09/27/2011 09:07 am ET Updated Nov 27, 2011

Step 1: Spending 100 Percent Of Our Efforts On Next Generation Technologies

Whether you are for ending our dependence on oil, individual freedom from monopolies and the government, job creation, safe water supplies, commodity price stability, or human health protection the answer leads to the same set of innovations and business models. 

To achieve any of these goals, my friend Jeremy Rifkin of The Foundation on Economic Trends has the right vision. It is the emergence of a third industrial revolution. He sees that we are on the cusp of a third industrial economy based on a foundation of the following five pillars:

Pillar 1 -- renewable energies

Pillar 2 -- converting buildings to power plants

Pillar 3 -- hydrogen storage

Pillar 4 -- the energy Internet

Pillar 5 -- plug-in transport

I recently wrote about Pillar 5, plug-in transport, pointing out that while the newly announced CAFE standards are good, they still do not give us a high likelihood of ending the use of oil.

And, while we push for incremental improvements in energy efficiency, basic understanding of economics says we "must" spend 100 percent of our incremental capital on deploying energy that replaces current fossil fuel energy systems. This "must" is critical to the ultimate realization of Jeremy's vision and unlocking the largest wealth creation opportunity of this generation.

Jeremy describes the end game well, but to get there requires a starting point we can all understand.

The reality is that, in Pillar 1 (renewable energies), which is the focus of this post, we are not starting with a clean slate.  

Rather, our starting point is the existing energy grid system.  We can chip away and replace current fossil fuel grid technology with renewable energy sources. We can chip away, but we cannot make a wholesale replacement of the grid overnight. It is just too entrenched and would result in too many stranded assets.

With that reality in mind, we have made real progress and made inroads into Pillar 1, renewable energies.  

A case in point is SunEdison, a company I founded. 

SunEdison started, and is successful, because it was a business solution -- to sell solar power to businesses as a service -- not sell a power plant. The company installs, owns and operates the plants. In return, customers sign power purchase agreements locking in electricity prices for as long as 20 years.

This has created a steady revenue stream for the company and an affordable way for customers to use (very) locally generated clean power for their businesses -- instead of paying the rates du jour for power generated by utilities at central stations and transmitted miles and miles over aging and congested transmission lines.   

When SunEdison started in 2003, getting it going was not easy. We had to overcome the qualms of conservative investors and in many states, push to get laws and regulations that posed potentially insurmountable barriers modified. But, we created a thriving multi-billion industry with scores of competitors.

The point is, we worked within the existing infrastructure and economic realities to bring radical change that could be deployed and funded -- making real Amory Lovin's Small Is Profitable. Solar is now a fast growing industry in the United States and in most parts of the world.

Today, as the price of oil and fossil fuels on global markets continues to climb, grid parity has become a reality market-by-market which has helped the solar industry. In the end, economics win out. 

We are chipping away at making solar and clean electricity an increasing piece of the energy portfolio.  At the end of 2010, there were 2,593 megawatts of solar electric capacity deployed in the U.S. Projections are for more than 8,000 cumulative by end of 2012; with an industry goal of 10,000 MW by 2015 -- enough to power about 2 million U.S. homes.

My own expectation is that solar PV will provide 5 percent of all electricity in the U.S. by 2020 and clean electricity will provide 80 percent+ of all new incremental capacity additions to the grid starting in 2015.

Yet, we are still sitting on developed technologies in renewable energy that have not been fully deployed such as wind, hydrogen, geothermal, and biofuels.

Equally important to renewable energy deployment, as Jeremy Rifkin has pointed out, is fully leveraging renewable technologies.  He noted:

The great pivotal economic changes in world history have occurred when new energy regimes converge with new communication regimes. When that convergence happens, society is restructured in wholly new ways. In the early modern era, the coming together of coal powered steam technology and the print press gave birth to the first industrial revolution.

Our first glimpse of one of the first mass scale "virtual power plant" (VPP) architectures is in Germany. The Regenerative Combined Power Plant blends together three wind farms totaling 12.6 MW, 20 solar PV plants worth 5.5 MW, four biogas systems equaling 4 MW and a pumped storage system with 8.4 GWh of storage.

This is leading the way to Jeremy Rifkin's Third Industrial Revolution.

One company that is leading the way in communication and measurement is Spirae. Spirae, through communication and proprietary technologies, helps energy companies integrate distributed renewable energy sources, customer load response, and other dynamic elements into the mainstream grid. Spirae's innovative grid management technology optimizes the performance of the system by maximizing the contribution from more reliable distributed generation and customer load control.

More importantly, from the traditional provider's point of view, Spirae helps ensure system stability and security, and helps enable power restoration in the event of system failures. Right now, Spirae is working with, the Danish TSO company, and the owner and operator of the high-voltage power system in Denmark.

The point is that we have piloted all of the implementing measurement and communication tools in the field to assure that our Pillar 1 renewable energies will deliver the required performance in the next few years. This is the beginning of communication for Pillar 2 -- peer-to-peer energy where buildings are power plants intelligently distributing electricity.

The result is that we are finally able to be "smart" and spend 100 percent of our time and effort deploying 30-year old renewable and customer load control technologies at scale to replace incremental fossil fuel use. Ready for the revolution -- it is coming anyway.