Buffett’s Smart-Grid Idea Takes Over Your Washing Machine

Print Friendly, PDF & Email
(Bloomberg) -- Vincent Thornley, head of Siemens AG’s U.K. smart-grid research, talks about the role of smart grids in the future of energy where a network can run household appliances when power is abundant and cheap. He spoke with Bloomberg's Alex Webb in Newcastle, England. (Source: Bloomberg)

(Bloomberg) — Vin­cent Thorn­ley, head of Siemens AG’s U.K. smart-grid research, talks about the role of smart grids in the future of ener­gy where a net­work can run house­hold appli­ances when pow­er is abun­dant and cheap. He spoke with Bloomberg’s Alex Webb in New­cas­tle, Eng­land. (Source: Bloomberg)

FA Note: The Smart Grid is pro­mot­ed as con­sumer choice. Yet as this arti­cle states plain­ly con­sumers must learn to “either use appli­ances them­selves at opti­mum times, or let the sys­tem decide that for them.”

 War­ren Buf­fett wants to tell you the best time to wash your clothes.

Or at least his ener­gy com­pa­ny in the U.K does. Buffett’s North­ern Pow­er­grid Hold­ings Co. is work­ing with Siemens AG (SIE) to test a so-called smart grid that has the abil­i­ty to con­trol when con­sumer appli­ances will be used in the home.

Being able to bet­ter man­age when elec­tric­i­ty flows allows util­i­ties to low­er con­sumer costs by reduc­ing the need for new equip­ment, and to bet­ter han­dle surges and gaps from inter­mit­tent sources such as wind and solar. The pilot pro­gram, known as the Cus­tomer-Led Net­work Rev­o­lu­tion, involves just 12,000 house­holds in the U.K. and is one of only a few such projects being test­ed world­wide.

America’s Power Grid

This sort of tech­nol­o­gy is real­ly impor­tant to the future of ener­gy,” said Vin­cent Thorn­ley, head of Siemens’s U.K. smart-grid research, in an inter­view. “Rather than build­ing new cable net­works and putting in new trans­form­ers, we can make bet­ter use of” exist­ing sys­tems by using automa­tion.

A four-year tri­al for the sys­tem ends this month in north­east Eng­land. It com­ple­ments the $15 bil­lion invest­ment Buf­fett has already made in wind and solar pow­er in the U.S. that he said in June he’s ready to dou­ble. His MidAmer­i­can Ener­gy Co. is the largest U.S. own­er of wind capac­i­ty among rate-reg­u­lat­ed util­i­ties.

Photographer: Jeff Kowalsky/Bloomberg Warren Buffett, chief executive officer of Berkshire Hathaway Inc..

Pho­tog­ra­ph­er: Jeff Kowalsky/Bloomberg
War­ren Buf­fett, chief exec­u­tive offi­cer of Berk­shire Hath­away Inc..

Util­i­ties world­wide are already using smart meters to col­lect data on cus­tomer behav­ior, and some noti­fy con­sumers about opti­mum times to use pow­er. The 54 mil­lion-pound ($85 mil­lion) tri­al by Buffett’s U.K.-based sys­tem goes a step fur­ther. It gives peo­ple a choice, allow­ing them to either use appli­ances them­selves at opti­mum times, or to let the sys­tem decide that for them.

Behavioral Shift

Cus­tomers can work with us to use their ener­gy in a dif­fer­ent fash­ion, by a range of tech­niques,” said Ian Lloyd, head of net­work tech­nol­o­gy research at Buffett’s North­ern Pow­er­grid Hold­ings Co. The pro­gram encour­ages peo­ple to use pow­er in a way that “com­ple­ments the run­ning of the dis­tri­b­u­tion net­work.”

This behav­ioral shift will be more impor­tant as wind and solar pow­er becomes more com­mon, requir­ing util­i­ties to man­age gen­er­at­ing sys­tems that don’t pro­duce pow­er on calm days or at night. Wider adop­tion of renew­able pow­er will also involve incor­po­rat­ing many local, dis­parate ener­gy sources, from large-scale wind­farms to res­i­den­tial rooftop solar pan­els.

In Ger­many, for instance, there were 1 mil­lion sep­a­rate ener­gy pro­duc­ers last year, up from 1,000 pow­er plants in 1990, Lisa Davis, the head of Siemens’s ener­gy oper­a­tions, said in a Dec. 9 pre­sen­ta­tion in Berlin.

Photographer: Krisztian Bocsi/BloombergWider adoption of renewable power will also involve incorporating many local, disparate...Read More

Pho­tog­ra­ph­er: Kriszt­ian Bocsi/BloombergWider adop­tion of renew­able pow­er will also involve incor­po­rat­ing many local, dis­parate…Read More

Grid Spending

Spend­ing on smart grids will climb to $25.5 bil­lion in 2019 from $16.6 bil­lion this year, accord­ing to esti­mates from Bloomberg New Ener­gy Finance. Chi­na has installed about 250 mil­lion smart meters, and Europe is expect­ed to have 185 mil­lion by the end of the decade, from about 55 mil­lion now.

Europe will more than triple spend­ing by 2019, to $7.6 bil­lion, main­ly dri­ven by the need to inte­grate renew­ables and util­i­ties rolling out smart meters, said Col­in McK­er­racher, a senior ana­lyst on smart tech­nolo­gies at New Ener­gy Finance.

To inte­grate renew­ables in a cost-effec­tive way, you need to inte­grate both grid-lev­el tech­nolo­gies and end-user fac­ing tech­nolo­gies,” he said in an inter­view.

The U.K. project, which is part­ly fund­ed by the British gov­ern­ment, is one of a hand­ful using sim­i­lar tech­nol­o­gy. Alstom SA’s Nice Grid tri­al in France will end in 2016, and Aus­tralia’s Aus­grid ran a A$100 mil­lion ($83 mil­lion) project.

The North­ern Pow­er­grid sys­tem was able to reduce ener­gy con­sump­tion 10 per­cent at peak times by encour­ag­ing cus­tomers to use elec­tric­i­ty when it was cheap­er, while cut­ting over­all use by 3 per­cent.

It may be imple­ment­ed on a broad­er scale as soon as next year. U.K. reg­u­la­tor Ofgem has called on util­i­ties to low­er the cost of deliv­er­ing renew­able ener­gy to cus­tomers. The tech­nol­o­gy is also gen­er­at­ing inter­est from the ener­gy divi­sion of Buffett’s Berk­shire Hath­away Inc. (BRK/A)

They’re invest­ing very heav­i­ly in low-car­bon tech­nolo­gies,” said North­ern Powergrid’s Lloyd. “So there’s sig­nif­i­cant inter­est about what we’re try­ing to do here.”