Today in Cleantech

It’s finally here! Yesterday, California Public Utility Commission issued what it expects to be its official rules for managing the security and privacy of utility customer energy data when it comes to smart meters, home energy management devices and every other potential gadget and business case that can be attached to the smart grid. We’ve covered many of the key issues surrounding this groundbreaking ruling, including the CPUC’s interesting definitions of just how customers’ data should be treated, and how utilities and their business partners should be held liable for protecting its privacy and security. The ruling also requires California’s big three utilities — Pacific Gas & Electric, Southern California Edison and San Diego Gas & Electric — to roll out all the smart grid/home energy technology pilots they’ve been putting off for the past few years, which should make for some interesting smart grid projects to come in the months ahead. I’ll be keeping a close eye on developments on the smart grid front here in California, but not from this site — as of today, I’ll be leaving my post as GigaOM Pro’s Green IT curator. It’s been a pleasure writing for you all, and I look forward to staying in touch with you amidst my future endeavors in the green technology field. Cheers!

Want a green cloud? Learn the metrics

Last week’s Verdantix and AT&T report on the energy and carbon emission savings to come from cloud computing is the latest in a long line of studies stating the obvious: Shifting computing from inefficient, dispersed data centers to highly efficient, centralized cloud data centers should save everyone energy. Indeed, the report’s claim of $12.3 billion in energy savings over the next decade fits in with other figures, such as Pike Research’s prediction of a 38 percent energy reduction from a wholesale move to the cloud or Microsoft’s claim of 90 to 32 percent energy reductions from its cloud-computing offerings, depending on how energy-efficient the customer’s deferred data-center investment would have been.

But when it comes to energy, what cloud providers and customers really care about is controlling data center costs and avoiding unneeded investment. To try to get at the cloud’s energy benefits, the industry will need transparency that can allow market forces to determine just how valuable those energy savings truly are — and that means data-center-efficiency metrics. There are several measurements you will need to know to figure out how to differentiate green-cloud-marketing hype from reality.

The data center writ large. So far, most green data center PR has been focused around power usage effectiveness (PUE) and data center infrastructure efficiency (DCIE). These measure a data center’s overall efficiency at using power to support its core IT assets, though from different angles. The Uptime Institute’s corporate average data center efficiency (CADE) measures utilization of both IT and data center facility assets across the enterprise. All of these stats get at how efficient a data center operator is at managing the non-IT energy costs — cooling, lighting, power delivery and backup — compared to the “working” IT power load.

No doubt, cloud-computing providers can offer far better PUE, DCIE and CADE measures than the data centers they’ll replace. Just compare the 2.0 PUE industry average to hyper-efficient cloud data centers from Facebook, Google, Cisco, Amazon and Microsoft with PUEs that approach the perfect figure of 1.0.

Power at the server level. But most cloud-services clients’ needs will be counted on a by-the-server basis. How to compare one server with another in terms of the efficiency of its operations? Getting at that figure is harder than just looking at a server’s specifications, since it also involves variables like how much the server is being used.

Still, a number of statistics are seeking to deliver some kind of computing-power-per-watt measurement. The nonprofit Standard Performance Evaluation Corp. has its SPECpower metric, which measures server performance in operations per watt. Data-center-efficiency-technology startup Power Assure has released its own version, called PAR4, which measures server power use at usages from idle to peak power, as well as on a transactions-per-watt basis. Deutsche Bank has developed a set of metrics that involves comparing a company’s existing servers to the best available to come up with a figure called hardware utilization efficiency (HUE).

With all of these measurements, some standardization is in order. The Green Grid — the industry group that came up with PUE, as well as measures on carbon emission and water-use efficiency of data centers — is working on a metric called data center compute efficiency (DCcE). It’s also working on a server compute efficiency (ScE) measure, which would go into calculating an entire data center’s DCcE.

That could give the industry some much-needed transparency into how to compare servers to one another in both dedicated and virtualized environments. Lost in much of the debate over the cloud’s energy savings is how the cloud will be priced into the equation. After all, every dollar of energy savings to come from switching to the cloud will be split between the cloud provider and the cloud customer. If the cloud host is saving a ton on energy, though, it’s not likely to let that margin go, unless it’s forced to in a pricing war. But we might have to wait for cloud services to get more popular before we see market data to prove that these metrics matter.

Question of the week

What are the key metrics needed to assess cloud computing’s energy efficiency and carbon claims?

5 smart grid startups to watch via the Cleantech Open

The network of the smart grid is taking its sweet time to get deployed, but we still need smart applications to run over these networks once they are fully installed. Here are five smart-grid startups to watch via the Cleantech Open.

