Utilities Going Small

Last month in Rio de Janeiro, I spoke at a conference of the non-profit Global Sustainable Electricity Partnership (GSEP), which may be the most disruptive and subversive organization you've probably never heard of. And I mean that as a compliment, because the baker's dozen of energy giants that are the group's members are challenging their own long-held business and technology models in ways that could dramatically benefit the global environment and economy in the very near future.

GSEP's members, covering all parts of the globe, manage about 75% of the world's developed electricity supply, so they clearly have the power (literally and figuratively) to change business-as-usual and are worth calling out by name: American Electric Power (USA); Comision Federal de Electricidad (Mexico); Electricite de France (France); Eletrobras (Brazil); ENEL (Italy); EuroSibEnergo (Russia); Hydro-Quebec (Canada); Iberdrola (Canada); JSC "RusHydro (Russia); Kansai Electric Power (Japan); RWE (Germany); State Grid (China); and Tokyo Electric Power (Japan).

Through small investments in GSEP projects, these high-voltage utilities are experimenting with generating energy from renewable feedstocks available locally, such as biogas from cattle manure in Uruguay; hybrid wind-diesel micro-grids in Argentina; solar powered water pumps and medical clinics in Africa; mini-hydro power in the Philippines; and distribution of tens of thousands of solar lanterns that provide light and charge cellphones and laptops all over the world.

What do these projects, and dozens more like them, have in common and what makes them potentially so disruptive? They're scalable, easily replicated, and distributed, meaning no need to build expensive grids and massive power plants to electrify the households of the world's 1.3 billion people that currently lack access to energy. And these technologies demonstrate that there are business models to accomplish the goal of providing energy to more people in more places much faster than designing, permitting, building and financing conventional large systems.

But given the long-proven business models of these major utilities, why are they not just doubling down on coal, gas, oil, nuclear, and large hydro? Consider the drought in parts of Brazil or California - - hydropower has become less reliable and climate change is likely to continue to exacerbate that problem. Consider Fukushima - - Japan and Germany have closed nuclear plants and made policy decisions to avoid those risks in the future. Consider coal - - cheap natural gas has quickly replaced coal in much of the US and elsewhere, but now even that fuel is under pressure from regulators concerned about water pollution, earthquakes, and leaking methane (not to mention places like Europe, where Russia uses gas supply as a political tool, making it less reliable than energy sources such as wind, solar, or biomass).

Make no mistake, as I spoke with the leaders of these energy companies I heard a consistent bias towards "all of the above" for their future business strategies, but there was also a unanimous and unequivocal opinion of the group that climate change and other sustainability challenges must be addressed by their companies and that there is no time to waste. Some were even wiling to embrace a price on carbon and the need for utilities to play a progressive role in the United Nations' efforts to secure a global agreement on climate change solutions.

To be sure, the leaders of the nations where these utilities operate will be listening to these same executives as climate negotiations continue and, possibly for the first time, hearing that new clean energy sources and technologies are not the stuff of expensive science fiction, but are practical, economically viable options for today. If that helps the world tackle our sustainability challenges in a meaningful way, we will have the innovators at GSEP to thank.