Shrinking Cities


One of the biggest challenges for the world this century is how to accommodate the hundreds of millions of people who will flock to cities, especially in emerging economies. Coping with this human torrent will be fearsomely difficult but at least the problem is widely acknowledged. That is not true of another pressing urban dilemma: what to do with cities that are losing people.They are hardly unusual. Almost one in ten American cities is shrinking. So are more than a third of German ones and the number is growing. Although Japan’s biggest cities are thriving, large numbers of its smaller ones are collapsing. Several South Korean cities have begun to decline a trend that will speed up unless couples can somehow be persuaded to have more babies. Next will come China, where the force of rapid urbanisation will eventually be overwhelmed by the greater power of demographic contraction. China’s total urban population is expected to peak by mid-century; older industrial boom towns are already on a downward slope.

An abandoned street containing a rotting nursery or primary school is a sad sight. And declining cities have more than visual problems. Disused buildings deter investors and attract criminals; superfluous infrastructure is costly to maintain; ambitious workers may refuse to move to places where the potential clientele is shrinking. Where cities are economically self-sufficient, a smaller working population means a fragile base on which to balance hefty pension obligations. That is why Detroit went bust. So it is unsurprising that governments often try to shore up their crumbling smaller cities. Japan recently announced tax cuts for firms that are willing to move their headquarters out of thriving Tokyo. Office parks, art museums and tram lines have been built in troubled American and European cities, on the assumption that if you build it, people will come. For the most part, they will not. Worse, the attempt to draw workers back to shrinking cities is misconceived. People move from smaller to larger cities in countries like Germany and Japan because the biggest conurbations have stronger economies, with a greater variety of better-paying jobs. The technological revolution, which was once expected to overturn the tyranny of distance, has in fact encouraged workers to cluster together and share clever ideas. Britain’s productivity is pitiful these days (see article) but it is almost one-third higher in London than elsewhere.  Policies meant to counteract the dominance of big cities are not just doomed to fail but can actually be counter-productive. The most successful metropolises should be encouraged to expand by stripping away planning restrictions. If housing were more plentiful in the bigger conurbations it would be cheaper, and the residents of declining cities, who often have little housing equity, would find it easier to move to them. Rent controls and rules that give local people priority in public housing should go, too: they harm the poor by locking them into unproductive places.

A new kind of garden city

Even so, many people will stay stuck in shrinking cities, which will grow steadily older. Better transport links to big cities will help some. But a great many cannot be revived. In such cases the best policy is to acquire empty offices and homes, knock them down and return the land to nature—something that has worked in the east German city of Dessau-Rosslau and in Pittsburgh in America. That will require money and new habits of mind. Planners are expert at making cities work better as they grow. Keeping them healthy as they shrink is just as noble.

In the US at least, cities house poor people, often racial minorities or from lower classes, who global capitalism no longer wants to employ. The excesses of finance with harmful if not predatory mortgages, ended up kicking people out their houses, which become vacant and vandalized, driving people away from cities. Who will pay to restore or repair them? Excessive wealth inequality may favor a few high lifestyle metros, but also prevent capital from investing in places where the those who control capital seek only to exploit. Growing populations may keep property values inflated, but low and stagnant wages will not make cities liveable. Our biggest crisis is how to employ everyone, or if that is becoming more obsolete, to ensure that the productivity of the society is widely shared. Whether that happens in large metros, smaller cities or even repopulated and renewed farmlands is less important than that it happens at all.

Cities rise and fall. Take the former City States of Rome and Venice as two significant examples. This pattern will continue and the global pattern of key cities will also shift. Cities with strong economic drivers will prevail. Cities with attractive natural qualities will prevail. Cities which are well marketed and offer a better quality of life will prevail. Cities in countries whose governments offer significant financial and taxation advantages will prevail. Competition will always prevail at the Local, Regional, State, National and International level. Larger cities with characteristics such as those above will continue to prosper provided they can compete. Smaller centres located within short travel times to such cities will also benefit and transport technology here can play a large role. In addition locations with good cyber connections to people in such centres also have potential. The urban settlements patterns of the past and today will be quite different to those of tomorrow. Government will always have a regulatory role in ensuring that citizens are safe and prosperous and make a fair contribution to society. People will migrate to seek a better life. Those people captive to their own predicament and their country’s policies will be unable to move and policies of countries may restrict immigration. Humanity adapts.

