Category Archives: Green Energy

As Belkin Ramps Home-Energy Management, Where’s Linksys?

As Belkin ramps up its smart-grid activities in electric-vehicle charging and home-energy management, an obvious question arises: Where’s Cisco?

Specifically, where’s Cisco’s Linksys unit, the business that competes against Belkin in the home-nettworking market with a portfolio of wireless routers and other access gear?

Linksys would be a natural player in home-energy management. In fact, it wouldn’t be a stretch to imagine Linksys offering home-energy management or vehicle-to-grid (V2G) applications in residential and commercial environments.

True, Linksys already has powerline products, which were reportedly involved in Cisco’s smart-grid, home-energy management initiative with Duke Power. Nearly a year ago, speculation mounted regarding the imminent arrival of Linksys-branded, home-energy solutions.

Those products have yet to arrive on the market, though. Here are some scenarios that attempt to explain the Linksys no-show.

1) Patience — they’re still coming.

For all I know, Cisco could be on the veritable cusp of making a major Linksys home-energy-management announcement. Such an announcement might have been planned for months, and it might be made within the next few weeks.

2) The best smart-grid opportunities are elsewhere

Cisco might think the smart-grid market’s low-hanging fruit does not include home-energy management systems connected to smart meters. Indeed, considering all the infrastructure upgrades at utility data centers, across transmission networks, throughout distribution facilities, and spanning mesh networks that connect everything together, Cisco conceivably could have more than enough on its smart-grid plate.

What’s more, the home market might prove a tougher nut to crack than the aforementioned areas, most of which are, to varying degrees, “now” markets.

In this scenario, Cisco is treating home-energy management as a secondary consideration, a market segment to be addressed at a later date.

3) Maybe an all-Cisco-branded solution is in the works

In a way, this scenario connects to the first one, and maybe even to the second. Perhaps Cisco is putting together a utility-friendly end-to-end solution that will omit Linksys-branded products. I don’t know whether this scenario is probable — the Linksys brand has consumer cache, and it could be leveraged accordingly — but it can’t be dismissed.

4) Perhaps Cisco is asleep at the switch

Cisco is busy on multiple fronts across a growing number of technology-related markets. It’s entirely possible that Cisco’s market reflexes have slowed, and that it was beaten to the punch by a nimbler rival.

It’s possible, but I’m not buying it. John Chambers and his team waste no opportunity to cite the smart grid’s commercial potential and to emphasize Cisco’s singular suitability to address it. I don’t think Cisco has forgotten about this market.

In all probability, a hybrid of scenarios one and two explains the low profile Linksys and Cisco have projected in home-energy management.

HP Dumps Cold Water on Smart Grid

If the nascent smart-grid market is afire with hype, HP Is doing its utmost to throw cold water on the blaze.

Speaking at HP’s annual Executive Energy Conference in Dubai this week, Ian Mitton, HP’s utilities industry director and global lead on smart grid technology, said smart-grid security has been an “afterthought” in early deployments and that “projects are not happening fast enough,” according to a report in eWeek Europe.

When it comes to HP and the smart grid, we can go one of two ways with our interpretation. We can conclude that HP is right, that security has been overlooked and that market adoption has been tepid; or we can conclude that HP is denigrating smart-grid security and the overall market because it is late to an increasingly festive party.

Then again, maybe both conclusions are valid. They aren’t mutually exclusive, after all. In some parts of the world, such as Asia and North America, the smart-grid market is exhibiting relatively strong growth, whereas market vitality is less in evidence in many European jurisdictions.

What’s interesting, though, is that 3Com’s H3C, which HP now owns, is said to be well positioned to benefit from booming smart-grid expenditures in China. As the 3Com integration proceeds, HP’s tune on the smart grid might change.

Examining Analogies Between Internet and Smart Grid

In the summary paragraph of a perspective piece he wrote for Greentech Grid, John Steinberg, the CEO of EcoFactor, makes the following claim:

The Internet, the growing importance of the user experience, and the entrance of large tech companies should all be seen as good omens for the future of the smart grid.  These trends will lead to better products and services, which will in turn drive consumer adoption. And consumer adoption will be the key to fulfilling the environmental and economic potential of the smart grid.

For the most part, I agree with Steinberg, though, as the CEO of a software-as-a-service (SaaS) platform vendor offering consumer-oriented smart-grid solutions, he admittedly has a vested interest in promoting his argument.

