Graphic by Feilding Cage/TIME.com
Your home's rudimentary appliances just got a whole lot smarter thanks to the improbable meeting of two small Washington State companies that discovered that their energy-saving technologies melded perfectly. By attaching Allyn Technology Group's lunch-box-size Renewable Demand Response device to water heaters and combining it with GridMobility's wireless software, consumers will have an easy way to buy renewable energy and reduce overall electricity demand without costly smart metering. "We see this technology [eventually being used] in millions and millions of homes across North America," says James Holbery, a scientist and the founder of GridMobility, who designed the linking software. "There is no reason this can't fundamentally change the power market."
The project started when Allyn, a tech-development company in Allyn, Wash., founded by Fred Barrett, got an assignment from a local utility to prove that its demand-response hardware worked with smart-metering technology on resource-hogging appliances like heaters and furnaces.
As the project was winding down in the spring of 2009, Barrett began searching for other "smart-grid people." He found Holbery through LinkedIn, and the two compared notes. "We started showing each other some of the technologies that had come out of our collective efforts and then started talking about what we might do next," Barrett says. "Jim and I agreed that there were synergies in both of our visions and our personalities." The fact that this was a multibillion-dollar opportunity didn't hurt, either.
Barrett, a versatile tech entrepreneur, really juiced the technology when he combined his work with Holbery's GridMobility, which developed wireless software that lets consumers personalize their energy use, which saves them money and reduces their carbon footprint. "This meant the utility, with some of our interface software, could use the same equipment and systems they already owned and take advantage of demand response as one means for managing their customers' energy use," says Barrett.
The pair began working on winning a contract from the Bonneville Power Administration (BPA). GridMobility, a six-employee company with annual sales in seven figures, spent more than a year developing the software and added a wireless transmitter to Barrett's hardware. "The GridMobility platform provides a level of grid transparency previously not possible," says Holbery.
The system they designed, like its creators, is adaptive. After spending two weeks tracking a home's hot-water usage, it will power down if no renewable energy is available, but it will do so only if it knows the family won't likely need hot water, like during a school day. It switches on using real-time data that forecasts wind-power availability. When the wind blows, water heaters fire up.
Jay Himlie, a power-supply manager with Mason County Public Utility District No. 3 in Washington, says his personal unit works splendidly, even with three teenagers in the house. By using individualized profiling, the system — which can be operated by the homeowner via the Internet or manually for when those teens want hot showers in off-peak times — patterns the user's energy consumption to follow trends in renewable resources.
The strategy also gives utilities a better price when buying during peak supply times and lets wholesalers like BPA make use of fluctuating renewable resources. Mason County's pilot project — in a working-class area 80 miles (129 km) southwest of Seattle — calls for installing 100 residential devices this fall and is free to consumers, which will go a long way toward selling conservation. "The more flexibility we can get from whatever resources are out there, the more vibrant the grid is going to be," says Mike Weedall, BPA's vice president of energy efficiency. "It gives us flexibility. This is just the first of a new wave."
With Barrett now on board as GridMobility's vice president of operations, the pair have developed a strategic partnership. GridMobility will be using intellectual property from Allyn as it expands its reach, with eight more pilot projects on tap. Their partnership is not just about renewable energy but also about renewable business models.
Three years ago, when the personal saving rate (that is, disposable personal income minus personal outlays, usually expressed as a percentage of disposable personal income) briefly dipped below zero, it was easy to find economists willing to downplay the significance. David Malpass, then of Bear Stearns, was probably the most prominent low-saving-denialist. As he wrote in the WSJ in 2005:
Not only are we not running out of household savings, it is growing fast both in terms of the annual additions and the cumulative buildup of American-owned savings. Household net worth, one good measure of savings, reached $48.5 trillion in 2004. Time deposits and savings accounts alone total a staggering $4.3 trillion, versus slow-growing credit-card debt of $800 billion. True, the U.S. is the world’s biggest debtor, but it is building assets faster than debt.
It wasn’t just Malpass, though. New York Fed economist Charles Steindel said pretty much the same thing just last year:
Despite the decrease in reported levels of personal saving, aggregate household wealth has exhibited a strong uptrend since the end of 2002. Moreover, statistical evidence presented here suggests that past periods of low personal saving rates have not been followed by a retrenchment in spending or slower growth in living standards.
The argument was basically that, because it only looked at income and not asset values or capital gains, the standard measure of the saving rate vastly understated actual saving. Maybe so. But asset prices are volatile, far more volatile than incomes. When asset prices are in a bubble, any asset-based measure of saving is going to overstate actual saving by far more than an income-based measure understates it. As we’re learning now: Stock prices are off 40% in the U.S. House prices are down 20%. The net worth of American households declined in the second quarter, according to the Fed. It’s sure to decline a lot more.
What does this mean? I think it means that the saving rate, as measured the old-fashioned way by the Bureau of Economic Analysis, really does matter. The fact that it dipped so low in recent years should have been a major warning sign to the Fed and others that trouble might be in the offing–that American households might be dangerously exposed to financial-market stress.
The personal saving rate made a big rebound in the second quarter of this year, thanks to those government stimulus checks. It will probably drop back toward zero for a while, because it usually falls during recessions as people struggle to make ends meet. But after that I’d bet on a long rise. At least, I hope that’s what happens.