By Naved Jafry

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Advent Of A Sustainable Economy


There is a symbolic movement of our times that is promising a new lifestyle. A lifestyle that is not only transforming the vision of the future but changing the way we do business and invest. It is a possibility where the energy is produced and consumed sustainably, the environment is clean, and all of nature is in its healthy state. I know this could sound very idealistic when we are constantly bombarded by bad news. But if we look deeper the sustainable revolution has inspired and compelled governments and corporations to make goods and services such as clean power, extend green tax credits and encourage local recycling mandates that affect our day to day lives. This trend has also resulted in a new race to create better and more efficient cars and buildings which consume less energy and resources. New and advanced methods of growing food, and developing medications with organic ingredients are influencing nutrition and health care sectors as well. More humane procedures, like using fewer chemicals and minimizing animal testing’s has been advocated by consumers and activists alike. Even Local counties and schools are encouraging their constituents to recycle and conserve, this has resulted in many of us reusing shopping bags, using public transportation paying a premium for locally grown organic food and driving a fuel-efficient car.

But then we must also pay attention as to who are joining the movement to “LOOK” good and who are actually participating to” DO” good. Green washing is another technique where many may use to fit and conform into the new trend. Following the investments and the money chasing green projects is one way to keep abreast with what’s happening in the world of sustainability. As an entrepreneur or consumer pputting your money where your heart is another way to ensure the brightest idea will not get anywhere with the wrong funders. Don’t get intimidated by traditional start-ups and their glamorous image. You are not in the business of looking good, you’re in the business of doing good! And this is particularly what makes you stand out from the crowd. Invest in your purpose, put your heart and mind to nurture that big idea. Slowly, but surely, you can get the ball rolling further than you would have ever imagined.

Many VC monies may come with lots of strings attached and loss of creative liberty to steer businesses in the right direction hence not getting get stuck on the idea of VCs and cash in the bank but with key partnerships and  resources instead could be essential. People, skills, relationships that bring the right mix together to co-create things which at the end of the day may increase capacity to help move businesses further that otherwise would have been paid for. The right partners will embark on a journey with you because they believe in what you do and will give time, skills, networks and passion. That may be worth a whole lot than just cash!. If we must need to go the traditional route and go for the big money – VCs, grants etc – being picky about who we are pitching to may be critical. Research the VC’s or foundation’s history of giving, their pre-existing conditions and their relationship with their beneficiaries. Before pitching, try to meet with them informally and see if you click on the same things. Do you trust that person after you have left the meeting? Would they be an enjoyable teammate? Do you want to share more with them and value their advice, beyond just the business side of things? If your answer is yes, then go for it. Investments will come pouring.

In short align your values and stay true to yourself, your mission and your vision.  Never compromise and never lose sight of the purpose of your business, organizations or projects. Be authentic in everything you do!  Authenticity reinforces your purpose. Funding will only make it flourish. But if the Mission of sustainability is not there then there is nothing that can flourish.

Curated By Naved Jafry & Garson Silvers

Tragedy Of The Homeless 



Every year over 70 million rural migrats are moving into urban centers around the world. Unfortunately most of them land up  into the slums of their new cities.  In such a situation can the buy-one-give-one model work for housing? Imagine if every slumdweller or homeless family on earth had their fully paid home. Thanks to our new social concious buyers Many such projects and proposals are well under way to make that a reality. Buy A Luxury Condo or home, Give A Slum Dweller A New Home is a reality and is launched one of the first partnership in the U.S. and India. Buy a new luxury condo in San Diego, and you can help build a home for a family currently living in a slum in Manila or Mumbai. The philosophy and the social impact behind this has inspired many developers a one-for-one real estate gifting model,” says Pete Dupuis, who co-founded World Housing with his business partner Sid Landolt in 2013, beginning with a development in Vancouver.

