Sunday, August 30, 2009

Smart Technology

Yesterday I attended a workshop hosted by the IEEE focusing on the status of various alternative energy technologies from a business and employment perspective, especially in Colorado. There was a strong emphasis on the development of “smart grids” that could efficiently distribute and manage electricity generated from renewable sources such as solar, wind, and geothermal. Indeed, smart grids are seen as an absolute necessity for renewable energy to become more than a small part of what the United States consumes.

The good news for this effort is that most people can easily transfer their current skills into a new economy built on these technologies. This has long been obvious, given the fact that the economic model being used is almost indistinguishable from the status quo. Business today knows how to grow new ideas into products and services; and government regulation and tax structures can be tweaked to accelerate the development of new infrastructure and limit the unhealthy aspects of the way people use the current one. Business and government leaders involved in “green tech” and “clean tech” see boom times ahead, and there is a well-educated and skilled labor force ready and waiting to participate.

The bad news, however, is that demand is not yet high enough to sustain the growth required. Most in business, government, and the public don’t see the need for developing a new energy infrastructure, much less the lynchpin smart grids that will be required to route energy from alternative sources everywhere it has to go. One particularly scary graph showed per-capita U.S. residential energy use exponentially outstripping supply, a condition which typically means that time has run out to find new supplies and that limiting demand must be done first -- and immediately.

The topic of limiting consumption predictably came up only in the context of increasing efficiency, which the information technology contribution to smart grids (what makes them “smart”) is expected to address. Efficiency, of course, has two problems if demand growth isn’t stopped: (1) it eventually -- and arguably now -- needs to grow at least as fast as demand, reaching a hard limit at some value below 100%; and (2) it tends to cause people to consume more as it is economically interpreted as an increase in supply, causing its price to go down relative to other options. A smart grid system, even if it was now in widespread use, would at best delay a forced limit to demand; a prospect I never hear any discussion about among those pushing such technologies.

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