Story plus blog including (as of now) my additional comment -- check the
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http://www.siliconvalley.com/mld/siliconvalley/business/financial_markets/ventur\
e_capital/12685962.htm

Posted on Mon, Sep. 19, 2005

Rethinking energy
IN KATRINA'S WAKE, VCS SAY COUNTRY NEEDS TO OVERHAUL INFRASTRUCTURE
By Matt Marshall
Mercury News

The nation's electrical power grid was aging badly even before Hurricane
Katrina brought it to national attention.

Now, with regional energy bottlenecks and spikes in the cost of oil and
natural gas, some Silicon Valley venture capitalists and technologists are
saying the country needs to radically overhaul its energy infrastructure.

``Our culture is crisis driven,'' said Scott Mize, president of the
Foresight Nanotech Institute, a Palo Alto technology think tank. ``We go
from event to event, waiting for something to push us over the tipping point.''

Built on a technology and platform set in the 1950s, the current grid
remains unable to store energy, is too centralized -- and thus prone to
bottlenecks -- and cannot efficiently transport electricity without huge
losses in power along the way, he and others say.

One solution: the ``Intelligrid.''

Proposed by Mize and others, this new decentralized grid would rely less on
mega power plants. It would potentially allow millions of residents with
solar panels on their roofs to easily feed excess power back to the grid.
It would offer a more open system for buying and selling electricity. And
it might use a cutting-edge ``quantum wire,'' or fiber made of billions of
carbon nano-tubes, which would be low-resistant and able to transport power
much more efficiently.

This would, of course, mean significant investments in new technologies --
many of which would further the interests of Silicon Valley investors and
of groups like Mize's, which promotes nanotechnology.

The non-profit Electric Power Research Institute in Palo Alto has been
actively pushing the idea of the Intelligrid for four years, and it has
gained some adherents. It's even being tested by the Long Island Power
Authority. Part of the idea is to make utilities agree to standards of
buying and selling electricity -- not in complicated, opaque long-term
contracts but on an open-standards system with real-time pricing, and
software that would monitor usage.

When electricity is more expensive to consume, say at midday, the prices on
the grid would reflect that, and consumers would have incentives to turn
off usage at those times.

Raising awareness

Don Von Dollen, EPRI's program manager for the Intelligrid, says he's
making progress on raising awareness among state regulators, and several
state agencies expressed interest in the concept at a conference last week.
``It's not that they're opposed to us. It's just that they don't know about
it,'' he says.

Then there's the quantum wire, a project of Richard Smalley, a Rice
University chemist. The lightweight, high-capacity wire would provide more
efficient transport because it would not lose as much electricity in the
form of heat.

But even adherents of the Intelligrid acknowledge that significant
regulatory reform is required first. States and utilities would need to
open up their fiefdoms and make their costs and pricing more transparent.
And the powerful utility industry is resistant to change. A reformed grid
would have to include utilities, letting them get paid for running the more
transparent grid network.

And then there's the problem of money -- who would pay for the grid, and
how expensive would it be? Government is always short on money, and private
investors -- including those from Silicon Valley -- may not see potential
returns until regulations are changed.

``We represent money, and money looks for a return,'' says Marty Lagod, a
venture capitalist at Firelake Capital. ``We're not investing in the
electrical grid because we don't get returns.''

Still, Lagod may be one of the best-placed to understand the potential for
Silicon Valley companies if such regulatory reform is implemented. He
helped draft a proposal to show regulators about how to structure such an
Intelligrid. And for good reason: He toiled for four years to launch a
micro-turbine company -- part of his vision for a more decentralized power
system. But in 2001 it ran out of money and he was forced to throw in the
towel, letting go about 22 employees.

``I cratered my own company,'' Lagod says. ``I've got scars and blood all
over me.''

So far, on the energy front, venture capitalists have focused instead more
on small-step, prudent investments in alternative energy sources.

For example, Erik Straser, a venture capitalist at Mohr, Davidow Ventures,
recently invested in Jadoo, a company near Sacramento that makes fuel cells
to power portable devices. The need for alternative energy became clear in
the wake of Katrina, when the Superdome almost ran out of diesel gasoline,
water threatened to overwhelm an energy generator and local police were
running out of portable power for communications.

``They didn't run out of fuel,'' he said of the Superdome, ``but you
wouldn't want to try to guess what would have happened there if they had.''

Other investors are looking for more, like Ray Rothrock, a venture
capitalist with Venrock Associates in Menlo Park, who co-invested with
Straser in Jadoo.

Power losses

Rothrock was trained as a nuclear engineer. He bemoans how the existing
grid loses about half of its power in transmission due to heat loss on the
lines, and how failures disrupt entire portions of the grid.

``A simple failure turns into a catastrophe as it cascades through the
network,'' he says.

EPRI estimates that the economic costs of failures across the United States
total $100 billion a year.

A much more efficient system, Rothrock says, would be to have thousands, if
not millions, more power sources -- such as solar-powered homes -- freely
connected to the grid.

``The model is the Internet,'' he explains. ``It would be like Cisco
routers -- if one data line fails, you reroute it with switches.''