  

The business model is simple in theory: Real estate developers donate a portion of their marketing budget to the nonprofit, and then the nonprofit creates local factories that build low-cost homes in the developing world. Each home, which can cost about $5,000 in a place like Manila or Mumbai, is part of a bigger neighborhood with a playground, community garden, and other common areas. “Our mission at World Housing is to create social change by connecting the world to be a better community, so the idea of ‘community’ is foundational to how we think, design, and create our homes,” says Dupuis. In Cambodia, where the nonprofit has been building homes for the last two years, they’ve partnered with Cambodia Children’s Fund to help provide services like health care, nutrition, and education for residents.The team’s new project in Manila was inspired in part by a trip Dupuis took to a slum called Smokey Mountain, where about 300,000 people live in shacks in a landfill. “The abject poverty has left a lasting impression on how I saw the world,” he says. “However, the one thing I discovered was the welcoming and hopeful nature of the people there. One of my best memories was playing a game of pool in the middle of a slum, on a table reconstructed from garbage. The people made me feel like part of their family and I made a promise to myself that when World Housing opened we would return to help the people there.”

In India, anyone who buys a condo or house at any of its new developments in and near Mumbai, Houston and Tanzania called micro Cities will help change the lives of a family locally. The Bosa condo development in San Diego will fund 64 homes in Manila, housing 300 people.
The condos, which will be available in 2017, are polar opposites of the simple houses under construction in Manila, with amenities like ocean views, a pool and sauna, and even potentially an indoor dog run. But the developer thinks that buyers will respond to the idea of doing good as an added perk. “We hope to set a new norm in residential development and inspire buyers, who will be the driving force in building this community,” says Nat Bosa, president of Bosa Development, the company behind Pacific Gate. Companies such as Zeons Realty which builds off the grid Micro-Cities also donates to the local community in which it starts any project.  “We believe it will attract domestic and international buyers, so it is a natural progression for the company to expand its philanthropic footprint within the community it does business,” Garson Silvers says CEO for Zeons. World Housing has housed 2,000 people so far, and hopes to reach 30,000 by 2020. Bosa believes the model may start to spread in the development community. “As the industry continues to grow we believe this model of giving will also grow,” he says. “There’s nothing more powerful than having owners and developers see the physical impact they are having on a global scale. They are affecting lives in the most profound way.”

By Naved Jafry

Reference : A. Peters

IMPACTS TO CITY ECONOMICS THROUGH CLIMATE CHANGE

climate change 3Cities’ roles in fighting climate change have been showcased in recent years. In July, mayors from around the world met at the Vatican to discuss climate change. Last year, a report from the C40 Cities Climate Leadership Group found that, on their own, cities had the potential to cut 8 billion tons of greenhouse gas emissions by 2050. In August, former New York City Mayor Michael Bloomberg wrote in Foreign Policy that cities are “key” to fighting climate change.
Many of the most important new initiatives of this century — from the smoking ban adopted in New York City to the bus rapid transit system pioneered in Bogotá have emerged from cities,” Bloomberg wrote. “Mayors are turning their city halls into policy labs, conducting experiments on a grand scale and implementing large-scale ideas to address problems, such as climate change, that often divide and paralyze national governments. Cities around the world have suffered severely from climate change and pollution, so it makes sense that some of them are starting to find new ways to tackle climate change. Dry weather and major air pollution has made Santiago, Chile home to some of the worst air in the world. Beijing, China also regularly suffers from dangerous air pollution while Superstorm Sandy hit New York City hard.
climate change 5

Making cities greener could save a lot of, well, green, according to a new report. The report, published Tuesday by the New Climate Economy, found that if cities around the world implemented certain carbon-reducing strategies — including making buildings more efficient and investing in public transportation they could save a combined total of $17 trillion by 2050. The report looked at actions such as “aggressively” deploying high-efficiency lighting, “ambitiously” installing solar on buildings, increasing the fraction of methane captured from landfills, and expanding public transit. It found that, if all of the measures were implemented, cities would reduce their combined greenhouse gas emissions by 3.7 metric gigatons of carbon dioxide equivalent by 2030. That’s more, the report notes, than the annual emissions of India.
climate change 4Nick Godfrey, head of policy and urban development at the New Climate Economy, said in a statement that the amount of money saved by cities could be even higher. US$17 trillion in savings is actually a very conservative estimate, because it only looks at direct energy savings generated from investments which are a small proportion of the wider social, economic, and environmental benefit. The report recommends that cities make commitments to undertake these carbon-saving initiatives by 2020. On the national level, countries should implement support structures that incentivize city-wide efforts to reduce emissions. The international level, at least $500 million should be made available for cities to expand existing efforts to tackle climate change. The international community will be key in helping cities in developing nations find the capital they need to make these changes investing in improving the creditworthiness of these countries, for instance, can help them raise needed funds. That tactic has worked with cities in Uganda and Peru, the report points out. Overall there is now an increasing evidence that emissions can decrease while economies continue to grow. Hence major cities committed to fighting climate change are on a trajectory to be feasible with good economics.

