Renewable energy, energy storage will combine to power future distribution systems — experts
The panel, speaking before an audience at Chicago Ideas Week — a six-day series of talks on political, cultural and economic issues relevant to the Midwest and the world — also predicted a future in which traditional integrated utilities will cede key functions to new independent power producers, and individuals and communities will have significantly more control over their energy resources.
The path to a retooled energy economy will vary globally, as developing countries look for solutions that provide basic, affordable and reliable power to run essential services and appliances, while in advanced countries innovation will be driven by the pursuit of lower energy costs while healing the planet’s environmental ills.
Meeting those objectives, whether at home or abroad, will require a nimbler energy marketplace than what the traditional utility model offers, the experts told an auditorium of business leaders, professionals, students and others gathered at the Chicago headquarters of the investment research firm Morningstar Inc.
“We feel that large utility-scale projects may be a thing of the past in the U.S., and people are going to have energy [produced] on their own buildings or their own rooftops,” said Chirinjeev Kathuria, president and chairman of New Generation Power, whose primary focus is on developing small-scale distributed generation (DG) in the United States and larger power and infrastructure projects abroad.
Kathuria said his company is especially bullish on the potential for technology to drive energy innovation in developing countries, specifically Africa and South Asia, as well as in parts of Eastern Europe where energy infrastructure has deteriorated to the point that it is now too costly or too dirty to operate.
“If you figure out a model [for financing and developing such projects], you can actually improve the livelihoods of these countries and do well for yourself at the same time,” he said.
New capital needed to build sustainable systems
Emmanuel Lagarrigue, a Chicago-based executive of the global energy management firm Schneider Electric, said the company has undergone several evolutions over its long history in the electricity sector. Today, Schneider is focused on leading-edge technologies such as smart grid applications and building systems automation as the company’s clients come to appreciate the relationships between energy consumption and bottom-line performance.
“Increasingly, we are trying to help our customers around the world understand that doing good and doing well is possible,” Lagarrigue said.
The 20th century’s economy, he said, was marked by the industrialized world’s addiction to “cheap energy coming from fossil fuels.” Environmental downsides were of relatively little importance in a world where economic progress was closely associated with harnessing the power of hydrocarbons.
The current era is shaped by markedly different priorities, Lagarrigue and his fellow Ideas Week panelists said. The next wave of energy innovation will incorporate values of sustainability and equity while advancing technologies that could bring electricity to hundreds of millions of people who still lack basic grid access.
Some of those solutions will come through advances in science and engineering, while others will come through new and better management of existing energy systems.
But as with many cutting-edge fields, moving an idea from concept to commercialization requires access to large amounts of capital, something that the energy sector has not traditionally needed, since regulated utilities generally have deep cash reserves and built-in mechanisms for recovering costs.
Jason Blumberg, CEO and managing director of the Energy Foundry, a $23 million venture capital fund created by regional utilities Commonwealth Edison (ComEd) and Ameren Corp. to help bring new energy ideas to market, said entrepreneurs are pitching plenty of ideas to tap cleaner, more sustainable forms of energy. But rallying investor interest around some of those ideas can be difficult.
Ill. working for a more efficient grid
“We see ideas every day, and the biggest problem is they don’t make any economic sense,” Blumberg said. “For better or worse, in the energy industry, you need big things — things that are going to make you 20 percent [return on investment]. The market really hasn’t gravitated yet to understanding all of the things that energy can do for you.”
But that is beginning to change, in part because of synergies that firms like the Energy Foundry, which operates out of a 12th-floor co-working space overlooking Chicago’s Millennium Park and the Lake Michigan, are finding by fostering the growth and cross-collaboration of energy entrepreneurs.
The Energy Foundry is also working in concert with the state of Illinois as it undertakes a multibillion-dollar program to improve its electricity generation, transmission and distribution system, a program backed by the state’s major utilities.
Chicago’s nonprofit sector also is stepping up efforts to drive electricity innovation and efficiency improvements.
Anne Evens, CEO of Elevate Energy, which works to raise energy awareness and lower costs for low- and middle-income people in Illinois, said her firm has helped some apartment managers and property owners in the Chicago region reap between 30 and 40 percent cost savings from energy system upgrades and efficiency measures.
According to the Institute for Housing Studies at DePaul University, Chicago has one of the largest inventories of multifamily dwellings in the United States, with thousands of older apartment buildings concentrated in inner-city neighborhoods where high energy costs put a significant strain on household budgets.
“Not only are building owners seeing that their energy bills are going down, their maintenance costs are also dropping, their tenants are happier, and their buildings’ net cash flow is better,” she said. “It’s just good business sense.”