I am perhaps not as sanguine as Steinberg on two points. In his commentary, he compares the early Internet service providers and their walled gardens — the likes of CompuServe, Prodigy, and AOL — with today’s utilities. His argument is that just as the Internet occasioned the demise of walled gardens and their purveyors, Internet-based technologies providing the communications infrastructure for the smart grid will bring about a similar fate for utilities that resist demands to provide consumers with third-party, energy- and money-saving applications and services.

To a point, I accept that argument. That said, I’m not entirely certain that the aforementioned service providers are completely analogous to today’s utilities. The utility sector is probably the most highly regulated of any industry in the Western world. Any change that comes to the industry will not happen overnight. While I agree that Internet technology will unleash tremendous innovation and valuable services for energy consumers, I suspect the pace of change in the utility sector will be significantly slower than what we experienced in the Internet ecosystem.

In a similar vein, Steinberg asserts that incursions into the smart grid by information-technlogy giants Google, Cisco, and Microsoft represent both validation of the smart-grid market opportunity and a sign that said market has reached a critical phase of maturation. I accept the first premise, but I am skeptical of the second.

Cisco, for example, recognizes the vast growth potential of the smart grid, but it has yet to find a means of tapping into it meaningfully.  Cisco will figure it out, I’m sure, but the company is still learning about the energy business and utilities. It’s a radically different space than anything Cisco has tacked previously, and I think the leadership is Cisco is realizing that it must listen and learn before it prescribes nostrums.

Meanwhile, Google and Microsoft are making similarly measured moves.

There’s real promise in the smart grid, and liberating change will come to the utility industry. However, as Gartner might say, technology vendors seeking fortune in the space should expect to travel through a trough of disillusionment before ascending a slope of enlightenment.

Will Electric Cars Redeem the Smart Grid’s Reputation?

Michael Kanellos of Greentech Media has written a commentary suggesting that electric vehicles might be the silver bullet that overcomes public apathy and outright antagonism toward smart meters and the smart grid.

After explaining that utilities in the United States and Australia have discovered that consumers aren’t enamored of the concept of demand response or of the higher electricity bills that frequently accompany smart-meter rollouts, Kannellos writes the following:

Even avid greenies seem blasé. In Canada, Toronto Hydro has scrutinized the behavior of around 115,000 customers on time-of-use plans. Has cut rate power at night goosed them to shift their behavior? “No. Not really,” said Toronto’s Karen France during a meeting at eMeter’s customer event.

Matt Golden, co-founder of retrofitter/software vendor Recurve, told me recently that the company has installed some energy management dashboards in the homes of clients. After two weeks, the frequency of interaction with the dashboards drops considerably. There have been success stories — customers surveyed in a test conducted by Silver Spring Networks and Oklahoma Gas and Electric were overwhelmingly surprised to learn about their rate of energy consumption — but people seem to be dozing off on what is a very important technology.

So what’s the problem? Utilities and building management outfits are asking people to change their behavior to save pennies. PG&E’s residential rates range from 11 to 49 cents a kilowatt hour. Will you alter your laundry schedule to save 37 cents? Toronto’s spread is 9.9 cents at peak and 4.4 at night.

Indeed, Kanellos identifies the problem, in Toronto and elsewhere. But the problem runs deeper than that, and Kanellos, to his credit, addresses it.

A little later in his commentary, Kanellos writes that consumers are wary of smart meters, and of the larger smart grid, because they suspect strongly that utilities will be the only parties to benefit from them. There’s some truth to that assessment, too, especially when one considers utilities’ operational costs savings: no more truck rolls for meter reading or for shutting down or activating service, plus the capacity to shave peak demand and to avoid having to add costly electricity-generation capacity.

For the consumer? Well, the benefits aren’t so clear, and certainly not as compelling. In some jurisdictions, careful consumer ministrations to smart meters mean only the difference between small increases in electricity bills and larger hikes.

Kanellos thinks electric cars will enhance the consumer appeal of the smart grid. To his way of thinking, electric cars are destined to be a huge hit with consumers, who will come to understand that the smart grid, including charging stations at home and out in the wider community, is essential to the sustenance of their new vehicles. At that point, Kanellos believes, consumers will grasp the importance and value of the smart grid, and they’ll buy into the program the utilities are pushing.

Maybe Kanellos is right. Perhaps electric vehicles will rescue the smart grid from public apathy and infamy. Then again, electric cars will not become ubiquitous overnight. A year from now, even a few years from now, not everybody will have one.

In the meantime, the braintrusts at utilities, regulators, and smart-grid vendors will have to devise other means of engaging, rather than alienating, electricity consumers.

DOE Sounds Alarm on Rare-Earth Metals for Cleantech

The devil is in the details. We’ve all heard the saying, and we know what it means. It’s great to have a big picture and a bold plan, but getting the details and execution right ensures our success.

