1

65 (w/partial transp options) active slides, target 45m“*” denotes a click to build a slide. Unless otherwise noted as an [automatic transition], a * is also required and shown at the end of each slide. Many built-in animations are timed to the clicks, so make them where they’re noted. [To-dos: CK $25 in 29; CK if 60% motor el in 41 is industrial or all sectors; replace 61 w/4 vignette images.]______________________________________________________________________________________________Thank you for the honor of sharing with you the findings of an ambitious synthesis of American energy solutions that I think may help your work. Sixty colleagues and I at Rocky Mountain Institute—an independent, nonprofit think-and-do tank that drives the efficient and restorative use of resources—performed this study during six quarters, supported by $6 million of philanthropy plus much help from industry with both data and peer review. We published the thoroughly documented results one year ago as a graphics-rich business book called Reinventing Fire. Diamond published Santo-san’s excellent translation in Japanese last Thursday. Today I am deeply honored to help Diamond introduce this work to Japanese business leaders. But you might wonder why these American findings are relevant to Japan. * Visiting and consulting with energy companies in Japan over about 40 years, and comparing my observations with more than 50 other countries I’ve worked in, have made me think our U.S. study could be useful and timely for Japan. U.S. and Japanese conditions of course are very different, but their similarities can be even more important. Both countries have dramatically improved their energy productivity during various periods with varying results. In the 1970s Japan led the world in improving energy efficiency, and there have been some excellent initiatives since, both nationally and in particular firms. But much kaizen opportunity remains. This year, the respected American Council for an Energy-Efficient Economy’s International Energy Efficiency Scorecard, using the latest reliable data (from 2009), ranked Japan very high among 11 major industrial nations in industrial energy efficiency and #1 in industrial R&D, but #10 in industrial cogeneration (4% of national generation vs. Germany’s 13% or Britain’s 27%), #10 in commercial building efficiency (with 2.6x the energy/m2 of Germany), tied with the United States for next-to-last in automobile efficiency, and #8 in truck efficiency. Japanese buildings, especially big commercial buildings, are indeed ripe for deep retrofits, and road vehicles can also become far more efficient. So let me summarize what we found in our American study that I think could also be broadly adaptable to Japan.

Amory B. LovinsChairman and Chief Scientist

© 2012 Rocky Mountain Institute

Who Will Transform the Energy Society?Diamond SymposiumTokyo, 10 October 2012

エイモリ・B・ロビンス

2

Americaʼs public energy conversation boils down to this question: Would you rather die of (a) oil wars, (b) climate change, (c) nuclear holocaust, (d) all of the above,...or...(e) none of the above? What if we could make energy do our work without working our undoing? Could we have fuel without fear? Could we...reinvent fire?Fire made us human. Fossil fuels made us modern. Now we need a new fire that makes us safe, secure, healthy, and durable. This has now become possible. Indeed, it works better and costs less than todayʼs energy system. Letʼs see how.

[Add for non-U.S. audiences: For the sake of specificity, Iʼll describe a detailed independent analysis for the United States, but most of the results will be largely or wholly applicable in many diverse societies around the world.]

*

Oil Natural gas Coal Nuclear Biomass

Hydroelectricity

Other renewables

90%TODAY:

of America’s energy comes from non-renewable energy sources

3

Four-fifths of the worldʼs energy still comes from burning, every year, four cubic miles [19 cu km] of the rotted remains of primeval swamp goo. [continue talking through automatic transition to slide 4...]

90%TODAY:

of America’s energy comes from non-renewable sources

Oil Natural gas Coal Nuclear Biomass

Hydroelectricity

Other renewables

4

Those fossil fuels have built our civilization, created our wealth, and enriched the lives of billions. Yet their rising costs to our security, economy, health, and environment are eroding if not outweighing their benefits—so we need a new fire. *

41% 40%+

5

Switching from the old fire to the new fire changes two big stories—oil and electricity. [* automatic build] Each now releases two-fifths of fossil carbon. Theyʼre distinct: our electricity comes less than 1% from oil but about one-third from coal. * But their uses...

Transportation Factories Buildings

6

...are similarly concentrated. Three-fourths of our oil fuels transportation; three-fourths of electricity powers buildings. The remaining oil and electricity run factories. So very efficient transportation and land-use, buildings, and factories save oil, coal,...and natural gas that can displace them both.

