Will We Bother Using Our New Clean Energy Technology?

The Obama administration handed out $3.4 billion in grants the other day to begin building the smart grid - smart meters, smart transformers, smart substations, and smart what-not.

The money will buy lots of smart equipment. What it won't do is buy smart behavior. And there lies one of the great unknowns about the big energy transformation facing America.

Will all that great equipment be put to optimal use - squeezing waste out of our energy production and consumption patterns, integrating cleaner technologies into the electric grid, and banishing oil's shadow over our economy and our international relations? Or will cussed, mercurial human behavior drive our energy economy into unexpected directions?

Let's see how these unknowns might play out. One of the ideas behind the smart grid is that if utilities adopt variable electricity pricing for end-use customers and those customers can see current electricity prices on home data screens tied to their smart meters, they will have the information they need to optimize their demand patterns - say, running the dishwasher late at night when demand is down and prices are lower, rather than during morning or early evening hours, when loads are high and electricity prices reflect higher demand. One benefit of shifting demand to off-peak periods would be reduced need for "peaker" power plants, typically gas-fired combustion turbines.

Would consumers respond to clear price signals and shift their demand patterns in optimal ways? There is some evidence that they would, but much will depend on whether consumers  incorporate electricity price monitoring into their daily routines. Some may want to actively manage their electricity use, some may not want to be bothered. Today, no one knows precisely how consumers will respond to the technology.

Take another example - plug-in hybrid-electric cars that use both batteries and internal combustion engines for propulsion. General Motors plans to market the Chevrolet Volt sometime next year. Uber-environmentalist Denis Hayes says the Volt is the best idea that Detroit has had in decades.

The thinking behind a car like the Volt is that many people don't need to drive more than 30 or so miles per day for commuting, errands, and socializing.

So, a car like the Volt that can be driven on battery power alone for up to 40 miles would allow motorists to take care of all their routine daily driving without burning a drop of gasoline. In case drivers need to take a longer trip, the Volt's internal combustion engine will be there to provide range and peace of mind on those long, lonely highway stretches.

Will plug-in hybrid cars sell? Will drivers use them to their most efficient advantage? Will they recharge the batteries at times that complement the workings of the electric grid or put it under stress? No one knows.

How about "flex-fuel" vehicles, which can run on any combination of gasoline or E85, a mix of 85 percent ethanol and 15 percent gasoline? (Another possibility is M85, a mix of methanol and gasoline). Used to its most efficient advantage, a plug-in hybrid-electric vehicle with an internal combustion engine fueled with 85 percent alcohol could go 500 miles per gallon of gasoline. Very impressive.

Which fuel would drivers choose? Brazil's experience is revealing. The widespread availability of flex-fuel vehicles in that country and a competitive fuel market pitting gasoline against sugar-cane ethanol gave Brazilian drivers market power that they have been willing to exercise, to the disadvantage of oil. If flex-fuel vehicles and alcohol pumps become widespread in America, would American drivers emulate their Brazilian counterparts and drive down oil demand? Or, would they stick with gasoline? No one can say for sure yet.

So, bring on the smart equipment and the cleaner energy technologies. While we're doing that, let's also spend some effort on smart social marketing to effect the right behavior changes, so that our investments pay off in less oil demand and a smaller environmental footprint.