Clean technology, or cleantech, covers a wide array of technologies including construction materials, electric vehicles, renewable power, and smart meters.  Silicon Valley – long a hotbed of cutting-edge development – is now becoming a global center for solar power and smart grid innovation.

The region is already considered to have the highest concentration of cleantech jobs in the United States.  Much of the job creation has been in smart grid and solar technology.  According to Next 10, an independent think tank, the Bay Area now has 7,000 people employed in renewable energy alone.

“The skills that have been put to such good use in the valley with chips – engineering the processes to be more efficient, bringing costs down – are now being applied to solar,” said San Jose Mayor Chuck Reed in an interview with the San Jose Mercury.  “And in order to make a smart grid smart, you’ve got to collect an enormous amount of information and manage it and network it.  It’s a huge market opportunity for what companies here are already doing.”

Solar power and smart grid technology are a natural fit for the valley’s vast semiconductor industry.  Similar manufacturing processes are used to make chips and solar cells – which are essentially large and simple chips.  Smart grid technology is an extension of the telecommunications and software industries and its development is essential for the future.

Demand for electricity continues to increase.  By 2030, the Department of Energy (DOE) expects demand to increase by 30 percent.  Much of the infrastructure is decades old and is already handling more than it was designed to handle.  A smart grid will give consumers the incentives and tools they need to reduce demand – reductions that could eliminate the need to construct new power plants.

According to a DOE study, if the power grid were 5 percent more efficient the reduction in carbon emissions would be equal to removing 53 million cars from the roads permanently.  Analyst Morgan Stanley believes that smart grid revenues will be worth $100 billion by 2030 – up from $20 billion this year.

Developing the smart grid is a high priority for the DOE which has provided $4.5 billion in stimulus grants for the effort.  Of that amount, $303 million has been sent to utilities in California.  Utilities all over the country are installing smart meters which are widely perceived to be a critical first step for a smart grid deployment.  According to Pike Research, 46 million were installed around the world in 2008 and 250 million will be installed within five years.

Smart meter installations around the world have been a boon to valley-based Silver Spring Networks.  The company develops software that allows communication between the power provider and smart meters, load management sensors, and vehicle charging stations. 

“Anything we can do to make energy usage and distribution more efficient so we don’t need to build more power plants is a pretty big benefit for all of us,” said Eric Dresselhuys, executive vice president of Silver Spring.  “A lot of people are talking about electric vehicles and rooftop solar.  If we’re going to adopt those technologies on a massive scale, we need a network in place to communicate with all of these devices.”

Mayor Reed says there are at least 40 to 50 companies in Silicon Valley that are focused on smart grid development.

“There’s a huge opportunity,” said Don Von Dollen, director of the Electric Power Research Institute’s IntelliGrid program.  “Everyone is trying to figure out how to mine the data that comes out of the smart meters and turn it into usable information that can help consumers save energy and reduce their bills.  There are going to be lots of opportunities to develop apps, and that’s Silicon Valley’s sweet spot.  Someone is going to come up with the iPod for in home energy management.”

Cisco says that its utility customers encouraged the networking giant to get into smart grid development.  Cisco is developing communications infrastructure to connect all points of the smart grid from where energy is generated to where it is consumed in homes.  Cisco is also developing tools that manage energy usage.

Next 10
300 Brannan Street, Suite 402
San Francisco, CA 94107
http://www.nextten.org

Morgan Stanley
1585 Broadway
New York, NY 10036
http://www.morganstanley.com

Pike Research
1320 Pearl Street, Suite 300
Boulder, CO  80302
http://www.pikeresearch.com

Silver Spring Networks
575 Broadway Street
Redwood City, CA 94063
http://www.silverspringnet.com

Electric Power Research Institute
3420 Hillview Avenue
Palo Alto, California 94304
http://my.epri.com

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