Energy deregulation has led to big advances–and a few catastrophes. Silicon Energy develops systems that help customers and utilities manage energy use and costs.
President, Silicon Energy Corp.
FROM JOHN’S ORIGINAL ENTRY:
What is the big idea?
Years before the California energy crisis unfolded in the summer of 2000, John Woolard recognized that energy deregulation was creating unique needs for utilities, and commercial and industrial high-energy users. The way energy was procured, used and managed changed dramatically. Energy was considered to be the least controllable cost of doing business due to no real-time decision support system. If the person managing an enterprise or a utility could see in real-time when buildings, homes or machines were using energy unnecessarily and adjust usage remotely, how much energy and money could be saved? Woolard’s team created enterprise energy management software that enables efficient interaction between supply and demand of energy providers and energy users to reduce energy usage, lower energy costs and optimize the energy procurement processes. Even in an industry reluctant to accept new technologies, the concept of real-time energy management became essential the night the lights went out in California–so essential that President George W. Bush met privately with Woolard to discuss how technology could be used to bridge the gap between available supply and demand.
What was your creative spark?
What stemmed from social responsibility led to smart business. Woolard, an environmentalist, saw common ground for energy conservation and energy economics while earning his master’s degree in environmental planning from the University of Virginia. This common ground led him to University of California at Berkeley, where he further investigated the energy industry. But the stars truly aligned when Woolard and Dale Fong, both working at Pacific Gas and Electric (PG&E), and Keith Gipson, working at Johnson Controls, started talking about energy e-business opportunities sparked by deregulation. Fong was fresh from creating the software that uses Internet protocols to manage the majority of PG&E’s Northern California grid in real time. Gipson had conceived, designed and developed the Metasystem Personal Workstation at Johnson Controls, providing access to multiple control systems from an ordinary office PC network for the first time in industry history. Together the team envisioned an energy information management system designed to give customers real-time control of energy use and costs. Silicon Energy Corporation opened its doors in 1997 and began the process of introducing its technology, EEM Suite, to heavy energy users.
Why is the idea so compelling?
A survey conducted by Energy Cost Savings Council found that financial managers perceive that energy is the least controllable business expense. During the energy crisis of 2000 and 2001, the reliability of the nation’s grid system was questioned. Both cost and reliability are impacted by the available supply versus demand during peak and off-peak energy usage hours. Without energy management technology, a company manages its energy costs through traditional building control systems, if used, and historical analysis of monthly utility bills. Managing energy costs and usage based on historical information is ripe with inefficiencies and offers little control to impact energy usage and costs. Additionally, energy managers lack the understanding of peak period energy usage and timely price information needed to make effective energy decisions. As a result of using energy management technology, companies have the potential to significantly conserve energy and reduce costs by managing peak period usage smartly. Utilities can offer customers cost-saving energy curtailment programs and incentives to reduce energy usage during peak periods.
How or why did the innovation spread?
Deregulation and the unknown short-term impact of a true supply-and–demand energy marketplace created the opportunity. However, it spread because Silicon Energy’s team, with 125 years combined energy and technology expertise, understood the challenges of convincing the industry to adopt a technology solution so different from what it was used to using. First, the team had to develop a way to marry customers’ existing hardware systems to the power of Silicon Energy’s technology. With this accomplished, Woolard’s team had to demonstrate that the technology would impact energy usage and costs. By the time the lights went out in California during the energy crisis of 2000 and 2001, several of the nation’s top utilities were using Silicon Energy’s technology to manage energy use and on-site generation in real-time. The energy crisis brought to light the need for intelligent energy management and technology solutions available to bridge the gap between supply and demand. Today, as companies are looking to cut costs, energy is now a cost that can be controlled more intelligently with the right information to make decisions that can have immediate impact.