Decentralized
Energy
Welcomed Living
Energy to his
Decentralized Energy
house in Colorado: Amory B.
Lovins talking to Justin Gerdes.
View the film of this
Living Energy interview.
Amory B. Lovins:
The Marriage of
Smart Power
and Electronics
Amory B. Lovins is perhaps the world’s foremost champion
of and authority on energy efficiency and renewable energy
solutions. The Cofounder and Chief Scientist of Rocky
Mountain Institute, Lovins is a longtime adviser to utilities,
Fortune 500 companies, and heads of state. Living Energy
met with Lovins in his Colorado home to talk about why markets now favor efficiency, renewables, distributed r­ esources,
and customer services.
Text: Justin Gerdes Photos: Nicholas Strini & Ye Rin Mok
8 Living Energy · No. 11 | November 2014
Living Energy · No. 11 | November 2014 9
Energy Efficiency
A Showcase Green Home
“Run the grid the way a conductor leads
a symphony orchestra: No instrument
plays all the time but the ensemble continuously produces beautiful music.”
Amory B. Lovins quoting RMI Manager Clay Stranger
Amory B. Lovins
Background and Achievements
Amory B. Lovins’ private residence in Old Snowmass, Colorado, is a showcase of efficiency ideas.
In 2009, Time Magazine named Amory
influential people. The American physicist and most eminent expert on energy
efficiency has published more than
30 books and more than 500 papers,
about half of them scientific, the other
half popular.
Lovins has redesigned numerous buildings, vehicles and factories, all with the
goal of making them more efficient and
cost-effective. Over a career spanning
more than 40 years, he has advised
23 heads of state and firms in more
than 60 countries.
Amory B. Lovins is the Cofounder and
Chief Scientist of Rocky Mountain Institute, and the recipient of twelve honorary doctorates. Since 2011, he is a
­member of the US National Petroleum
Council. He has worked with the oil and
electricity industries for four decades.
Lovins Is the recipient of many honors,
including the National Design Award in
the USA, the Blue ­Planet, Volvo, Zayed,
Onassis, Nissan and Mitchell Prizes.
10 Living Energy · No. 12 | July 2015
T
he offshore wind industry
in Europe is up to 75 projects,
8 gigawatts, whereas the USA
has yet to put its first project in the
water. Was it market forces? Was it
the regulatory ­environment? What
allowed that industry to rise in
­Europe as it stalled here?
Amory B. Lovins: In Europe, it had
pretty strong policy support. In Germany, it had access to the grid. It had
a ­feed-in tariff. It’s had some support
of that kind in the UK, and in Denmark. In the USA, there was no such
policy support. On the contrary,
­offshore wind projects were met with
prominent opposition. But the
­industry does need early projects
at higher cost to gain experience and
bring the price down. It’s been
­retarded in the USA by these specific
forms of either the “Not in My Back
Yard” (NIMBY) syndrome or ideological opposition. Wind is certainly a
huge resource. It’s enough off the
northeast coast to run the whole region. In time I’m sure we’ll develop it;
we’ve just lost a decade through this
sort of ­opposition. There’s certainly
much more to be done from the marriage of smart power and electronics
with electromechanical systems.
You make the argument that areas
with some of the highest renewable
penetration in the world, D
­ enmark
and Germany, have b
­ etter reliability of supply than the USA.
A. Lovins: Yes, by about ten times.
­Although the trend data are weak,
they do suggest that the more renewable western Europe becomes,
­country by country, the slightly better the reliability becomes. But this
is just a large-scale effect. In the
USA, 98 or 99 percent of power failures originate in the grid. The more
­distributed your generators are,
the closer to the load they are, the
more you can avoid the main cause
of outages.
