The reason: the ubiquity of mobile devices, which now gives companies limitless ways to interact with their employees. While constant connection can be a driver of stress, this new link between workers and employers is driving an increase in employee engagement – and, in turn, sustainability.

In 2015, engagement “exploded onto the scene” as the top priority for companies, according to researchers at Deloitte. In a survey conducted by the consulting firm earlier this year, 87 per cent of corporate executives said it was their most important goal. And now countless startups are rushing in to fill the need.

“A new breed of vendors offers pulse survey tools, employee sentiment management tools, culture assessment tools, and real-time employee monitoring to help leaders and supervisors rapidly assess when engagement is high,” wrote the Deloitte researchers.

Mobile connectivity and engagement are colliding with two other important shifts: the rise of Millennials in the workforce and the growing importance of environmental initiatives. These factors are creating a “megatrend” for sustainability in the corporate world. And into that world steps Nudge Rewards.

Nudge Rewards is a Toronto-based startup with an app that allows corporate customers to drive employee engagement via mobile channels. Companies can set up any kind of action and education campaign, but sustainability is a core focus for Nudge’s early clients.

The premise is simple: employees download the app and management sends out surveys to judge awareness about issues, create contests, and develop rewards programs to encourage participation. Through back-end analysis, Nudge learns when employees are likely to respond to messages and categorizes different types of respondents.

Across a few early large customers, results have been strong. Close to 85 per cent of every single piece of information accessed through the Nudge app has been read – a big increase from the 25 per cent average response rate through traditional emails.

“It was an ‘aha’ moment to see how much better this type of system is over the prehistoric ways of communicating,” said Lindsey Goodchild, the co-founder and chief executive of Nudge.

Goodchild worked as a corporate consultant from 2009 to 2011 while getting her post-graduate certificate in sustainability at Ryerson University. As late as 2011, she noticed the lack of tools available for improving communications between employers and employees – a major problem as corporate environmental programs ramped up.

“I started thinking about a mobile app to make it really easy to keep employees in the loop and capture the impact of sustainability,” said Goodchild. “I floated the idea to some clients, and they loved it.”

Nudge’s most prominent user is Telus, Canada’s second-biggest telecom firm – a company that is dealing with the sustainability megatrend in a very real way. Telus has more than 43,000 employees, and over half of them are Millennials. Meanwhile, it has a goal of reducing energy use 10 per cent by the end of the decade. Seeing a unique opportunity to engage its young workforce, the company has ramped up efforts to build “ambassadors” to promote smarter energy use.

“We’re turning over every rock within the business to ensure that sustainability is considered,” said Colleen Dix, senior sustainability manager at Telus. “Using this app is a way to have an internal dialogue and allow our employees to be ambassadors for us.”

In a recent eight-week pilot with Nudge, Telus saw between 73 per cent and 95 per cent of employees participating in education programs around environmental issues. The company now plans to expand its pilot from hundreds of employees to many thousands. Dix called the app “cool and sleek” – something that attracted younger workers.

Nudge is off to a good start. But it’s entering a crowded space. Today, there are endless apps for sustainability. Gamification – the use of games to encourage behaviour change – has exploded in popularity. However, Goodchild thinks the company can gain an edge by proving strong results for large clients.

“We know not everyone is going to be passionate about sustainability. But by engaging through simplicity in places where employees already are, we’ve already shown that we can broaden the appeal,” said Goodchild.

The market pull is strong. If Nudge can continue to reap results for big companies like Telus, the startup has the potential to grow as quickly as the term “employee engagement.”

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As the centre of rapid change, cities are commonly used to imagine how society will be influenced by new technologies. The design archetypes are numerous: the floating city; the bubble city; the space city; the vertical city; and, more recently in the era of environmental awareness, the eco city.

While helpful as a way to expand the limits of design and technology, most visions for the city of the future have not emerged. The failure of eco cities is the latest example.

A decade ago, the Chinese government and international architects partnered to execute ambitious plans for zero-waste communities run entirely on renewable energy. But many of the projects never materialized because of technical delays, exorbitant costs and lack of demand.

“Some of the eco cities were too utopian or overambitious in terms of how quickly technology can change or get integrated,” said Constantine Kontokosta, director of academics at the New York University Center for Urban Science and Progress, who followed the projects closely.

The failures, said Kontokosta, stemmed from designing giant cities from scratch – a chronic problem in China that has plagued all kinds of new community development projects.

“What’s been forgotten in the discussions around smart cities is the understanding of social dynamics and how important they are to how cities function,” he said.

Today, another term has come to dominate urban futurism: the connected city.

Interchangeably referred to as the “networked city” or the “smart city,” the connected urban environment is less about redesigning gigantic futuristic cities from the ground-up, and more about creating intelligence from the inside-out.

Experts believe it’s the most accurate way to describe how cities are evolving alongside technology. And it’s actually being implemented by some of the biggest companies in the world – not just imagined by dreamers.

“The best success we’ve seen is where data is used to support city goals and objectives to make a community run better,” said Kontokosta.

We may not have cities in the clouds. But the urban environment is now enveloped in a broad spectrum of high-resolution data and networking technologies – from GPS to smart meters to building management systems – creating a virtual cloud suited for new applications.

The big challenge today, says Mark Fox, a smart cities expert with the University of Toronto, is how to manage all that information.

“There’s already huge amounts of data, and we are only just developing the capacity to analyze it to understand how a city is performing,” said Fox, who is a senior fellow at the Global Cities Institute at U of T.

Creating simpler, elegant systems designed to monitor the urban environment requires something very complicated: a standard way of assessing that data.

Fox and his colleagues at U of T have been developing an international standardized methodology for gauging performance in 17 areas, including sustainability, energy, education and basic city services. Without a common set of metrics, cities and companies will have a hard time understanding their performance, said Fox.

“We need very specific definitions,” he said. “We need to imagine a world when all the information about cities is published in a common way. We need to automate city analysis.”

The project is called the Global City Indicators Facility. It includes a network of 250 cities around the world and has resulted in the first ISO standard for cities to measure social, environmental and economic performance. The organization is working with Toronto to adopt the methodology for assessing smart city pilots.

