Can municipal energy achieve net zero carbon emissions?

As Boulder City Council holds a public hearing tonight on next steps to municipalization, I felt compelled to submit a guest opinion to Boulder Weekly...

Can municipal energy achieve net zero carbon emissions?

When Boulder signed on to the goals laid out in the Kyoto Protocol  we didn’t anticipate seeking net zero carbon emissions, just to rein in emissions as a starting point, then seek a sustainable energy future.  Since the turn of the century however [this century] a number of communities are leading the charge to net zero energy supply rather than solely pulling down overall emissions.  A big question in my head is whether all the trouble in wrestling for local energy control is worth it.  Boulder’s emission wedges show us that electricity supply contributes 57%, a good place to focus if we want to move the fulcrum.

So is net zero emissions even viable?  Is local control the best analog for other communities to follow?  If replicability is the overarching guiding vision then which is the simplest, quickest path? Let’s tackle the first question, and leave the second for another time.

There are a number of communities leading the way not just to Kyoto targets but toward net zero emissions in their energy supply.  Take Germany deciding that solar without nuclear base load is not only feasible but is achievable without a significant cost impact to their economy (a perceived competitive disadvantage to industry).  This vision is being accomplished through policy and financing solutions, all of which by the way are in support of local providers.  How about Australia deciding that 100% renewable supply is economically feasible, thru a carbon tax incentive of $50/tonne CO2.  Heck, Secretary Chu and NREL show that not only is 100% renewable energy [RE] feasible, they also modeled up that over built RE (to address the intermittency issue and high cost of energy storage) is economically viable!  A closer look at the local community question - Who is doing it and who is talking about it:  San Francisco (not the new Pope) has tried to municipalize more than once, and now has a 100% RE by 2020 goal supported through California’s Community Choice Aggregation law, which we don’t have here in Colorado; Palo Alto passed a ruling that their electricity must be 100% carbon neutral; Seattle also has aggressive net zero goals (of course that’s always easier with a liberal supply of hydro); Toronto is pursuing 100% RE by 2030; and of course our brothers and sisters up the street in Fort Collins are piloting projects to figure out 100% local generation.

Each of these cited is leading the way for others to follow.  Leaders choose to under take the risks, work through the kinks, and provide a set of learning’s for others to leverage for a faster smoother path to an end goal.  So we have to ask ourselves: is pursuing municipalization, the years and focus applied to this single goal, our shortest path to net zero emissions in our energy supply emissions?

Is Climate Change Really About the Science?

At a recent session with Auden Schendler at Hub Boulder the conversation rotated largely around how to convince the other half of our society of validity of the science behind Global Warming.  First let me point out that "the other half", or "53% makers", or whatever one chooses to point to those other people that don't think like they do, is aligned along a political stratification that is totally invalid when it comes to practical things like environment, and economics, and values.  Over the past year reports have emerged (Huffington Post Sep17,11; NYT Aug4,12) that show 70-80% of Americans believe the climate is warming and that this should be a national priority.  We have a consistent over 50% Republicans in line as well.  The only hold outs are largely Tea Partiers how trend Libertarian and although they subscribe to Ayn Randism economics (which maybe works well in a small population but is invalid economic theory with large crowded populations).. I think they missed some of the most basic philosophy of socio-economic structure namely -Tragedy of the Commons.  But I digress.  We believe the climate is changing, experience it every season now, and maybe even understand variability as we trend average warm (abnormal snows in the South but crazy hot summers).  Their is no disagrement among scientists on this subject.  Yet the media perpetuates in the face of the polls.  (The Union of Concerned Scientists just released a report on media over the last six months - 95% of Fox News reporting was 'misleading' on climate science; 80% of the Wall Street Journal reporting on climate science is 'misleading' while the 20% of reporting that isn't misleading is primarily op-ed write-ins or rebuttals to released articles.

So, we believe in climate change.  We are witnessing disruption to daily life on a regular basis these days.  The "once in a lifetime storm" or "500 year flood" is becoming a more frequent occurrence, every few years now.  And we surely can't cover our eyes from seeing glaciers disappear.  So what are we actually talking about?  Human induced climate change.  That's the sticking point because if we are not responsible, and natural occurrences are, then why would we want to be concerned about green house gases?  Well, this is a problem.  

So what motivates people to believe, to change behavior?  I argue that first we've got to be cognoscente of ones value system.  When people experience things in their environment that connect with the values, we have cognition.  Scientists and academics believe in data, studies, and well written journalism.  So it's very natural to believe the results of 30 years of modeling the climate which is based on data, observations and deep reaches back in time through core samples.  They get the complexity of it all and the prudence of science itself -to discover, not spout ideology.  Yet many people don't live in this realm.  If we look at two other value systems that define American's world view we see religion and also economics.  Religious based value systems believe in age old testament and current community.  Testament only gives us Revolutions as any future guide to humanity, definitely a problem.  How this fictional story ended up in good book will be debated for eons.  But closer to home is one's community and family, so when a religious values person experiences the pain of climate change upon their friends or family, they believe.  Likewise with a person who's value system is founded in economics -show me the money rains supreme.  They believe when they see the costs associated more deadly storms.

Behavior psychology informs us that we change when we feel the pain.  We're seeing the results of this everyday through evolutions laid out in the previous paragraph.  Learning theory also illuminates that we don't change instantaneously, that there are a serious of small changes in perception until the tipping point, where our views change permanently.  The point is that we are seeing a migration in belief in climate change and we weren't there just a few short years ago, now we are.  The next step we've all been working on is convincing the populace of human induced climate change.  But this has also got to be rooted in value systems and everyone doesn't believe in the numbers.. because they probably don't really understand the numbers.  I mean heck Fox News loves to use the term "calculus" when they are talking about simple addition and subtraction!  One step at a time.  We're largely there with climate change which gives us the opportunity to change behavior to conservation of depleting resources and prudent planning for risky events.  We are largely there with economics and the understanding of job scarcity and prudent investment on our future (ok, not quite but we're on the way).  

