It's Time to Upgrade to Electricity 2.0
While clean energy has captured the imagination of everyone from Silicon Valley venture capitalists to President Obama, it has yet to fulfill its job-creation promise. Non-hydro renewable power accounts for just 3.5 percent of electricity in the United States, compared with 28 percent in Denmark, a leader in the transition to renewable energy. In a study released today, I examine why progress has been so slow in the electricity industry - the network at the center of the wider energy network. The answer turns out to be that our highly regulated system, uniquely complex by global standards, is blocking progress.
Put simply, only by upgrading from Electricity 1.0 - the closed, highly regulated network created a century ago - to Electricity 2.0 - an open, distributed network - can America unlock the potential of clean technology and experience a renewable energy revolution.
It is often said that an inadequate electric grid is slowing the rollout of clean renewable energy. But why is the grid inadequate? Because the regulatory regime of Electricity 1.0 guarantees the current state of affairs. While the industry research consortium, Electric Power Research Institute, has done an outstanding job in improving the reliability of the network, utilities do virtually no research and development. Laws bar them from trying new business models, innovating and taking risks. This bias against innovation prevents utilities from purchasing technologies developed by others. Thus, entrepreneurs find the gates of the network closed. It should not be surprising that a highly regulated industry cannot lead a revolution.
So, how can America upgrade to Electricity 2.0? As with telecom reform, Electricity 2.0 will require nothing less than a Big Bang that includes federal legislation as well as close cooperation with the states to harmonize rules of the road. Partial reform, such as has taken place in Texas and California, is a start, but it is not enough. What's needed is an entirely new plug-and-play architecture that opens the grid to everyone, making connection the norm not the exception.
Just as Americans and others drove the Internet revolution by staying up late, building Web sites and wiring home networks, so are energy innovators ready to drive a clean energy revolution. But they need the tools to do so.
Electricity 1.0 served the world well in its day. But the innovation (e.g., radar, radio, wireless power), which appeared in the early days, stopped as the current system of regulations took hold.
Today, the undeveloped technologies are piling up. A few of the ideas that need only an upgrade to Electricity 2.0 in order to flourish include: distributed storage, which could free the grid to react to shifts in power demand; electric car batteries, which by some estimates could store 14 times the power used every day in America; wireless charging and power transfer, which were developed by the great inventor Nikola Tesla, but never commercialized; low voltage, direct current lines in the home to power electronic devices; guaranteed power to prevent blackouts; and networked devices to conserve power.
Finding the right balance between opening up the network, securing it, expanding it and adding functionality to it will not be easy. But upgrading to Electricity 2.0 is work that cannot be postponed if America is to undergo a real renewable revolution.
Michael Moynihan is the director of the Green Project at NDN, a Washington, D.C., progressive think tank. To read his report, "Electricity 2.0: Unlocking the Power of the Open Energy Network," go to www.ndn.org.
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