Today in Cleantech

What’s going on with the smart grid in Europe? About €5.5 billion ($7.7 billion) worth of projects, according to this new report on the European smart grid scene from the JRC Smart Electricity Systems, the European Commission’s smart grid research group. Sounds like a lot, but according to the report, it’s only a fraction of the anticipated €56 billion ($78.4 billion) to come across Europe by 2020. So where is Europe ahead of the rest of the world, and where is it lagging? Well, much like the U.S. smart grid buildout, most of Europe’s smart grid investments to date are in smart meters, with less going to distribution grid managements systems and automation. The report also cited a relatively small investment in R&D projects, “suggesting the need to invest in larger scale demonstration  projects to gain a better knowledge of the functioning and impacts of some innovative solutions.” In another echo of U.S. smart grid discussions, the report cites a pressing need to get consumers involved in smart grid education and use, “to give consumers the freedom to choose their level of involvement and to ensure data privacy and protection.”

What Silver Spring’s IPO means for the smart-grid landscape

Last week’s launch of Silver Spring Networks’ long-awaited IPO is a big deal for the smart-grid industry. The company’s early public performance could be considered a gauge of the sector’s health as it emerges from a stimulus-backed growth spurt into an uncertain future. And in the longer run, Silver Spring’s success or failure will be closely tied to its plans to build a smart-grid application-delivery platform from its smart-meter networking base — a challenge many utilities face in integrating smart-meter deployments into their smart-grid offerings.

The company, whose networking technology is inside 8 million deployed connected devices and another 9 million under contract, has benefited from the $4 billion U.S. federal smart-grid stimulus. Its S-1 reports $422.2 million in deferred revenues, compared with 2010 revenues of $70.22 million, with much future revenue tied up in stimulus-funded projects. But that stimulus is coming to an end, and last week’s federal action plan on demand response (PDF) said the industry shouldn’t expect any more federal funds beyond existing stimuli. Likewise, the Obama administration’s smart-grid initiative, launched last month, contained little new funding beyond $250 million for rural grid projects.

For Silver Spring, that means new growth must come either from outside the U.S. — something that has begun to happen in Australia and that could happen in markets such as South America — or by adding new businesses to its existing smart-metering deployments. How to tackle that challenge is an important question, not just for Silver Spring but also for competing startups such as Trilliant, SmartSynch, Tantalus and Tropos Networks, not to mention giants like Itron and Landis+Gyr.

Home energy management could be one route. Silver Spring has home-energy and demand-response platforms, and pilots show that it works to drive down energy use. But home energy management remains a very uncertain market, as the withdrawal of Google and Microsoft from the field indicates. A June survey by Black & Veatch (PDF) found lack of customer engagement the biggest barrier to utilities’ justifying investments in customer-facing smart-grid deployments. Silver Spring might have to wait awhile for its utility partners to start spending on home energy management. Even then, utilities may choose another HEM provider to run over Silver Spring’s networks.

Silver Spring could also tackle the utility side of the smart grid. Corporate smart-grid M&A activity has been booming, and most of it has been aimed at utility-centric software and hardware systems. Silver Spring has distribution grid systems, and it is testing them with utility AEP in Ohio. But it will be competing against some huge multinationals like ABB, GE, Siemens and Alstom for that business.

In the long run, Silver Spring wants to build a host of applications — plug-in car management, demand-response controls and the like — on the foundation of its smart-grid networking platform. Whether utilities will choose Silver Spring’s in-house systems or pick other companies in those fields to run over Silver Spring’s networks may decide whether the company’s growth potential is limited to making smart-meter networking cards or whether it will expand to become a services provider for the grid — a move it will want to make to take part in the broader transformation of power grids to come.

In an interesting way, U.S. utilities at large face a similar challenge. They invested at least $2 billion last year into more than 12.8 million smart-meter deployments and are expected to invest a little bit more this year and next. This investment is with the promise of using the smart meters not just as digital cash registers but also as grid-management devices and gateways to new forms of customer interaction. Maybe Silver Spring can be the smart-grid champion to get the ball rolling. If utilities can’t deliver the full range of services and savings they’ve promised from their smart meters, however, regulators and customers might start to believe the entire smart grid is a waste of money, spelling disaster for everyone involved, Silver Spring included.

Question of the week

How will Silver Spring Networks’ IPO gauge the market’s interest in the smart-grid sector writ large?