We are on the path forward with climate change even in all its struggles.  Which means we're that much closer to the tipping point in the learned psychology of human induced climate change. But, academics, cease insisting on the "science", we know we are under change.  Science doesn't have the appropriate language for sound bites and definitely can't project undeniably what will happen... nor what happened to end the last ice age only 11,000 years ago (when man kind spawned civilization).   Let's focus on the undeniable observations like the rise in CO2 during the industrial revolution, and the direct correlation to environmental devastation along the way.  Habitat!  Let's focus on devastation of super storms to commerce and productivity.  Costs!  And let's illuminate the changing landscape and widespread release of CH4.  GHG!  If we only say 'what if it is us?'; 'what if it isn't us?' Are you really going to do nothing as our world changes way too rapidly?  

Approaching Energy Independence?

When I read an article a couple of weeks ago in Bloomberg about the US nearing energy independence, I thought to myself -how could that possibly be?  What are we talking about anyway?  Fuel? Crude Oil? Natural Gas? Electricity??  (Ok not true, what I really thought to myself was: The US is no closer to energy independence than the world is to solving global hunger!!)  Back to the question at hand.  We can't be talking about crude oil for transportation fuels (the commodity at the origin of a number of foreign conflicts).  After all, we hit a 70% import ratio last decade; we're the world's largest consumer of oil.  We must be talking about natural gas... but we don't export LNG (liquid natural gas).  In fact, before the shale-gas revolution just a few years ago we were building up infrastructure to import significant amounts of LNG.  So what is being referenced in speaking of energy independence? 


I've been following the news since then on this topic of course, and we're now seeing 'energy independence' bandied around amongst the political right as some sort of proof that we are on the right course, and need take nor further action on energy, and that we'll return to $2.50/gal gasoline.  Ok!  At least in these perspectives I see proof that we are talking about crude oil.


Well a simple little fact checking, to remind me of our exact trade deficit shows 19 million bbl/day imported and we produce some where around 9 MMBD.  I darned sure wouldn't label a 50% import ratio as "approaching energy independence"; it may no longer be what I have previously referred to as energy ambivalence, but energy independence!? Come on.  (There is good information at the EIA site but these two summaries show the trends more clearly -Washington Post and -RigZone.)


Yes it is true that continued innovation in drilling techniques have recaptured previous depleted fields.  In fact in only 5 yrs US oil drillers have increased total production by 25%.  Awesome.  That's what high priced fuels will do for you.  When you add a 10% drop in US fuel usage, mostly due to the economic shock of the last three years, you get a nice narrowing of the gap.  No doubt, high prices have modified behavior and we should see more gains coming with increased fuel economy standards as well as switching to natural gas propulsion.


But back to the main point here: what in the world is behind the statement "Net Exporter"?  Refined fuels, that's what we are talking about, not crude oil.   We actually have more refining capacity than we need in the US.  Perhaps that's good.  I think it's actually a result of capital expenditure decisions early last decade to stay ahead of projected growth in consumption.  No wonder all the hubbub over the Keystone Project to pipe hard crude from the Alberta tar sands to the Texas refining mecca.


It's interesting how 'net export of refined fuels' gets lumped in with a 'narrowing oil import gap' and also crosses over to the topic of 'natural gas as a bridge fuel' to become Americans Gaining Energy Independence with US as Top Producer.  It is absolutely wonderful that the US has a bit more time  to become as efficient as possible given expected growth rates.  It's also noteworthy to look at the drop in CO2 emissions over the same time period.  But it is unethical to lead the public to a belief of energy independence -no doubt that has to be the goal however- when we remain the largest per capita consumer of all things disposable, by a wide margin.  We should live well, no question, but we have to do so in a sustainable manner... which can only happen with open discourse of real issues.

Pop! ulation

As we all thought of population this week, hitting 7 billion people on October 31 2011, I was startled at the  pop! I heard as the world burst its rapidly expanding balloon.  After 200 years of exponential growth we find our species on the brink of the Earth's carrying capacity.  What is striking to me is just how fast population has exploded.  To stick with the metaphor, its as if a child has been trying to blow up a balloon for 10 thousands years, but only able to fill the space to that initial elasticity.  Then a thousand years ago with stronger lungs the kid blew one long breath which forced the balloon to expand, and if you have ever filled balloons with helium at the fair it's as if the valve was suddenly opened and the balloon expanded so quickly you didn't even know if you could pull it off the helium bottle in time!  If you can picture that balloon doing nothing for a very long time, them starting to fill with slow expansion, and a sudden shift to an exponential rate of growth that makes you turn your head and shield your face from the impending explosion... we have an accurate view of where we are.


A great visual by NPR shows this growth in another way.  What is absolutely astounding is that we did finally hit 1B people in 1800 or so, but that took nigh on 10,000 years.  850 years to double, then double again from that original 300 million in 1000 AD; but it only took next 100 years to double and double again to hit 5 billion!  6 billion..  7 billion..

Now, population experts will say that there will be a self governing leveling before the balloon pops.  Conventional wisdom also shows that we believe much of this sudden growth was due to far better health care (lower infant mortality and longer lives), and increased crop yields.  Although this may be true, I see a correlation to the discovery and use of fossil fuels, along with the direct correlation of CO2 in the atmosphere.  Just look how well these two charts overlay!  The reason for better health and higher yields is due to easily accessible power, work not tied to human and animal power which has limited scale, and global economics that allowed advances circulate globally.  