DANGERS TO THE FUTURE PROGRESS OF SUSTAINABLE TECHNOLOGIES

solar 2Solar perovskite cells, patterned with gold electrodes, await tests that
measure their efficiency at converting sunlight into electricity. (Plamen Petkov)

In the 1950s vertically integrated giants such as IBM and AT&T evolved its telecommunication and semiconductor businesses by having their global network of suppliers compete for its business at every step of the value chain including and not limited to redesigning components and dramatically improve the performance and cost of electronics. But if you look at how clustered sustainable technologies supply chains in China work, it demonstrates that it will only reinforce the industry’s focus on today’s technology, rather than allow competition to drive tomorrow’s advances.

For instances the next generation technologies of solar and LED are developed at a slower pace in laboratories all over instead of today’s promising technologies such as the solar perovskites that could beat silicon on efficiencies and costs many folds if ramped up to scale production. But the more the solar/LED industry concentrates and calcifies in China, the harder such a disruption will happen. By subsidizing its domestic manufacturers, China also subsidizes clean energy deployment around the world. But this sort of argument by pro-deployment activists suggests that China’s dominance in solar/LED manufacturing is a boon to the world. In the near term, they may be right as the solar deployment is booming around the world, fuelled by cheap Chinese panels. But in the long term, today’s silicon/LED technologies will not displace even a substantial fraction of fossil fuel energy. This near-term/long-term disparity stems from the economics of electricity grids as solar’s/LED’s value declines as its penetration on the grid increases.

solar ledTo look into this view a little deeper there are two reasons why dramatically superior technologies will likely not emerge if the solar/LED industry remains concentrated in China. Firstly, Chinese firms are more likely to pursue incremental process improvements and cost reduction e.g., optimizing factory layouts, strengthening supply chains rather than product innovation. Some might argue that this is a dated caricature of a newly dynamic Chinese innovation complex which benefits from lavish state-funded laboratories (cf. Chinese “State Key Labs”) and improved coordination among universities, research institutes, and corporations. Still, fundamental technology researchers in China are struggling to close the gap with Western counterparts, and most major manufacturers have displayed little interest in seriously funding alternative technologies. The second reason for pessimism is that if innovation flourishes only in a Chinese-dominated industry increases, vertical integration will eventually stifle disruptive change. For example China dominates not only the panel manufacturing business, but has consolidated the entire upstream supply chain within its borders, from polysilicon to solar cell production. Where the supply chain is not formally vertically integrated, it is de facto monolithic, simply by virtue of colocation in massive industrial centers like the Yangtze River Delta Economic Zone.

solarFrom 2006 to 2011, venture capitalists invested over $25 billion in clean technologies and lost over half their money needless to say, VC interest in new solar start-ups today is minimal. But there still appears to be a silver lining when large U.S. companies can play a crucial role in driving innovation in solar and sustainable technologies. Firms like Applied Materials and Dupont still achieve levels of quality that the Chinese have been unable to replicate (in solar cell production equipment and materials, respectively), giving the United States a toehold in the solar supply chain. Moreover, two large solar panel makers First Solar and Sunpower are American and employ more advanced technologies than their Chinese competitors. And SolarCity, a downstream residential solar installer, recently acquired an innovative solar technology company and will produce its own panels in Buffalo, New York. These American solar players are far more amenable than Chinese counterparts to exploring new technologies for commercialization, and they have the sector expertise, manufacturing prowess, and project pipeline to bring new solar technology to market where VCs failed. State incentives such as those that attracted SolarCity to New York, can support American companies to drive local economies. I would strongly recommend more federal research funding to be aimed at fostering partnerships between major American firms and cutting-edge research in universities and national research laboratories. Ideally we can look forward to a time when sustainable technologies such as solar is an industry waiting to be disrupted in the US and eventually worldwide.