Assuming the standard is adopted by more cities, software providers and hardware producers, the bigger challenge will be how to effectively use it to provide better services in the urban environment. And on that front, Fox is adamant we need a “citizen-centric” approach.

“Traditionally, cities have taken a city-centered view of how they offer services,” said Fox. But with a growing range of third parties connecting streetlights, energy and water infrastructure, and transportation systems, cities need to view themselves as brokers of information, not the only service provider in town.

What does that mean, exactly?

This human-centric approach has spawned a whole new field of research called urban informatics. It applies computer science, social science, physics and statistical analysis to understanding how to make cities more efficient and livable – with the goal of understanding how people interact with the urban environment.

“Although we’ve been talking about smart cities for a long time, the field [of urban informatics] is still quite new and many of the techniques are just now being applied in an urban context,” said Kontokosta, who teaches urban informatics and consults on projects.

One such project is in New York City’s Hudson Yards, a 28-acre mixed-use redevelopment project started in 2012, and planned for completion by 2019. Sleek, energy-efficient skyscrapers and retail centres will modernize the landscape, but it’s the guts of the project that will truly futurize the neighbourhood.

The $20-billlion Hudson Yards project is the largest in U.S. history. It’s also set to become the world’s first fully instrumented community outfitted with “future-proofed” communications systems, as well as sensors and meters to monitor traffic, air pollution, water, energy consumption and pedestrian movement. The neighborhood will also host a 13.2-megawatt cogeneration power plant, a microgrid connecting homes and businesses, and a vacuum-tube system to collect and sort waste streams.

Urban informatics researchers at New York University will analyze the community. The project is designed to fine-tune building performance, transportation flows and emergency operations. But the bigger opportunity, said Kontakosta, is in understanding the complex connections between noise and air pollution and education levels, or building design and occupant behaviour.

“This will really help us truly understand how an urban neighborhood functions at a granular level,” said Kontakosta. “The social sciences element is all very new.”

While there is much learning and experimentation still to come, the influence is being felt. Under this people-first premise, cities around the world – from Rio de Janeiro to Vancouver – are implementing new systems connecting streetlights, water infrastructure, buildings and transportation systems into a cohesive, controllable whole designed to better serve citizens.

“We’re seeing projects in the thousands, across governments and the private sector,” said Rob Bernard, the general manager for cities and sustainability at Microsoft. “Cities are figuring out how to turn citizens into human sensors for improving their services and infrastructure.”

Progress is still incremental, not revolutionary. But it’s clear that the “city of the tomorrow” is arriving today.

The post The future of cities: from social sciences to data standards appeared first on Corporate Knights.

Seven years ago, with public and investor interest in carbon accounting on the rise, Pepsi undertook its own mission to map the resource intensity of its Tropicana orange juice.

The company turned to Christoph Meinrenken, a mathematician and physicist at Columbia University who had shifted his attention to environmental engineering. Meinrenken and a team of engineers at Columbia were working on a new technique – called “fast” lifecycle analysis – for measuring resource use, carbon emissions and supply chain costs. Pepsi was intrigued, so asked for Columbia’s help.

In Meinrenken’s eyes, traditional analyses were tedious and often incomplete. Armed with proprietary algorithms to calculate “emissions factors,” he believed he had a shortcut that provided a more comprehensive way to filter the immense amount of data across Pepsi’s business.

“We needed new ways to mine the data while using machine learning and predictive statistics to produce the outputs,” he said. “They already have a lot of information in their systems. It was really a question of mining and combining that data.”

Rather than manually calculating inputs, Meinrenken took in data from Pepsi’s enterprise resource planning systems and used statistics to “bridge gaps” and map out how each piece of the value chain interacted with another. Very quickly, the Columbia University team uncovered the most carbon-intensive component of Tropicana orange juice: fertilizer.

Pepsi executives were surprised to find that manufacturing and shipping were not the top carbon culprits. They were also impressed with Columbia’s modeling. Years later, they decided to perform a similar fast lifecycle analysis on more than 3,000 other Pepsi products across more than 30 brands.

The results, documented in a peer-reviewed journal in 2012, showed that Pepsi was able to cut emissions by 8 per cent, and for $30 million less than what traditional lifecycle analyses might indicate.

With those results in hand, the idea for a company was born.

In 2013, a team of entrepreneurs with ties to Columbia University licensed the technology and independently turned it into an interactive software product. The startup, called CoClear, is looking to transform lifecycle analysis (LCA) by making corporate sustainability faster, cheaper and more accessible to decision makers.

According to Sally Paridis, the company’s chief executive, sustainability consulting is controlled by four large firms: Deloitte, Ernst and Young, KPMG, and PwC. Her goal is to steadily erode the market share of those firms by offering a more automated product.

“Our reports include product LCA, corporate carbon accounting, material and process scenarios, supply chain and risk mapping, key sustainability metrics, and target tracking. Having this all available via an app makes us unique,” said Paridis.

With that touted advantage, Paridis estimates the company can eventually capture one-quarter of the consulting market.

So how’s it going so far? The startup has locked up two big clients: ice cream maker Ben & Jerry’s and an undisclosed global sports apparel company. Paridis also said ties to Columbia University have been important for bringing in new business, as alumni working on sustainability issues in large corporations help tout “the rigor of the data science behind our technology.”

Ben & Jerry’s, a leader in sustainability, is currently in the process of setting greenhouse-gas reduction targets using the CoClear modeling software. The company’s focus is exclusively on emissions at the moment. But Andrea Asch, manager of natural resources at the ice cream maker, said the models could go much deeper, if needed.

“The software offers great information in other environmental areas, like water, solid waste and direct energy consumed,” said Asch.

Even with Ben & Jerry’s and Pepsi touting the product, breaking into the world of big sustainability consultancy firms will not be easy for CoClear. But Paridis and Meinrenken believe they have a superior product that will cut down on the top-down manual work that has dominated lifecycle analyses.

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The Canadian Electricity Association estimates Canada will need to spend nearly $294 billion by 2030 to upgrade old equipment and accommodate more distributed resources. The American Society of Civil Engineers says the U.S. needs a $94-billion upgrade by 2020 in order to modernize its grid. Meanwhile, in both countries, more than half of the utility workforce is nearing retirement age.