Quite startling don't you think?  That which gave us so much potential and incredible evolution -easily accessible, low cost, and super dense energy- is also potentially our undoing.  


One argument about population is the disparity in per capita energy use, and the contrary per capita population growth between developed and developing worlds.  You could argue that the developed countries have caused the CO2 rise simply do to such huge energy consumption; where as the developing world is the cause of population explosion.  Well, the two happened simultaneously so energy must be responsible for improved medical and agriculture in the developing world allowing an exit from severe poverty, will also allowing a life style of wealth and rapidly decreasing birth rates over the previous two generations.  Awesome on us as humans to be well underway in lifting living standards around the world, and everything that comes with that from education to equality to innovation.  The down side we all know -as energy appetite increases there will be more than just stress on supply, demand, and environmental degradation.


So what to do?  The crash course that the human race is in with our Mother's ability to support us is apparent, we've already the population and life style expectations, and only the energy consumption, environmental degradation, and natural resource depletion lag to come. 

Politicians Waffle On Energy While Government Leaders Take Action

It's an interesting juxtaposition when politicians take a stand against government action, pointing to a bureaucratic system ripe with waste while exhibiting the very characteristics of ineffectiveness they purport to be against.  Witnessing the debt ceiling debate, errr activism, while watching bills being voted in Congress that seek to undo past decisions makes me think of Lord of the Flies meets Fast Times at Ridgemont High, where somehow Spicoli becomes the elected leader.  Ok, actually just the former reference is accurate, but you'd expect that the new Congressional caucus came with a greater depth of knowledge.  Undoing what has already been done simply obviates the reality brought forth in Tragedy of the Commons -we must work toward the common good of a system that supports us all.  Worse, is which issues are chosen to go after, with torches a blaze, as if our species is not on a crass course with natures ability to support us (we've doubled our population in only 50yrs and natural resources are oversubscribed).  Geologists and anthropologists have even placed us in a new era - Anthropocene.  But regardless if you believe in environmental degradation or not, there is simply no reason to waste time and energy on silly grand standing pursuits when there are critical actions to be taken for our country and its people.


Exhibit #1a -Tea Partiers and light bulbs.
Amazingly, this wise new congress choose to use lighting standards as a platform for government intrusion of privacy and right to free choice.  You'd think they might have used a more astute prop such as CAFE standards, or at least they could have done their homework to find out that that the law is an energy efficiency standard, not product outlaw.  Of course that might have uncovered the fact that incandescent lights are the biggest electricity demand in our country (remember Timothy, turn off the lights!).  The Pop and Bake oven even used a 100W bulb as its cooking element!  Of course, contrary to the libertarian mindset that no one wants these CFLs, Home Depot will tell you that CFLs were the biggest selling item on the shelf, if they could even keep it stocked.  Now that's freedom of choice.


Exhibit #1b -Rick Perry on the EPA their job killing regulation.
For the life of me I can't figure how the air pollution requirements of utility scale generation, specifically coal fired power plants, would kill jobs.  Regardless whether you add technology to existing plants or convert to natural gas, the costs are somewhere around half a billion dollars per utility scale plant.  That sounds like jobs to me.


Exhibit #2a -Federal government and sustainable energy.
When Obama took office the administration knew that one of the best approaches to supporting the new green economy was to be the buyer.  Green building guidelines were adopted for all federal agencies with respect to integrated design principles, optimized energy performance, water conservation, indoor ari quality, and reduced environmental impact due to materials.  This 30% reduction by 2015 builds on the executive order from the Bush era [Energy Independence and Security Act of 2007] that by 2030 100% reduction in fossil fuel consumption (below 2003 baseline).. that's Net 0 yo.  And in turn these policies indeed have been major drivers in reducing building energy consumption (40% of our national energy profile) and paving the way for wide spread green building -and retrofit- adoption while simultaneously lowing the annual expenditures by an equivalent amount today and far exceeding inflationary rates tomorrow.


Exhibit #2b -DoD has already chosen energy security and cost hedging.
The major story just starting to break out of the dark is the amazing advances taking place in the Department of Defense.  All politics aside of course when it comes to long term strategy and serious decision making.  From the Marines adopting new energy tech (solar charging) to significantly increase in-field time, lower costs, and most importantly reduce the risk to troops through far fewer fuel transports; to the navy already achieving 30% reduction in global fuel consumption (through bio fuels) with another 50% reduction target!  The DoD is no lot of fools.  I can't wait to see some of the grander plans coming out of the other two branches, no doubt coming to air waves near you soon.


Exhibit #2c -DOE Secretary Chu on energy and the great American innovation machine.
A nobel prize winner in physics, creator of Bio-X the cross discipline scientific initiative, professor at Stanford, with a past at Bell Labs -Secretary Chu well understands the power of innovation when a critical mission is at hand.  His critical mission is driven by climate change and the future of our species.  (Catching Mr. Chu's brief synopsis of climate history and analysis proving where we are, and likely to go, is quite eye opening.  Did you know that in the last ice age global temp was only 6C less than this century's average; we're projected to increase global temp by 6C in the next several decades -if 6 minus is continents under ice what is 6 plus?)  Regardless whether one believes in environmental concerns, the rest of the world does and is rapidly advancing to the head of the line while the US struggles to find a common mission.. much less a common vision.  The point is that Secretary Chu sees a mission far greater than the space race and he understands how to spark the specific strings of imagination, ingenuity, an good old team work in order to achieve grand breakthroughs on the order we need.  Capitalism is awesome but free markets don't create an atomic bomb nor a moon shot.


The only answers you need to determine:

• Are politicians protecting us or holding us back?;
• Is federal government an ineffectual bureaucracy or the enabling system of our better future?