Such a distributed system would also minimize exposure to security risks,
he said. Three terrorist bomb detonations of the Bay Area's key
switch-yards could take out the region's power for two or three days, he
noted. And a more efficient grid would make it more feasible to plug hybrid
cars into home power sockets.


http://www.siliconbeat.com/entries/2005/09/19/katrinas_lesson_we_need_an_intelli\
grid.html
Silicon Beat (Blog)
Posted by Matt Marshall on September 19, 2005 07:13 PM | 0 Linking Posts

Katrina's lesson: We need an "Intelligrid"

IntelliGridlogo.jpgKatrina showed that much of our infrastructure can be
bottlenecked, from our electrical grids, to our telecom networks. Some said
media coverage seemed to work best, but that was decentralized -- as
exemplified by the vibrant work of bloggers.

On one of the failings, for example the electric grid, there's a worrying
lack of urgency. Again, it is fertile Silicon Valley that has ideas about
how rejig our grid. The problem is building the political case, to get
approval in Washington, and the states.

Our story, published today in the Mercury News (free registration), is
about how venture capitalists and technologists in Silicon Valley agree
with the proposal, by Palo Alto's Electric Power Research Institute, for
something called the Intelligrid. It makes sense. Instead of hundreds of
power plants, such as giant 1,200 megawatt nuclear power plants, powering
our needs, we should have millions of solar powered...

...residences and workplaces -- or at least a power source closer to their
destination -- so that a good fraction of the power doesn't get wasted in
transportation.

And that way, a single error at one plant, or cut in an electrical
transmission line, doesn't shut down the power of 2 million people, as it
did last month yet again in Southern California.

Utilities would have to buy into idea, which arguably is against their
interests -- they'd lose control. So our politicians need to be pressured.
And they're not feeling that pressure. We'd be interested in feedback on
the Intelligrid, from other cleantech experts like Rob Day. Is it really
just politically dead in the water?

Locally, it is significant because the California Independent System
Operator, which oversees most of the state's electricity system, has just
approved a $300 million transmission line that brings power into S.F. from
Pittsburg under the S.F. Bay. That's a whopping-big line. Sounds like the
opposite of the Intelligrid, but maybe we're missing something. Apparently,
it still needs environmental approval.

Meanwhile, check out the idea of Felix Kramer, co-founder of the Palo Alto
company, CalCars -- retrofitting the Toyota Prius hybrid to form an
efficient decentralized electric generator grid. The raft of comments
suggest he's on to something.

Felix informed us this morning, after reading our story, that EPRI has
actually been pushing this idea of the Intelligrid for decades, but simply
came up with the name 4 years ago. It is the brainchild of EPRI's founder,
Chauncey Starr now 93, and still going in to work.

Related to all this, there's an Red Herring interview with Nancy Floyd,
co-founder of the San Francisco venture firm, Nth Power, and note her
answer to the question about where the next big opportunity in cleantech:

The big infrastructure problem is the aging grid, and the whole
automation area. The average age of transformers is 38 years, and their
design life is 40. Almost every week transformers explode, causing outages,
costing money, even killing people. And how do they find out if a
transformer is going to fail? They send someone out to take a sample of oil
from the transformer and send it to a lab to get results a week later.
It’s just one poignant example of how antiquated the system is. I think
about my boys instant messaging for fun, and we still send meter readers
out. It’s something that has to change

Meanwhile, the NYT fell on another "decentralization" story, about telecom.
It notes the drawbacks of the incumbent phone network, and advantages of
the decentralized nature of WiFi. If cities had lots of little WiFi nodes,
their communications might stay up during a Katrina-like catastrophe. Note,
too, how these networks could best be powered by distributed solar or other
energy sources.

There'd be work for Silicon Valley companies, too. The NYT piece says the
cost of the WiFi network is laughable. It refers to the Silicon Valley
(Sunnyvale) company, Tropos:

Alternatively, a city could simply hire a mesh-networking company like
Tropos Networks, which estimates a cost of $70,000 to cover a square mile
with DSL-speed connections. These numbers are so low that they are
virtually rounding errors in any city's budget.


Comments
Posted by: Felix Kramer on September 19, 2005 08:08 PM

The Intelligrid is something that we ought to get around to doing sooner
rather than later. It's a critical part of a 21st century infrastructure.
For what CalCars.org is promoting -- plug-in hybrids -- the current grid
has off-peak capacity to charge tens of millions of cars. But a modernized
grid would pave the way for the now futuristic "vehicle-to-grid" (described
at the bottom of http://www.calcars.org/vehicles.html -- millions of cars
as active nodes on a two-way national power network), with many additional
benefits.

In the original article, I was surprised to see Ray Rothrock's statement
that "wheeling losses" could reach 50% -- I'm not an engineer, but I've
seen numbers more around 10%, for example:
http://www.memagazine.org/backissues/june01/features/reality/reality.html .

Finally, I wanted to clarify that any hybrid, not just a Prius, could
provide portable backup power, mobile for emergencies, in Silicon Valley
driveways for local power outages. Comments especially welcome at my blog
(Matt gave URL in his posting).
-- Felix Kramer, founder, California Cars Initiative

-- -- -- -- -- -- -- -- -- -- -- --
Felix Kramer fkramer@...
Founder California Cars Initiative
http://www.calcars.org
http://groups.yahoo.com/group/calcars-news
http://groups.yahoo.com/group/priusplus
http://www.hybridcars.com/blogs/power
-- -- -- -- -- -- -- -- -- -- -- --