Today in Cleantech

It’s the big smart grid IPO of the year. Silver Spring Networks, the most successful smart meter-smart grid networking startup out there, has filed for an initial public offering to raise as much as $150 million on the New York Stock Exchange. We’ve been waiting for this one for a long time. SSN’s Internet protocol-based networking and 900-megahertz radios are inside about 8 million smart meters now deployed and a total of 17 million under contract, mostly in the United States, but also in Australia and potentially in Europe and South America as well. Unlike some of its fellow greentech IPO candidates in industry sectors such as biofuels and solar power, Silver Spring has revenues — $70.22 million in 2010 and $46.69 million so far this year, although it’s still not a profitable company. Then again, SSN works with slow-moving utilities as its clients, meaning it can take years for projects to move from initiation to revenue-generation. Indeed, beyond the potential good news this IPO represents to Silver Spring’s investors — including big shareholder Foundation Capital with 41.5 percent of shares, but also Kleiner Perkins Caufield Byers, W.R. Holdings, NCD Investors, Contra Costa Capital and JVB Properties — there’s the value in finally seeing a smart grid company take itself to the public markets. The smart grid sector’s exits have almost exclusively been via acquisitions. While some pretty big payouts have been happening there, a successful Silver Spring IPO could prove that startups in the sector can make it in the utility-driven smart grid world on their own.

Opportunities in California’s smart grid deployment plans

Last week, California’s big three utilities — Pacific Gas & Electric, Southern California Edison and San Diego Gas & Electric — released in-depth smart grid deployment roadmaps that include about $5.6 billion in smart grid spending over the coming decade. For smart grid companies, it’s about the closest thing to a detailed plan of attack one could ask for. Of course, much of that money is tied up in ongoing smart meter deployments, and another huge chunk is for transmission and distribution grid projects with a limited range of potential competitors. Still, that leaves plenty of opportunities for nimble companies with key software, networking or hardware technologies to fill the gaps that remain. Here are some of them.

Today in Cleantech

California’s big utilities are getting more specific about their smart grid plans. Today is the deadline for Pacific Gas & Electric, Southern California Edison and San Diego Gas & Electric to turn in documents describing just what they want to do on the smart grid front between now and 2020, complete with estimates of the 10-year capital investment plans and costs to be borne by their customers, as well as what they payback will be. PG&E filed its 280-page plan yesterday, and the plans are big — $800 million to $1.25 billion in capital investments and $500 million to $700 million in operating costs over the next 10 years. Of course, that’s meant to deliver $900 million to $2 billion in lower energy purchasing costs, avoided costs of not having to build new power plans, grid reliability improvements and the like. SDG&E’s plan, filed June 6 (PDF), sets a 2006-2020 smart grid cost of $3.6 billion, with a resulting benefit of  $3.8 to $7.1 billion, including a potential “societal and environmental” benefit of as much as $1.9 billion ascribed in part to the advanced grid systems that will let it incorporate the 33-percent intermittent, renewable energy generation that state mandates require it and other major state utilities to have in their power mix by 2020. No doubt the smart grid industry is looking carefully at these cutting-edge utilities to see how the new plans change the expected flow of investment to various technologies. Will smart meters see a diminished emphasis? Will distribution automation, renewable energy integration or energy storage see a big uptick in spending? I’ll be reading the full reports over the weekend to let you know what they say — stay tuned.

Today in Cleantech

General Electric may not pay taxes, but it sure does spend big on its Ecomagination line of pro-green business. In fact, GE spent as much as $1.8 billion on research and development into clean energy and green technology last year, according to its latest report on the subject released this week. That puts the conglomerate on track to reach a cumulative $10 billion in green R&D by 2015 — and so far, it’s been a profitable investment, given that Ecomagination lines of business brought GE $18 billion in revenues for 2010 and $85 billion since 2005. Products launched under the brand last year include the Wattstation car charger and the Nucleus home energy manager. GE’s venture-backed investments into greentech startups also played a role in its investment total, with about $55 million given out to the first 12 winners of its “Ecomagination Challenge” so far, mostly in the field of smart grid systems. The next round of GE’s challenge is focused on home energy, and GE is set to announce winners of that round tomorrow — stay tuned for more details.

Today in Cleantech

If anyone was wondering what the Obama Administration wanted to see from utilities and companies building the country’s smart grid, here’s a document for you to read. The White House released its “Policy Framework for the 21st Century Grid” (PDF) this morning, laying out just what the President would like to do to boost grid modernization in the future — besides directing another $4.5 billion in federal stimulus grants toward the industry, of course. With Congress now deadlocked against any more stimulus, what can the President do to boost the industry further? Well, for one, the U.S. Department of Agriculture has some rural utility funding authority, and plans to make up to $250 million in loans available to rural grid improvements. Beyond that, there’s a new pledge to speed up permitting for transmission and clean energy projects on the part of the Departments of Energy and Interior, a new federal-industry best practices coordination effort to have its own Web site (www.smartgrid.gov), and a new non-profit program called Grid 21 to try to get consumers more interested in energy saving. For not being able to spend a lot of money, I suppose that’s pretty good.