Electricity powers nearly every aspect of our modern, convenient lives. It’s so pervasive and easy that most of us take it for granted. But just behind the common electric outlet lies a system that is expensive, insecure, and, worst of all, dangerously dirty – the grid. For example, clean energy from the sun and wind only powers 7% of the US. Even more concerning, the government predicts that even over the next 25 years, it will only rise to 14%. The grid is long overdue for an upgrade. We need to do better. We can.
Bill’s TED talk lays out a simple idea that can not only help us navigate a faster path to clean energy but also make our electricity cheaper and far more resistant to blackouts and outages.
Check out the talk to learn more about the problem and the simple solution that can save us money, make us safer, and improve our environment all at the same time.
What if I told you we could dramatically accelerate the shift away from fossil fuel power to clean energy… while at the same time, cut our future electricity bills by literally hundreds of billions of dollars?
I have a simple idea I’d like to share with you today that could accomplish all this and more.
But let me start with a little background on the power industry.
While most of us take Electricity for granted, it is the foundation of our modern society. It powers everything: our lights, air conditioners, computers, and refrigerators.
It powers our hospitals, schools, offices, and factories.
And, before we know it, electricity will be powering our cars, too.
It is so pervasive and so simple that it’s easy to overlook.
But below the surface sits one of the most amazing and sophisticated systems ever created – the electricity grid. The National society of engineering calls electrification the single greatest engineering achievement of the century. And at $2 trillion a year, electricity is also, arguably, the largest industry on earth.
Despite its incredible impact, this 100-year-old industry is facing a growing set of challenges that demand our attention.
You can think of the grid like this old mainframe computer my dad worked on. When this mainframe was invented, it was revolutionary. It changed the world. But as technology sped forward, the mainframe slowly became outdated.
Like that old mainframe, the grid has become outdated and long overdue for an upgrade. For example, the US Government says that clean energy powers just 7% of the grid today and, even over the next 25 years, this will only grow to 14%.
In my opinion, this pace is unacceptably slow. I believe that accelerating the shift to clean energy is one of the most important challenges of our generation.
It is so important, in fact, that I decided to step away from my 30-year career as a software CEO to do my small part to accelerate this critical shift. After a year of research and over 100 interviews with industry’s brightest minds, I have come to believe there is a faster path…
… a simple idea that can accelerate the shift towards cleaner energy decades sooner than the path we are on now.
It’s called Local Energy.
If the grid is like that old mainframe computer, local energy is like a laptop computer or a smartphone – smaller, cheaper, and much smarter.
Local energy is about generating electricity in the same place we use it.
Think about the farm-to-table movement where food is grown locally. Communities have more choice on what they eat, the food is healthier and it creates local jobs. Local energy is like Farm to Table but for electricity instead of food.
The best news is that local energy is starting to happen now.
Residential solar is by far the most popular.
But for people without access to a roof, community shared solar is a fast-growing alternative.
Companies like IKEA are beginning to generate their own power.
During hurricane Harvey, Texas grocer HEB kept the lights and refrigerators on 24/7 with their own local energy solution. This allowed first responders to use these stores as a base of operations.
Municipal buildings like hospitals, fire stations, and schools are turning to local energy to ensure they always stay open, particularly during emergencies.
Local energy is a perfect solution for places are too remote for the grid to reach. The military uses it to power remote bases.
Believe it or not, even in our modern age, over one billion people have literally no electricity at all. Local energy is the fastest and cheapest way to bring electricity into their communities.
And, for islands like this one in the American Somoa, Tesla solar and battery products have replaced the island’s expensive diesel generators.
Local energy is helping the shift towards clean energy but it is also helping the current grid deal with several growing challenges. I’d like to tell you about three of them today.
First… Local Energy is More Secure…
You see, the grid is frighteningly vulnerable and the risks are getting worse each year.
Outages are on the rise as extreme weather events increase in frequency and infrastructure equipment ages. For example, the 2,000 large substation transformers that form the backbone of the US grid are designed to last for 20 years. Their average age is a staggering 38 years old.
But it’s not just age. Hackers and foreign enemies are starting to view the US grid as a prime target.
A chilling report leaked from the federal agency that oversees the grid said …
“Destroy nine interconnection substations and a transformer manufacturer and the entire United States grid would be down for at least 18 months, probably longer”
[Pause] Think about that. A one hour outage is annoying. A one week outage makes national news. A multi-month outage has no precedent in modern history and it could drag our country back to the 1800s.
Fortunately, Local Energy can help can help make the current grid more resilient and secure.
How would this work? Imagine a wall with several large balloons. Metaphorically … this is how the grid looks if you are a hacker or a powerful storm. It’s easy to target and a single attack affects a chunk of the grid.
Tragically, this is exactly what’s happening as hurricanes in Puerto Rico and the Virgin Islands have left millions of people without power for weeks or possibly longer.
But, now let’s imagine a better, more advanced energy future. Image the same wall with lots of smaller balloons too. Even if you take out many of these balloons, the interconnected local energy grid continues to operate.
The idea of a distributed redundant system like this isn’t even new. It has been proving itself for decades. All the way back in 1969, in the middle of the cold war, the US government needed a way to make their data networks more resilient in the face of a nuclear attack. Their solution was so successful, it changed the world. Today, we call their solution the internet.
The second benefit of local energy is that it’s cleaner.
I could do an entire talk about how the grid is poisoning the planet. But, for now, I’m going to focus on the one issue that shocked me the most during my research.
