For the past century, innovation in energy, water and agriculture has been driven by massive capital expenditure (capex). Trillions of dollars have been poured into making drill bits better, irrigation systems cheaper, and solar panels more efficient. We’ve made tremendous progress in optimizing this hardware. But the software to take advantage of it has been relatively neglected.
We’ve squeezed the value out of the atoms. It’s now time to focus on the bytes.
Solar is a shining example. VCs have sunk billions into solar PV materials development. While this funding didn’t make (most of) these investors rich, it did contribute (along with Chinese manufacturing) to a staggering drop in hardware costs. In just the two-year period from 2010 to 2012, solar hardware costs plummeted over 45 percent. As a result, “soft costs” like permitting, financing, and customer acquisition costs now contribute 64 percent of the total installed costs in residential deployments. The best way to address such soft costs is with software.
Indeed, software has successfully tackled these issues in other industries, such as Big Pharma, that have similarly high customer acquisition costs.
James Avery, senior vice president of power supply at San Diego Gas & Electric (SDG&E), is often asked if rooftop solar is ruining his business.
SDG&E currently has 45,000 customers with rooftop solar -- more than 7 percent of the roughly 600,000 solar systems installed in the United States today -- and that number is increasing by 4 percent to 5 percent each month.
“I get asked this question,” said Avery. “‘Isn’t rooftop solar destroying your business?' 'You've lost all your sales, where’s your growth?’”
Yes, solar is creating some grid issues, but the utility isn’t in any sort of decline, he said. One major reason, in California anyway, is electric vehicles (EVs).
To meet the state’s aggressive greenhouse gas objectives, virtually every vehicle in the state will have to be powered by an alternative fuel by 2050. For the vast majority of passengers cars, electricity is expected to be the fuel of choice.
For Avery, the math looks like this: there are about 30 million cars in California today, about 3 million of which are in San Diego. EV loads range from 1.5 kilowatts to 20 kilowatts, depending on vehicle type. Picking an average load of 3 kilowatts per vehicle,...