Washington Is “Well Behind” Other States in Cleantech, but Gaining in Smart Grid, Efficiency

“If you’re a technology junkie, cleantech is the candy store for you,” said Byron McCann, co-founder and managing partner of Seattle-based Ascent Partners, an investment bank that advises cleantech and software entrepreneurs. McCann, who also serves on the board of the Northwest Energy Angels, was talking about his own transition from software to energy, and about his fascination with the complexities of cleantech. “Three years ago, I was doing some research, and the whole cleantech industry was starting to take off,” he said. “Now it’s on fire.”

McCann moderated a breakfast panel yesterday entitled “Harnessing IT for Energy.” Organized by the Washington Technology Industry Association (WTIA), the goal of the Seattle event was to stimulate discussion about the strengths of Washington state in software and energy distribution, and how they can be used to further innovation in cleantech. “We felt there was a huge opportunity for our state to become a leader in the convergence of IT and energy,” said Ken Myer, the chief executive of WTIA, in his opening remarks.

There are certainly some serious opportunities to consider. McCann noted that the state’s allocation of federal stimulus funding for energy transmission is projected to come to $574 million for energy efficiency, with another $1.5 billion going to smart-grid technologies (figures quoted from Climate Solutions, a Northwest nonprofit). He also pointed to financial industry surveys (as recent as November) that indicate cleantech and life sciences have the “highest potential for stability and growth.”

“The big issue for me is, this whole opportunity is not lost on the rest of the world,” McCann said. “If we win here, the stakes are huge. They’re bigger than information technology. The energy industry is the biggest on the planet.”

With that, he turned the discussion over to a distinguished panel, made up of Randy Berry, managing director at Areva T&D, a French smart-grid firm with operations in Redmond, WA; Jim Kensok, vice president and chief information officer of Spokane, WA-based utility company Avista; Marc Cummings, director of public affairs at Battelle’s Pacific Northwest National Laboratory (PNNL) in Richland, WA; and Michael Butler, chairman and CEO of Cascadia Capital in Seattle. They hit on some key progress being made in energy efficiency and smart grid systems, as well as what Washington still needs to do to create a cleantech hub—all from the complementary viewpoints of technologists, utilities, policy, and finance.

Here are a few key takeaways from each panelist:

Randy Berry of Areva T&D, a computer scientist by training, clarified that a “smarter” grid means more efficient, reliable, and environmentally friendly energy transmission and management. The problem is no longer just getting electricity from A to B. “Flows are all changing—it’s any direction on the grid,” he said, in part because of the addition of renewable sources like wind and solar. “It requires a lot of technology.” Berry said he has challenged his team to be able to display in a control center, in five years, the cost and savings at each node in the power grid, as well as the voltage distribution and flow of electricity. He added that Areva already manages 39 percent of the electricity flow in the United States.

Jim Kensok of Avista said his goal, coming from a utility company, is “how to get the customer real control over costs and carbon emissions.” He detailed the consumer side of the smart grid, which he said requires advanced metering, distributed power generation, and other technology foundations. Avista has already worked up a clean energy test site, Kensok said—a place where utility-scale renewable energy developers can try hooking up their solar photovoltaics or thermal-solar systems to the grid, add their software, and do research and product development.

Marc Cummings of PNNL emphasized the need to think on different time scales—especially long-term. “It’s not solar versus wind versus efficiency. It’s going to be all of the above,” he said. One problem is that the U.S. electric grid has been cobbled together based on the needs of different geographical regions—and unifying it is challenging. The West, for example, has lots of hydro power, but not as much capacity for plug-in hybrid vehicles; the East is more congested, and reliability is a major issue. Part of the answer, Cummings said, is to “deploy cost-effective solutions today, but then we need partnerships to accelerate next-generation systems, and then we need basic R&D investments to develop breakthrough technologies.” Efficiency, he said, is “a good place to start.”

Cummings mentioned a couple of cutting-edge PNNL projects in this vein. One is grid-friendly appliances: the lab has developed a chip that helps your refrigerator or dryer automatically sense the grid so it can turn the appliance off for a few seconds when electricity is needed somewhere else or the grid is having trouble. PNNL also did a test demo on the Olympic Peninsula in which it gave a few hundred people incentives to save electricity, let them set their house temperature and so forth, managed their utility bills, and showed that the process decreased peak load demand by 15 percent.

Lastly, Michael Butler of Cascadia Capital spelled out Washington’s energy position in no uncertain terms. “We’re well behind,” he said. “Not only California and Massachusetts, but we’re well behind Colorado and Texas, and I fear we’re behind states like Michigan and Pennsylvania.” He pointed to a couple reasons for this. One, the “sectors that have taken off are driven by technologies deep in the stack that we’re not very good at.” (Solar is an example.) Two, he said, “We don’t feel the pain. We have clean, affordable energy” in the form of hydro—and other states don’t.

The good news, Butler said, is “the market is moving towards smart grid and green buildings, which is energy efficiency. Companies will be driven by software technology, and that’s what we’re good at.” He then detailed a list of five things Washington needs to develop and nurture in order to build a true cleantech hub:

—Entrepreneurs, specifically those moving from software into cleantech.

—Investment, including venture capital from firms like OVP Venture Partners, Pivotal Investments, Chrysalix Energy, and Yaletown Venture Partners.

—Research institutions, such as the University of Washington, Washington State University, and PNNL.

—Ecosystem, especially lawyers at leading firms like Stoel Rives and Davis Wright Tremaine.

—Public-private partnership, in the form of communication and support between the state government and companies. “A lot of entrepreneurs have built their companies without regard to the public sector,” Butler said—and that has to change. “It’s brutal, it’s like watching paint dry. But you have to do it.”

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