Negawatts Megawatts - RE vs EE

I find myself needing to right about negawatts and megawatts, just to push the point that there is little utility in generating renewable megawatts if the efficiency negawatts have not been harvested. I'm reminded of the gluttony in Super Size Me - if one continues to gorge on unhealthy food, but occasionally consumes apple wedges or the lettuce based 'salad', can you really champion those habits as if he/she is making a difference in their overall health? I think not. So why do we feel that generating our ever increasing energy needs from renewables will save the environment.. or save us from rapid and intermittent climate change? It won't.

The value in renewable energy is awareness and proof. Everyone can get excited about it and energy becomes front of mind. Capital can get excited about it and that creates prof in projects. Entrepreneurs can get excited and that creates jobs and buoyancy for an industry. And policy makers can get excited about it (if our Representatives would get off their silly stumps). So although leading with the megawatt RE before cleaning up with the negawatt EE doesn't make sense... maybe it does! Its all a game of psychology isn't it.

However, we can't negate the point that the quickest energy path forward is by far and away through energy efficiency. We could achieve a 30% reduction in our energy needs in the next 20years. It will take twice that long with renewables.  But with both, we can offset half of today's consumption of fossil fuel in just 20 years!

Solar Thermal in Colorado and Beyond

Solar thermal may be older, more efficient, and a more straight forward renewable energy than its newer brethren solar electric.  But just like some families the first born remains in the shadows while the younger sibling steals the limelight.  Why is this?  Because PV (photovoltaic) produces electricity, widely consumed and normally generated by coal, where as ST (solar thermal) produces heat, often generated by natural gas.  Addressing green house gases from coal fired power plants with bling on your roof is definitely sexy; addressing the more direct form of solar gain is simply practical but less exciting.  Teh question is: is addressing practical applications of equal importance to our sustainable energy future?  In the follow-on report I seek to shine light on the pros and cons of each technology, their applications, economics, and the state of Solar Thermal in Colorado and the Nation.  Most interesting however are newer technologies that fall into 'thermal' and address peak electricity demand!


Pros:

PV produces electricity; has lots of consumer awareness; and now has widely available incentives in the US with 'net metering' policy that allows grid tied solution (think storing when producing and not using).

ST produces heat and is highly efficient; energy is easily stored; the carbon payback from production is rapid; and several new technologies address electricity.


Cons:
PV comes with a significant manufacturing impact (high energy loads, high carbon release, plus transportation); is very low in efficiency; production is not aligned with peak load demand; and there is no reasonable energy storage option.
ST is not plug and play; has few cost offset incentives; and offsets natural gas which is cheap.


Near Future:
PV is seeing a number of breakthroughs on the efficiency scale but related economics will need to mature.  The storage option could be well aligned with the e-vehicle revolution and grid intelligence but that will take a number of years to really flesh itself out to a state of robustness, and comes with a significant cost in infrastructure.  We are starting to see utility scale economics work as the manufacturing base over-supplies the market demand.  Technology break throughs are needed and much R&D monies are being deployed to both efficiency and storage research.
ST is seeing a nice resurgence with a number of high quality products and new technological approaches that move far beyond heating water.  We can now do space cooling in addition to space heating; commercial scale hot water; industrial scale process water and even process steam; and the coolest approach is utility scale CSP (concentrated solar power).  Major Incentive programs are just now becoming available, in some states, and gas utilities are pursuing how natural gas can offset peak electricity demand!


Applications:
PV - micro scale consumer devices; residential electricity; commercial electricity; community electricity; and utility scale electric power.
ST - residential hot water and space heat; commercial hot water, space heat, and space cooling; commercial process water; industrial process water and steam; district energy scale space heating and cooling; district energy scale electric generation; utility scale electric generation.


Economics:
The rule of thumb on PV with both federal 30% incentive and utility based incentives are about a 10 year payback to ROI with another 10-15 years of free energy after that.  Electricity has a fairly stable price, but it is trending upward and will continue to do so as State's adopt renewable energy portfolio standards.
The rule of thumb on ST looks about the same at 10year payback with only the 30% federal tax credit, but that is entirely dependent on the cost of the legacy fuel. When put against natural gas, although a volatile priced fuel, paybacks are way out at 20yr but when local incentives are applied we're back at the sub 10yr point.  When up against propane the economics are awesome, on the scale of energy efficiency payback of 3-5yrs.  Add local incentives to that and paybacks can be 1yr.  When you can offset electricity we look like a 5 yr payback; and against heating oil near 7.
However, it shouldn't go without addressing that PV is virtually plug and play at scales below 250kW.  A recent study shows economies of scale around 100kW that don't appear to exist at larger scales. ST takes piping and even though plumbing is no big deal there are more holes to cut and flows to address.  Economies of scale definitely fall away from small in favor of large for this reason, and lean heavily toward commercial and industrial installations.  Although, a residential system can simply be a packaged kit which doesn't seek to offset all hot water needs.  A simple cookie cutter approach can cut down on soft costs.


Technologies:
For solar thermal we are seeing special glass glazing that pull in more sun yet radiate less back; we are seeing concentration technologies; advances in evacuated tube; hybrid technologes; and now combined systems that use solar drivers as 'when-available' engine with boiler based hot water as the base source.

What to Watch For 2011/2012
Natural gas volatility due to speculation and environmental regulation.
State based policy and incentives.
Commercial and industrial applications.
Space heating and cooling.
Solar thermal utility scale electric.
Thermal electricity from both direct solar and indirect waste heat.


