While the basics of consumer-level mobile tech and industrial or institutional big data make enough sense to your average cocktail sipper, what the hell are the energy startups doing? When you meet someone working in “really cool” energy stuff, what should you be thinking? What are these energy companies doing?
Premise: The Power Grid
For instance, take Josco Energy Corporation that distributes electricity. Where does it get its power? The simple answer is the power grid. The electric energy grid is a colossal feat of engineering much larger than the Hoover Dam. When it works, you get computers and induction furnaces; when it doesn’t, the giant infrastructures of industry and civic life just sort of don’t work for a while. Huge losses, billions of bucks, trouble in hospitals, etc.
Opportunities: Not in Consumer!
Big business has big power bills. Power generators and grid operators have huge costs. The old system is not that efficient, in some ways, and that means opportunities for business.
Now, for consumers, is there much to gain? I would say no. You might save some bucks with a smart thermostat or futuristic energy box, but the returns are about as tangible as a savings account. Will your power be greener or more reliable? If you live in the developing world, then yes! Otherwise, uh, maybe slightly!
What Energy Tech Startups Do
Imagine a huge machine, several thousand miles wide, with nodes and substations and wires running along every road, parts doing all kinds of things, controlled by a series of incredibly complicated trading markets, and rather small tolerances for any deals going up or down too far too fast. That’s the power grid.
Now imagine you have a huge political will to throw away half of the parts in this machine. That’s the victory of environmentalism. (Yay!) Now imagine you have PUCs and shit breathing down your neck to change things way faster than any of your engineers thinks makes sense.
The power companies are struggling with the transitions, need help from new technology, and are very conservative. Working in power, if you make a mistake, you could cause a cascading power outage or damage hundred million dollar equipment in a second. Fair enough. Politically, they have entrenched power (one of the largest and most consolidated industries in the world) and have been bad sports about being on the wrong side of environmentalism.
New energy companies try to sell to existing power companies (this is hard) or try to work around them (this is harder). Legally, you can sell power from the roof to the tenant “behind the meter,” but the power company has a legal monopoly on selling power from one unit to another. This monopoly should probably be revoked, but that would be very hard.
New energy companies offer to improve the efficiency of energy distribution, better produce energy behind the meter, milk subsidies, or sell into the energy markets (often with specialty services like providing a slowly increasing amount of power for 3 hours tomorrow afternoon). Some produce equipment for electronics, but that’s a very different business than energy.