As the U.S. and other Western countries pursue a future in which clean technologies and renewable energy will play integral roles in economic growth, industrial strategy, environmental sustainability, and societal wellbeing, the details will be increasingly important.

Here’s a detail that’s been overlooked until recently: China produces more than 95 percent of the global supply of rare-earth metals. Some reports suggest that China controls, through ownership of foreign sources as well as those on its own territory, nearly 100 percent of the global market. That’s an important detail, because rare-earth metals are essential ingredients in a wide range of technology products.

Rare earths are integral to the development and manufacture of a wide range of technologies and products used in medicine, consumer electronics, mobile phones, computer networking, data storage, and — last but not least — cleantech (wind turbines, photovoltaics, HVEC batteries and engines, among others).

Without an adequate supply of rare-earth metals, or suitable substitutes for them, the future of cleantech (and many other kinds of technology, too) is compromised.

All of which explains why the U.S. Department of Energy (DOE) yesterday issued a request for information (RFI) pursuant to development of “its first-ever strategic plan for addressing the role of rare earth and other materials in energy technologies and processes.”  The purpose of the RFI is stated clearly:

The purpose of this RFI is to solicit feedback from industry, academia, research laboratories, government agencies, and other stakeholders on issues related to the demand, supply, use, and costs of rare earth metals and other materials used in the energy sector. DOE is specifically interested in information on rare earth elements (e.g., lanthanum, cerium, neodymium, terbium, europium, samarium, dysprosium and ytterbium), gallium, lithium, cobalt, indium, tellurium and platinum group metals, as well as other materials of interest identified by the respondents to this request.

During the Cold War, the U.S. pursued a strategic interest in rare-earth metals, ensuring their exploration, mining, separation, refinement, alloying, and manufacture domestically and in countries such as Brazil, South Africa, Canada, and elsewhere. Then, the Cold War ended, and the focus shifted, primarily because rare-earth metals had been strategic defense considerations in the showdown with the U.S.S.R, which no longer existed. With no need to worry about the U.S.S.R., and cleantech not yet considered strategically important, rare-earth metals were deemphasized.

In the interim, however, cleantech — and especially renewable energy — has become a top-of-mind strategic concern. During the same period, China — emerging as the global manufacturing foundry for a panoply of technology products — seized control of the market for rare-earth metals. China realizes that demand for those key ingredients outstrips supply, and it has been increasingly taking measures to restrict their export. China’s goal, it seems, is not only to control the market for rare-earth metals, but also to control the downstream markets for the products and technologies made from them.

That is why the DOE has issued an RFI and why it feels the urgent need to draft a strategic plan. In a keynote address at the Technology and Rare Earth Metals Conference 2010, David Sandalow, the DOE’s assistant secretary for policy and International affairs, said that it was imperative to globalize supply chains, to develop substitutes for rare-earth metals, and “to promote recycling, re-use and more efficient use of strategic materials.”

Fortunately, rare-earth materials aren’t especially rare. They’re widely found in the earth’s crust. The problem isn’t so much that they can’t be found, but that they’re not being mined, refined, processed, and manufactured outside China. With crisis comes opportunity, of course, and several mining companies in the U.S.A. have plans to reopen abandoned or disused mines.

It’s worth noting that rare-earth materials differ in their commercial applicability and market value. Although not openly traded — not yet, anyway — recent valuations in China suggest “heavy” rare-earth metals are worth more than their “light” rare-earth counterparts. As mentioned in an article in The Australian, covering the recent Toronto convention of the Prospectors & Developers Association of Canada:

Among the “heavy” rare earths, europium (which gives you red on your TV or computer screen) was bringing over $US475/kg; terbium (used in magnets) was worth at least $US340/kg; and dysprosium (magnets and lasers) could bring upwards of $US107/kg.

By contrast, the “light” rare earths are in a different price bracket. Lanthanum (used in re-chargeable batteries) brought under $US6/kg, cerium (used in glass) under $US4/kg, with neodymium (magnets, lasers, glass) fetching around $US14/kg.

If the concerns of the DOE are well founded, market prices for all of the above will rise. If you’re in cleantech or information-technology hardware vendor, you’ll probably want to track these developments closely.

It’s interesting to note that China has used its rare-earth advantage as a lever to draw companies and projects onto its soil. Facing the threat of supply bottlenecks and export controls, some U.S. and European technology vendors have relocated some initiatives to China.

Understanding Implications of China’s Technology Ambitions

Today I want to expand on ideas I have presented previously. I think these concepts, relating to China’s industrial strategy for its technology sector, are important for readers to understand and internalize. Eventually, they will affect most o us, one way or another.