Tune into the Solar Thermal Alliance of Colorado [COSEIA] for legislative activity.
http://www.cleanenergyauthority.com/solar-energy-news/solar-thermal-alliance-of-colorado-111710/

Chasing Chickens - The Entrepreneur's Dilemma

The beautiful thing about an entrepreneur is the undying optimism. Let me tell you: Its required to maintain momentum in crossing that 'valley of death'. Yet that optimism can present an opaque lens which makes it difficult to see the difference between value and excitement. Value is an activity and resource that actually moves the business forward; excitement is activity that simply plays on emotion but actually serves to distract from the path forward. Obviously the entire challenge of entrepreneurial success is knowing what to pursue at the right time in light of so many options and a forever changing landscape. That's why when I saw Dawn Todd's post on Chasing Chickens I was beside myself with laughter. Or as one colleague put it recently: chasing shiny objects.

When chasing chickens you are running in circles trying to cover all things before they get away. You know the goal: all chickens need to go back in the coup. YET the art in success is getting them one at a time back into the shed. As an entrepreneur you can't take your eye off the chicken you are currently chasing - make sure it is put away before chasing the big fluffy one that just ran by in the other direction! Of course you must be assured that you are chasing the right chicken so choose wisely, the others will return because they don't stray very far.

Sustainability Juxtaposition - Industry Drives GHG / Gov Drives EERE

The perspective of energy and environment in the US is: one half green house gas emissions [GHG/Cap-n-Trade] and the other half energy industry [EERE]. While the private industry is unable to act on the potential added cost of carbon dioxide emission due to an unknown policy climate they are able to respond to the demands of their biggest customer [Walmart et al] - to reduce GHG and social ill will [Sustainability Scorecard]. Why? Because pursuing sustainability saves money! ...and builds a green conscious brand. Obviously, thru a consumer product lens, there is a win win in pursuing environmental impact reduction: $ and $. And although our politicians are incapable of acting as a body, and therefore signaling the entire market to do nothing, some very large entities have stepped forward to lead the way through the almighty dollar and free market economics. While we applaud this new found religion of cost savings through sustainability we must also highlight the return of corporate social responsibility [CSR]. "Its good business" say CEOs, and that's because it represents the social aspect of triple bottom line - both customers and employees.

What is interesting is the tie of sustainability to energy. Most of these sustainability actions are energy savings which garner additional capital expenditure ROI with federal, state, and local EERE incentives... which are the result of citizen demand. The government has been unable to put in place appropriate carbon emission costs to society so instead we are spending our citizenries money to fund these energy reduction actions in the private sector... at least fund a good portion. Of the $767B American Recovery and Reinvestment Act $61B is targeted at energy ($21B in tax incentives); DOE's $32B pot has only spent $7B and will continue to allocate $1B/mo through 2011. http://www.gao.gov/recovery/ There is still much support for energy waste reduction to hit the streets, and then make its way to actually paying for projects over the ensuing two year period. New industries need big support early (unlike Cash for Clunkers, auto bail out, and Wall Street handout) and of course still needs additional appropriate policy to get the long lasting effect we're all looking for.

The point is that although we all thought that Govt would would see GHG at large and industry would see $ at home, when industry reads the Tarot cards and acts along with a supporting governmental acting on behalf of society (the Executive branch anyway but no reason that shouldn't be the Legislative branch!) we have the combined incentives to move in the right direction. Lest not forget that we the people continue to fund the transition, through all mighty democracy: social economics US style!

Now just imagine if the finance arm hadn't played us all during the Neocon political era of this last decade - we'd have that fourth branch of government [Walstreet] fully in play on the New Energy Economy (and that's expansion market capitalism).

Solar Electric (PV) Is Not The First Thing To Do

Solar electricity? Solar hot water? Wind? Weatherization? Efficient lights? Day lighting? Electric conditioning? Automated control? Heating? Geothermal?

If you are going to spend your money to make an impact on your energy use what is the best thing to do? Its a big question but it really comes down to "what have you already done"? It makes the most sense to work on efficiency first, that way you use less [fossil fuel] and need a smaller amount of renewable energy as offset. However, utilizing the various local, state, and federal incentives is important so that may be the driving decision. We also need to recognize easiest to implement. But hey, if its PV panels you want on your roof, as ego boo, then have at it. We love distributed generation. Just remember, it doesn't stop there and the real question is: what is your per capita energy profile? You may be higher than others, or lower, but as long as you are lower than you were a year ago that's all I ask.

I'll followup this post with a rules of thumb perspective, e.g.for $20k of each type energy project what is my impact?

The new IBMs of the world - ESCOs.

Amory Lovin's book back in the 90s -Natural Capitalism- exposed us all to the concept of the "negawatt", the inherent power in the energy never used. That in and of itself is a powerful concept. Once you begin to realize that the energy problem isn't about where it comes from, rather its about how its used, then its a fairly quick leap to understand that energy conservation can guide entirely different designs and break the mold of legacy configuration. Today, this is figurative for legacy thinking -renewable energy may be the long term goal, but the quickest path to energy independence, and to a high ratio of renewable energy is through a systems thinking framework. Simply put: if you consume less then you need to produce less and the alternative source ratio increases.

Energy efficiency is finally in vogue, largely supported through the Federal AARA stimulus but this use of public funds is by far and away going to make a much much bigger impact than electric vehicles or intelligent electric grid, both in psychology and in market opportunity. Interesting is that energy efficiency is driving renewables as well. Retrofits to alternative energy sources go hand in hand with conservation, or tuning the system first.

