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Renewables: The “great dual challenge,”

The new General Electric  is a shell of its former self as it sheds most of its business units and its industrial coverage is down to its aircraft engine, renewable, and power plant businesses. GE CEO John Flannery has called the three “highly complementary businesses poised for future growth”. Yes, each is based on turbine technologies, but I can see how green zealots cringe when they see the association between fuel guzzling planes, coal and natural gas-driven utilities and wind turbines. It is, however, the reality as GE sees it.

The Washington Post has an article on BP and how the oil giant was “forced to shrink to greatness”. It shows how the US government almost put the company out of business after the Deepwater Horizon explosion and how the rest of Big Oil shunned it. It has trimmed down and is starting to invest again.  Renewable investments may reach $500 million a year, a tiny fraction of BP’s $15 billion or more in capital spending. Its big bet is on natural gas and that utilities will increasingly move from coal to gas.  CEO Robert Dudley says “This is not a race to renewables. It has to be a race to reduce emissions,”The “great dual challenge,” is to do that while generating enough energy to lift people out of poverty and absorb population growth.

You could argue that GE and BP are not ardent supporters of renewables, but how do you explain the situation in Germany? Foreign Policy says

For years, Germany’s Energiewende, or renewable energy transition, was held up as a best practice for other nations to follow. After all, in just 15 years Europe’s biggest economy turned a third of its electricity generation green by subsidizing investments in solar energy and wind power. In doing so, it added 300,000 jobs to the economy. Even while it was in the process of phasing out nuclear power, Germany managed the transition while its factories hummed along, the economy posting record growth and trade surpluses. In the late aughts, Merkel was dubbed “the climate chancellor” for her engagement on behalf of the climate.

Yet, in spite of spending hundreds of billions of euros on subsidizing renewables, Germany will struggle to meet its 18% renewables target for 2020. The country continues to rely heavily on its coal and lignite, and more recently on natural gas from Russia.

Progress is more visible in smaller countries like Denmark (especially with wind), Kenya (especially with solar) and Iceland (with geothermal).  If you include hydro power in the renewables bucket (many hard-core green fans argue that dams cause ecological damage so aren't as as sustainable) Norway, Canada and Costa Rica are shining examples. The little island of Palau has announced plans to move completely to solar power in the next few years.

There is also good news from the state of California. Assembly Bill 32 pushed the state to reduce emissions by 2020; California did it in 2016, dropping from 1990’s 431 million metric tons to 429 million metric tons.

The next big hope is China which is said to be investing $ 360 billion (mostly in wind and solar energy) during the five-year 2016 to 2020 period.

Renewables are making nice gains in the utility sector, but that is not being matched in transportation (tankers, trucks etc.) and heating – which together account for 3/4 of global energy consumption.

A number of fan boys keep arguing otherwise, but the disappointing German experiment in particular tells us the BP comment about “the dual challenge” will be our reality for the foreseeable future.

Renewables are a bit like Artificial Intelligence. Every few years we get excited with progress but you look a few years later and the adoption progress is uneven.

“Make Renewables so Cheap that they KILL Fossil Fuels”

Peter Diamandis, of Abundance fame, put out this rallying cry in a recent post. Renewables definitely need a kick in the behind. A recent conversation with my lawn guy, Bruce told me how far they still have to go.

I asked him if he had considered one of the new robotic, electric lawnmowers for a couple of thousand before he invested in his $ 16,000, gas-fueled 35 hp Gravely. He smiled and said “I can cut your front yard in less than 3 minutes. The robots are much slower and often run out of battery, and then you have to restart the cycle. Also lawn in Florida grows taller than what the robots can tackle ”. The conversation then turned to his set of DeWalt tools. He has a whole collection which run on lithium-ion batteries. Even there he said “I only use the battery powered blower at night to not bother the neighbors with the noise of a gas powered one”. On and on he went on why gas fueled appliances are still so much more efficient.

Bruce is smart enough but he uses simple phrases. He was saying energy density matters as much as economics. Renewables need to scale up.

The opportunity has been around for decades to kill Fossil Fuels, but renewables continue to rely too much on hope and fear

Country after country is announcing plans to ban gas or diesel fueled cars in the next couple of decades. Reason to celebrate, right? Yes, if you are blessed to live in countries like Norway and Canada where utilities get the bulk of their fuel from hydro. In most other countries, EVs are only marginally greener than cars in Brazil where 25% of fuel is cane-sourced ethanol. This chart from Our World in Data ( a project at U. of Oxford) shows how far renewables have to go just to replace coal usage in utilities. Add nuclear to that, given skittishness around that, and the opportunity for renewables is almost intimidating.

