The Pecan Street Project

Can the city of Austin become a savior of the nation's energy future?

That's the lofty goal announced for a new clean-energy initiative dubbed, for local flavor, "the Pecan Street Project." After six months of quiet brainstorming, the futurist project gained stature last week when City Council resolved to work with partners to develop a next-steps plan. The mission: "To make the city of Austin into America's clean energy laboratory – a place for researchers and entrepreneurs to develop, test, and implement the urban power system of the future."

To initial participants, such as the Austin Cham­ber of Commerce, Austin Technolo­gy Incubator, and the national Environmental Defense Fund, that scope makes the project tremendously exciting. To skeptics, Austin's proposed national preeminence may sound overreaching. Yet three short decades ago, few would have predicted that Austin would become such a high tech center – more than 3,300 tech companies employing more than 100,000 people.

The partners say Austin is an ideal real-world lab due to its constellation of industry, semiconductor, supercomputing, and software players. Strong local support for green power and clean tech is another plus. And factor in Austin Energy's singular status as the only city-owned utility in the only U.S. state not subject to federal regulatory controls (which the participants say would unnecessarily delay such innovations).

Spearheading the project is Mayor Pro Tem Brewster McCracken, backed by Austin Ener­gy General Manager Roger Duncan. (The City Council serves as AE's board of directors, and the mayor is board chair; it should not go unnoticed that McCracken is a presumptive mayoral candidate for May 2009.) Joining McCracken in sponsoring the council resolution were Randi Shade and Laura Morrison, the other members of the Coun­cil Committee for Emerging Tech­no­lo­gies and Telecommunications.

"At this point, it's too early to say how this would shape up, but the ultimate goal would be to create something like Sematech," observed Shade, who was involved with the 2001 launch of the Austin Clean Energy Initiative. The Sematech consortium was instrumental in transforming Austin into a high tech city, starting with just 13 members in the early Eighties.

"There are some really great folks who are part of the conversation," observed Morrison. Power partners on board include UT-Austin and the IC2 Institute. Representing UT have been Michael Webber, associate director for UT's Center for International Energy and Environmental Policy, and Marcia Inger, chief development officer for the Texas Advanced Computing Center. Representing IC2 is Isaac Barchas, director of the Austin Technology Incubator, which has helped start more than 150 tech companies locally since 1989. Championing local economic development opportunities is Jose Beceiro, director of clean energy at the Austin Chamber of Com­merce. (For more, see www.austin-chamber.org/dobusiness/theaustinadvantage/energy.html.)

The Environmental Defense Fund, an advocate for solutions to global warming, decided to make the Pecan Street Project a national initiative, after being invited to the table by McCracken and Barchas. "They've convinced us and others to put in resources to try and make this happen," said EDF's Texas Director Jim Marston. EDF's New York, California, and Washington, D.C., offices are contributing staff experienced in partnering with corporations (e.g. FedEx) and electric utility issues. EDF brings relationships with key corporate leaders – such as Jeff Immelt, the CEO of General Elec­tric – established through its U.S. Cli­mate Action Project. The nonprofit will not be compensated by the city or AE: "Our client is the environment and global warming," explained Marston.

A Total Reinvention

As cities seek sources of power other than petroleum and coal, clean energy sources such as wind and solar represent the great hope. The most daunting technical question is how to store and distribute alternative energy on the massive scale needed to power a city. A primary goal of the Pecan Street Project is to advance the technology and infrastructure by offering Austin Energy's grid as a real-world lab for the development and testing of prototypes. The idea is for Austin to jump-start innovation while promoting an economy-stoking local industry sector. On the smart-generation side, the push is for new solar technologies (such as thin-film photovoltaics sprayed on buildings) that can vastly increase the solar power collected daily. Equally important, states a Pecan Street Project info sheet, is "a total reinvention of how energy is distributed and stored."

Historically, energy has flowed in only one direction, from a central power plant to consumers. Under the new model of distributed generation, energy will flow both ways. Potentially, most consumers can generate small modules of energy – via on-site rooftop solar panels, for example, or recharged and plugged-in electric cars – near the point where the power is needed. Excess energy could be provided back to the grid – that is, a city's overall, integrated system for electricity distribution. But as Roger Duncan emphasizes, this "total reinvention" will in turn demand a whole new business model for electric utilities. As the distinction between consumers and producers dissolves, how will AE charge for its services so as not to go bankrupt going green? That's a challenge as imperative as the technological one. Duncan is on the national forefront of trying to solve it. To date, the city-owned utility has been a huge municipal profit center and an irreplaceable funder of city initiatives. For 2008-2009 alone, $95 million in excess profits was transferred from AE to fund the municipal budget. If those profits diminish or vanish, taxpayers will need to make up the difference – or lose corresponding city programs and services.

Lest "reinventing the grid" sound like hyperbole, it's worth noting that Silicon Valley is working on the same challenge. The concern of major corporations: protecting the long-term reliability of the energy resources needed to run our chip-powered nation (and their products). On Sept. 17, Google and GE announced a partnership to "focus on improving power generation, transmission and distribution – a combination of technologies that could be known as the 'smart grid.'" (See release posted at www.googleblog.blogspot.com; for news on corresponding green-grid philanthropic investments, see www.google.org.) Google announced: "We'll start by working together in Washington, D.C. to mount a major policy effort to enable large-scale deployment of renewable energy generation in the United States. We'll also work on development and deployment of the 'smart' electricity grid. ... Finally, we'll collaborate on advanced energy technologies, including technologies to enable the large-scale integration of plug-in vehicles into the grid."

McCracken and other project members have been anticipating this announcement since the spring. The council member forwarded the news with a wry note: "Now if they could just find a utility to partner with them ... a progressive public utility that could offer access to the grid and didn't need any federal regulatory approval to start work. Anyone know where we might find a utility like that?"

For now, as Morrison emphasized, Pecan Street is just a research project to which the city has dedicated no new staff or funds. Marston and others said they hope to announce consortium partners at the Clean Energy Venture Summit 2008, to occur Dec. 2-4 at the AT&T Executive Education and Conference Center. A completed business plan could take another nine months. "There are a lot of moving pieces; that's the hardest part," Marston acknowledged. As for devoting scarce Environmental Defense Fund resources: "It's a little scary, but it also has the potential of very high reward. It will have some bumps along the way. But it's got such potential, it's worth the risk."

The Four Initiatives

The Pecan Street Project has outlined this four-part plan:

1) Create a consortium: The city of Austin will help create and fund a new local, public/private consortium devoted to the research and development of clean energy technologies and distributed generation systems. It will thus work to reduce energy consumption, air pollution, and greenhouse gas emissions.

2) City as lab: Austin Energy will open its grid to entrepreneurs and researchers to test a few megawatts of their prototype technologies – after ensuring they pose no threat to our energy system's safety and reliability.

3) Create business model: As the consortium develops a new distributed generation system for clean energy, Austin Energy will correspondingly develop a new profitable business model for the utility's services.

4) Show the world how it works: Austin will become the first city to test-drive the new system and business model. As a result, we'll enjoy energy savings that will – in theory – prevent the need for an entire new power plant.