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June 30, 2008

The Internet’s Next Killer App

Fred Wilson, blogging about the economic disruption caused by high oil prices, says: "And the web clearly has a role to play in all of this too. More on that later."

I look forward, as always, to seeing what Fred has to say but a smart reader Rajesh Raut jumped the gun in a comment on my post Passing the BTU:

"Why do we need smart meters to use off peak electricity?

"Take a space heater, connect the on/off switch to a small computer with Wi/Fi access. Have the computer read a web page once an hour and if the price of electricity on the page is above a certain value (settable by the user) turn the heater off. With a little more work you can have it read the outside temperature and ignore the price of electricity if the temperature is too low.

"Why wait for the electric company to grow a brain? It could be a long wait."

As Rajesh points out, the Internet (and the web as part of it) have a huge role to play in both immediate coping with the current emergency and a long term response to a world with more affluent people and a basically fixed supply of fossil fuel (oil production WILL grow in response to higher prices but, absent a catastrophe, demand for energy will grow even faster). Communication and computing are the key both to using existing energy sources more effectively and the very necessary switchover from oil to electricity first for home heating and manufacturing and , only slightly later, for transportation.

Electricity, of course, is not an energy source; it's a mechanism for energy delivery. The real substitution is whatever fuel is being use to generate the electricity for oil. Many of these fuels – coal, nuclear from existing plants, hydro from existing dams, solar and wind in the right configuration – are already cheaper than oil even given energy losses in generation and transmission. However, peak electricity is generated from natural gas, propane or oil so is less efficient in most cases than just burning the fossil fuel at the end point where you need heat or motive power.

So the trick is to use off-peak electricity better at the same time as we develop more baseline capacity. Because different parts of the world are suitable for different types of generation, a very smart grid – with the parallel Internet carrying the data required to be smart – is necessary both so that local price signals will be correct and actionable and so that electricity can be wheeled from areas of surplus to areas of deficit and routed around inevitable outages.

Consistent with Rajesh's vision, much of the price signaling will be between the grid and its endpoints in businesses and residences with no human intervention required. Energy use will be the first massive D2D (Device to device) application on the Internet. Energy is the next "killer app". It will be energy use that will force 100% broadband connectivity and even pay for getting to the hardest to reach places – all we're talking about is reaching all the places the electrical grid already goes.

My only quarrel with Rajesh's comment is that it is naïve. Some people may be willing to regulate their own energy use for the common good, but significant self-regulation of demand won't happen without prices which reward those who use energy when it is in surplus and penalize those who use it in when it is scarce. We need the smart meters both so that everyone doesn't have to hack together his or her own solution and to charge appropriately for usage.

Related posts:

Heads in the Sand

Passing the BTU

Electric Heat Savings Estimator

Energy Saving Devices

Fuel Selector Helper

Energy Tipping Point – Part 1

Should You Be Heating with Electricity?

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