In a positive sign for utilities, a growing number of “Millennials” are moving into the electric sector. Interested in addressing the complex challenges of decarbonization, grid resiliency and distributed energy integration, these young entrepreneurs and engineers are bringing new ways of thinking to a sector undergoing seismic changes.

That’s where a startup like eRespond comes in. Founded by three students at University of Southern California’s Marshall School of Business, the company is developing a software platform that combines drone technology and social media aggregation to pinpoint outages quickly and manage the grid more effectively.

Many power companies use social media as a one-way communications tool to tell customers about outages; eRespond wants to use it as a way to identify the outages themselves. “Everyone is carrying a smart phone and using these outlets; yet very few are trying to create a centralized engagement platform for them,” said Payam Yeganeh, a master’s student at Marshall and one of eRespond’s co-founders.

The software analyzes all texts, emails, social media messages and telephone calls coming into a utility in order to gain insights into where outages are occurring, and then communicates targeted messages back to customers. The tool also analyzes images from unmanned aerial vehicles (drones) and compares them to messages from the field. In theory, it could be used by utilities with limited advanced metering infrastructure.

“There’s been a lack of solutions in the space. The more we look at it, the more we realize it’s needed. Social media today is not effectively used at all as a two-way communications channel. We enable that,” said Yeganeh, who worked in the utility sector for a decade before enrolling in graduate studies.

The idea emerged from student competition run by the non-profit business incubator Spark Clean Energy, based out of Chicago, Illinois. The competition, supported by the U.S. Department of Energy’s innovation arm, ARPA-E, identified grid management problems faced by utilities and then challenged graduate students to create the solutions. First place went to eRespond, giving it the chance to validate its software with ComEd and Exelon, two major U.S. utilities.

If it gains traction, eRespond would come into a crowded market where big grid engineering firms such as ABB, GE and Siemens are developing products designed to tie meters, outage management systems and social media together to boost grid resilience. But utility adoption has been modest so far, and no single company has market dominance.

Mark Silberg, executive director of Spark Clean Energy, believes there are lots of ideas brewing among young business leaders that could change energy markets. He compared the competition to the XPrize, which puts aside monetary rewards for entrepreneurs to solve “unsolvable” challenges.

“There are a lot of ideas incubating outside traditional businesses. Our role is to democratize access to these resources and pull in new talent,” said Silberg.

Spark has supported numerous other student-led startups addressing similar challenges, including rare earth recycling, realtime residential energy analytics, and a completely new control infrastructure designed to decentralize the grid.

This type of competition is not just beneficial for funding new ideas, it’s also important for attracting the next generation of talent for utilities shedding legacy workers.

In a 2013 report on the changing utility landscape, the consultancy PwC outlined the importance of hiring younger workers, who “tend to be more tech savvy” and bring new ideas for building smart grid infrastructure and deploying renewable energy.

“A rapidly evolving workforce is re-shaping the risk profiles of America’s power and utilities,” wrote the PwC analysts. “One possible solution: a more systematic approach to capturing and keeping core know-how – and new ways of transmitting that knowledge to a younger generation.”

Click here to view our complete Tech Savvy series.

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That’s what executives at Arby’s Restau­rant Group figured out in 2012 when they reviewed yearly expenditures and saw that electricity and water were some of the sand­wich chain’s biggest controllable expenses. But even with that knowledge, the company had no comprehensive plan to reduce re­source consumption across its hundreds of company-owned restaurants. Executives on the financial side of the business were talk­ing a different language than the employees managing the stores.

That’s when Arby’s turned to Ecova, a sustainability software and services compa­ny, to help bridge the gap.

Based in Spokane, Washington, Ecova has become one of the leading software providers for monitoring electricity use, water consumption, recycling programs and car­bon emissions. The company was founded in 1995 with a simple utility bill management tool to help corporate customers navigate deregulated electricity markets in the United States. Over the years, it has expanded into nearly every offering related to corporate sustainability and resource efficiency.

When Arby’s approached Ecova, it was in need of a corporate-wide strategy, not just a one-off efficiency upgrade at a few outlets. The restaurant chain initially started tracking billing data in 2009. But as Ecova analyzed consumption patterns over the proceeding years, it was able to uncover $5.5 million in annual savings opportunities across Arby’s portfolio of buildings.

That granular data helped Ecova’s ser­vice team identify equipment scheduling adjustments and retrofits, water conserva­tion opportunities and encourage employee behaviour changes. As the restaurant-level changes were initiated, the software was used to communicate savings to employees, as well as show executives the company-wide impact of the initiative.

It “led to broad organizational under­standing of energy management opportu­nities,” said Scott Boatwright, Arby’s senior vice-president of operations. This resulted in resource productivity efforts becoming fully funded within the company.

By mid-2014, Arby’s had cut its energy consumption by nearly 8 per cent and is on target to achieve 15 per cent savings by the end of 2015. It also cut enough water to fill 115 Olympic-sized swimming pools.

Ecova has delivered similar results for numerous resource-hungry food service companies, including Cheesecake Factory, California Pizza Kitchen, Domino’s Pizza, and Jack in the Box. Along with saving ener­gy and water, Ecova has helped food chains cut food waste by up to 20 per cent.

But it’s not just the restaurant industry. Ecova has accumulated 700 customers, in­cluding one-quarter of corporations on the Fortune 500 list that are looking at resource productivity more holistically. With a bil­lion data points being processed each day, the company now claims to have a near-complete picture of resource consumption in 10 per cent of commercial and industrial buildings.

Ecova’s expansion from tracking utility bills to analyzing a broad range of sustain­ability metrics came amidst a stark change in the software market. Over the past five years, many vendors have strayed from “sus­tainability” and have chosen much more targeted offerings, such as HVAC optimiza­tion, demand response and real-time energy monitoring. For example, there are over 200 companies now offering different variations of energy monitoring software in North America.

However, Ecova has chosen to keep a ho­listic sustainability strategy at its core. In the spring of 2014, it rolled out a new product that blended together all its offerings into a major package, dubbed the Sustainability Management Technology Platform.

“Sustainability metrics have definitely changed over the years. A big one is that we’re actually seeing a broadening of the metrics that clients are looking for, and they’re asking us to tie them together,” said Indigo Teiwes, Ecova’s senior manager of strategy and program management. “Man­aging costs and the environmental footprint are tied to one another. It’s not a silo.”

