Douglas Goldstein: Lynne Kiesling is an Associate Professor of Instruction in Economics at North
Western University.
She does some fascinating research in the world of energy.
A lot of times people talk about the future
of energy efficiency which is a big part of what you study.
Why does that matter?
Lynne Kiesling: Energy efficiency matters for a few reasons.
One is that both because of technology and because of population growth, we over the
past say 50 years have increasingly globally been consuming more energy in total but if
we pay attention to energy efficiency on kind of per person basis or on a per dollar of
economic value created, so like economic use divided by number of dollars in GDP say.
That means that those two measures of efficiency basically mean we are getting the most value
out of a given amount of energy and since energy is in many ways scarce because we tend
to, I study electricity, generate our electricity mostly using non-renewable sources and sources
that cause some concerns about pollution and greenhouse gases and geopolitical things that
are getting the most value, again the most bang for your buck out of every unit of energy
consumed is really important so economically important, environmentally important.
Douglas Goldstein: As someone who is not an expert in the greenhouse effect, although
I read about it in the press, I get the feeling when I read both sides of the equation that
there is a lot of politics going on here and frankly not a lot of interest necessarily
in the good of the people.
So if you’re talking about saying “I want to have more efficiency in one area or another”
it seems that there are a lot of technologies which are just being ignored instead of actually
being developed.
Lynne Kiesling: I think there are a lot of political in the various things around climate
change.
One of the things that I get concerned about when I look at policies in the U.S. and internationally
is the effect of the politicization of the issue on science and what does this do to
our hours or quest for truth if you will, the science as opposed to represent.
And one thing that I would argue for and that I argue for my own work is that having low
barriers to innovation and allowing for a lot of experimentation and questioning and
testing and innovation in energy technologies is likely to set us up to best be able to
deal with whatever the effects are going to be of changes in greenhouse gases, global
warming and climate change.
Douglas Goldstein: It sounds very ideal, it would be great if we can have a low barrier
to entry and lots of entrepreneurs could come up with new ideas but what would seem to happen
is that the politicians come in and either they support let’s say a solar energy plant
between half a billion dollars and they get a lot of bad press about it and at the same
time they are using that money for whatever their pet project is instead of another project.
It seems like your idea is an ideal but we are moving exactly in the opposite direction,
is there any hope?
Lynne Kiesling: In some ways, I think we are an in other ways we aren’t.
I take a lot of inspiration both in terms of formulating the ideas for a future in energy
markets that is very decentralized and where both consumers and producers have a lot of
ability to experiment and search and create new technologies and experiment with new technologies,
but also personally you know in terms of personal interest in the issues, I take a lot of inspiration
from what we’ve achieved with digital technology and that the model, that digital technology
and the internet provides for us to think about different ways to structure and organize
business models and regulatory models even in an industry like electricity where you’ve
got pretty serious wires that build and fix capital wires infrastructure.
There are different ways that we can arrange our business models and regulatory models
to induce people to experiment with the kind of technologies that can simultaneously be
both cleaner and allow for a prosperous, thriving economy.
Douglas Goldstein: You mentioned something that really kind of struck a cord and you
made a comparison between energy or in particular electricity and digital technology that seems
so different when you sign up for your local utility company, you don’t have a choice,
there is only one company who put the wires there unlike with digital technology where
it’s all around, how do you make that comparison?
Lynne Kiesling: It’s true that when you think about it physically, there is one set
of distribution wires and if you think about it physically, when you think about electricity
it is a flow of electrons, but one of the things that I think we’ve learned from the
internet is to think about the network as a platform and so that physical network of
wires, there is an analogue in the internet which is the wires there that create the physical
platform of the internet and with all the digital innovations, what we’ve seen is
that we can have these technology layers on top of that like one next layer up is going
to be the TCPIP protocol and that’s what enables devices to talk to each other using
a shared interface, a common understanding of what the data mean on both sides of the
communication and then you build applications on top of that and so on and so on and so
on and the next thing you know you’ve got Snap Chat and Instagram.
Douglas Goldstein: You are describing the digital side which I buy into 100%, how does
that apply to electricity then?
Lynne Kiesling: So how does that apply to electricity?
Let me put it in a little bit of context first, at least here in the U.S. one of the issues
that is in pretty heavy discussion among regulators and utilities is something called grid defection
which is as the digital smart grid technologies to enable us to automate and manage the electric
grid better and distributed energy resources like rooftop, solar panels, things like that.
The more prevalent those that come in, the more widespread they become and the easier
they are to install and the cheaper they are for end user customers, the concern is that
more people are just going to rely on their own distributed generation and they’ll just
go off grid and the utilities have all of these sunk investments in the wires network.
So they are concern that their customers are going to leave, they’re going to be stuck,
hole in the bag in terms of the wire’s capital cost.
My argument is that if we instead think in terms of a business model where the utilities
sees its wires as a platform for enabling interaction and enabling transactions and
in particular enabling the connection of different customers around the edge of the distribution
network, but then that wires network is going to continue to have value and what you can
do is you know enable those people who have those distributed generation resources to
buy and sell energy from each other.
Douglas Goldstein: It sounds nice that it smooths out that way but it’s not necessarily
the experience we’ve had like with the phone companies who had lots of sunken cost and
you have copper wires and all of a sudden the government came in and started regulating
it and it could necessarily make the money and then the internet came along and said
“Hey we want to use those wires and not pay.”
Lynne Kiesling: I agree with you and I think you are right that you know, I’m kind of
putting a theoretical stake in the ground and saying “Here is a business model, here
is a regulatory mode that involves very light handed regulation but can enable all of these
distributed people around the edge of the distribution network to create value and create
value for themselves and for each other but connecting them through exchange on this physical
wires platform and then building a market platform on top of it.
So one way to think of it and I’m not the first person to say this but is to think of
this as an Airbnb for electricity or Uber for electricity.
Douglas Goldstein: How can people follow you and follow your work?
Lynne Kiesling: I follow this industry constantly.
I have a blog where my colleague, Mike Gimberson and I write occasional post, it’s called
Knowledge Problem and it’s at www.knowledgeproblem.com.
I also am on Twitter as @knowledgeprob and then I have my own website which is www.lynnekiesling.com
and those are probably the best places to keep up with what I’m thinking about.