But todayʼs energy system is not just inefficient; itʼs also disconnected, aging, dirty, and insecure. It needs refurbishment. *

2050Efficient

Connected

Distributed

7

By 2050, though, it could become efficient, connected, and distributed, with elegantly frugal autos, buildings, and factories all relying on a secure, modern, and resilient electricity system. We can eliminate our addiction... *

90%TODAY:

of America’s energy comes from non-renewable energy sources

8

...to oil and coal by 2050... [automatic transition to slide 9]

90%TODAY:

of America’s energy comes from non-renewable energy sources

9

...and * use one-third less natural gas... [automatic transition to slide 10]

90%TODAY:

of America’s energy comes from non-renewable energy sources

10

... * while switching to efficient use and...

Other renewables

Natural gas

Biomass

HydrogenHydro

TODAY:By 2050:74%90%of America’s energy could come from renewable sourcesof America’s energy comes from non-renewable energy sources

11

...renewable supplies. [pause] *

158%+$5T 0in savings bigger economy oil, coal, nuclear

12

By 2050, this could cost $5 trillion less in net present value than business-as-usual, assuming that carbon emissions and all other hidden costs are worth zero—a conservatively low estimate. Yet this cheaper energy system * could support a 158%-bigger U.S. economy, all * without oil, coal, or nuclear energy. Moreover, this transition needs no new inventions, and no new federal taxes, mandates, subsidies, or laws—end-running Washington gridlock. Let me say that again: Iʼm going to tell you how the United States can get completely off oil and coal, $5 trillion cheaper, with no Act of Congress, led by business for profit. This doesnʼt mean no policy changes are required to enable and speed the transition. Many are needed. But without a coherent national energy policy set by Congress, the needed policies could instead be set administra-tively or at a state level, where most utility regulation and much other energy policy has long been made anyway.With such sensible policy support, this energy solution could be driven by the C-suite, not by K Street. It could use our most effective institutions—private enterprise, coevolving with civil society, sped by military innovation—to go around our least effective institutions.And whether you care most about profits and jobs and competitive advantage, or national security, or environmental stewardship, Creation care, climate, and health, Reinventing Fire makes sense and makes money. *

If a problem can’t be solved, enlarge it.

—attributed to Dwight Eisenhower

13

General Eisenhower reputedly said that expanding the boundaries of a tough problem makes it soluble by encompassing more options and more synergies. Reinventing Fire therefore integrates all four energy-using sectors—transportation, buildings, industry, and electricity—and it integrates four kinds of innovation—technology, design, policy, and business strategy. These combinations yield far more than the sum of their parts—especially in deeply disruptive business opportunities. *

1985 1990 1995

Weight

14

Where to start? Well, our mobility fuel goes three-fifths to automobiles, so letʼs start by making autos oil-free.

* Two-thirds of the energy needed to move a typical car is caused by its weight—and every unit of energy we save at the wheels by reducing weight or drag saves six more units we neednʼt waste getting it to the wheels, so it saves a total of seven units of energy at the fuel tank. *

1985 1990 1995

Weight

15

*

2005 2010 2015

Weight

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* For the past quarter-century, though,...[keep talking through automatic animation/transition to slides 19 & 20] epidemic obesity has made our two-ton steel autos gain weight twice as fast as we have! * But today...

EfficiencyWeight

17

...ultralight, ultrastrong materials, like carbon-fiber composites, can make * dramatic weight savings snowball and can make autos simpler and cheaper to build. Lighter, * more slippery autos need less force to move them, so * their engine * gets smaller. Such “vehicle fitness” then makes * electric autos affordable because their batteries or fuel cells get * 2–3x smaller, lighter, and cheaper, so their * sticker price will fall to about todayʼs level, with far lower driving cost. * These innovations can transform automakers from wringing tiny savings out of... [automatic transition to slide 22]

18

...essentially Victorian steel-stamping and engine technologies to * the steeply falling costs... [automatic transition to slide 23]

Advanced materials Manufacturing Electric propulsion

19

...of three mutually reinforcing technologies—ultralight materials, manufacturing, and electric propulsion.