Some software companies are choosing the straight energy route – in other words, the silo. Others, like Ecova, believe that more holistic offerings are what the market will in­creasingly demand. So far it’s right.

Click here to view our complete Tech Savvy series.

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Sharing is becoming second nature to consumers armed with mobile phones and constant connections to the Internet. But it’s not just limited to individuals.

Collaborative consumption is also becoming more important for large corporations looking to make their operations more efficient and less costly. Some of the products used by companies are a natural extension of the web: document sharing, project management tools and sales software are just a few. But sharing is also extending to physical assets.

Transportation is one of the most promising places to start. That’s where California-based startup Local Motion says it can use mobile technology to substantially cut the required size of corporate vehicle fleets – potentially saving companies millions of dollars on investments in new cars and trucks.

“Companies are getting used to sharing things. They share calendars, schedules, and other things – why not share mobility?” asks John Stanfield, chief executive of Local Motion.

Local Motion is somewhat similar to consumer-focused car sharing services. Corporations with large fleets hire Local Motion to install small boxes in their vehicles’ computer systems, allowing them to monitor driving data, remotely lock and unlock doors and track location in a company-wide sharing calendar. Employees can then use the mobile app to easily find a vehicle, while employers can see how they’re being used.

The result: nearly every Local Motion customer has been able to reduce the number of cars in their existing fleets by double digits.

“They are able to get much more out of every vehicle,” says Stanfield. “Through optimization, scheduling and sharing, we are reducing vehicles by up to 30 per cent.”

Since launching in 2011, Local Motion has secured a few high profile customers, including Google, Verizon and the City of Sacramento. It has also raised $6 million from venture capital firm Andreesen Horowitz to expand its sales team.

One might think that Google already had the technology and insight to track the hundreds of cars around its campus. But until Local Motion came in, Google was as blind as any other company. Over the last 18 months, however, Local Motion has been able to take dozens of vehicles out of Google’s fleet.

The search giant also faced another challenge that Local Motion helped solve. Before installing the tracking service, Google’s plug-in hybrid fleet was almost always low on charge. By monitoring how the cars were being used, it found that plug-in rates were extremely low – sometimes only five per cent. Local Motion used its software to remind drivers to plug the cars in after use, and that rate climbed up to 90 per cent. 

Sacramento has seen similar results. Over the past few months, the city’s electric vehicle fleet has seen a 10 per cent increase in use, providing 30 per cent more employees with access to shared cars. The increase is a double win: it gets more workers driving electric cars and will allow Sacramento to use them more effectively, thus preventing the city from overbuilding the fleet.

Keith Leech, the city’s fleet manager, now wants to expand the service to a wider range of vehicles. “The City of Sacramento plans on expanding our vehicle sharing beyond routine passenger vehicles to several of our specialized vehicles that are considered to be low usage, yet mission critical to city operations,” he says.

Google is also expanding its relationship with Local Motion by adding the application to vehicles used for its new express shopping service, an offering designed to compete with online retailer Amazon.

There are a number of other companies providing tracking services for corporate fleets. The most direct competitor to Local Motion is Zipcar, which has used its considerable size and first-mover advantage to break into the corporate market. Others provide tracking services for safety or fuel optimization, but don’t have the same focus on sharing, says Stanfield.

There are 10s of millions of vehicles operating in corporate fleets around North America. Local Motion only has around 500 automobiles under management to date, so it has barely begun to tap the market potential.

Research consultancy Frost & Sullivan estimates there could be between 75,000 and 100,000 fleet vehicles being shared across enterprises by 2020.

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“The digital universe astronauts among us – the chief information officers, data scientists, digital entrepreneurs – already know the value that can be found in this ever-expanding collection of digital bits,” IDC optimistically concludes in its analysis of the sector.

But back on terra firma, the expansion of the digital universe also means concurrent growth in the energy-intensive hardware needed to support it. Between now and 2020, IDC projects that global IT infrastructure will grow by 40 per cent. The result is growing demand for energy services that are still largely supplied by finite, polluting fossil fuels.

This creates new challenges for data centre operators and IT service providers seeking to reduce the environmental impact of their operations. Consequently, it also means there’s a lot of economic value to capture as the worldwide market for data centre infrastructure management services balloons from just over US$660 million today to $4.5 billion in 2020, according to Navigant Research.

The big question is whether the entire industry – not just the biggest and most public IT firms – will realize that environmental value.

Over the last decade, the data centre industry has begun a steady transition toward reducing energy use in buildings through smarter design and improvements to equipment performance. Driven by pressure from environmental groups, corporate sustainability goals and steady advances in hardware, the biggest tech firms are now embedding sustainability into their practices. The transition accelerated after the Environmental Protection Agency reported a doubling of energy consumption among U.S. data centres between 2000 and 2006, creating more public awareness about the industry’s growing impact.

The most prominent shift has come from corporations like Apple, Facebook, Google and Microsoft, which have all built ultra-efficient data centres powered with renewable energy to green their images. The public might reasonably assume that this is where the entire data centre industry is headed. But these firms are outliers in the industry, not the norm.

“For the companies building highly visible data centres, you see a lot of movement,” said Jonathan Koomey, a Stanford University professor who analyses the IT sector’s energy use. “But smaller data centres are not getting on board in the same way.”

The problem, said Koomey, is not technical – it’s structural. The vast majority of data centres are owned by smaller companies with little budget for improving energy performance. They also have no public pressure to improve their facilities as well as conflicting management roles. As a result, they waste a lot of energy.

“Most companies can’t even tell you how many computer servers they have,” said Koomey. “The IT department buys the hardware, finance pays for the energy bills and no one talks to each other. These are institutional problems that need to be fixed.”

Relative to other sectors of the economy, data centres don’t use an overwhelming amount of electricity. The industry accounts for around 2 per cent of electricity consumption in the U.S. and about 1.5 per cent globally. In comparison, the U.S. manufacturing sector uses 30 per cent of total energy. However, the amount of waste in the IT sector is staggering. According to a McKinsey & Company analysis compiled for the New York Times, only 6 to 12 per cent of electricity consumed by data centres is actually used for computing. The rest goes to cooling equipment and keeping servers running in case of an unexpected spike in demand.

