The 3rd annual Earth Hour this past Saturday night resulted in some fairly dramatic before and hour photos of iconic skylines across the world. http://www.reuters.com/news/pictures/rpSlideshows?articleId=USRTXDD2Z#a=3. The event is not mainstream yet, but may be well on its way. Power companies throughout the world sprinkled press releases quantifying how much energy was saved. ComEd, a Northern Illinois division of Exelon Corp. (NYSE:EXC), noted that the 1 hour ‘lights out” event reduced electricity usage in its service area by 100 megawatt hours, which is the equivalent of removing 154,500 pounds of carbon dioxide from the atmosphere, or planting 19 acres of trees.
The visual reference of planting a mini-forest is both staggering and hopeful, but it is also a bit misleading and adds to the misconception that there is a direct correlation between energy production and usage. Consider this note from a blogger for treehugger.com. “Gas and coal fired plants dial up and down all the time to adjust for peak load, so an event like Earth Hour is actually turning down the dirtiest fossil fuel burners, taking it right off the top.” After being challenged by a reader, he did his own research and owned up to his mistake. Coal and gas fired plants do not crank up and slow down based on energy cycles during the day – that would consume more energy than producing at a consistent level. And they produce for peak demand, which means a LOT of energy is wasted. Think of a hosting a wedding for 300 guests. You know not everyone will show up but you have to have a seat ready for them anyway.
The ComEd release does not say whether it lowered generation in advance of the event so we do not know if energy was actually saved. We do know that The Independent Electricity Systems Operator of Ontario generated 920 MW less energy for its users. How did it know? It used data from Earth Hour 2008 to forecast demand for last Saturday night. What if we could replicate the IESO results every day? That in a nutshell, is the promise of the smart grid. Meters, networks, software, algorithms and storage devices will coordinate to create a structure where no more energy use is generated than is needed to meet demand.
Like the IESO example, Wake Forest, NC based PowerSecure International (Nasdaq:POWR) www.powersecure.com, forecasts peak electricity and deploys energy loads in the most efficient manner. The company notched a profit of $10.66 million or $0.63 per share in 2008, compared to a loss of $1.61 million or $0.10 per share in 07. The stock trades at $3.42 – its 52 week low/high is $2.70/$12.70. American Superconductor Corp. (Nasdaq: AMSC), www.amsc.com, of Devens, MA recently has developed a new technology that allows electric utilities to optimize power delivery directly at the grid’s critical load-serving points by automatically adjusting the reactive power supply in real time. The first customer is Southern California Edison’s “Circuit of the Future” in a deal announced this month. The stock trades at $17.54, far down from its $47.53 high. Its CEO promised that the last quarter would be its last to end in the red. If he is right, the stock’s stay in smallcapdom will be a short one. http://www.forbes.com/2009/02/03/american-superconductor-business-energy_0203_power.html?partner=yahootix
Boston’s EnerNOC (Nasdaq:ENOC), www.enernoc.com, provides energy management technology to large users and is a leader in demand response management (a precursor to the smart grid) which limits electricity use during peak demand for participating customers in return for cash payments. The Company expects to generate positive cash flow from operations in the second half of 2009 and report a profit in 2010. At $14.60, it trades roughly halfway between its 52 week low ($4.80 and high $24.10.)
The smart grid will take years to build out but the key contracts that will power it are happening now. Keep your eyes open.