Smart Power: Why More Bytes Will Mean Fewer—and Cleaner—Electrons

The hottest new thing in clean tech isn't solar panels or wind turbines—it's computers. Big data analytics and smart meters are allowing utilities to use more renewable power while reducing energy waste.

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Siegfried Layda

Improving energy efficiency is the no-brainer, no loser environmental policy. By limiting wasted power, we reduce the number of power plants we need—and their consequent pollution—and we save money. It shouldn’t be surprising that when President Barack Obama went looking for a green policy that the entire nation could agree with during his state of the union speech, he settled on energy efficiency, challenging Americans to “cut half the energy waste by our homes and businesses over the next 20 years.”

Cutting energy waste is a matter of better lights and better insulation, better heaters and better air conditioners. But first and foremost it’s a data challenge. You can’t cut waste until you know what you’re wasting—and most of us have only the slightest idea of the energy we’re using at home. (Even big electricity users in business often aren’t much better—or need to employ human managers to monitor that usage manually, which cuts into any saving from efficiency.) Standard electricity meters might take one reading for an entire month, which makes trying to save energy like trying to lose weight if all you knew was the total amount of food you ate over the course of 30 days. “You need data to make energy saving work,” says Bennett Fisher, the CEO of the building efficiency startup Retroficiency.

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Thanks to the growth of smart sensors and the big data they produce—along with new companies that know how to crunch that information—energy users from huge factories down to individual households can track and reduce waste in a way that simply wasn’t possible just a few years ago. It’s the combination of energy technology with the Internet—or the Enernet, as some have called it—and it’s the hottest sector in clean tech right now, in part because it relies on relatively cheap, easily scalable software, rather than the expensive factories needed for, say, solar panel manufacturers. That makes the Enernet a smarter, safer play for venture capitalists burned in the wake of big ticket cleantech failures like Solyndra. “My last company was a solar firm and we had to spend tens of millions of dollars building factories,” says Roy Johnson, now the CEO of EcoFactor, an energy management startup. “And now just have software engineers, server resources and data centers. It’s much more capital efficient.”

And efficiency, after all, is what the Enernet is all about. Take the Virginia-based Opower, one of the oldest and most successful companies in the energy management space. Opower began by offering homeowners the chance to compare their power use to those of their neighbors, to discover whether they were energy hogs or energy saints. Just the contextualizing effect of knowing how you compared to others—along with Opower’s energy efficiency tips—was enough to encourage most homeowners to reduce waste. But as smarter meters began to gather much more granular data about energy use—as many as 1 million energy reads per year—Opower has been able to offer much more. The company provides a mobile app that allows customers to see how and where they use electricity, as well as receive service updates from their utility. Opower is also working with Honeywell, which is selling a WiFi-enabled thermostat, to create web and mobile platforms that customers can employ to better manage their electricity use, even if they’re away from home. (It may not be long until all our thermostats can connect to the Internet—the popular Nest smart thermostat, designed by former engineers at Apple, is selling to the tune of more than 40,000 devices a month.) And the company can use analytics to sort through the vast amount of data produced by those smart meters to help customers better manage their energy, identifying exactly where the waste might be occurring and how it can be fixed. “These are things we could never do without big data analytics,” says Dan Yates, the CEO of Opower. “We can provide you most of the value of a home energy audit without actually showing up at your house.”

(MORE: How SolarCity Makes Energy Efficiency Easy)

For the average household, energy efficiency is mostly a matter of cutting down the monthly utility bill. But for utilities themselves, smarter energy management can keep overloaded grids running and prevent the need for new and expensive plants. Energy use isn’t constant throughout the day or the year—it tends to spike in the middle of the day, especially during hot summers. (Heating and cooling are responsible for about 50% of all electricity use in the U.S.) Because utilities keep power running 24/7, they need to have spare capacity to meet those spikes—and that extra power tends to come from polluting and costly so-called “peaking plants.” Dormant most of the year, utilities will activate these plants during particularly intense periods of energy use—like brutally hot summer days in the Northeast—to keep the grid delivering electricity. The costs can be astronomical—in the Austin area, for instance, the cost of a megawatt/hour of electricity during the absolute summer peak can be more than eight times what an equivalent amount of power would cost off-peak. If you could eliminate those rare spikes by reducing peak demand—perhaps by shifting it to non-peak hours—the savings would be more than worth it for utilities and ratepayers alike.

Companies like AutoGrid can help utilities smooth out the demand curve through smarter energy management. AutoGrid’s algorithms sort through the petabytes of data created by smart meters—as well as exterior factors that might influence power consumption at different times, like weather—and spit out solutions that enable utilities and their customers to automatically shift non-essential electricity use to non-peak times. This is the sort of work that would have been done by human energy managers in the past—if your office building ever shuts down lobby lights in mid-summer, you’ve seen demand side management in action—but AutoGrid can do it faster and cheaper. “We make the system more informed by real time data, and we make it more reliable,” says Amit Narayan, AutoGrid’s CEO. “Utilities can get around 30% more out of their existing resources.”

(MORE: The U.S. Will Be an Oil Giant Again. But It Won’t Be Energy Independent)

Smarter energy management can also help utilities better handle intermittent renewable sources like wind or solar, compensating automatically when the wind isn’t blowing or the sun isn’t shining. The Danish wind company Vestas has partnered with IBM to model past, present and future wind patters, allowing it to optimize the location and design of new wind turbine sites. This is something that simply wouldn’t have been possible a few years ago—the sheer amount of data that computers have to process to simulate weather patterns is vast. But now IBM supercomputers can crunch that data in a matter of hours, while also analyzing patterns of turbine usage to predict potential mechanical failures before they happen. “The real advance isn’t just the sheer amount of all this data,” says Allen Frefield, the senior vice president of law and public policy at Viridity Energy. “It’s all that we can do with it.”

If we’re ever going to truly clean up our electrical grid, we’ll need to replace coal and natural gas with zero-carbon sources like solar or nuclear. It won’t be easy—and it’s likely won’t be cheap. But a smarter, more efficient grid—enabled by the same intelligence that brought us the Internet—can help smooth that transition. More bytes will mean fewer electrons.

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