To reverse that abysmal statistic, the most effective solution for the vast majority of the industry isn’t to build out fancy new data centres; it’s to better use the infrastructure already in place. In many cases, however, that can be just as difficult.

“In this business, no one gets fired for wasting energy. But you do get fired for making a change that causes a server outage,” said Mark Housley, chief executive of Vigilent, a California-based energy management company focused on controlling “mission critical cooling” in data centres.

Founded a decade ago as an intelligent HVAC (heating, ventilation and air conditioning) company for commercial buildings, Vigilent has narrowed its focus mostly to data centres, where cooling systems are often run at full blast to protect servers from overheating, even when they’re not needed.

By installing a network of sensors that measure temperature, humidity and pressure, Vigilent can dynamically adjust cooling using its software dashboard. Housley said the company is shutting down 40 per cent of air conditioners on average across its portfolio of 200 facilities by adding intelligence to “Neanderthal” controls systems.

“Operators don’t even know which systems to turn off. We figure out which air conditioners are needed for a given IT load, and always find that balance,” said Housley. In one data centre, Vigilent was able to reduce cooling loads by 70 per cent by shutting down excessive cooling.

Canada’s second biggest telecom company, Telus, saw similarly striking improvements to its energy use after installing Vigilent’s system at its data centres. Telus’s first integration brought 1 gigawatt-hour of savings at a data centre in the first year, reaping $100,000 in savings and enabling a payback on investment of 18 months. After that, Telus was hooked. The company has continued retrofitting its Canadian data centres with the system, and in June of last year, it made an undisclosed venture investment in Vigilent.

Vigilent’s success has taken a long time to materialize. Educating and winning new customers is very difficult work, said Housley, who calls himself an “old Silicon Valley guy” accustomed to quick turnaround for products. In the data centre world, change to critical systems comes incrementally. Fears about equipment failures are the main reason, but finite capital and skepticism about the “crappy ROI of sustainability investments” are also big factors, he said. However, momentum is accelerating as more products get into the market and data centre operators gain experience.

“The market is very slow to change, it’s still a pretty conservative industry. Data centre managers don’t want to take any risk,” said Housley. “But the conversations are getting much shorter than they used to be. Now we have customers that can tell the story.”

For some data centre operators, telling that sustainability story is vital to educating the rest of the industry on what’s possible.EMC, a Massachusetts-based storage and cloud services company, has made sustainability the central focus in its data centre design. Unlike most of the industry, EMC has created an integrated decision-making process that ties together energy budgeting, IT purchases, facilities management and sustainability goals so that all areas of the business are working toward the same goals.

“A lot of companies have no aligned interests between the IT side and the facilities management side,” said Kathrin Winkler, EMC’s chief sustainability officer. “You need to build in 21st century collaboration to actually measure your impact.”

In its latest sustainability report, the company said it had reduced its greenhouse gas emissions by 40 per cent since 2005, largely through better use of IT equipment and retrofitting facilities with efficient energy systems. EMC’s newest data centre, completed last year in Durham, North Carolina, recently achieved a LEED gold certification for its integration of free air-cooling, rooftop water collection and a flywheel battery for uninterruptible power supply.

The cumulative impact has been a 34 per cent reduction in energy use and 78 per cent reduction in potable water consumption compared to the average data centre. The company has achieved a gold rating at four other data centres around the world implementing similar technologies.

EMC has branded itself very heavily around its approach to sustainable data centre design, releasing detailed data on its energy consumption and putting Winkler – its leading voice on the environment – front and centre publicly. But Winkler admits there is a disparity between what a bigger company like EMC can do and what the majority of the industry is capable of. To address this challenge, the company has focused increasingly on “infrastructure-as-a-service,” which allows enterprises to use EMC’s existing resources in the cloud. This approach is becoming standard in the industry, and allows bigger firms with more resources for energy efficient design to pass the benefits along to customers.

“The problem is that there’s a large number of much smaller data centres, and the ROI in those facilities can be relatively small,” said Winkler. “As we incorporate infrastructure-as-a-service, that can help achieve economies of scale.”

Most data centre operators still have a lot of inefficiencies to tackle. But there’s no doubt that the industry has started transforming itself. Since 2008, due to the combination of an economic slowdown, better data centre design and better utilization of IT equipment, growth of electricity consumption in the sector has been far below earlier projections from the Environmental Protection Agency. Koomey said the trend was promising, and that meaningful changes are taking place.

 “This is not an overwhelming thing,” said Koomey. “But it comes back to management issues. If you’re not tying the sustainability metric to the rest of your business, you’re not going to end up with sustainable changes.

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When completed, they will be the first nuclear units constructed in America since 1979. But getting them built is the problem. The expansion, which will consist of two 1,100-megawatt generating units, is 14 months over schedule and nearly $1 billion over budget. It could be 2018 before either reactor finally starts feeding the grid.

The project has sparked widespread backlash from consumer advocates, environmentalists and even a local libertarian Tea Party group. This summer, an economist working for Georgia’s Public Service Commission slammed the project, saying that if regulators knew how expensive the process would be from the beginning, the expansion never would have been approved.

“If a decision had to be made today to build a new nuclear project, it would not be justified on the basis of these results,” Philip Hayet, a nuclear consultant with the commission, said in August.

Just a week before that rebuke, Duke Energy announced plans to scrap a 2,200-megawatt nuclear power plant in Florida as the projected costs climbed to $24 billion and the estimated time of completion was moved out to 2024. Duke had already spent $1 billion on the cancelled project, which ratepayers will need to soak up in the coming years. In Ontario, ground zero of Canada’s nuclear industry, plans to build new reactors totaling more than 2,000 megawatts were scrapped in October because of the high price tag and falling power demand in the province.

Meanwhile, 2,600 miles away in California, the future of the power sector is starting to emerge. There, in the first half of 2013, more than 7,300 solar photovoltaic (PV) systems were installed on residential rooftops without any help from state incentives. Although the 33 megawatts of systems did qualify for net metering (a payment from the utility for the retail value of the solar electricity) and a federal investment tax credit, installers were able to make the economics work outside the state’s solar promotion program.