So who stands to capitalize on this shift? ESCOs. Energy services companies are the new IBMs and HPs of the world! Just look at the market opportunity - every commercial building and every mid to large organization (enterprise) will need to retool so to speak. Its like the era when ERP software became needed in order to run your business, but its bigger than that! So who will guide your organization and where to look and what to implement? Who will serve this new market opportunity? Comprehensive energy solutions that's who. We're not talking about GHG accounting, where talking about kW accounting which is easily seen directly in dollar impact -ROI, IRR, Payback, Lifetime Cumulative Cashflow. And guess what? You can measure this with our traditional accounting systems! Which means easy decisions and justifiable spends.

Supplement post will cover which ESCOs to be watching - AMERESCO is even going IPO this year.

Does Sustainabilty Include People Or Just Planet?

As "sustainability" penetrates the minds of corporations and consumers alike, we find ourselves attempting to define what that actually means. Sustainable focused ventures speak in 3BL (triple bottom line) while mature enterprises invoke their old CSR badges(corporate social responsibility). So are we talking about planet or people or both?

Most folks on the clean tech side of the world say that if you are doing good by the planet then you are doing good by people. Ok, but are you measuring that social impact? Corporate sustainability reports address energy and materials (planet) and at best solely address slave labor conditions (people). Ok, but are you measuring positive impact? At the other end of the spectrum are mission based social ventures, those operating on the people bottom line first with the profit bottom line last. Great! What is your planet impact and are you measuring that? I point this out because if you want to 'talk' 3BL then you must 'walk' 3BL... which brings us back to the main question: what does sustainability mean?

Addressing a common scorecard or standard is not my intent here. I'll take every effort that all organizations put forth with respect to people and planet to further buoy profit. Its the New Operation Norm (or the "NON" as we like to say at w1sd0m). My point is that however you configure your sustainability scorecard you need measure on all three fronts, not just two. Granted, there will be very very different impacts on these three vectors dependent on the nature of the industry and the company's products and services. But the most important element is to convey to investors and customers alike that you've leveraged the organizations resources to do good by all of us, not solely to benefit the three guys at the top eh.

I do suggest targeting those efforts that return on the investment applied, every organization needs early wins to gain wide spread support. Starting at green washing the brand will sink you in the end, undertake practical projects once you have a baseline, and turn that into positive branding. Side note: we must address BP yes? "Beyond petroleum" did work for the short term, which most of these greed mongers are about, but at a 40% drop in share value its apparent the sentiment now out weighs true value. Whoo hoo I say to the shift in consciousness - because its not about the short term, although that is how we survive, rather its about the long term.

Sustainability starts with mission statement as a guiding principle so a team can begin the baseline process to get an idea of where the company has large and small opportunities related to planet and people. Planet = green house gas; People = lives touched; Profit = dollars. There may be internal commitment already to a specific aim but don't let that override the need to baseline so you can report positive impact.

Common waste reduction efforts for immediate dollar return (Planet): Energy efficiency; renewable energy; waste to energy; packaging; transportation; and supply chain.
Common social impact efforts for immediate brand awareness return (People): non profit and philanthropic impacts; local jobs; employee benefits; community involvement.

Stay tuned as gNav solves the social impact side for a cleantech company -SunTrac Solar. We'll also post addendums on sustainability scorecards and standards, as well as the three vector approach from the big leaders in the space (Walmart, IBM, P&G, ...) gNav's overall effort is to bring true 3BL or integrated bottom line awareness to the clean tech euphoric world that believes simple enviro is the only effort needed.

Ag 1.0 System Effects Lead to Ag 2.0 Sustainbly Local

Recent readings on Ag investment [Silicon Valley investors place bets on sustainable ag] compelled me to post a brief compilation on the movement -organic food to sustainable farming to localization- becomes -urban farming, venture capital, and Ag incubators! This illuminates that different elements in change allow for an entire industry evolutionary step, if not revolutionary. Its absolutely amazing to see so many things changing about our current agriculture production system. A testament to near end use drivers to reset inherent values in the end product (sustenance and health) [Sustainable urban farming ideas that think inside the box], coupled with traditional incumbent motivations to produce a quality product economically [How export-focused agriculture has failed everyone it was meant to help]. THANK YOU Michael Pollan [The Omnivore's Dilemma] for showing us all the the systems impact. Large scale farming was a boon gone awry - loss of family farms, continuing starvation, and dare I say the fattening of America with low cost unhealthy food. Yes, markets and systems are complex but that doesn't mean we need simple catch phrases to point fingers with, it means that we each need the fortitude to look through the other lens -greenies need to look at systemic issues and how it came to be where we are now; capitalists need to see how their cost/margin/competition decisions affect their end users and the externalities alike. The bottom line is NOT solely financial. We're all in this together, there is no conspiracy and activists are not cooks, but we all affect each other's quality of life.

Our ability to learn from mistakes and avoid future problems is what makes us so called 'intelligent' right?

BTW - Grist provides great coverage on the industry http://www.grist.org/kingdom/food

Catalyzing an Ecology

How can an ecology of social networks, venture incubators, conferences, non-profit organizations, and government agencies work together to connect resources in order to accelerate ventures and sustainable initiatives? That is the question in front of the Colorado clean/green/sustainable/social next economy.

You can think of it as facilitation, you can think of it as enablement (with IT), or you can think of it as a chemical reaction that requires a catalyst and a container for the reaction to take place in.

Often we have the catalyst - market perception (reduce foriegn fuel dependence), rapid change in environment (financial meltdown); change the work mentality (millennium generation). But the container is the challenge, a place where facilitation can occur and activities can be coordinated.

One of the biggest problems, and greatest attributes, is free market competition. We end up with so many players doing similar things that the noise overrides the signal. It takes quite awhile for the noise to settle down, for the weaker players to fall by the wayside. Its up to each venture to narrow its focus and become more unique and better able to compliment peripheral capability.

