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Be a Change Agent

Sweeping and irreversible changes are transforming the energy sector. Amory Lovins says those laboring in the industry must learn how to frame the issues.

Utilities must prepare to serve more engaged, energy thrifty customers. Meanwhile, the era of electric transport will explode upon us faster than many expect, according to Amory Lovins, the chief scientist and co-founder of Rocky Mountain Institute. He will kick off the Energy Times’ third Empowering Customers & Cities executive energy conference in Chicago November 7-8. He recently chatted with the Energy Times about major issues transforming the energy sector at a faster-than-anticipated pace. This is the second of a two-part series. Last week: Insurgents Rule, says Amory Lovins

ENERGY TIMES: The Trump administration is back-pedaling on a lot of clean energy and climate change initiatives that the Obama administration put in place. Is it irrelevant who occupies the White House?

LOVINS: We regulate utilities very largely at the state or local level. Decisions are driven much more by markets than by federal policy.  Beyond that, we have a system of government brilliantly designed to make large, fast changes impossible – in any direction.

ENERGY TIMES: Are there any other game-changers you’re tracking?

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Amory Lovins

LOVINS: Many.  And they’re not only on the supply side, nor are they all technologies.  To give a simple example, if you optimized the friction in the world’s pipe and duct systems, you’d save so much fan and pump energy that in principle you could save half the world’s coal-fired electricity. You get paybacks typically under a year with retrofits and immediately in new builds. It’s not a technology, it’s a design method.

Also, an important part of the market is the capital market, which tends to move even faster than shifts by customers or regulators. If the capital markets think your industry is being disrupted, they will move very quickly to de-capitalize you and put their money into the next big thing.  I think that’s already happening to both the electricity and the oil industries – but they don’t all realize it yet. Another item that I think many utilities haven’t quite digested is that customers are figuring out they can buy fewer electrons, use them more productively, produce their own, and even trade them with each other.  It’s generally a good idea to sell them what they want before someone else does.

ENERGY TIMES: Can you tell me whom you respect in the United States in the utility sector?  Who you think gets all this?

LOVINS: I’d rather not be that specific, partly because it would disclose some of the work we’re doing quietly with some utilities to help them figure all this out.  But it is an industry in transition, and different parts move at different speeds.  Groups like Edison Electric Institute  would do well to bring in the top executives of European utilities that have utterly changed their business model, to learn why they did it and how it’s working. A lot of what is starting to happen here has happened earlier elsewhere.  I’ve worked in about 65 countries, so I tend to see a lot of this elsewhere before it becomes obvious here.

ENERGY TIMES: What do you think of innovative small modular nuclear reactors and future fusion technologies?  Do you think they’ll ever be ready for prime time? 

LOVINS: No. Not in any market transaction.  The economics are fundamentally unworkable.  These are future technologies whose time has passed.  As a physicist, I think fusion is an interesting physics experiment, but I don’t see how it could ever make money. The fusion reactor we already have 150 million kilometers away is sufficient.

ENERGY TIMES: Do you believe electric vehicle adoption in America is going to ramp up and exceed expectations?

LOVINS: Yes.  And not only in America. Ultra-lightweight cars, better streamlining, and better tires can save half to two-thirds of the size and cost of the batteries or fuel cells, and thus greatly speed adoption of EVs.  If you monetize the grid value of smart-charging EV’s, that can re-pay up to half the total sticker price of the EV.       

ENERGY TIMES: Jeremy Rifkin at our conference last year was pretty negative about the prospects of warding off climate change.  It sounds like you’re pointing to a number of trends that are working. Do you think we’re on track to aggressively combat climate change, or does more still need to be implemented?

LOVINS: We do need to accelerate but we’re going in the right direction with the now three-year pause in carbon emission growth while the economy keeps growing several percent a year worldwide. China is the out-front leader in both efficiency and renewable deployment.  As you’ll see from our website, we have a great deal going on to create a complete, prosperous, secure low-carbon future and we occasionally do a real deep dive for the U.S. and China. Mostly we work on implementation. 

ENERGY TIMES: What would you advise somebody who is working in a utility that is slow to shift its policy and strategy along the lines we’ve been discussing?

LOVINS: Well, I would get totally up to speed on the kinds of topics we’ve been discussing, Marty, and keep up with it online.  I would look for like-minded people in and around the company. I would figure out how to frame issues and speak to the concerns of my colleagues about how to accelerate the transition in the company’s activities business model. Jack Welch said, “If the rate of change on the outside is greater than the rate of change on the inside, the end is near.”  I would want to make sure that that doesn’t apply to my company.

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