Announcement of the GE ecomagination Challenge, Powering the grid, a $200 million innovation experiment

Arno A. Evers | Aug 20, 2010

 

With fanfare and high expenditure in top brass, high-calibre personell on both sides of the podium and with high travelling costs, GE (General Electric Company) announced in its GE Global Research Europe Center in Garching (near Munich), Germany on July 15 the GE's US $200 million ecomagination Challenge to seek for external breakthrough ideas for a smarter, cleaner, more efficient electric grid, and to accelerate the adoption of smart grid technologies. The same announcement was made by Jeff Immelt, CEO of GE, at a conference in San Francisco on July 13, announcing three major initiatives that GE is committing to in order to advance their ecomagination project. GE is planning to expand further into the clean tech world, and to drive innovation around the smart grid, energy efficiency, renewables, and electric vehicles. ecomagination.com.

This ecomagination Challenge was further explained in Munich by Steve Fludder, Corporate Vice President ecomagination based in Boston, MA, USA. The challenge is initiated by one of the biggest energy supplier companies of the world, incorporated in 1892 by US enterpreneur and inventor Thomas Alva Edison (1847-1931). It is targeting to reach worldwide businesses, entrepreneurs, innovators and students. They are asked to submit their ideas to GE for a better energy world.

Ferdinando "Nani" Beccalli-Falco, President and CEO, GE International based in Brussels, Belgium, started the presentation in Germany with an update on GE ecomagination. He surprised the audience with a slide about the introcuction of GE ecomagination with the following contents:

Ecomagination

Lessons learned during implementation of GE ecomagination:

• GE thought when they started: "it costs too much" -- They discovered: "it saves money."

GE thought when they started:"it's about green" -- They discovered: "it's about industrialization."

GE thought when they started: "customers will hate this" -- They discovered: "customers like saving money."

GE thought when they started: "this will be action by the elite" -- They discovered: "this is about scale and creating jobs."

GE thought when they started: "we'll be going it alone"-They discovered: "a system is required."

This slide was even shown twice during the day.

Asking Mr. Becalli-Falco after the conference how long it took GE from the stage: ...when we started" to: ...we discovered", he explained to me that it was reached in a periond between three to five years, ...depending on the area of work and the individual customers..." Quite an achievment, reached by such a huge organization in that time.

If only Thomas Alva Edison knew...

Both speakers in San Fransico and Munich stressed that they want GE to continue to be an open technology company. GE is going to continue to innovate and admited that it's a clear advantage to cooperate with others. To achieve this goal, the company has initiatived it`s innovative 'coopetition' model GE is now going to pursue. GE was rattling off the company's recent performance in the clean tech sector since 2005, establishing the company firmly in the center of the growing sustainable economy. Over the last five years,

• GE has doubled research and development (R&D) expenditures in clean tech to US $5 billion,

Revenues from the ecomagination brand grew 400%, from US $5 B to US $20 B over the same time period,

The company lowered their own emissions by 22%,

and saved US $130 million in energy, water, and other resource costs.

According to the speakers, this is just the beginning.

Ecomagination's goals for the next 5 years, 2010-2015:

• Double R&D to US $10B,

Reduce GE's energy intensity by 50%,

Reduce water by 25%,

Launch 30 new ecomagination products in 2010 and 30 new products in 2011

About the GE ecomagination Challenge, a US Dollar 200 million innovation experiment:

Participants are asked to submit their ideas online, vote for the most promising teams and "...help us to change the way the world uses energy in powerful new ways..."

There are three categories for potential submissions:

Challenge 1: Create - Renewable Energy

According to GE, renewable energy holds extraordinary potential for helping "us" to create the energy to meet "our" growing needs. Many forms of renewable energy are highly variable in their output. This is where a more intelligent system comes in, integrating and managing renewable energy sources.

GE is developing technologies that protect the quality of power, compensating for voltage flactuations and managing output intermittency. GE wants to provide utilities with better information about energy production, transmission, consumption and energy system health to help them protect equipment and ensure safe, reliable power.

Making the best use of energy created by renewable resources is critical to a reliable supply of affordable energy.

GE is then asking potential participants: What kinds of technologies or processes do you think will maximize the penetration of renewables on the grid?

I ask GE at this point: Why are you so surprised that renewable energies are fluctuating? This is by far not new nor does it come by surprise. Sun, wind and even water are fluctuating "...by nature". In the power, or better electricity production, this is known since the implementation of the first photovaltaic and thermal solar power plants, the first wind energy plants and even the old hydro power plants. Let alone geothermal plants. They all exist since generations, generating electricity at pace.Why did GE and other major suppliers did not find solutions for this kind of "natural" challenges earlier? Why did GE not mention the worldwide biggest producers of losses which are also the biggest creators of Greenhouse Gases (GHG) incl. CO2: The power plants, operating on fossil fuels (coal, "natural" gas, even oil) as feedstock. Are they holy graves? I do not think so. If you want to initiate a real change, you have to start there, where it gains and maybe even hurts most. But as the utilities are the customers of GE and similar consortia, they maybe do not want to wake them up...

If only Thomas Alva Edison knew...

Challenge 2: Connect -- Grid Efficiency

According to GE, the U.S should have the most efficient grid in the world. But we don't. "Our" grid wastes energy at every point during every day. The solution is to connect advanced power generation to a more intelligent and more efficient grid -- that then connects with consumers.