Sales can grow and prices drop even faster with a temporary “feebate”—rebates for efficient new autos, paid for by fees on inefficient ones. In its first two years, the biggest of five European feebate programs tripled the speed of improving auto efficiency. *

Gamechanging Technology

20

The resulting shift to electric autos will be as gamechanging as shifting from small refinements in typewriters to the dramatic Mooreʼs-Law-driven gains in * computers. Computers and electronics are now Americaʼs biggest industry; typewriter-makers have vanished.

So vehicle fitness opens a new automotive competitive strategy that doubles oil savings in 40 years—and makes affordable the electrification that can save the rest of the oil. [Leaders will beat laggards, just like hybrid cars—only faster, because hybrid autos have only one learning curve, not three.]

America could lead this next automotive revolution. The formidable barriers are more cultural than theyʼre technological or economic, and Detroitʼs new leaders are starting to tackle them, with our help. But... *

Volume Production of Electrified Carbon-Fiber Slated to start by 2013

VW XL1 2-seat plug-in hybrid (2011)

230 mpg (gasoline), 2013

BMW i3 4-seat battery-electric hatchback (2011) with range-extender option, 2013

21

...the current leader is Germany.In 2011, Volkswagen announced 2013 production of this 230-mpg [1 L/100 km] carbon-fiber plug-in hybrid. * BMW announced 2013 production of this carbon-fiber electric car, confirmed that its carbon fiber was paid for by needing fewer batteries, and said, “We do not intend to be a typewriter-maker.”Audi claimed itʼll beat them both by a year, and just showed in Paris a >110 km/L carbon-fiber plug-in-hybrid concept SUV. Seven years ago, an even faster and cheaper American manufacturing technology made, in one minute, this carbon-fiber “carbon cap” [ring “prop” like a bell]. These techniques can scale to automotive speed and cost with aerospace performance, save four-fifths of automakingʼs capital needs, save lives (because these materials can absorb 6–12x as much crash energy per pound [kg] as steel), and save oil equivalent to discovering 1.5 Saudi Arabias, or half an OPEC, by drilling in the Detroit Formation. Those “negabarrels” under Detroit cost $18 a barrel, and theyʼre all-American, carbon-free, and inexhaustible. *

[VW: 795 kg, 98 km/L gasoline; BMW: 1250 kg, efficiency TBA]

95% carbon composite, 1/3 lighter, 2/3 cheaper

Migrating advanced composites from military & aerospace to automobiles

22

Those German cars use a resin-transfer-molding process much faster and more economical than the hand-layup-and-autoclave process used to handmake Formula One cars, but itʼs still somewhat costlier than regular automaking. Can we improve that further?Well, aerospace uses carbon composites—theyʼre half the weight of the latest civilian Boeing and Airbus planes— but automaking needs roughly a thousandfold higher volume and lower cost. I gained hope that this huge gap might be bridgeable when I met David Taggart at the Lockheed-Martin Skunkworks. There heʼd led the design of a 95%-carbon advanced-tactical-fighter airframe that was 1/3 lighter but 2/3 cheaper than the 72%-metal Joint Strike Fighter base design, because his new clean-sheet design was optimally manufacturable from carbon composites. Finding no military customer for something so radical, he quit, so I hired him to lead the design of... *

23

...the midsize 5-seat Revolution concept SUV (designed in 2000 by RMI’s spinoff Hypercar, Inc with two European Tier Ones)Gen X/Y active-outdoor-lifestyle luxury crossover stylingUltralight (857 kg = steel – 53%) but ultrasafe; if redesigned today, it would weigh much less (est. ~740 kg)0–100 km/in 8.3 s: 2.06 L/100 km (0–60 mph in 8.1 s, 114 mpg) with fuel cell0–100/7.2 s: 3.56 L/100 km (0–60 mph in 7.1 s, 67 mpg) with ~1-L gasoline hybridThis virtually designed car, using all the industry-standard tools of 2000, can carry five big adults in comfort and up to 2 m3 of cargo; if you fold down the rear seats it can even carry two adults and two standard-size kayaks inside. It can haul a half-ton up a 44% grade. [Its comparable 2000 market model was the Audi 2.7T AllRoad with Tiptronic.]You steer, accelerate, and throttle with a joystick—using the right or left hand, in any of the four sockets—and that can markedly improve safety.The design is radically integrated and simplified in many ways. Nearly all the functionality is in software with a very robust and easy-to-use interface. Think of it like a computer with wheels, not a car with chips. Sony PlayStation 10. Way cool.

