Information technology is the most powerful tool to accelerate cleantech adoption, but is being blocked by energy regulation developed during the industrial revolution, a leading investor told a Silicon Valley conference last week.
Sunil Paul, founding partner of Spring Ventures, which has invested in social networking
company LinkedIn and biofuels startup Solazyme, said: “Our entire regulatory regime is built for the industrial revolution and we have a different way of working today that requires a different code.”
Paul, who coined the term “cleanweb” to refer to the application of social, mobile, and internet media to accelerate cleantech deployment in buildings, lighting and renewable finance, told delegates at the Connectivity Week conference in Santa Clara:
“I see three significant barriers to achieving real impact with IT and cleanweb – they are all code. One is software code and data code, the second is the legal code and regulation and the third is the code in our brains and how we think about things.”
Since last summer, Spring Ventures has sponsored a nationwide “hackathon” tour to build momentum around developing new apps for the energy industry.
“Initiatives like Green Button are a great start but we are fundamentally broken in the way that we deal with data in energy and transportation. These are ossified industries that are not used to sharing data or are reluctant to do it and they will only do it through concerted effort through the public rising up, either through individual action or government to force that data to open up.” See the winners of the Green Button contest here.
Dave Graham of Greenstart, a cleantech accelerator in San Francisco, said that there was a
“boat load of money” to be made in the cleanweb sector.
“Energy 1.0 has cracked the nut. We see wind, solar, LED [lights] are working – price points are being driven down every day. What energy 2.0 -is about making energy smart, networking it moving energy and electrons in the same way that we move through traditional IT like bits and bytes,” Graham said. “We see that being done now by some really innovative startups. A lot of possibilities are open to us now.”
“The challenge instead of trying to start next Facebook to use that brain power and effort and energy to tackle a big problem,” he said. “If you’re going to make a lot of money, you’ve got to solve a problem and what bigger problem is there out there than the world’s dependence on fossil fuel.”
Could there be a Facebook for cleantech? See why one major funding institution says no here.
Jeffrey Byron, vice-president of integrated solutions at NRG Energy, said that California’s investor owned utilities had more lobbyists than any other industry in Sacramento and were resistant to the change foretold by Paul and Graham.
“Utilities supply significant resources to protecting that status quo. Utilities block big bills, they initiate big bills. They protect their service territory, they don’t want folk coming into their service territory and generating energy or using equipment that they don’t own.
“That status quo is important and protected for their investors, but it’s the largest impediment to the change, [to] the new thinking and new markets that we want to create outside this monopolistic hole. It’s been a transformational undertaking that’s taken a decade or two for IOUs to implement energy efficiency, demand response and energy storage initiatives.”
Byron, a former commissioner at the California Energy Commission, said that as markets for third parties in the energy industry open up, the role of the regulator will also change.
“That status quo is a very difficult thing to overcome and the role of the regulator is primarily to ensure that we look at opportunities for new markets outside that monopolistic role and we try and do things that makes those channels are open,” Byron said.
Andrew Bennett, an analyst with the Federal Smart Grid Task Force, said that changes to regulation could only ever be limited in the energy industry.
“Government is interested in breaking the data code and seeing the freeflow of information happen. [In terms of] regulatory and legal structures and reliability of the system, I don’t know that government wants to or should break that code. We do want to see it change in order to free up the other code.
“The reason the data doesn’t flow goes back to regulatory and legal structure. See some changes but to completely break that code that impacts our energy producers and suppliers – that’s tough for government to do, and I don’t think it should.”