How Making Solar Accesseble & Affordable To All Can Change The Energy Future

solar financing      We all would love to see free limitless electricity generated by the sun. But while it’s great to see large homes owned by wealthy pioneers being solar-powered, rooftop solar should be accessible to people across the socio-economic spectrum everywhere. But putting solar on all of these different roofs is currently a serious challenge. Even with lowered PV costs and the prevalence of third-party financing programs, solar is largely out of reach for many low-income families. Many are renters who do not own their homes, putting them at the mercy of their landlord. For those that do own their homes, few have enough tax liability to take full advantage of federal and state tax incentives for rooftop solar. That’s largely a moot point anyway, since even with incentives the steep upfront cost of rooftop solar puts a PV system financially out of reach for low-income families. That’s where third-party leasing can come in, but many low-income families have low credit scores and most solar leasing companies require a higher credit score. It’s one potential financial barrier after another.
Fortunately, there are groups around the world working to overcome these barriers to market participation and ultimately bring solar to low-income households. Giving low-income families access to solar PV systems can help lower their utility bills, provide employment opportunities, and bring about an element of environmental and economic justice.

Saving Money
Low-income families spend over twice the proportion of their total income on energy bills than the average person with a higher income. When low-income families have high energy bills one of the first thing they often skimp on is food. Researchers from the Boston Medical Center have found that children in energy-insecure households don’t get enough food, have poorer health, and are more prone to developmental problems. One way to lower energy bills and keep food on the table is to power homes with solar photovoltaics.
I believe that Low-income families pay into the rebate pool like everyone else. Yet often, even with rebates, they can’t afford a solar home system. Grid Alternatives, or simply Grid, as it is fondly called, is a nonprofit organization providing low- to no-cost PV systems to low-income families throughout California, Colorado, New York, New Jersey, and Connecticut. Homeowners who earn 80 percent or less of the median income and have a solar-appropriate roof qualify for a Grid Alternatives PV system. “We see people save an average of 50 to 75 percent off their electric bill. Money that can go towards paying their mortgage, putting food on the table, or saving for college.
Grid works with local partners to find qualifying families. The families do not have to put any money down, but do have to contribute 16 hours of sweat equity. They can work in the Grid office, help on the installation, or even cook lunch for the installation volunteers. They then pay $0.02 per kilowatt-hour for what their system produces. It’s a small price to pay for leasing the system, often adding up to only about $100 per year, but according to Chuck Watkins, executive director of Grid Alternatives–Colorado, “we want the homeowners highly engaged with their system and aware of their energy usage.”
solar saving graphA similar organization, Citizens Energy, provides free solar PV systems that reduce homeowners’ electricity costs by 40 to 50 percent in the Imperial Valley of California, an area with the highest unemployment rate in the country. With temperatures in the area climbing to 120 degrees Fahrenheit, homeowners can have a difficult time paying for the electricity to run their cooling systems. Citizens Energy uses 50 percent of its profits from its share of the Sunrise Powerlink high-voltage transmission line that brings renewable energy to the San Diego region to purchase, install, and maintain the systems. The homeowner signs a 20-year lease only after they receive a free energy audit and weatherization services. One of the 200 homeowners to receive the free PV system saw her monthly summer electricity bill go from $350 to $85.
A statewide program in California is also helping low-income families. SASH (Single-family Affordable Solar Homes) provides fully subsidized 1 kW systems to very-low-income households (50 percent or below the area median income), and highly subsidized systems to other low-income households. The incentives for the subsidized systems range from $4.75 to $7.00 per watt, depending on the customer’s utility rate schedule and tax liability. Incentives are higher for customers who cannot take advantage of the ITC. Over 3,600 systems have been installed, and participating families’ electricity bills have been reduced by approximately 80 percent.
Green Jobs
Another benefit to bringing solar access to low-income families is increasing employment opportunities. Low-income communities often have high rates of unemployment. Yet more than 140,000 people are employed in the solar industry, more than half of them in installation jobs that can’t ever be outsourced. That’s a drop in the bucket of the 46.5 million Americans currently living in poverty, but with solar installations growing at a rate of 40 percent, those jobs are going to keep growing as well. Grid Alternatives, for its part, installs its systems with local volunteers and partners with job training organizations to provide hands-on field experience students need to get certified as solar installers and to get jobs. Partners include community colleges and vocational schools, the Center for Employment Training, YouthBuild, Veterans Green Jobs, and Green City Force.
At a recent installation in Carbondale, Colorado, twelve local volunteers along with the homeowner helped install a 3.6 kW system for Dan and Pam Rosenthal.  Volunteer comes out to at least four to six installs where they can get valuable hands-on experience as well as experience in leading crews, and a lot of our team leaders end up getting employed in the industry.