Radically simplified manufacturing

14 parts, ~99% less tooling costno body shop, little or no paint shop

~80% less automaking capital2/3 smaller powertrain

!

24

Even more importantly, Dave Taggartʼs team showed how such integratively designed, ultralight, ultrasafe autos need not cost more to build, so the $18/bbl cost of getting autos off oil pays for the electrification; the ultralighting costs roughly zero. How can we do that? * Well, that airframe-inspired SUV body design—suspended from rings, not built up from a tub—has just 14 parts, each made with one low-pressure dieset—saving ~95–99% of the $1/3-billion tooling cost. Each part can be lifted in one or two hands with no hoist. The biggest part, on the side, I can briefly lift with one finger. * The parts then snap precisely together for bonding without the robotic body shop. Laying color in the mold can nearly eliminate the paint shop. There go the two hardest, costliest steps in automaking: * altogether the automaker needs four-fifths less capital. * The propulsion system is also two-thirds smaller, hence lighter and cheaper. All these savings pay for the carbon fiber, making the ultralighting roughly free. And carbon fiber itself is probably about to get much cheaper.

Toyota 1/X concept sedan (2007)Prius size, 1/2 fuel use, 1/3 weight

25

Iʼm told thatʼs how Toyota designed this 1/X carbon-fiber plug-in-hybrid concept car. Itʼs as spacious as a Prius but with half its fuel use and one-third its weight—just 420 kg, or 400 kg if it were an ordinary non-plug-in hybrid like a Prius. The day before it was shown, the worldʼs biggest maker of carbon fiber announced a $300-million factory to “mass-produce carbon-fiber car parts for Toyota,” and later added four more automakers. VW and BMW will soon gain worthy competitors, and not only in Japan.

Confirmed by racecar crash experience(thermoplastics are even tougher)

Katherine Legge’s 180-mph walk-away wall crash in a ChampCar (similar to Formula One), 29 Sep 2006

26

Here’s a simple example of an ultralight carbon-fiber racecar hitting a wall at 180 mph...[film runs]. Notice that you have 9x as much kinetic energy at 180 mph as you would hitting a wall at 60 mph. I think we’d all like to have autos this safe!

!!

Tripled-Efficiency Trucks and Planes

27

[The same physics and business logic apply to big vehicles too.] In the six years through 2011, Walmart’s heavy trucks used smarter designs and logistics to haul each case using 44% less fuel. Just the technological fuel saving in heavy trucks can rise to two-thirds, and combined with tripled- to quintupled-efficiency airplanes like these—now on designers’ screens at places like Boeing, NASA, and MIT—can save $0.9 trillion.

And in both light and heavy vehicles, today’s military revolution in energy efficiency will speed all these advances in the civilian sector, which uses >50x more oil—much as military R&D created the Internet, GPS, and the jet-engine and microchip industries. *

1

1.1

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12am 2am 4am 6am 8am 10am 12pm 2pm 4pm 6pm 8pm 10pm

Trav

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Revolutions in Vehicle UseNational travel time index by weekday hour

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As we design and build vehicles better, we can also use them smarter. If this graph of traffic congestion in the morning and evening rush hours were an electricity loadshape, weʼd try to flatten it with IT-enabled demand response, pricing, and smart-grid techniques. * Not yet doing this for road traffic is wasting many billions of dollars per year through idle people, idle vehicles, and idle roads. But instead of just watching driving double as forecast, we can use four powerful techniques to cut needless driving. * We can charge real-time driving costs per mile, not per gallon; * use smart IT to enhance transit and empower car- and ride-sharing; * allow lucrative smart-growth real-estate models, so more people are already where they want to be; and use * IT to make traffic free-flowing. Together, these proven methods can * give us the same or better access with 46 to * 84% less driving, saving another $0.4 trillion—plus $0.3 trillion from smarter use of trucks. *