GE is looking at different grid technologies that help lower losses and those that anticipate and monitor demand. Reducing losses frees up grid capacity, reduces the need for infrastructure capital expenditure, and protects consumers from steep rate increases. Reducing voltage eliminates the over-delivery of energy, so customers are not paying for unused energy.

GE is asking the potential participants: In terms of technology, processes and policy, what do you think are the best means to help ...us" to realize greater gains in grid efficieny and outage management?

I ask GE at this point: This is also not at all new. Why so addicted to the grid? Why are you not thinking of the 1.7 billion people worldwide who have neither access to eletricity nor to a decent water supply available? Why are they so neclected?

If only Thomas Alva Edison knew...

Challenge 3: Use - EcoHomes/EcoBuildings

According to GE, energy consumption is growing so quickly that it's creating an imbalance between demand and supply. This mismatch short-circuits power production and distribution, leading to higher energy costs for consumers and businesses. ...We need to change how and when we use energy.

We're looking at many promising technologies to help power companies and their customers share information and manage their energy use better.

At GE, we are already working on a wide range of promising technologies, including smart meters and appliances that let consumers' appliances "talk" to their power utility; wireless AMI; home area networks; renewable integration tools; demand response systems; home energy use monitoring; time-of-use pricing; plug-in hybrid electric vehicle integration; and neighborhood micro grids.

GE is then asking potential participants: What new technologies, processes or business models can help consumers use energy more wisely and improve our energy balance?

I ask GE at this point: This third challenge is more or less already defined in challenges number 1 and number 2. How can a electricity grid in a small country like Germany being 1,600 kilometers (approx 1,000 miles) long ever become smart? Why are you not addressing X and Y?

The potential revenues of the participation for potential participants:

According to the GE Terms and Conditions (these are the legal terms that control the ecomagination Challenge), the following is to be expected by sucessful participants:

Based on the evaluation of the Committee, GE may decide to pursue a business deal with you related to the technology in an entry. Such business deals could include, at GE's sole discretion, one or more of the following:

An equity investment by GE or others.

A cooperative agreement to develop a product or technology.

A distribution or marketing agreement.

A review of your product or service for possible qualification to be a part of the GE ecomagination program.

In addition to the above awards, the one Entry receiving the most user-submitted votes during the Voting Period will receive, subject to GE's review of the Entry for inappropriate content, a cash award of US $50,000.

However, the GE terms and conditions also state:

NO OBLIGATION: You acknowledge that multiple participants may submit Entries that contain concepts or technologies similar to your Entry and that GE, its subsidiaries and business partners may already be pursuing technologies that are related or similar to those that you disclose in your Entry. You acknowledge and agree that GE's action with respect to another Entry, even if similar to your Entry, shall not create in GE any liability to you or others. Further, GE is not and shall not be restricted in any way from pursuing, developing, or commercializing, in any way that GE sees fit, independent of you and at GE's sole discretion, any technology that is created independent of your Entry. For the avoidance of doubt, you acknowledge that GE is not obligated to take any action whatsoever with regard to your Entry.

WAIVER: By entering the Event, you waive all rights to seek injunctive or equitable relief, or to claim punitive, incidental or consequential damages, or attorneys' fees.

It this point I ask GE: Is this not a little too cheap? Do you think that the commitment of GE is in balance in regards to the request to the potential participants? You are asking third parties like businesses, entrepreneurs, innovators and students to share their best ideas on how to build the next-generation power grid. And they just might get funded. Or may not, see above. The prices "...at GE's sole discretion, one or more of the following: (a) An equity investment by GE or others...(b) A cooperative agreement to develop a product or technology...(c) A distribution or marketing agreement...(d) A review of your product or service for possible qualification to be a part of the GE ecomagination program..." are more than debateable. I wonder, how, on which basis/calculation GE can come to announce the sum of US $200 million which is mentioned in the headlines of the GE ecomagination Challenge. Or do this US $ 200 million also includ external cost for agengies, consultants etc, who are engaged in the Challenge? All this appears to me far out of balance. When companies of with a status like General Electric Company are actively initiate a global public request for bids (tender), like GE is doing with its ecomagination Challenge, they should have looked at it before from all thinkable angles. And even from those, who might not be thinkable, because of lack of imagination.

The ecomagination initiative challenges, terms and conditions suggest a greenwashing campaign like Dupont and other big pollutants did. We hope, at least, that this campaign will make people think differently and be open to real green products and services.

If only Thomas Alva Edison knew.

Also, I am courious about the number of real entries CE is going to receive. I wish them all the very best. I also wonder, which effect this action will be having on the GE employees. 35,000 of those are working in R&D alone. I am sure, that you, "the GE management", underestimates the power in these individuals, who are on the GE payroll already. And you also underestimate the impact, this GE ecomagination Challenge has on your own employees. Most of them will return "back into normal working mode" when they hear about this initative. Their emphasis to work hard for GE and to greate "greater values" for GE will have been highly dampened by the GE ecomagination Challenge. I also wonder, which effect this action will have on other stakeholders. They might get nervous, wondering and questioning themselves: Does "my" esteemed company GE really have to rely on external knowledge from students? Nothing against students at all, hower, but a GE shareholder may think: So far, I trust(ed) the GE management as I thought they knew what they were doing, also in repect to future market opportunities.

If only Thomas Alva Edison knew. He`d rather better not, though...