and is playing an increasing role in electrical generation, this becomes a very complex interaction. Think about it this way... when supplies are tight, will the available gas be directed toward heating or electrical generation?  Moreover, how does one use impact the price of the other?  While an electric utility has alternatives to generate electricity, albeit perhaps at a higher price, the consumer with gas heating has no such alternatives to turn to.

The speakers, who mostly came from gas and electric utilities, didn't come to any definitive conclusions but the discussion did highlight the differing perspectives of the two industries.  Apparently, there will be several more meetings in this series in the coming weeks on a variety of energy market topics.

Thursday, April 03, 2014

Sales of Electric Vehicles... and Concerns With Buying the Fuel for Them

If you've been following the papers and some parts of the blogosphere, you're likely familiar with the difficulty that Tesla is having in implementing its direct to consumer sales model.  Those of you on LinkedIn may want to visit a discussion a few of us have been having in the Colorado Renewable Energy Network user group on this topic here.  

I don't intend for this post to debate the pros and cons of electric vehicles aside from one particular concern that I've always had.  No, it isn't the range anxiety, or the time it takes to recharge batteries, or even the cost of the batteries.  My biggest concern is the supplier of the fuel.

In my opinion, electric utilities -- and especially investor owned electric utilities -- already have too much power.  Do we really want to extend their hegemony into the transportation sector too?  Do you want your ability to get to work to now depend on that same monopoly electric utility whose rates constantly escalate and are totally inelastic?  You might say it is a catch 22 between Big Oil and Big Monopoly Electric Utility, but gasoline prices have at least been shown to be somewhat responsive to supply and demand and there is at least some competition in the marketplace.  In most states, however, the price you pay for electricity is established in a rate case that is decided by a public utilities commission or similar agency.  In my experience that is less comforting than letting supply and demand regulate the price of fuel. 

I love the idea of electric vehicles although I am less optimistic than many advocates about their market potential in the near term.  But frankly, my biggest concern is being held hostage by that monopoly fuel provider. What do you think?

Thursday, November 14, 2013

Community Votes on Oil & Gas Fracking Bans

On election day, voters in four Colorado cities – Boulder, Lafayette, Fort Collins, and Broomfield – weighed in on whether or not to allow hydraulic fracturing in their communities.  Measures to ban “fracking” passed easily in the first three while the Broomfield proposition fell short by only a few votes and appears headed for a recount.  As is well known by now, the state regards the regulation of drilling activities as its sole domain and has filed suit over an earlier fracking restriction in Longmont.

It has been well documented that the state and nation as a whole have benefitted immensely from new oil and gas extraction technologies.  The U.S. is now the world’s largest producer of natural gas and, thanks to new production in shale oil and shale gas, is on a path to become a net energy exporter in a few short years – something that would have been unthinkable not long ago.  Moreover, reductions in greenhouse gas emissions from the electrical power sector are the result of the increase in natural gas fired power generation – a direct result of the decrease in price that has accompanied the increased supply due to fracking (the impact of renewables in achieving this reduction, in spite of receiving a disproportionate amount of press, has been negligible in this regard).  So, in spite of the economic and environmental benefits of hydraulic fracturing and horizontal drilling, why did these communities vote to ban them? 

First, there remains a widespread misunderstanding of the environmental concerns associated with hydraulic fracturing.  Fracking occurs thousands of feet below the surface, well below any source of potable water in the country.  And, in spite of some alarmist propaganda, there have been no demonstrable cases of fracking at depth contaminating ground water supplies.  But, with that said, there have been problems, virtually all of which emanate from poor well completions and other surface or near surface drilling contamination.  While these are not an issue with hydraulic fracturing per se (i.e. they could occur with conventional production as well) they are legitimate concerns.  To some extent, the industry is its own worst enemy, whether it is its own failure to adequately take preventive measures against spills or specious claims about the need for trade secret protection for the constituents of frac fluids.

There are some 50,000 oil and gas wells in Colorado with approximately 2,000 new wells drilled each year.  A check of the COGCC incident reporting database reveals that thus far in 2013, there were just over 100 spills that impacted surface or ground water, with about a quarter of those a result of the September floods.  Most others appear not related to drilling and completion activity but resulted from mechanical failures in collection and distribution systems.  Even though that incident rate is only a few percent, you would probably not get on an airplane if the airline industry’s incident rate was that high.  So, perhaps there is something to learn from the exemplary safety record of the airline industry and the transparency afforded by the Airline Safety Reporting System (ASRS) which allows everyone to share and learn from critical incidents that are voluntarily reported by pilots.  FYI, the same has been suggested for the medical community as well.

It is a fair question to ask why local communities should not have the same right to regulate this type of industrial activity within their borders as they do in regulating building permits, construction, transmission lines, or other industrial activities?  But, perhaps they should consider establishing systems to evaluate drilling activity on a well by well basis rather than enact outright bans.  It strikes me that the referenda on hydraulic fracturing are as much a statement on the state’s oversight of drilling as on concerns with fracking itself.  In other words, do the residents of these communities trust the state and its cognizant regulatory authority, the Colorado Oil and Gas Conservation Commission (COGCC), to protect their interests?  The answer, it seems, may be no. 

I have written in the past about the inconsistency in energy development regulation in Colorado noting that, while the state asserts primacy in the regulation of oil and gas drilling, it remains strangely disinterested in permitting electric generating facilities, be they renewable energy related or otherwise.  For instance, I would venture to say that most citizens are entirely unaware that neither the Public Utilities Commission nor the Colorado Energy Office requires even the most minimal registration of, or could provide data on, all of the electrical generating facilities in the state, the principal exception being the Department of Public Health and Environment which issues air quality permits for them.  Drillers, at least, must file a permit application for each well they seek to drill. 

The bottom line is that I would be no more in favor of having a drilling rig 500 feet from my back door than I am having a 400-foot wind turbine there.  And, before critics decry this as NIMBYism at its worst, consider that both drilling and renewable energy facilities represent industrial development that is not wholly compatible with residential neighborhoods.  The important point is not that these types of energy development do not belong anywhere, but rather that they do not belong everywhere.  And, until the supply of energy (be it liquid fuels or electricity) becomes so critically short, there is no reason to find that no land – be it residential or wilderness – should not be off limits.

Yes, the state and the oil and gas industry need to get their acts together and do a better job of understanding and responding to the legitimate concerns of the public.  Perhaps a reporting system analogous to the ASRS mentioned above would help.  Local communities that seek to ban hydraulic fracturing entirely, on the other hand, need to consider more flexible regulatory schemas that can be applied with more precision than a sledge hammer.  The nation, the economy, and the environment have benefitted from unconventional oil and gas development and we need to figure out how to keep this train rolling.