This video shows a small Tennessee town over run by coal slurry.
Before my research, I had never heard of coal slurry.
It turns out that coal plants generate 770 million tons of toxic ash every year. This stuff is full of mercury, arsenic and lead. To keep it out of the atmosphere, coal plants mix this nasty stuff with water and dump it in ponds. There are over 1,400 barely regulated toxic coal slurry ponds scattered across the US.
Ladies and gentlemen, we need to do so much better than this. Fortunately, we have much better options.
Wind turbines and solar panels generate no waste. They don’t require pipelines or railcars to bring in fuel. They produce no greenhouse gases or dangerous radiation. Once installed, they generate electricity for decades and cost almost nothing to run.
The challenge is that coal and nuclear plants have mortgages that often extend for decades. Until those plants are paid off and decommissioned, the companies that own them have little incentive to embrace clean energy alternatives.
But local energy can break this log jam. Communities, businesses and individuals can leapfrog dirty energy from the grid and simply install their own local energy solutions like solar, wind, and batteries.
This isn’t just an environmental benefit; these communities can also save money to because…
The third benefit of local energy is that it is cheaper.
Believe it or not, the Grid is actually getting more expensive, not less
Let’s go back to my dad’s mainframe so I can explain.
Since that computer was built 50 years ago, the cost of computing has dropped more than one hundred million times.
And it’s not just computers that are dropping in price.
Cars, Airlines and appliances, just to name a few examples, have all gotten cheaper. But somehow, the price of electricity hasn’t moved at all.
What’s going on here? Let’s take a look.
Three-fifths of your electricity bill pays for power plants – most of which are coal and nuclear. The US government tells us that these dirty energy sources keep getting more expensive over time. Even natural gas, which has recently dropped in price, will eventually rise again just like any finite natural resource.
Now, let’s look at your electricity bill as if it were coming from local energy.
First, the sources of local energy, solar and batteries, are getting cheaper every year… and they will continue to get cheaper for decades. Second, local energy doesn’t need miles of powerlines so the other two-fifths of your electricity bill can drop significantly as well.
But how does some power get cheaper while other types get more expensive?
I’ll tell you a secret…
Solar, wind and batteries are technologies, not fuels.
This is very important so let me say it again: Solar, wind and batteries are technologies, not fuels.
Coal, natural gas and nuclear are all fuels. They are governed by the costs of drilling, digging, transporting, and refining. There is only a finite amount of fuel – as we dig out the cheapest sources, the prices will inevitably go up. And when you burn a chunk of fuel to make electricity, all that’s left is waste. After that, if you want more electricity, you need to get rid of the waste and need to dig up more fuel.
Now compare that with technologies like solar, wind and batteries. These technologies are similar to computers and microchips in that they will get better and cheaper for decades. Best of all, once you install a solar or wind farm, the only fuel they require is sunshine and wind. They just sit there and cranks out electricity for years… practically for free.
If you’re still skeptical that local energy can be cheaper, just look at Minster, Ohio. In 2015, this small community decided to build their own local solar and battery system to help supply some of their electricity needs. Thanks to some innovative uses for their batteries, they are now spending LESS for this clean electricity than their traditional coal and natural gas sources.
Amazing. This is an example that can be replicated across the US and the world!
For years, the energy business has been shaped by the forces of regulation and politics – but the future of energy will be driven by the most powerful force of all: economics. Local energy is simply a better, cheaper product than anything that has come before.
You’re probably thinking… local energy sounds great so how do we get it moving?
There are two things we can do.
The first is local electricity markets. We need to create local electricity markets.
Think back to the early days of computers. Imagine if the government granted mainframe manufacturers a monopoly and it was illegal for anyone else to sell computers. Without any competition, do you think these mainframe companies would have created personal computers, or smart phones or the internet? I seriously doubt it.
Unfortunately, this IS exactly how the power industry works – governments grant a monopoly to utilities and, in return, utilities make a very important promise to the government. They promise to provide reliable, affordable electricity to every single person. For the most part, this important bargain works but it has come at a huge price – the lack of competition has slowed grid innovation to a snail’s pace.
Government regulators understand this but they struggle to balance competition and control. But when Super Storm Sandy hit New York in 2013 and left half-a-million people without power for over a week, New York got creative. The state has since created some of the most ambitious and innovation-focused electricity regulations in the world.
One of my favorite examples to come from this is the Brooklyn Microgrid. Dozens of small businesses and homeowners have formed a local energy community. Each household is able to buy and sell electricity from the others. It’s like a farmer’s market for electricity instead of food. This may seem straightforward but, for the power industry, this is revolutionary. For me, this is a small glimpse of the future of energy.
The second way to speed up local energy is you.
It turns out that solar and batteries are governed by something called Swanson‘s law which states the more product you manufacture, the cheaper it gets. If we want to unleash society’s most powerful force for change, the irresistible economics of a lower price, we just need to make more and more solar panels and batteries.
This is where you come in. For the first time in energy history, each of us can play a role in creating the future.
All we have to do is embrace clean, local energy ourselves. Install solar panels. Purchase community solar. Buy an electric vehicle to drive up the battery volumes. Do business with companies powered by clean energy.
Every little thing we do adds up. Higher volumes drive down costs. And lower costs accelerate the shift to clean energy even faster.
I urge each one of you to join me on this journey – together, we can launch a local energy movement.