Our GreenBeat conference Wednesday and Thursday at Stanford University, we’ll be talking about investment opportunities in energy grids. Could it be that some of the smartest minds in the business are missing out on the next big thing?
The experts advising us on GreenBeat have pointed to one huge area of intriguing opportunity that the industry has yet to discuss in depth: the collection and processing of weather data.
The innovator who manages to aggregate key data about weather patterns and then generates a killer algorithm from that data to predict weather and how it affects our grid, stands to make a massive amount of money — as do the investors who back that person.
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That startup, if it were to ever emerge, could potentially upend the opaque and confusing multi-trillion-dollar energy markets, which have long been rife with manipulation from a few well-placed insiders and traders.
Over the past couple of years, giant U.S. utilities have been leading the world in rolling out smarter electrical grids. PG&E, Northern California’s largest utility has been deploying thousands of smart meters a day, networking residents and businesses to its power-generation infrastructure with two-way communications. Over time, this information network will grow in power and complexity, morphing from a mere smart grid into something that could put the virtual world of the Matrix to shame: Industry giants and young, disruptive tech companies are busy building it right now.
This ultramodern Super Grid, as we’ve called it, allows immediate and efficient response to new information — and as such, makes the response to new data about weather even more important.
Is the day suddenly getting much hotter than expected? Well, if PG&E were to know that, it could send alerts to its customers immediately. Smart controls and dashboards at our homes and business would be programmed to respond automatically, in this case by turning on air conditioners before we come home — and gradually, rather than all at once at the end of rush hour. And sensors at our homes, perhaps hooked up to the same network as smart meters, could feed local weather data back into the grid and refine forecasts.
It doesn’t take much to envision the future: a live Super Grid, pulsing with knowledge about how to respond to real-world conditions in real time, delivering just the energy we need at the moment we need it Everyone wins: utilities, consumers, and the environment.
And this is just the beginning of the data story. It’s not just about faster response. Better data will allow a cleaner response, too. Right now, the integration of renewable energy into our grid is extremely inefficient. Take wind power: Even when the wind is blowing hard, no one can predict when it will suddenly die down. The operators of central grids, called ISOs, which transmit energy across the grid to utilities, tend to play it safe — and hence shy away from such unreliable supplies. Instead, they use traditional, dirtier, carbon-based energy sources which they can turn on and off as needed.
But now the Federal Energy Regulatory Commission is pushing for more efficient use of renewables like wind, and so there’s now an urgent need to figure out how to predict wind patterns. Solar production, likewise, waxes and wanes with the sunlight, and could benefit from more precise forecasts.
There are already some data-collection companies reportedly making a killing off of the need for better grid data. Genscape, of Louisville, Kentucky, started ten years ago to collect power supply information by placing sensors around on power lines across the U.S. to detect usage (PDF report). Now Genscape is recognized as having some of the best information about the grid, and traders are buying it to make better trades. And that energy trading market is worth multiple trillions of dollars, which means billions are easily up for grabs if you can help traders increase their profits by just a few percentage points.
Finally, detecting weather patterns matters not only for the grid. It’s also relevant for multibillion-dollar markets such as agriculture, transportation and insurance. WeatherBill, a startup founded by two ex-Googlers in 2006 and backed by Index Ventures, NEA, and Allen & Co., among others, is mostly serving those markets with its weather-linked insurance policies — but it could easily turn to energy markets as they become more weather-sensitive.
A truly aggressive player would aim to corner the market on weather data, doing everything from downloading the latest weather satellite reports to decking airlines with sensors to get real-time atmospheric data, and even partnering withGM’s OnStar to get temperature readings from the new wave of electric, Internet-connected cars out there. If that company can also come up with the best algorithm to sort the weather-forecast signal from the data noise, this would be a hugely valuable asset, experts tell us.
Right now, it takes utilities days just to process the data they’re currently getting from their grids. But imagine if utilities start storing and processing this data in the cloud, where computing power is growing in seemingly limitless fashion? Well, that’s where Silicon Valley’s technological prowess comes in. With Microsoft, Google and IBM offering new cloud platforms to exploit, you’ve got to imagine we’ll see someone seizing the opportunity to process all the data thrown off by the Super Grid more efficiently.
To catch the rest of the debate, join in November 3-4 at GreenBeat 2010 to hear from the experts about the new wave of data hitting the market, and the investment opportunities that await. See you there!
Are you a green executive or entrepreneur? If so, sign up now for GreenBeat 2010 — the year’s seminal conference on the smart grid — November 3-4 at Stanford University. World leaders in smart grid initiatives will debate how the new “Super Grid” is creating huge opportunities in cars, energy storage, and renewables. GreenBeat 2010 is hosted by VentureBeat and SSE Labs of Stanford University. Go here for full conference details.