I’ve written often about how the Western companies seeking to sell their products in China confront a genuine dilemma. They really must choose between two outcomes that are likely to be undesirable: They can enter the Chinese market at the risk of losing intellectual property and long-term competitive advantage, or they can refrain from playing in China, perhaps retaining their IP and competitive advantage in other markets but surrendering short-term gains in China to others.

In the end, no matter what path they take, they still might find themselves threatened on the global stage by vendors from China.

Most public companies, with institutional investors breathing down their necks, will plunge headlong into China for the near-term pop. Most of these companies, facing quarterly pressures to deliver results, will not consider, or will choose to studiously ignore, the long-term implications of their decision to play in China by China’s rules. In their minds, they have no choice but to play the game. They don’t want to explain to shareholders why they aren’t chasing what is ostensibly the biggest technology growth market in the world.

Other companies, admittedly in the minority, will choose not to play in China or will limit their exposure there. In limiting their exposure, they’ll also limit their near-term gains, but they’ll also keep most of their core IP and have a better chance of holding off Chinese technology competitors when those players seek hegemony beyond their home base.

And make no mistake: China is pursuing nationalist mercantilism as industrial strategy for its technology sector. China aspirations for the technology sector aren’t limited to its current stereotype as the world’s low-cost manufacturer of consumer electronics, computers, and networking gear. For China, development of its technology sector — encompassing cleantech as well as strategic aspects of information technology and communications — is integral to its long-term economic, industrial, political, and social stability.

China goal isn’t to let Google, Cisco, HP, Applied Materials, Microsoft, Apple, and Nokia boost their stock prices on Chinese’s sales. Instead, China wishes to create its own Google, Ciscos, Applied Materials. And China has created an industrial policy, within the framework of a concept called “indigenous innovation,” to achieve that goal.

Toward that end, China not only promotes companies, such as Huawei, that it wants to grow into world leaders, but it also develops a regulatory structure that inhibits and restricts that gains that foreign companies can make on its soil. In this respect, the aim is to ensure that Chinese companies dominate China’s markets, as Baidu did against Google, and as Huawei is doing against HP and Cisco.

With is “China Out” strategy, 3Com’s H3C master plan was not dissimilar from the national technology blueprint of China itself. There are differences, of course. 3Com is but one company, and it’s less Chinese now, after being bought by HP, than it was before, as an entity that grew from 3Com’s joint venture with Huawei. What’s more, 3Com has less power and fewer resources at its disposal. It essentially wanted to win early customers with low-cost, good-quality products in China, then use economies of scale and aggressive pricing to capture market share elsewhere.

China wants to do essentially the same thing for its technology companies, but it has tremendous power, influence, and resources at its disposal. It can use regulations, policies, and prohibitions to condition the result it desires. It can make life easier for indigenous companies while making life much harder for Western firms operating on Chinese soil. It can devise and enforce rules that require Western companies to disclose intellectual property or other trade secrets as conditions of selling products or winning accounts in the country. It can, and does, establish intellectual-property laws that favor the home side.

I think it’s critical for denizens of the technology industry to fully appreciate what China is trying to achieve. This is not business as usual.

3Com Concerned About China’s “Indigenous Innovation”

In a DC Velocity article in which a senior executive of the U.S.-China Business Council says conditions for foreign companies doing business in China have reached a new low, a quote from a 3Com spokesperson makes for interesting reading.

3Com is a networking vendor that manufactures nearly all its products in China. Most of its design and development is done there, too. As such, it’s notable that 3Com should have concerns about China’s “indigenous innovation” polices, which are intended to boost the research, development, and manufacture of Chinese companies — relative to foreign competitors — in computing, software, telecommunications, and cleantech.

One might think that 3Com, essentially a Chinese company with an American moniker, wouldn’t have an objection to China’s industrial policy. Nonetheless, 3Com is concerned, as the following paragraph from the DC Velocity makes clear:

Not only does that policy erect unfair trade barriers, it also puts intellectual property at risk, said Misty Rutter, trade compliance director for 3Com, a telecom hardware maker that manufactures almost exclusively in China. Rutter warned that the process of certifying a product’s compliance with the “indigenous innovation” policy exposes design and other intellectual property to Chinese government scrutiny—and potentially, to piracy.

HP’s pending acquisition of 3Com has been held up, awaiting official approval from China’s Ministry of Commerce (MOFCOM). If 3Com has concerns that China’s indigenous innovation might compromise its intellectual property, one can only wonder what HP will make of the situation.