Environmental Justice
Clean energy access for low-income Americans is not just an issue of economics, but an issue of justice, as well. Lower-income people are more susceptible to the negative impacts of climate change, may be more affected by urban pollution, and face health issues from living closer to coal plants. Often times low-income families are the ones most affected by pollution but with solar in the mix it’s nice to see that they too can be part of the climate change solution.
Even more important is that the new systems are estimated to save 75 percent off their monthly electric bill each month along with the amount of CO2 that families will be offsetting in the lifetime of their system, helping communities reach its carbon footprint goals.
Over all I think cities around the world should embark on a minimum goal of generating 35 percent of its electricity by renewable energy by 2020. It’s a big goal but through participation from everyone, smart solar businesses can help erase the financial barriers to to the future of energy.

Can Transitioning Our Electricity Grid To Evolve Into A Shared Economy platform Such As Airbnb or Uber Work ?

shared revolutionAs Thomas Friedman reported in the New York Times, the shared economy is booming, with companies like Uber and Airbnb continuing to disrupt the incumbent taxi service and hotel sectors. The Ubers and Airbnbs of the world tap the huge value of underutilized assets and create millions of dollars of value for users in the process. Shared economy companies unbundle existing assets and enable value exchange out of those assets, with close to zero marginal capital cost since the users themselves own the actual physical assets, whether a car or a home. Could the electricity grid be next to go the way of a sharing economy?
For more than a century, the electric grid has relied almost exclusively on centralized infrastructure, such as large power plants and long-distance transmissions lines. But distributed energy resources (DERs)—and the customers buying, installing, and using them—are changing the economic landscape for the power sector. Energy efficiency, demand response, distributed generation such as rooftop solar, distributed storage such as batteries, smart thermostats, and more are poised to become the front lines of a sharing economy revolution for the grid. Shared economy solutions will help to increase asset utilization rates and improve consumer and overall system economics, just as they have for other sectors.
What’s been missing—so far—is a trusted, open peer-to-peer (P2P) platform for DERs to “play” in a shared economy. An independent platform underlies the success of many shared economy businesses. At its core, the platform monetizes trust and interconnection among market actors—a driver and a passenger, a homeowner and a visitor, and soon, a power producer and consumer—and allows users to both bypass the central incumbent (say a taxi service, hotel, or electric utility) and go through a new service provider (say Uber, Airbnb, or in the power sector, Google).
Now as millions gain experience and trust with Airbnb, Uber, and Lyft, they should reasonably ask, “Why couldn’t I share, sell or buy the energy services of consumer-owned and -sited DERs like rooftop solar panels or smart thermostats?” The answer may lie in emerging business models that enable 1) peer-to-peer sharing of the benefits of DERs, and 2) increased utilization of the electric system and DERs.
Peer-to-Peer Access
Peer-to-peer (P2P) platforms empower consumers to directly buy and list a diverse set of products and services. For example, Vacation Rental by Owner (VRBO) allows anyone who owns a vacation home to rent it out when not in use. VRBO creates revenue streams for the house owner, and expands accommodations options outside of traditional hotels to travelling consumers. Similarly, good old-fashioned weekly farmers markets bypass “centralized” supermarkets, bringing “distributed” local foods direct from farmers to consumers. In both cases, P2P platforms provide consumers direct access to and enhanced information about the source of diversified goods or services.
On the electricity side, this past April, Netherlands-based Vandebron (literally translated as “from the source”) launched a platform similar to VRBO, which allows individuals to buy electricity straight from a local farmer with excess electricity production from solar PV panels or biogas-to-power installations. Forget farm-to-table food; this is farm-to-meter power. The website allows you to pick from different producers, each featuring a high-quality picture and a small story about their farm, betting on the trust component to change how people pick their electricity producer. In this example, farmers receive a higher compensation from the platform per unit of electricity then they would selling their power to traditional utilities.
Likewise, California-based Mosaic offers private investors a P2P lending platform for solar power, although Mosaic aggregates investors to fund larger solar projects, so it may more accurately be described as a group-to-peer platform. Mosaic customers invest in solar projects sited on top of schools and other locations, and earn a rate of return that beats many investment vehicles in the market today. Revenue from the solar generation is shared between the investor and employed to offset the customer utility bill.
Increasing Asset Utilization
Any underutilized private asset is now a target for shared economy platforms, and that includes DERs.
Distributed Energy Resources
