Power Report

On a motherboard the small amount of power needed for a few milliseconds can be handled by finger-sized capacitors. But at the megawatt local network level, even a few milliseconds entails the use of capacitors the size of a stack of oil drums, or American Superconductor's refrigerator-sized semiconductors. At the network level, Siemens Westinghouse Power (SMAWY) has developed a power-electronic based "Dynamic Voltage Restorer" (DVR) that can fix high power voltage sags in real time for loads in the 2 to 26 MW range, enough to keep, e.g., a serniconductor fab humming.

Ride-Throuqh Systems

Clean Power Systems take care of blips lasting from milliseconds up to about a second. Ride-Through Systerns take care of events lasting seconds to minutes, and occasionally hours.

Most home and small office PCs already use the increasingly ubiquitous American Power Conversion products which use a battery (controlled by PowerChips) that can keep your PC up for several minutes if the power hiccups.

A dot-com or net-bank with a power appetite hundreds or thousands of times greater may use enormous banks of batteries for ride-through. Batteries present maintenance, reliability, and longevity constraints that have not fundamentally improved in decades. But they are now responding to dot-com needs, as new materials and computer-aided design capabilities are finally beginning to yield real progress.

Most power secure operations have two redundant battery banks. But an electro-mechanical flywheel can replace one, using one-tenth the floor space of batteries and requiring essentially zero maintenance. An electric motor runs, when there's Power, to spin up to a one-ton steel flywheel. When the power fails, the motor reverses and becomes a generator, powered by the flywheel's inertia - good for 250 kW and more, for as long as it takes to power up the back-up generator. This past summer, for example, Constellation Energy (the Baltimore Gas and Electric parent) installed an Active Power CleanSource CS 200 as part the UPS serving Comcast's critical cable and Internet hub facility.

Stand-Alone Local Generators

Electronics and batteries take care of the milliseconds and the minutes, beyond those lie the outages that last hours or days. On-premises generating capacity boosts the reliability of the power mainly by shortening the wire between the generator and the user.

We project a huge surge in demand for on-premises generators. The estimated world market today is $5 billion a year for diesel generators. Standard wisdom forecasts a tripling over the next five years. We think a ten-fold increase will be closer to the mark. The hockey stick,will he driven by four factors.

The demand for High Nines power is altogether new; the Intemet Economy is here and growing.
The power electronics required to bring stand-by generators on line quickly and cleanly only matured in recent years. Safely and economically interfacing half-megawatt generators with the utility grid required switching gear that was almost impossible to find as recently as five years ago. It is readily available today.
The deregulation of the power industry is accelerating just as PowerChip makes deregulation relevant.

The deregulation of the electric market and the disassembly of the "natural" monopoly system began in earnest in 1992 with the Energy Policy Act that opened up competition at the wholesale level. Over one-half of all electricity produced at utility and merchant central station generating plants is already sold several times over, through broker contracts, before it is ultimately consumed. Now the retail side of deregulation is in full swing, with 22 states under legislative "restucturing," or deregulated (except for transmission; more about this in future issues). Federal legislation is likely to accelerate the movement once we get past the next presidential and congressional elections.

The stealth revolution in materials science and engineering for diesel engines has almost doubled efficiency and boosted reliability. A 1981 Caterpillar 3500 series produced 900 kWh; the same block and geometry now produces 2,200 kWh.

PowerChips are eliminating the mechanics governor, alternator and voltage regulator. Windows-compatible software controls startup, fuel economy, and voltage sta- hifity. Thin servers and neural networks allow real-time and remote monitoring and diagnostics, boosting reliability and dropping costs. In short, the venerable diesel has come a much longer way technologically than the much hyped windmill or fuel cell; and it's cheap.

On the horizon are mini- and micro-turbines, tiny versions of airplane engines. Mini-turbines are already commercially viable, poised to take market share as the monopoly regulatory structure unravels. On the horizon, a 100 pound machine producing 400 kW. Turbines like to run flat out round-the-clock. One thing dot-coms need, is lots of power round-the-clock.

All three of these technologies, Clean Power Systems, Ride-Through Systems, and Stand-Alone Local Generators, are practical only because of PowerChip. PowerChip is as central to the transformation of the power industry as the microchip was to the transformation of the computer industry. Thus we put forward two propositions:

Solid-state devices will take over all power switching at all power levels and all speeds. And it will happen far faster than most analysts suppose. PowerChips will permeate the grid, from the central power station down to the motherboard.
As PowerChips proliferate, they will expose the entire generating and service infrastructure of the conventional power industry to competition. A tidal wave of new storage and generating alternatives will respond to a huge reservoir of unmet demand for High Nines power. In so doing, they will thrust competition into the bowels of the industry, and transform it beyond recognition.

The Implications for Utilities

The PowerChip will disrupt established utilities in much the same way as the SmartChip disrupted the mainframe industries, except that this time there is more to disrupt. SmartChips arrived just two decades after the mainframe; the PowerChip arrives to disrupt an electric utility business that has been growing for more than a century. It is coincidentally an industry now poised on the brink of enormous collateral disruption by regulators.

The worst utilities will go the way of PanAm. Or the way of Digital Equipment, or Control Data, Wang, Burroughs, Univac, Tandem, Data General, or Prime. Over time - and huge though they are - they will see their core businesses wither and vanish. Others will limp along, the way of a TWA or a Continental. A third group, the IBM equivalents, will get smart or lucky. And there will be fourth group, new entrants that don't exist today, the equivalent of America West, or Dell, or AOL, that will build up from scratch, seize new opportunities, and prosper.

The weak players will he destroyed by a technological pincer movement. Their base of Three-Nines commodity kWhs will he stolen by more efficient providers transporting electrons on upgraded or new backbones. At the same time, peak loads - and peak prices and margins - will he flattened by back-up generation systems whose owners start wheeling their excess power back on to the grid. Most back-up systems, installed to support High Nine quality, will run too expensively to make it worth while to wheel their power back on to the grid - most of the time. But when spot prices spike they will be there to pick up some of the windfall that now goes strictly to the utilities. Even more likely they will find it profitable to leave their systems up and sell High Nines power to other nearby SmartChip companies.

As the number of local generators grows, installed originally to provide High Nines insurance to their owners, the architecture of the grid itself will begin to change. Rather than a series of virtually identical Three Nines plugs, the grid will take on a lego-block architecture: with a variety of components highly adapted to different functions, yet also standardized and perfectly interconnectable, analogous to both the fragmentation and the interoperability of telecommunications networks. The forces of dispersion are by no means identical, but the main currents are the same: new interfaces, made possible by new switches and new 'pipes', that