Another hope of the renewable sector is we will soon run out of fossil fuels. Tell that to bankers who plan to take Saudi Aramco public next year at a valuation between $ 1 and 2 trillion. Yes, it will be the world’s largest ever IPO. M. King Hubbert came close on his projections of decline in US oil reserves in graph below. But he did not factor the stubbornness of George Mitchell and other energy entrepreneurs and their fracking and horizontal drilling innovations. Yes, some day we will run out of oil. For now, renewables need to quit hoping that day is anytime soon.

Then there is the fear mongering. 2017 was a torrid hurricane season (it officially ended November 30) and all the boo-birds are out saying if we had moved to renewables we would not had such a ferocious time. Hello – since records were kept, 2017 was only the seventh most intense season in the Atlantic basin. And here’s another contrarian data point “Harvey ended the record-smashing 4,324-day-long “major hurricane drought” in the United States when it crashed ashore near Corpus Christi, Tex. And then it stalled, maintaining tropical storm status for 117 hours after landfall, a record for a Texas landfalling hurricane.”

It’s uncanny that for a decade after the documentary The Inconvenient Truth was released, we had that hurricane drought. Now that its sequel has been released, hopefully we will see another long respite

So, yes I hope the renewables industry steps up to Peter’s rallying cry. Start executing relentlessly and quit hoping and spreading fear.

SAP and Sustainability

SAP’s annual sustainability report is out. As usual it is prodigious and professional. In the past i have commented that it was too focused on internal SAP efforts and what its customers were doing broadly, not how SAP’s software contributes to their efforts. This year it does better.

In the meantime, it is pretty impressive how the market definition of sustainability keeps expanding. I have attached below the entire chapter on sustainability from my new book. It includes an interview with Jeremiah Stone of SAP. You may enjoy reading about how other tech vendors like HP, Apple, Google etc are also doing.

Download Sustainability Chapter

The disruption from Global Warming

A blog which focuses on disruption should highlight what Discover considers the 9 industries which will be most disrupted by climate change…

• Wine making
• Fishing
• Ski resorts
• Other tourism
• Insurance
• Forestry
• Mining
• Meat
• Energy

I am surprised they did not include real estate – guess my Florida property will do fine :)

There is capital and then there is capital

In the 90s when George Shaheen was CEO at Accenture I was at a dinner speech where he said “Like Bechtel, I want my firm to go in to obscure parts of the world and raise cities where they were none. Digital cities in our case”. I could relate. 10 years prior as a young auditor I had spent time in the city of Jubail, Saudi Arabia where Bechtel had been the master program director. I was impressed with the thousands of blueprints and program plans which showed the complexity of coordinating massive shipments from Japanese, Korean and other suppliers. And labor from at least 20 countries that turned that piece of arid desert into a modern township.

Like Accenture, Bechtel is a darned good integrator. Like Accenture which is good at managing staff ebbs and flows, Bechtel is good at managing cashflow ebbs and flows.

But today, I see a Bechtel rep say about VC investment in Greentech “Capital needs will be far greater than what venture capitalists experienced with high tech.” Actually infotech has seen much bigger investments than the construction industry. It’s just that VCs were selective which segments of the industry they chose to invest in like chips and software. They kept away from those that required massive armies or oodles of long-term capital like systems integration, outsourcing and telecom services. 

I suspect something similar will happen in Greentech. VCs will leave those segments which need armies and long-term capital to the Bechtels, and increasingly the Accentures of the world (as smart infrastructure projects require blending knowledge of sensors, fuel cells and cements).  The VCs will happily be funding startups which make better sensors, better yielding cells and newer cements.

Sustainability: The Pig and the Chicken

Remember the old story about the chicken and the pig at breakfast?

The chicken brags his kind “was involved” in breakfast because they laid the eggs. To which the pig responds his kind “was committed” to delivering the bacon.

I see a number of ERP companies brag about “being involved” in sustainability efforts as they help account for carbon or help in compliance with regulations.

So I am pleased to see NetSuite report it was “committed” in not just reporting, but actually helping customers reduce carbon emissions.

• With more than 6,000 customer companies sharing datacenter resources, NetSuite's platform saved more than $61 million in energy bills per year
• These savings amount to nearly 595 million kilowatt-hours (kWh) annually, the equivalent of nearly 423,000 metric tons of carbon dioxide per year
• This is equivalent to nearly 1 million barrels of oil or the average electricity consumption of 56,000 homes per year.

HP and Green Tech

GreenComputing carries a HP update on its green activities.

I would have probed in 3 area:

a) what are HP/EDS doing about data centers customers have outsourced to them? It’s fine to talk about green internal DCs, but the majority of customer centers they run appear to be locked into multi-year deals and could not be considered green by a long shot.

b) how is HP reacting to Xerox claims that its new dry ink printing is much cheaper, needs much less packaging, wastes less and is therefore greener than HP’s traditional cartridge based ink printing? (See the note on Xerox's  ColorQube on my innovation blog here)

c) How will HP re-compete against Cisco which has taken a commanding lead in the telepresence market? 3 years ago HP was considered one of the pioneers in the space