“It would be hard to overstate the significance of this,” said Shayle Kann, vice-president at GTM Research, who crunched the numbers (disclosure: the author of this article works for GTM’s sister media division). “This is emblematic of a sea change in the solar industry and, even more importantly, the energy industry.”

Directly comparing the baseload generation potential of a fully constructed nuclear plant with several thousand distributed solar systems would be a stretch. But the juxtaposition of these two experiences – years of delay and billions of dollars in cost overruns for building a centralized nuclear plant versus the rapid installation of distributed solar PV with fewer incentives – offers a look at where the electricity industry is headed.

The last five years have set the stage for a major transition in the U.S. power sector. With natural gas prices still hovering at historic lows, utilities are scrapping plans for nuclear and coal plants in favour of combined-cycle gas plants. And with the cost of wind and solar dropping, renewables are also dominating new power plant development. For example, U.S. utilities could purchase wind power in 2011 and 2012 for an average negotiated price of 4 cents per kilowatt-hour, according to the U.S. Department of Energy’s Lawrence Berkeley National Laboratory.

In 2012, wind was the single biggest source of new generation capacity in America, beating even natural gas. And two-thirds of all distributed solar PV has been installed in the U.S. in just the last two years. The industry is expected to double solar installations in the next two years – deploying between now and 2015 what it previously took four decades to install.

Companies in the power sector are taking notice of these trends, which will bring big changes to the way electricity providers build, own and operate assets on the grid.

“The change is going to be about empowering the end-use consumer to make energy choices for themselves rather than having the government and the public service commissioners tell them how they’re going to get the power,” declared David Crane, CEO of the independent power company NRG Energy, in a recent television interview.

The Edison Electric Institute (EEI), a trade group representing the nation’s utilities, agreed with that assessment. Over the summer, the institute released a landmark report on disruptive energy technologies, declaring a coming transformation in the sector. But its prediction for the future wasn’t nearly as rosy as the one from NRG’s Crane.

“The financial risks created by disruptive challenges include declining utility revenues, increasing costs, and lower profitability potential, particularly over the long-term,” wrote Peter Kind, author of the EEI report.

There’s a much catchier phrase for those challenges that is becoming common in energy circles: “utility death spiral.”

Since the dawn of the electric grid, utilities have been tasked with building ever bigger facilities to meet ever-growing demand for power. In most cases, regulated utilities’ rate of return is tied to selling more electricity, so they have very little incentive to invest in energy efficiency or encourage their customers to invest in technologies like solar. This is the model that allowed large projects like the Vogtle nuclear plant to get financed with the help of ratepayers – even when costs skyrocket.

However, a few things have shaken up that traditional model. The first was deregulation in the 1990s, which broke up utility monopolies in some markets and gave consumers more choice. The second is the falling demand for power in America over the last few years. The third – one that is just now starting to emerge – is the improving economics of efficiency and distributed renewables. Growth is now coming quickly enough that utilities are worrying about what happens when customers don’t need to rely on the grid as much.

While that could be a good thing for people who are able to invest in a technology like solar, it could also lead to a smaller number of customers paying for the upkeep of the electrical grid. And if the cost of paying for grid-based electricity rises, investing in distributed energy looks even more attractive to those remaining customers. This is the iterative cycle known as the utility death spiral.

“We’re not seeing electric utilities pulling down their poles and their wires. We’re a long way from there. But we need to start planning now for when that does happen,” said Richard Caperton, managing director of energy at the Center for American Progress. “The ongoing technological improvements that make these new energy resources cheaper and cheaper will lead us down the path to the utility death spiral.”

Along with this summer’s report from EEI, a number of analysts have written detailed reports in recent months on how utilities can turn this potential death spiral into an opportunity. The latest, America’s Power Plan, was reviewed and authored by over 150 experts in the industry. It lays out a broad range of actions that regulators and power providers can take today to prepare for the future.

One of the most important changes would be to scrap traditional rate-of-return regulation for some kind of performance-based model. Rather than simply reward utilities for selling more units of energy, regulators could reward them for the quality of service they provide. This could enable utilities to use their expertise to manage third-party service providers and not feel threatened when customers consume fewer kilowatt-hours.

“We know that distributed energy resources are taking off so fast – it’s unstoppable,” said Sonia Aggarwal, one of the authors of America’s Power Plan. “We need to look at the way policies and market design can catch up with the technology.”

In theory, many of these policies are quite easy to implement, both in the United States and neighbouring jurisdictions in Canada. But in reality, there is often resistance from vertically integrated utilities, skepticism from regulators and ratepayer advocates, and concerns from policymakers in states with heavy dependence on fossil fuels. However, the conversation is starting to shift.

“The mere fact that we are seeing the beginning of customer disruption and that there is a large universe of companies pursuing this opportunity highlight the importance of proactive and timely planning to address these challenges early on,” concluded EEI’s Kind in his report.

For years, people talked about distributed energy in abstractions. But now that these technologies are growing faster every year, thought leaders in the power business are starting to address the new reality. The question is: will they address it quickly enough?

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Over the proceeding months, as a handful of other government-backed companies failed, Republicans looking to unseat the president crafted their message: Supporting cleantech was the definition of “crony capitalism” and a threat to the free market.

In the six months leading up to the presidential election, outside groups promoting fossil fuels and casting doubts about clean energy spent $153 million on television ads. But it didn’t work. In spite of the spending bonanza, exit polling showed that voters were just as bullish on cleantech as ever. The president kept his job, as did almost every member of Congress who was attacked for supporting the clean energy stimulus. And the cleantech sector breathed a collective sigh of relief that the White House was still occupied by an ally.

“We saw the American public willing to go another round of four more years of investments in clean energy and four more years of seriousness about climate change,” said Michael Brune, executive director of the Sierra Club, in a press conference the day after the election. “This is a big win.”

Boosted by voter support and his personal belief in the value of clean technologies, President Obama will undoubtedly make the sector a priority. But the second round of support will likely be much different from the first. If the president’s first term was defined by a grandiose stimulus package and high-flying rhetoric about building a clean economy, the second term will likely be defined by executive actions rolled out with much less fanfare – but with a decidedly positive impact.