To take your point a little further,
in 2014, 27 percent of German consumption came from renewables, but
over 50 percent in Denmark and Scotland, 46 percent in Spain, and 60 percent in Portugal, which has made
­really remarkable progress. The Iberian Peninsula as a whole is quite a
remarkable demonstration of how to
get high renewable penetration with
high reliability ­rather quickly without
adding bulk storage. How do they do
it? Well, they, and particularly the
Danes, who are the best in Europe at
Illustrations: Anton Hallman
B. Lovins one of the world’s 100 most
Completed in 1984, Amory B. Lovins’ home – and
(the home is situated at an elevation of 7,100 feet)
RMI’s original headquarters – exemplifies RMI’s
with the use of superinsulated stone walls and a
“abundance by design” ethos. The home is outfitted
heat-trapping indoor greenhouse. “We ended up sav-
with advanced energy-saving technologies – LED
ing 99 percent of the heating energy, about US$1,100
lighting, an electric cooktop that uses 60 percent less
cheaper in construction costs than if we had simply
energy than an induction cooktop, superwindows
met the building standard,” says Lovins. “Why get
that achieve a center-of-glass R-value of 14 ­(k-0,4) –
there the long way around when you can tunnel
but the takeaway for building professionals is that
through the cost barrier by asking right up front:
the home illustrates the value of integrative ­design.
‘Is there a sensible way to design this building so
Lovins designed the home to suit the site and c­ limate
it won’t need any mechanical equipment?’”
this, run their grids the way a conductor leads a symphony orchestra:
No instrument plays all the time but
the ­ensemble continuously produces
beautiful ­music.
To build the reliability or flexibility
stack from the bottom up, as if it
were a supply curve, the first thing
you would do is optimize efficiency,
which tends to make loads less peaky
as well as smaller, and demand response. You would forecast the variable renewables accurately, which
we now can. You would construct
a diversified and, where possible,
anticorrelated portfolio of both
variable renewables and dispatchable renewables, so that they’re not
all of the same kind and in the same
place, seeing the same ­conditions
and responding the same way. You
would integrate them with dispatchable renewables and with combined
heat and power, often using waste
heat. You would integrate with thermal storage, like ­ice-storage airconditioning, and ­distributed electric
storage, especially in smart electric
vehicles. You could go ­further and
use fossil-fueled backup, and even
bulk storage, but these ­costliest options may not be needed.
You’ve written much about the
­disruption of the utility market in
Europe, making the argument that
the big incumbent utilities were
slow to change. Can they make the
transition fast enough?
A. Lovins: Time will tell. It’s certainly
faster once you start. These are companies that have wonderful technical
skills that we need, and I hope they
find a way to thrive in the new world.
They supposed that incumbents would
set the pace of the transformation.
That isn’t actually what happens. Insurgents set the pace. In fact, the
­market shifts even quicker than you u
Living Energy · No. 12 | July 2015 11
Energy Efficiency
Energy Efficiency
Considered among the
world’s leading authorities
on energy, Amory B. Lovins
has published 31 books and
more than 530 papers.
lose customers because the capital
markets quickly sniff disruption and
shift their investments competitively.
Photovoltaics were only at 4.5 percent
of electric production in Germany
when the major utilities lost half
their ­market cap because the shift in
merit order destroyed their business
­model. They should have seen this
coming; most of them didn’t. The
market has shifted irrevocably to favor
those who provide efficiency, renewables, distributed resources, and
­customer services. Some are doing
very well in this transition. But there
are laggards, and they will be punished in the market. ­Siemens is making some excellent contributions,
and many others are playing
catch-up.
We’ve touched on disruption of
the utility sector in Europe. In the
USA, a handful of states, notably
California and New York, have
­initiated efforts to figure out what
comes next. If you’re looking out
10 years, 20 years, what is that
­going to look like?
A. Lovins: Customers are figuring
out that they can buy fewer electrons,
use them more productively, and
­produce more of their own, and it’s a
good idea to sell customers what
they want before someone else does.
All the rest is detail. Now, there is a
12 Living Energy · No. 12 | July 2015
lot of messy detail. But consumers
are becoming prosumers. We need to
be intently customer-centric. The
­IT-electricity mash-up is producing
a flood of new business models and
­financing mechanisms that sweep
away the old business models pretty
quickly. We need to be prepared for
customer production, savings, and
other service provisions to beat
­anything we can provide centrally.
In the medium term, it will still
be very desirable to have the grid,
but more and more customers
will become able to drop off the grid
cheaper than buying power from
the grid. This is already happening in
Hawaii. One of the reasons Barclays
recently downgraded the whole
US utility sector’s international
­rating was a paper we wrote called
The Economics of Grid Defection pointing out that the ability to use
­efficiency and solar and cheaper batteries to leave the grid altogether
would roll across the rest of the USA
well within the lives of existing utility
assets.
