Most of us are accustomed to thinking about change, to anticipate it and be ready to bring new productivity to new opportunities. Many of us believe we understand the changes that information technology is bringing to organized society. But I think we are all just beginning to glimpse the consequences, in the United States and all the industrializing world, of information technology’s growing role in the energy economy.
Old businesses and business models, long-standing regional and jurisdictional domains, and traditional economic regulatory systems will be as disrupted in energy as they have been in publishing, entertainment and communications; as they are being in medicine and education. For example, for the first time in the U.S, extractors and processors of fuel are now becoming less important to society, politically and economically, than are the industrial and business companies that use electricity and fuel to create products and enterprises that add value to the economy. Furthermore, increasingly urban, decentralized models of energy distribution—made possible by innovations in both information technology and fuel extraction—are shifting political and economic power to cities (and city leaders) and away from the regional energy producers that have traditionally managed the U.S. energy supply.
“Increasingly urban, decentralized models of energy distribution are shifting political and economic power to cities.”
Decentralized Urban Energy Distribution
The cities’ increased influence over their own energy investments is important because most Americans, and most citizens in the world’s industrial economies, now live in urban societies. Technology developments now make it more economic for most major metropolitan regions to invest within and near their own urban economies, in the distributed generation of electricity, from multiple and often small-scale resources and technology systems—rather than continuing to depend on and pay for the old model of importing electricity from very large remote generating plants.
This increase in the cities’ economic and policy influence over which energy choices to make also has political implications—it means that new decisions about which energy systems to use, and which energy technologies and producers to economically reward for their products, will be made more by regulators and political leaders responsive to the needs of urban economies and to urban energy producers and managers.
At the national level, political influence is following the economic power, shifting rapidly away from the US regions and enterprises that provide primary energy resources, from the states where most energy commodities are produced, to the urban regions and enterprises that pay for and use the energy. Political leaders from those parts of America that are more urban and culturally diverse, less dependent on commodity production, and more focused on manufacturing, technology and complex international business relations, will become more important to national decisions about which energy fuels and technologies to encourage, to subsidize and to tax.
At the state and regional level, influence will shift away from the remote producers of central-station electricity, toward the urban economies making investments in their own diverse, distributed and resilient electricity systems.
Expanded Energy Patch
Many people in the energy business are not focused on these changes in the geographic and sectoral influence of regions within our political economy, because today when energy is the topic, most attention is paid to the national and global impacts of newly recoverable and abundant supplies of U.S. unconventional natural gas and oil.
But this new supply of domestic US energy is actually contributing to the shift in economic and political influence away from traditional energy producing regions and their political representatives—and not just because commodity producers will no longer enjoy the power that comes from perceived energy scarcity in the U.S..
That’s because the energy patch itself has now expanded, to include production of shale gas in Pennsylvania, Ohio, Illinois, West Virginia and perhaps New York, and will include new oil production in California. “We should see information technology as the circle that links energy production, energy use, and the management of energy efficiencies.”The Southwest, Gulf south, Rocky Mountain and Appalachian fossil fuel producing states, which, with Alaska, have dominated US energy policy for so long, will see their influence diluted as California and the previously declining eastern and midwestern industrial states become important energy producers.
The abundance of American shale gas means that natural gas will displace coal and even some nuclear power in the US electricity industry, which will make solar and wind more economically competitive in electricity markets. The variable nature of solar, wind, and energy created through demand-side management will no longer be treated as unreliable when they are sold into natural gas systems that can easily be made to produce more or less electricity as inputs from solar, wind and demand management supplies vary. Natural gas is the only baseload fuel useful in small-scale generating systems to support distributed solar. The combination of natural gas displacing coal to make electricity, and the trend away from remote power generation toward urban distributed generation, will stimulate greater penetration of solar and wind into the new and more efficient urban electricity infrastructure.
Information Technology, Energy, and the Future
Such rapid innovation in urban electricity systems has surprised even some green thinkers. Those tech investors and environmental leaders who just a few years ago thought that big sun and big wind would replace big oil and coal, that the Mojave Desert and our central prairie states would become our Saudi Arabia of sun and wind, did not understand how the rapid emergence of new technologies would move our economy toward local solar and regional wind in more diverse urban generation, distribution and management of electricity.
Similarly, some investors and environmental groups thought the problems of auto pollution would be solved by turning cars into electrical appliances, plugged into utilities that could sometimes use the cars’ batteries, instead of investing in the utilities’ own storage. Again, rapid technology development in new distributed electricity systems, in integrated urban transportation management, and in automotive design, make the old new ideas less attractive.
We should see information technology as the circle that links energy production, energy use, and the management of energy efficiencies, increasing productivity and saving money and time while reducing pollution. Whether it is combining the most environmentally clean fossil fuel with wind, solar and demand-management energy to make electricity, the integration of automobiles and electricity with urban transportation management, or the implementation of more efficient and resilient urban distributed generation, it is the information technology industry that will manage and connect all the components to create the most productive, secure and environmentally responsible urban energy infrastructure.