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4–13%

20–30%

6–14%

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As we design and build vehicles better, we can also use them smarter. If this graph of traffic congestion in the morning and evening rush hours were an electricity loadshape, weʼd try to flatten it with IT-enabled demand response, pricing, and smart-grid techniques. * Not yet doing this for road traffic is wasting many billions of dollars per year through idle people, idle vehicles, and idle roads. But instead of just watching driving double as forecast, we can use four powerful techniques to cut needless driving. * We can charge real-time driving costs per mile, not per gallon; * use smart IT to enhance transit and empower car- and ride-sharing; * allow lucrative smart-growth real-estate models, so more people are already where they want to be; and use * IT to make traffic free-flowing. Together, these proven methods can * give us the same or better access with 46 to * 84% less driving, saving another $0.4 trillion—plus $0.3 trillion from smarter use of trucks. *

$4

Transportation Without Oil

$25per barrel trillion saved

despite 90% more automobility, 118% more trucking, 61% more flying

30

So 40 years hence, a far more mobile [point to subtitle] U.S. economy can use no oil. Saving or displacing each barrel for just $25 rather than buying it for upwards of $100 saves $4 trillion in present value, counting all its hidden costs at zero as we did—or about $12 trillion if we’d counted just the hidden economic and military costs. *

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2010 2015 2020 2025 2030 2035 2040 2045 2050

Mb

bl/d

despite 90% more automobility, 118% more trucking, 61% more flying

Transportation Without Oil

Oil Biofuels Electricity Hydrogen More-Productive Use Efficiency EIA Savings

31

So to get * mobility without oil, * we can first get efficient, then switch fuels. [explain] Those 125–240-mpg-equivalent [1–2 L/100 km] autos can use any mixture of hydrogen fuel cells [green], electricity [yellow], and * advanced biofuels. Trucks and airplanes can realistically use advanced biofuels or hydrogen, or trucks could even burn natural gas, but no vehicles will need oil. Any biofuels the U.S. might need, at most 3 Mb/d, could be made two-thirds from wastes, without displacing cropland or harming climate or soil. *

[53–110-km/L, or 1–2 L/100 km]

“We must leave oilbefore it leaves us.”Fatih BirolChief EconomistInternational Energy Agency 2008

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Our team speeds these oil savings by “institutional acupuncture”: where the business logic is congested and not flowing properly, we insert little needles to get it flowing. Our partners range from Ford to Wal-Mart to the Pentagon. In most of the six sectors we need to transform, the long transition is already well underway.

In fact, in 2009, mainstream analysts began to see “peak oil”—not in supply but in demand. Deutsche Bank even forecast world oil use will peak around 2016.

In short, oil is becoming uncompetitive even at low prices before it becomes unavailable even at high prices!

But electrified autos needn’t add new burdens to the electricity system. Rather, when smart autos exchange electricity and information with smart grids through smart buildings, they add flexibility and storage that help the grid integrate variable solar and windpower. So electrified autos make the auto and electricity problems easier to solve together than separately, and they converge the oil story * with our second big story... *

“We must leave oilbefore it leaves us.”Fatih BirolChief EconomistInternational Energy Agency 2008

Electricity:Key to the NewEnergy Era

33

...saving electricity, then making it differently. Those twin revolutions in electricity promise more numerous, diverse, and profound disruptions than in any other sector, as 21st-Century technology and speed collide with 20th- and 19th-Century institutions, rules, and cultures. *

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Electric Needs Will Decline as Efficiency Gains SpeedAnnual changes in U.S. electricity consumption

Historic

EIA Baseline Transform with Efficiency + Electric AutosWith Efficiency Only

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Changing how we make electricity gets easier if we need less of it. Today, itʼs mostly wasted, and efficiency technologies keep improving faster than theyʼre applied, making the potential savings ever bigger and cheaper. But as buildings and industry start to get efficient faster than they grow, * Americaʼs electricity use, instead of growing 1% a year as officially forecast, could start shrinking by 1% a year despite * electrified autos. We can do this by reasonably accelerating existing trends. *

3-4x Energy Productivity in Buildings, 2x in IndustrySame or better services

Integrative design in retrofittingState Building

35

Over the next 40 years, * U.S. buildings can triple or quadruple their energy productivity, saving $1.4 trillion net with a 33% Internal Rate of Return. The savings are worth four times their costs. * And industry can accelerate too, doubling its energy productivity with a 21% IRR. Weʼd need only to ramp up national-average efficiency adoption over the next 20 years to the levels already achieved in the Pacific Northwest states.