If you’re an incumbent utility faced
by this swarm of insurgents on the
demand and supply sides, there are a
number of ways you can respond.
­Ostrich is not a wise posture. Trying
to tax, fight, or block the insurgents
isn’t a very smart strategy either,
partly because it annoys the
customers so they will leave faster.
But there are many intelligent responses available to you. You could
buy the insurgents and offer their
products as your own branded product. You could become an integrator
of all technically qualified offerings.
You could ­become a ­financier of the
transition. You do, ­after all, have customer ­relationships, financial expertise, and large cash flows. There’s no
particular reason you should own assets on only one side of the meter.
There are other ­coopetition models
that may also make sense and make
money.
RMI has developed a technique
it calls integrative design. Can you
describe what it entails and give
an example or two of a project in
action?
A. Lovins: Integrative design is a
way to design a building, a factory
or ­industrial process equipment, a
­vehicle, any technical device as a
whole system for multiple benefits,
rather than as isolated components
for single benefits. Your typical result
is radical efficiency at lower costs,
and, therefore, expanding not diminishing ­returns to investments in
­efficiency. The more you save, the
cheaper it gets. That’s a game changer.
When we led the design of the retrofit
for the Empire State Building it was
u
Rocky Mountain Institute
Cofounded in Snowmass, Colorado in 1982 by
and military partners “to accelerate and scale
Amory B. Lovins and L. Hunter Lovins, Rocky
­rep­licable solutions that drive the cost-effective
Mountain Institute (RMI) is an independent, non-
shift from fossil fuels to efficiency and renew-
profit “think-and-do tank” that creates a clean,
ables.” RMI’s 2025 goals are to accelerate
­secure, and prosperous global energy future. From
the shift of the US electricity system to renew-
humble beginnings – for many years, staff worked
able energy, make US buildings superefficient,
out of an office in the Lovins’ home – RMI now
transform commu­nities’ energy systems, and
­employs more than 140 analysts, designers, and
­ensure that the ­Reinventing Fire vision is adopted
engineers at offices in Colorado, New York City,
by ­China and other major energy users. In Decem-
and Washington, D.C. RMI consults with ­business,
ber 2014, RMI ­announced a merger with Carbon
government, academic, nonprofit, ­philanthropic,
War Room.
Living Energy · No. 12 | July 2015 13
“The market has shifted
irrevocably to favor
those who provide
­efficiency, renewables,
distributed resources,
and customer services.”
Amory B. Lovins
A piano takes a center space in Lovins’ residence: The energy
expert is also a pianist and composer.
Shaping the
New Energy Market
considered pretty good that we’d saved
38 percent of the energy with a threeyear payback. How? Remanufacturing
the windows on-site into superwindows that would pass light but block
heat and insulate four times better,
and doing other improvements, cut
the peak cooling load by one-third.
Then we could renovate smaller chillers instead of adding bigger chillers.
That saved US$17 million in capital
costs, more than paying for the
­superwindows. But three years later
we saved 70 percent on a difficult
50-year-old big office building, making it more ­efficient than the best new
US office – which in turn uses twice
the energy of RMI’s new office now being built in ­Basalt, Colorado, with no
heating or cooling equipment. Integrative design typically pays for much
or all or more than all of the efficiency gains by downsizing or eliminating
supply-side equipment. We must also
take the right steps in the right o
­ rder
at the right time. That’s important
14 Living Energy · No. 12 | July 2015
because a big building gets a ­major
renovation at least every 20 years or
so to renew the ­facade or the mechanicals. If you do a major whole-system
retrofit at that time, you can make
the mechanicals much smaller, or perhaps get rid of them, and thus save a
lot of capital costs and make the economics spectacularly better. Integrative design makes energy savings
much bigger and cheaper than had
been thought. The low-hanging fruit
keeps growing back faster than we
can pick it. p
Justin Gerdes is an independent journalist
­specializing in energy issues based in the
San Francisco Bay Area. His work has appeared
at Forbes.com, The Guardian, Yale Environment 360, and MotherJones.com, among
­others.
A film by director Nicholas
Strini of the interview by
Justin Gerdes with Amory B.
Lovins can be viewed online.
­siemens.com/living-energy/
lovins-interview-yt
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