Archive for the 'wind power' Category

Smart grids and the changing role of utilities

Much of the focus when discussing smart grids has been on hard-ware, such as  heat pumps and energy storage opportunities offered by electric cars. It has struck me that not sufficient importance is given to the IT infrastructure and the operational intelligence required to actually run a smart grid.

Smart use of smart grids

Energy utilities are in an ideal situation to take a leading role in the development of smart grids as long as they remain agnostic about the elements that form part of the smart grid. The moment energy companies try and start dominating the heat pump and energy storage market they will be focussing on the wrong thing.

The money is in the smart use of the smart data supplied by the smart meters of the smart grid.

It will enable the energy company as a spider in the web to determine when to use what asset and optimise its revenue.

The money is in the data

This means that energy companies should be focussing on the collection and interpretation of data. Data has become  a most valuable asset judging by the valuation of Facebook and the same applies to energy companies.

Privacy objection are temporary

Collection and use of data has privacy implications. These privacy implications stopped the rapid introduction of smart metering in The Netherlands, It is however my impression that the majority of internet users are gradually coming to terms with the benefits of the web knowing what our preferences are. It would not surprise me if people actually start liking the fact that automatic marketing systems create offers for them in line with their preferences; and even if we do not like it, data collection about us appears to have its own unstoppable momentum.

Smarts grids means lower costs

The collection of data by energy companies has definite advantages to consumers because it will lower their energy bill.

It will lower their energy bill because:

  1. the smart use of energy will reduce the amount of overcapacity that energy companies now have to  maintain and
  2. it will lower their energy bill if they can respond to the pricing incentives that a good smart grid system can send to the clients connected to it.

Lower costs by moving the demand curve

Currently energy prices are set by energy companies using their cost efficient power generators first and their least efficient  reacting to more or less fixed in-elastic demand.

The price is determined by the least efficient generator.

The moment demand becomes more flexible energy companies will see their revenues drop as consumers will take less energy when they try and increase prices. It will no longer be the most inefficiency/expensive power generator determining the price.

The price will be determined by  the flexibility of the consumers fixing .

How to make money out of lower costs

Unable to set the price energy producers will see their income reduced, to make up for some of  this loss they can position themselves at the heart of the smart grid and make money as a result of that position.

  1. By enabling consumers to get the best price out of the market some of that benefit will stay with them.
  2. By optimizing the use of the various hardware parts of the grid. Energy companies will be paid for that service and,
  3. By supplying energy to the grid (using their efficient wind parks and gas powered generation capacity)
  4. By reducing its own costs as a smart grid will enable an energy producer to reduce its overcapacity.

Smart grids, in other words, offer energy companies an excellent opportunity,


Sustainability its example and its deceit

Sustainability and Unilever

Unilever has published its Sustainable living progress report. It has made good progress. Most of the progress really impresses me, like the 24% of agricultural raw materials and 64% of palm oil that are now sustainably sourced.

The fact that 100% of energy is from renewable sources is less impressive as at least some of it is from Norwegian and Swedish hydro sources. We all know that this is nothing but “green washing”. Norway has sold so many of its green certificates (proving that the power was generated by hydro) that one could say that it has, in fact, the dirtiest energy mix of Europe.

But most important to me is the rationale behind the plan. It is a rationale that should inspire all CEO’s to follow Unilever’s lead. Unilever states that it is pursuing its sustainability goals because:
1. consumers want it
2. retailers want it
3. it fuels innovation
4. it helps develop new markets
5. it saves money.
6. it inspires our people
Who would not want his/her company to feel that its strategy achieves all these goals?

It strikes me that all the reasons listed have two sides to them – two sides that can be explained through Unilever’s Dutch heritage. Like any Dutchman, Unilever is both a missionary and a salesman at the same time. Innovation, inspiring employees, developing markets: it is all pursued with missionary zeal in the knowledge that the salesman knows that the market wants it and revenue can be increased.

Sustainability and partnerships

It is also Interesting that Unilever works in partnerships to realise its sustainability goals. CSR business practices require close co-operation with others. Companies cannot do it alone as CSR requires a much more holistic approach to the business. No company can control all the aspects of a-cradle-to-cradle approach effectively and efficiently. Here too Unilever leads the way.

Eneco’s sustainability and deceit

I drove past an Eneco commercial outside Schiphol Airport today. Eneco sells Dutch Wind power and advertises this graphically by a display in which a wind turbine and a washing machine both turn, implying a direct link between the turbine and the energy consumed by the washing machine. We all know this is not true. Today it was great to see that the wind turbine in the display was not turning even though the washing machine was on “full-cycle”. This is the reality: when there is insufficient wind in The Netehrlands, Eneco’s customers still receive power. This power comes from the coal power stations of E.on, Essent, Electrabel and Nuon. It always hurts me to hear and see Eneco claiming it is the greenest producer of power in The Netherlands. It might be true, but Eneco produces such a tiny fraction of Dutch power that this claim does not mean much. Without the coal (and gas) powered generators of its competitors, neither Eneco (nor Greenchoice for that matter) would exist.

Felix Gruijters

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