We can go further faster by having a smaller breadth of reach, lock in the traction begun THEN expand across peripheral offerings to touch the next player in ecology. Container (means and rules), catalyst (market and money), and collaborative players (desire for common benefit rather than aggressive competition).

How to Turn Incubators into Venture Accelerators

..well that is the point yes? That an incubator is in the business of accelerating ventures to a cashflow positive state faster than they could get there on their own. Rather than trying to take apart what does not work herein, let's address what does work! We have several successes to model, a couple of which I'll reference, but do keep us honest by referencing others not covered, and present why they work so well.

Although incubators were all the rage in the late 90s and it seemed like all one had to do was provide office space and e-infrastructure! Well, those obviously weren't the only two ingredients in the recipe were they. You also needed pull, as in a funding market, and you needed push, as in advisory intellect. Incubators evolved into networks (virtually connected) rather than office space only (physically connected). But that allowed the pay to play model so one still got a lot of chafe in harvesting the grain, and without regular wins the angel money got locked up in indecision, generally. (Note that these also are not the sole winning and loosing ingredients but its important to get to the point). So if its not about pay to play -which in itself could be a good business advisory model- then it must be about quality ventures and quality advisory intellect.

An accelerating model that appears to be working very well we find in the software world -- y-combinator models such as TechStars. What works so well in this model? First and foremost is the promise of money along with a heavy dose of advisory intellect. If we take a look at what that does we'll immediately understand that the promise of money will draw many ventures... which allows picking the winners from a huge pool of ..ah .. loosers. (We should remember that not all ventures are winners, and that not all ideas will result in value, and therefore entrepreneurs would serve themselves and their friends and family the pain of pursuing a deadend. Fail fast is honorable in this game!) Also determine a near term liquidation model, not 100% liquidation but some way to refresh the pool of money for the next cohort. Second and also foremost is a high quality network of advisers and angels, with rolodexs filled with the market of target partners. Reach to intellectual and social capital is probably more critical than financial capital. Its arguable that one could derive a better business if they had the right advise rather than money alone. Yet the problem with advise is that the entrepreneur must utilize advise wisely, not attempt to execute every piece of advice that comes along... not easy. I propose that there are three other critical elements to successful accelerators - narrow focus; catalyst mechanism; and time dependency.

A narrow focus can be a host of different things -to solve a specific problem realm; to take advantage of an emerging market; or to serve a specific community. What a narrow focus does is the same for any organization - it requires that all involved are working in the same direction on the same time frame. That is the only way to fully understand a market place and its dynamics; it sets the playing field to know everyone involved (the players) and therefore what they are seeking to accomplish; and provides for cross-pollination on all the business elements. When you add a catalyzing mechanism into the mix we spawn the right conversations. A catalyzing mechanism is something that brings two communities together and generates forward momentum. Although there are several options, each being a fairly deep discussion, the simple one I like is a process with stage-gates. When 'gates' are predetermined and used as a carrot (and stick), then both entrepreneurial team and advisory team are aligned on goals, ideally one of those gates being funds or a serious funding consideration by the external angel network - focused, fast, evolution. And the final catalyst is time. Like the TechStars and UnReasonable model ventures are put through a camp. Not a camp with learning sessions but one where you either achieve and get the most out or you miss your chance to have attracted that network and money. Time focus is great because people are able to focus on interests for a few weeks or months, but that becomes a long dwindling tail over time because other life issues crop up and take over mind share.

To reiterate - a venture accelerator needs the following elements:

1. use money to attract the highest quality ventures and teams - not all are quaity so make sure the ones you allow in can be successful; put a small amount up front, and a larger amount at the end;
   
2. engage successful advisers with deep industry experience and rolodexs - not just one or two, but a whole peer group per target industry.
3. maintain a narrow target industry focus - industry focus allows all the ventures and advisers to attack that target segment and know more than any other single group;
4. use time to catalyze activity - with a time dependency such as summer camp or semester focus you can capture significant mind-share ... but that will only last for a while and they have to feel success in the graduation rate;
5. implement a focusing mechanism such as a scorecard or stage-gate methodology - this will align entrepreneurs and advisers on exactly what they are seeking to achieve by when, and overcome debate or counter productive decision making.

All comments welcome of course. And one thing to keep in mind is how to leverage the entire regional ecosystem of stakeholders to achieve job creation - networks, government offices, private enterprise, and university's. A later post no doubt.

-Chuck Ray-

Sales People or Business Development ??

So you need sales people you say.. feet on the street knocking on doors and finding customers. You want to compensation that effort based on results (commission only), after all your product is ready and proven, you are telling them where to look, and you provide sales support. What's wrong with this picture?

Before diving in on what's wrong with this expectation, based on the stage of business' evolution, let's provide a bit of framing. As a business development consultant I find that when early stage companies think they want sales people what they are really seeking is revenue, which of course comes from product and service sales. Upon a bit of investigation into the target market and company history it becomes immediately obvious that we're talking about a new offering to the market or extending the existing offering into a new market segment -- in both cases we have a 'business development' need, NOT a 'sales people' need.

Let me explain: Traditional "selling" IS about people and their skills. They sell on points of differentiation into a market that knows what the product does for them. Usually that means selling into the middle of an organization on points of productivity and competing for existing budget. Business development is about market place needs--the value proposition--and identifying points of entry or those functions that will respond to the value prop which usually means the top of an organization, and likely on points of strategic objectives.

These are two completely different methods for increasing revenue. Sales people will differentiate on features yet they also seek the close with exuberance. They will knock of door after door and will chase any and all prospect interest, but will never look at how their offering fits with the breadth buyer needs. Biz Dev people will discover what the market place needs based on current dynamics and match your offering accordingly. This may inform the market approach vector to be channel partnerships or association leverage points to penetrate a market. The goal remains -quickest path to revenue- which is some combination of biz dev and sales, but usually not one alone.