“I actually spend a lot of time explaining to different groups just how much Obama has done with his executive authority,” says Scott Sklar, president of The Stella Group, a clean energy services firm. “I think these will be the big drivers going forward.”

Indeed, across a range of sectors – advanced automobiles, renewable energy, energy efficiency and the smart grid – the administration is wielding its authority.

In August 2012, the White House finalized fuel standards requiring that light trucks and cars get an average 54.5 miles per gallon by 2020. All the major auto manufacturers and unions got behind the targets, saying they would drive billions of dollars in new manufacturing investments and help spur tens of thousands of new jobs.

Those new efficiency requirements – combined with existing tax incentives for electric vehicles, Department of Energy programs for new EV charging stations, and continued investments in next-generation automotive manufacturing supported by the stimulus package – will ensure steady progress in cleaning up the nation’s auto fleet. The White House estimates these policies will leverage as much as $50 billion in next-generation vehicles in the coming decades.

“If we’re going to meet the CAFE (fuel economy) standards, it’s going to require a lot of hybridization – efficient vehicles, hybrid technologies for vehicles and then of course to all-electric. That’s a major area of opportunity,” says Ron Pernick, managing director of cleantech research firm Clean Edge.

One of the Obama administration’s other big moves has been to finalize new rules on mercury, air toxics and carbon emissions for power plants through the Environmental Protection Agency (EPA).

Like fuel economy standards, new EPA rules will help propel the transition toward distributed renewable energy, efficiency and greater penetration of natural gas. They will also encourage a greater build-out of new pollution controls on existing coal plants, potentially creating thousands of jobs. According to conservative EPA figures, new regulations for mercury and air toxics will support 31,000 new construction jobs and 9,000 long-term operations jobs in the utility sector.

Under the Obama administration, electricity generation from wind and solar nearly doubled while consumption of coal-fired electricity fell about 14 per cent in 2012 alone. Although this drop was due largely to power plants switching to natural gas, the legal and regulatory factors supported by the Obama administration will play a strong role in speeding the shift to cleaner electricity.

And it’s not just wind and solar. In 2012, President Obama issued an executive order to procure 40 gigawatts of combined heat and power projects over the next decade, an efficiency initiative that could result in a doubling of existing capacity and up to $80 billion in new industrial manufacturing investments.

The other piece to this transition is how to manage all the new clean energy facilities coming online. The administration is rolling out some unique programs to help build upon $4.5 billion in smart grid investments through the stimulus.

In 2011, the White House released a comprehensive policy framework for building a 21st century grid, which offers a blueprint for what the administration plans to do in the next term. These include maintaining R&D programs for new technologies, encouraging new interoperability standards for grid communications technologies, and developing open-data programs so consumers can see their electricity usage.

These standards will build on the 15.5 million smart meters likely to be installed by 2014. “You think about Superstorm Sandy and about how woefully inadequate our grid is today,” says Pernick. “This utility of the future concept and the emboldened grid are very important. We still think that’s one area of big opportunities in the next administration.”

Expect more large-scale grid investments, too. The Federal Energy Regulatory Commission just finalized Order 1000, a rule that will require transmission planners to consider state renewable energy standards when building new lines. Bloomberg analysts say the policy will “turbocharge” a next-generation grid and help support more than $100 billion in new transmission investments by 2022.

Moving forward, the military will be one of the biggest forces pulling all of these programs together. The Interior Department and Department of Defense recently signed a memorandum of understanding that would open up 16 million acres of land for wind, solar and geothermal projects to power military bases. In 2012, the Army solicited $7 billion in contracts for renewable energy projects – part of a broader effort to expand on-site generation and develop distributed micro-grids for military bases. And the military is investing $510 million over three years to develop cellulosic and algae-based biofuels for its so-called Great Green Fleet.

“We’re seeing some pretty ambitious stuff,” says Sklar. “Whether it’s the new fuel standards, the military’s commitment or all the federal procurement programs, the administration is making some interesting plays.

Of course, there will be enormous political and market-based challenges across the board.

The balance of power in Congress is unchanged, making passage of any comprehensive legislation benefiting the industry unlikely. In addition, prominent free-market groups are working to repeal state-level efficiency, renewable energy and smart growth programs around the country.

At the same time, the energy market is undergoing immense change. The boom in unconventional oil and gas will continue to challenge the renewable energy market; solar and advanced battery manufacturers will likely continue to struggle due to pricing pressures; and consumer demand for clean technologies will be shaky along with the sluggish economy.

But those forces are not enough to stop the growth of cleantech, a sector that has become a central piece of global economic competitiveness, military planning and corporate strategy. With the Obama administration firmly behind the industry and much of the election-year fighting in the past, the next four years will bring a range of new opportunities for cleantech companies operating in the U.S.

Says Sklar: “I believe the country has reaffirmed its commitment to this sector in all its forms.”

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Outside of those lenses, it’s important to keep in mind that this Administration has done more to lay the groundwork for a clean energy revolution than any other president in history. However, a number of major factors have dragged Obama’s grades down. Some of them are a direct result of the Administration’s actions and others are just market realities.

Clean Energy Deployment: B-

The still-sluggish economy has made development of energy projects very challenging, even in fast-growing clean energy. Yet the president’s stimulus package, which created the Loan Guarantee Program and the Treasury Grant Program, has kept project deployment levels relatively high during extraordinarily bad economic times.

When the financial crisis struck, tax credits for the industry became much more difficult to monetize. That’s because the number of financial players with enough profits (i.e., tax appetite) to take advantage of tax credits dropped precipitously. As a result, the Administration created a grant program that allowed developers to take a cash payment through the Treasury equal to 30 per cent of a project’s cost. This incentive enabled a range of new banks and financiers to partner with developers, thus keeping project development rates steady.

Through the Loan Guarantee Program, which has leveraged more than $35 billion in private dollars, the Department of Energy has enabled some extremely important first-of-a-kind projects and manufacturing facilities in the United States. Among them are the largest wind farm, the country’s first cellulosic ethanol plant and some of the largest solar projects in the world. This program has also spurred development of numerous advanced battery and electric vehicle manufacturing plants.

Unfortunately, the lack of transparency in the loan guarantee process has attracted sharp criticism and turned a few recent failures – Solyndra being the highest profile example – into a political nightmare, even though a certain degree of failure is inevitable and expected with such a program.