Take rooftop solar PV systems, for one example. For grid-connected customers with rooftop solar, the majority of whom are net metered, existing valuation and compensation mechanisms fail to capture or share many values among participants at the distribution edge or exacerbates asset utilization problems.
Net energy metering compensates PV system owners for the kWh production of their system, but may not reflect the full range of system values that DERs can provide. These values—including wholesale peak shaving (since solar PV output is often coincident with peak demand), relief of distribution system congestion, and emissions reductions—are potentially left on the table, while a shared economy solution could enable direct exchange of those values between consumers. Peers on the same congested distribution circuit could buy and sell energy services from DERs from one another, for example, providing relief for their feeder circuit.
For another example, consider unused DER siting locations such as south- and west-facing rooftops of multi-family buildings and commercial buildings. These are prime targets for shared economy DER products and services. Emerging tariffs such as Virtual Net Metering in California utility territories allow for sharing of these unused locations and the renewable energy they generate by allowing their value to bridge from building owner to tenant.
Bulk Power System
A P2P platform for DERs can also benefit the bulk power system.
In Thomas Edison’s grid, as with much of the grid today, central-station bulk generators with monopoly power deliver energy and information unilaterally through transmission, distribution, and metering networks to end users. According to the New York State Department of Public Service, “the bulk power system is designed to meet retail peak demand, which … tends to be 75% higher than average load. The total rate of system utilization is under 60 percent.” Similarly, SDG&E’s load factor has been steadily declining (to less than 50 percent in 2013).
With a growing difference between “base” and peak load—and central power assets that sit idle much of time, more or less called into use only to meet the peaks—the bulk power system’s decreasing load factor is a sign of increasing asset underutilization … just like the spare bedroom in your house that’s vacant most of the year, or the empty car seats so prevalent in Americans’ single-occupancy car commuting. That’s untapped value a shared economy P2P platform can access, including in the bulk power sector.
For example, optimally-deployed and dispatched DERs (ranging from energy efficiency and demand response to generation and storage) can shave peak demand, reducing the need for utilities to purchase and deliver expensive wholesale energy during peak demand periods. DERs have the potential to produce a smoother load curve, resulting in a smaller amplitude difference between “base” and peak load, and thus improving the grid’s load factor and improving the grid’s overall asset utilization rate. By enabling sharing of P2P DER energy services, the distribution system platform can more fully capture that economic opportunity.
P2P, But Not Without A Central Backbone
As decentralized DER markets emerge, the possibility that the power sector becomes a massive platform for shared economy businesses is real and exciting. As others have opined, the electricity consumer will quickly become a prosumer in a shared power economy, benefiting participants and non-participants alike. The question is how the incumbent grid can financially survive the coming energy system disruption, as it is a valuable component of the platform.
No P2P platform is without a centralized backbone. Whether Airbnb, Uber, or something as yet unknown for DERs, telecommunications and software infrastructure—and the electricity grid—is a critical enabler of a P2P sharing economy. This is true, not just to literally make the platform work, but also to provide consumers with both choice and reliability.
Can’t find a ride on Uber? Take your personal car, or use a car-sharing service, or call a taxi, or rent a car, or take public transportation. You’ve got options, including several “centralized” ones, and those options give you both choice and reliability. So it should be with power, too. A P2P sharing economy for DERs doesn’t obviate centralized power resources and the grid—it complements the grid to provide consumers with a more optimized set of choices and reliability.
P2P solutions are an exciting prospect, but other options, including grid-sourced power, will remain a piece of the puzzle that together offer the system reliability people and businesses demand of today’s electric power grid.
The Path Forward
Along with grid utilization improvements, the increased market adoption of decentralized energy resources creates new markets for democratized and transactive trading of power and information. In turn, the opportunity for trade creates opportunities for new business models to disrupt the current utility monopoly around power delivery.
The regulatory challenge and opportunity is to determine the best path forward to support innovation through markets, maintain gains in clean energy programs, and uphold regulatory compacts to provide reliable service at reasonable rates. Existing regulatory paradigms and utility systems are insufficient to enable the same type of information, payment, and market disruption that spawned the sharing economy. New distribution system platforms are under development in several jurisdictions, either leading—or being led by—the explosive growth of DERs.