What is most telling in understanding your best approach is to look at the stage of company evolution versus the market place dynamics. Product or service is mature enough to sell today-check; target market is identified-check; target market has reference clients-?; target market is an emerging market place.. or is a new target market-?. It is absolutely critical to understand where you are if you want to to achieve your revenue objective anywhere near the internally set expectation. Curiosity for your offer IS NOT commitment! If you product/service offer is new then your targets don't yet fully understand what is does for them and they won't adopt. This means a long process in realizing the value prop, getting the decision makers on board, and finding budget. Which means you MUST FIND EARLY ADOPTERS so you have pilots and references for those still trying to make a decision. If you are pursuing a new market with existing offer then you have reference clients, yet you don't actually understand the appropriate value prop, decision process, and approach vector. You still need to find early adopters which comes down to tracking them by navigating a myriad of conversation in this new ecosystems.

Why sales people are the wrong activity: Because most start-ups begin with product we have an engineering mindset which puts all modes of selling in the same bucket. This perception leads to things like 100% commission, technical differentiation, and territory alignment-which sets us silos-but leaves a gapping hole in proof of application in this new market. It also negates the fact that to penetrate a new market quickly, requires tightly coupled cross pollination of all internal intellect as your team discovers how to win in the new market place. From value proposition to target client objectives to how your offer fits in their work flow to where it falls in the priority list to how buy decisions are made to what does an average sales cycle look like.. should be mapped out by the whole team.

Create the right incentive structure: Ensure that you incent your team to work together to discover how to win. This value--determining how to penetrate a new market--is not worth zero!! In fact, its some of the most important knowledge your company will acquire.. so set up the team to work together and figure it out. If you can't pay base salary until commission can take over, then offer equity or compensation in arrears. Double pay commissions and don't set up silos. And above all else, make sure you have a business development person leading the charge, not a sales manger simply setting up processes.

Smartgrid Matters

The last quarter of '09 witnessed a big federal push behind smart grid technology, to the tune of $4.2B deployed to utilities out of the stimulus package. That gives buoyancy to near the same amount of private investment in smart grid companies from late '08 thru '09. What is interesting is that the federal money is intended for smart meters and intelligent utility infrastructure, where as the private money has primarily funded consumer side intelligent devices.

Seems like a great double sided stimulus doesn't it, to get to real demand side management [DSM]. Well...

The trouble is the so called 'behavior economics' which says that a rational individual will choose the most economic path for themselves if information is freely available. In other words if I can save a buck then I will take the action that saves me a buck. Number1 - this is the same base economic argument that underlies Free Markets, and we surely know by now that irrational exuberance is as much a decision driver as is so called rational banking. We must admit that psychology behind consumer or investment decisions is an emotional one, supported hopefully by facts and knowledge but emotional non the less.

What the behavioral economists believe, and the entirety of the smart grid community, is that - consumers will turn off their air conditioners when its hot; charge their EV at night; hang out their laundry; buy new in-home electric meter devices, and new intelligent appliances; and generally run around turning off lights based on watching the live price of electricity.

Number2 - people are far too busy to outs lots of effort behind saving $15/mo, and there is no way they'll spend $15k so that their appliances self regulate. Not in this economy where scrapping for income goes a lot farther than saving a little.

So if its not about economics as the purists' would have us believe, then its about change behavior based on societal norms. I think its prudent here to cite one of our last big evolutions in this society, that wasn't about economics but about conservation and quality of environment - recycling. We all do it now, almost all of us, as long it is readily available and especially if our neighbors do it. So how did we get here? A teared up native american was the initial image, emotional quilt the drive to actually go out of your way, a lot of awareness building, definitely peer pressure, and eventually a robust infrastructure to allow easy of doing the right thing. But is sure isn't about economics.

So what can we learn from the migration to wide adoption of recycling? Now continuing forward to zero waste. First that it takes education and awareness. Utilities: note this, it takes a human 8 times to be introduced to a new way of things before it is accepted (and often overtly rejected along the way). Second that it takes a robust outreach/engagement program, within communities in order to create the peer pressure and top of mind behavior shift. Third that it is usually the kids in the house that take the lead and keep us reminded of what we are doing and why. Fourth that a little competition goes a long way in our society, especially with a dose of nationalism. And fifth that results should be easily accessed and compared to substantiate the results and reinforce the change.

Its psychology not economics!

Social Venturing and 3BL Startups

Wow! Fresh from the w1sd0m inaugural love-in its apparent that shared values can move the world in the right direction - social justice and sustainable ethic basis of for-profit organizations. Two things stick out: first that social innovators are collaborative beyond all other career types I've known; and second that we can extend this openess and shared objective practice to the sustainable minded entrepreneurs [LOHAS and cleantech] as they seek to change the world in their own way. We even coined a term this winter -NON- new operational norm. Where doing good gets as much attention in the board room as doing well (good = helping others; well = making money).

I should clarify that w1sd0m is a network for social and sustainable ventures to find the resources they need during the evolution of their venture, what we like to think of as 'capital', in all forms - social; intellectual; human; and of course financial. The base belief is that business has the scale and momentum to create meaningful change. And that the wisdom of your crowd makes better decisions than the wisdom of one. So if you can connect all that wisdom, and flow capital where and when needed, then you can accelerate the doing good in the world with for-profit businesses. Of course its not so simple, but that is the intent.

Of course as it is with any startup, you have to find your niche build a solid offering around that, and then branch out from there on a strong core. Judging by the intellect in the room w1sd0m will have no trouble finding a solid core, but that is a whole lot easier said than done.