Everyone talks about Demand/Response. Everyone talks about peak shaving. These are very important to short term goals. These will be the ways to make money in 2009. They are, however, only the beginning.

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Demand/Response is real-time pricing without the infrastructure. Demand/Response rewards using less energy when there is a shortage, but it does not reward using more energy when it is readily available, or even in surplus. For this reason, Demand/Response can never be more than a good start.

Electric Cars might complete the starting game. EPRI scenarios suggest a single car in the home, all programmed to charge slowly in the middle of the night. They expect millions of them by 2010. This will cause no problems because there is a surplus in the middle of the night. A single car per home will cause no problems, because it is a single 100 amp circuit. But most homes have more than one car. Most car owners will want to have the option of a rapid charge Friday afternoon before leaving for the holiday weekend. This means that cars on some weekends will be uneconomic for the grid, but we will pretend otherwise.

I think the crisis comes at two o'clock in the afternoon on Thanksgiving. Or maybe during the super bowl. On Thanksgiving, Mr. & Mrs. Recent Retiree will expect the kids to drive over, bringing the grandchildren. All will expect a plug, and Grampa will pick up the tab because he likes to spoil the grandchildren. Today's neighborhoods are segregated by life stage, and income, and lifestyle. Across the cul-de-sac, Mr. & Mrs. Soon To Retire are also expecting their kids to bring their grandchildren. They also have had several 100 amp circuits installed. At two o'clock, this cul-de-sac has 27 cars charging, each on their own 100 amp circuit, just as 6 turkeys in 6 ovens are being basted one last time. After the great Thanksgiving Day Fire erupts simultaneously across the subdivision, and the simultaneous Sub-Station melt-down, we will get dynamic real-time pricing.

Dynamic pricing will reflect the wide swings in demand each day. Dynamic pricing will reflect the "negative pricing" that nuclear plants must pay to put power on the grid during certain times in many regions. Dynamic pricing will swamp the inefficiencies of energy storage. It makes no sense to store energy locally when buying at flat rates. With prices that look anything like today's wholesale rates, all kinds of storage make sense. Pools in the basement, filled with icy brine, or filled with vanadium salts in solution. Large rooms lined with a bladder and filled with compressed air. Water stored in the attic. Any number of technologies will begin to have markets; some of them will survive and make long term sense.

You will not want to do custom integrations with each of these technologies. You will not want to assume responsibility for some of the fly by night and emerging technology companies that will be selling storage to the home and office. You will want a simple interface. How much power can you give me? For how long can you give it? How reliable are you feeling? Anything more intimate will require that your technicians assume liability for their technology. There will be many technologies. Simpler interfaces will be best. A new market will flourish, driving innovation and adoption.

This will open the door for energy recycling. I think data centers will lead the way. No building with a data center will need any energy for the re-heat loop. But what if one tenant is running the data center, and one tenant is managing the office space? Soon there will be in-building energy markets, to supplement the energy supplied by Big Energy.

[an error occurred while processing this directive] In building energy trading will cause owners to re-examine in building market distribution and in building market inefficiencies. Why convert generated energy to AC, if the final market is DC? With the market numbers clearly in front of the owners and tenants, some buildings will begin to acquire alternate distribution channels, including in-building DC distribution. Photovoltaics gain improved Cap Rates instantly when removed from the burden of converting to AC and back again.

This will ease the development of new energy systems. PV paint and PV window glaze will make better economic sense when they are coupled with nearby local DC distribution circuits. Pervasive metering will align the owner and tenant interests. Exotic but low performing technologies such as Bacterial Generation will make sense when coupled with low demanding local circuits. The game has just begun, and we don't even know the players, but we do know that complexity and diversity will rise.

We will manage that diversity through simple uniform interfaces, that let systems interact without deep integrations. We will manage performance guarantees and system warranties by keeping one control system from interfering with the next. All interfaces will offer simple metering, and support simple inquiries about pricing, availability, and capacity.

It will be an interesting time. There will be many new markets, several bigger than building systems and controls are today. There will be fortunes won and lost. Some of those lost will be through reluctance to embrace new business models. It will be what John Doer calls "the mother of all markets", dwarfing all internet fortunes won and lost.

But it starts today, with demand response, and continues with transacted energy.

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