At the same time, the Administration has balked at extending the single most important stimulus program for clean energy, the Treasury Grant Program, which expired at the end of 2011. In all, Obama has done a lot to elevate the industry, but many in the industry are concerned that he’s shifting focus at the wrong time.

Clean Energy Job Creation: B

Grade Job creation is a very sensitive issue, due to the political controversy around the 2009 stimulus package, so it’s important to set the record straight. To say the stimulus was a failure is simplistic and incorrect. The non-partisan Congressional Budget Office found that through the first quarter of 2011 the stimulus created between 1.6 million and 4.6 million jobs and reduced unemployment by between 0.6 and 1.8 percentage points. It also allowed the clean energy industry to grow by 8.3 per cent between 2008 and 2009, adding thousands of needed construction jobs. The recent green jobs report from the Brookings Institution described it as a period of “explosive” growth.

And those jobs are diverse. There are now 100,000 jobs in the U.S. solar industry, according to the Solar Foundation’s Solar Census. There are 661,000 green jobs in the design and construction industry, according to McGraw Hill. And the Administration’s energy efficiency weatherization program hired 25,000 people between April and June of 2011 alone.

The problem is not that the Administration didn’t create jobs, because it created a substantial amount. It’s that Obama and other clean energy advocates touted figures for job creation that were extraordinarily high – based largely on the assumption that we would get a comprehensive energy bill including a serious price for carbon dioxide that in turn would pay for major clean energy investments. So even though we’ve seen slow and steady growth in this sector, clean energy job creation is wrongly being held up as a failure.

The Administration could be doing more to accelerate clean energy job creation, but it must also be recognized that millions of jobs can’t be created overnight.

Clean Energy Regulations: B

In 2009, the industry was very close to getting a comprehensive climate and clean energy bill that would have busted the market wide open. After that bill went down in flames in 2010, the president stopped pursuing a price on carbon or a national clean energy standard. We’ve seen very little movement on the issue since.

Why a decent grade then? This Administration has undertaken a considerable number of regulatory efforts that don’t have as much political flair, but do have an enormous impact on spreading clean energy technologies.

Last summer, the Administration negotiated aggressive fuel standards for light and heavy vehicles – a move that will bring a new generation of fuel-efficient cars and trucks on the road in the coming decade and create thousands of jobs in the struggling auto sector.

At the Interior Department, Secretary Ken Salazar has streamlined the regulatory approval of numerous renewable energy projects on public lands, including the largest concentrating solar power plant and the nation’s first offshore wind farm. As well, the department facilitated approvals by creating a “zones” approach to siting clean energy facilities on public lands.

The Administration has also improved the transmission siting process. The Federal Energy Regulatory Commission issued a final rule last summer that gives priority to those transmission corridors that help bring clean energy online, while also clarifying who must pay for transmission upgrades. Not very sexy, but it’s billed as one of the most progressive pieces of clean energy regulation coming out of the Administration.

Finally, the Environmental Protection Agency has actualized rules for regulating carbon emissions, air toxins and mercury from dirty power plants. Last fall, the Administration dropped a rule for regulating smog, infuriating environmental groups. The EPA has also delayed other rules for regulating greenhouse gas emissions from oil drilling rigs. But the agency, having successfully implemented rules for carbon and mercury from power plants, will be responsible for spurring a major transition away from coal and toward more renewables and natural gas.

Clean Energy R&D: A-

Obama has come out very strong in support of clean energy R&D, calling for a 70 per cent increase in research in his 2012 budget, even in the face of massive budget cuts. He explained: “Our focus cannot just be on the short term.”

The Administration has set aside more than $1 billion for grants to national labs and academic institutions for research on new solar materials, next-generation batteries, biofuels and bio-based materials development, and new manufacturing techniques for a variety of renewables.

One of the Administration’s hallmark programs is the SunShot Initiative, which is aimed at lowering the cost of utility-scale solar PV and concentrated solar power by 75 per cent in the next decade. The Administration recently announced $60 million in grants for research into new storage mediums, heat transfer technologies and engineering techniques in concentrated solar power. And the Advanced Research Projects Agency for Energy (ARPA-E) is playing an important role in the program by helping develop new integrated power electronics for clean energy facilities, with the goal of halving power conversion costs by 2020.

This Administration has done more for clean energy R&D than any previous administration, and deserves a high grade as a result.

Climate Change: D/Incomplete

A lot of people in the climate community would say Obama deserves an F in climate. Given all the Administration has done to set the stage for a massive uptake of renewables and other clean technologies, it’s unfair to give him an outright F. Instead, he gets an incomplete or conditional D.

In the face of the most vicious and well-funded attacks on climate science, this president has not stood up to the climate-denial machine. Since the completely bogus 2009 “climategate” scandal and the defeat of a cap-and-trade bill in Congress, Obama has fallen silent on the issue, even while the science continues to prove how dire the situation is. As a leader with one of the loudest megaphones in the world, Obama should be doing far more to defend the science.

There are still many unknowns that may impact whether this Administration’s grade goes up or down. The first is the future of the proposed 1,700-mile Keystone XL pipeline, which would bring carbon and water-intensive tar sands crude from the Canadian province of Alberta to refineries in Texas. Leading climate scientist James Hansen calls the project “game over for climate.” After a strong and vocal protest movement pressured the State Department to delay a decision until 2013 and demand another environmental review, congressional Republicans set a 60-day deadline which forced the Administration to deny the pipeline application to TransCanada. However, the state department insisted at the time that “denial of the permit application does not preclude any subsequent permit application or applications for similar projects.” TransCanada could reapply with an alternate route, which is a likely scenario. Obama deserves an F if he ultimately approves the project.

The other unknowns involve a few of the regulations mentioned above that are currently in the works: two aggressive fuel standards for light and heavy vehicles, and the Environmental Protection Agency regulation of carbon emissions. If both of these are finalized, they could prove to be a very effective tool for substantially reducing greenhouse gases in the transportation and electricity sectors – perhaps even better than the original carbon cap-and-trade program proposed in Congress.

In conclusion, when grading the Obama Administration across this range of issues, it fares above average. But the political pressure from Republicans to drop strong support for clean energy has the Administration on the ropes.

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