Are You an Energy Sage?

If you were fortunate to attend the December 7, 2011 North Shore Technology Council’s Sustainability Forum, you saw a fascinating presentation by EnergySage, a very cool new online portal for learning, evaluating and pricing alt-energy for your business or domicile.

As a homeowner and parent of two young adult sons, one currently a Computer Science major and the other a recent MS Physics grad, I have become accustomed to healthy skepticism.   When we discuss business, economics, energy, dating, etc., they continually ask: whose axe is being ground? Whose ox is being gored? Their “ax/ox” questions keep me on my toes.  I am thus well trained.  And I brought that to the meeting.   Having been involved in some successful startups, I think that thinking like an investor is good discipline.

That said, I thought I’d pass along some of my reactions from today’s meeting.

The Good

First off, here’s what I liked.

I liked the clarity with which today’s presenter , founder Vikram Aggarwal, described alt energy as a new asset class opportunity for property owners.   The case for heightening awareness, convincing homeowners of alt energy’s sound financial sense, and simplifying the purchase process, all became very clear.  EnergySage is to be applauded for their superb effort at meeting a very complex set of needs for a broad audience.  Which got me thinking about…

The Questions

Having read McKinsey’s November 2011 report on resource opportunities and Columbia University’s Center for Research on Environmental Decisions (CRED), and blogged about it here, and having faced skeptical investors,   I felt the ox/ax factors weighing in.  Are all salient market aspects thoroughly vetted?  How viable is the market opportunity?  Who are we selling to?   Who are we leaving out?  Which got me thinking about…

Macro Trends and Opportunities in Housing & Tech

So, what about macro trends? For starters, it’s not just about life in the ‘burbs.  Household solar may be disrupted by other trends which weigh more heavily in the global energy balance.  Of course, any existing structures could benefit from energy efficiency improvements, but is that opportunity window expanding, shrinking, or stable? Consider:

• New construction trends are persistently relatively flat, as mortgagors default and young adults either boomerang home or flock to cities and jobs.
• By 2030, there will be 3 billion (with a B) more middle-class consumers.
• Resource and commodity competition will intensify nearly 150%, further inflating prices – especially for land, water and steel.
• The World Economic Forum reports that we just passed the tipping point this year, where 50% of all the earth is urbanized, and that trend is accelerating.

Taken together, these signals suggest that the iconic “American Dream” – at least the home ownership part – may have just ended, simply because today’s young adults understandably shun the extravagance of heating, cooling and lighting 2,000 square feet of detached homestead for 2 to 4 people.  They are smart, mobile and mobilized, flocking to cities out of pure economic sense.  Our cities are becoming smarter and, frankly, fun.

The real energy benefits, then, are in retrofitting city building envelopes, improving the alternative energy buildouts in urban centers, replacing copper with passive optical fiber and antennae, etc.  Those are the big wins.  Fund that, Congress.   On second thought…

Your Own Private Stonehenge?

If grid solar eclipses residential solar, years from now archaeologists may well wonder what we were thinking.   Solar panels on a fundamentally inefficient detached suburban household roof are, by definition, an isolated solution.  House rooftop solar serves mainly the narrow self interests of the residential bill-payer.  It could be made more broadly cost effective if it is subsidized (a false economy), but it does little to solve our seething, problematic, collectively used fossil fuel burning national electric  energy grids.  In other words, unless your own household math is too compelling to ignore (try it, though!), putting solar panels on a house could be like patching a pothole in a dead end street while the main arteries crumble.  To fix those arteries (the Grid), you need solar arrays by the acre.  Fortunately, they are being built.  Brownfields, office parks…all the top siting ideas are either on the table, in the works, or already quietly online (maybe too quiet!).  Spot-mark them on Google Earth, and you’ll be looking at a virtual pincushion.  The question lingers:  Will Grid solar “eclipse” the market for residential?   Who has that answer? Holla back!

A Plug for Organic Solar

And let’s not forget the aesthetically attractive alternatives, like oh, say… organic solar paint. That’s right, paint. Using green chemistry to blend organic photovoltaic compounds into just about any outer coating, the actual shingles on our roofs could be the circuit someday soon.  Recent efficiency leaps are bringing it closer to everyday practicality.  For details, visit the local Nobel laureates at Konarka.

Entering the Grid Parity Zone

Fortunately, we are nearing the solar gid parity “zone”, where by mid-decade solar energy will be broadly cheaper than fossil grid energy.  As solar technology improves, though, it improves the math for both residential solar panel installations and for grid-feeding solar array “farms”.  So, again, the question is:  will grid solar obviate residential solar?

Currently, only about 4 world regions (Spain, Japan, California, Mexico) are in that Solar Grid Parity Zone, principally because of the cost per KwH of grid-based power.  Above the Mason/Dixon line, geothermal and wind power seem generally viable (check it out) – and both technologies continue to improve.

Last Word on Real Estate

NSTC meeting attendees heard an anecdote about how new homes with alt energy installations sell faster and at higher prices than other homes in the same development tract.  Not to be too much of a wet blanket here, but note, however, that this is a statistically small, anecdotal sample – uplifting and instructive, yes, but still.   Okay, so how’s that macro home sales market doing?  Oh, yeah.  Even those new alt energy homes are selling at deflated prices in this market, whose inventory is projected to take 20 years to churn through, by which time many of us will have moved on, demographically speaking.

Energy, schmenergy

Buyers want low prices.   I wish this weren’t true but, as altruistically and fatalistically compelling as the “green” argument may be, it’s about cash.  The good folks at Ogilvy Earth, who on behalf of the world’s biggest consumer product companies exhaustively studied how to communicate effectively about “green” products, have concluded that the “green” message fails…but they offer solutions, too, so study the learnings from Ogilvy and from Columbia University.  You’ll know whether you need that info if you find yourself struggling to convince the owner of a 401(k)  (make that 2o1(k)) about energy as an asset class.   Where will that money come from?  Speaking on behalf of today’s typical household, at a time when the average household disposable income after essentials has declined to under $10K,  an up-front investment upwards of $3K in energy efficiency is about as likely as a new pool.  To paraphrase the J. Geils Band’s frontman Peter Wolf:  “First I look at the purse”.  Alt energy as a new asset class looks attractive, but to the skeptical, indebted homeowner, it is like those 401(k) assets that were once deemed rock solid.  Boing.

Getting the Flywheels Turning

Improved resources utilization, price-driven markets, and other macro trends will help us learn how to do the greatest good for the greatest number of people.  Keeping the earth’s temperature increase under 2 degrees Celsius, improving infrastructure, and funding basic research into solutions that show the greatest promise, are just 3 flywheels that need to turn faster.  Fortunately, the pace of innovation is good.  Even I, the surly adopter, am encouraged.

Anything else is like patching a pothole on a dead end street: nice, but not as important and possibly irrelevant.

But, in the end, I am speaking in generalities.   Your own residential results may vary, so visit the good folks at Energy Sage.  You just may be in for a pleasant shock.  I hope so!

Additional Resources

Resource Revolution: Meeting the world’s energy, materials, food and water needs (McKinsey, 2011)

Center for Research on Environmental Decisions (CRED) (Columbia University)

Solar Grid Parity: Are You in the Zone? (SocialClimate)

Environmentally Benign Products:  A Green Chemistry Mentor Speaks (SocialClimate)