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Image courtesy of smartgrid.gov
 
In any given month these days, you could find a smart energy conference to go to, and you wouldn’t have to look that hard. There is no shortage of discussion on the smart energy revolution, whether it’s at a conference, at school, in the office, or online. But for all the talk about revolutionizing the traditional energy industry into a more modernized, low-carbon industry - when the discussion begins with all the futuristic cool applications drawing from the analogy of the Internet or the iPhone apps, as it often does, that discussion misses the point. For many reasons, the 21stcentury energy transformation will most likely be an evolution rather than a revolution, or face the risk of the transformation causing catastrophic reliability issues in the process.


This viewpoint is reinforced at a recent event one of my alma maters, the Massachusetts Institute of Technology, held and featuring Tony Earley, the current Chairman and CEO of PG&E Corporation, a Fortune 200 energy holding company based in San Francisco, with assets of almost $50 billions, revenues of almost $15 billions, 20,000 employees, and serving more than 15 million customers in Northern and Central California. It is the parent of Pacific Gas & Electric company and is widely regarded as one of the most forward-thinking utilities in the United States.


Earley shared with the audience all the challenges faced by the electric industry. These challenges are big and complex. They include carbon/environmental regulations, renewables mandates, aging infrastructure, increasing demand for energy and reliability, supply constraints, energy efficiency goals, and retiring workforce. The electric industry need to address all these challenges while at the same continue to provide safe, affordable, and reliable energy to society. This is really the crux of the reason as to why the energy transformation will most likely be evolutionary rather than revolutionary. Unlike the industrial revolution of the 19th century, or the internet revolution of the 20th century, the 21st century energy evolution needs long-term vision and strategic focus and resolve of many stakeholders: innovators, incumbent utilities, consumers, regulators, and the government.

As Daniel Yergin, the Pulitzer Prize-winning author, speaker, and economic researcher once said, “Energy is different, very different.”  Energy is different in terms of capital, time, and scale. There is no Moore’s Law in energy as it is in the IT world, where computing capabilities roughly double every 18 months inexpensively.  There is no legitimate energy company who can grow at the speed of Google or Facebook, nor should they be.  Energy is a policy-driven, mature, capital-intensive industry that provides vital necessity to all mankind. Consumers may change their computers or mobile phones every two years, electric utilities will continue to operate their infrastructure for more than 50 years. Only by understanding this fundamental principle and taking the strategic long-term approach can an energy innovator, entrepreneur, and professional be successful in this business.

Having said all that, evolution is not boring. In fact, evolution can be exciting and provides many opportunities for the right budding innovators, entrepreneurs, and professionals. So, if you are an innovator or budding entrepreneur or professional, what principles should you use to guide you in your long-term quest to succeed in the energy business? You need to understand the following general principles:

The energy industry will continue to evolve in the next few decades.

This will continue to provide opportunities for people with the right skillsets to innovate and execute game-changing ideas to be active participants in the evolution for many years to come.

Supply diversity and balance are key to achieving a safe, reliable, and affordable energy supply for the future.

This will provide plenty opportunities for technology innovators to continue to explore ways to provide clean, reliable, and affordable energy. This will include innovation in solar, wind, nuclear, storage, micro grid, grid modernization, distributed energy resources such as electric vehicles and other technologies to bring scalable, reliable, and affordable energy sources for all.

Energy efficiency will grow in importance.

In a supply-constraint world, demand management is as important as, if not more important than, the supply side. In fact, many in the industry often think of energy efficiency as the “fifth fuel,” joining other generation fuels such as natural gas, nuclear, hydro, and renewables as a critical resource necessary to serve the growing energy needs of our nation.  Furthermore, in a carbon-constraint world, energy efficiency will become essential to meet our growing energy needs while reducing our greenhouse gas emissions to combat climate change. This will provide ample opportunities for innovators, entrepreneurs, and professionals to find new ways to empower businesses and consumers to better manage their energy consumptions. This will also provide opportunities for technology innovations in smart appliances, smart homes, smart buildings, and other distributed energy resources such as smart solar panels and electric vehicles.

In summary, the possibilities to become active participants in the 21st century energy evolution are plentiful. But to succeed in it, one needs to understand the fundamentals of the business and have the strategic focus, resolve, and patience to ride it for the long run.

Sonita Lontoh is an executive at Trilliant. Follow Sonita on Twitter @slontoh.