A disruptive innovation we call “integrative design” can do even better, because it often makes very big energy savings cost less than small or no savings, turning diminishing returns into expanding returns. *

Integrative Design in Retrofitting the Empire State Building

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Thatʼs how our 2010 retrofit is saving two-fifths of the Empire State Buildingʼs energy. * Remanufacturing its 6,514 windows onsite into superwindows that pass light but block heat, plus... *

ESB Approach

Avoided Chiller Plant Retrofit

$4M

$2.7M

$5.6M

$2.4M

$8.7M

Minus$17.4

$4.4MAnnual Savings

Windows RadiativeBarrier

DDCControls

VAVAHUs

Lighting & Plugs

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...better lights and office equipment, cut the maximum cooling load by one-third. Then renovating smaller chillers instead of adding bigger ones * saved $17 million of capital cost, helping pay for the other improvements * and cutting the payback to three years. Thatʼs the same payback a major energy-service company had offered, but with dis-integrated design yielding just 1/6 the savings!

Some retrofits elsewhere are saving as much as 70%, making some old buildings better than new! *

Lovins House, Old Snowmass, Colorado7100 ft / 2200 m elevation, 1984

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My own house high in the Rocky Mountains, where temperatures used to dip as low as –47˚F / –44˚C, helped inspire 32,000 European passive buildings that likewise need no heating, yet have about normal construction cost. And they neednʼt look like this to work like this. *

90%

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99%saved electricity

month payback

saved space andwater heating energy

1984:

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* Inside, weʼve grown 44 banana crops with no furnace. In 1984, this house saved 99% of its space- and water-heating energy * and 90% of its electricity, * all with a 10-month payback. Todayʼs technologies, which we've just retrofitted, are even better. This design approach works in any climate...including eliminating air-conditioning up to at least +115˚F / 46˚C with lower construction cost and better comfort.

The key is integrative design that gives multiple benefits from single expenditures. For example, this white arch [point] has 12 functions but only one cost. *

World Electricity Use

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Integrative design can also increase the half-trillion dollars of conventional energy savings in industry. Dow has already captured over $9 billion of those savings on a $1-billion investment. But thereʼs more to do. * [Dow: 1994–2010]

MotorsWorld Electricity Use

60%

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For example, * three-fifths of the worldʼs electricity runs motors. *

MotorsPumps and Fans

60%30%

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Half of that runs pumps and fans. Those devices can be improved, and the motor systems that turn them can save about half their energy by integrating 35 improvements that pay back in a year. But first we should capture bigger, cheaper savings normally ignored. For example, pumps—the biggest use of motors—... *

Saving Electricitymotors, pumps, and pipes

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...move liquids through pipes. A typical industrial pumping loop was redesigned to use at least 86% less pumping energy, not by getting better pumps but just by replacing long, thin, crooked pipes... *

Saving Electricitymotors, pumps, and pipes

Less CapitalInvestmentsmaller equipment

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...with fat, short, straight pipes. That also shrinks pumping equipment and its capital costs. This isnʼt new technology—just rearranging our mental furniture. *

Power Plant Power Grid Motor/Drivetrain Pump/Throttle Pipe

-70% -9% -12% -55% -20%

100Energy units

10%Delivered flow

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So what do such savings mean for the electricity thatʼs three-fifths used in motors? From the coal burned in the power plant to the end use, many successive losses compound, so only a tenth of the energy in the coal comes out the pipe as flow.

But now turn those compounding losses around backwards... *

Power Plant Power Grid Motor/Drivetrain Pump/Throttle Pipe

-70% -9% -12% -55% -20%

100Energy units

5 %Delivered flow

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...into compounding savings (from right to left), and every unit of flow or friction you save in the pipe saves ten units of coal, cost, and emissions at the power plant. And as you go back upstream, the components get smaller and cheaper. *

$30 Billionradically efficient industrial redesign

47

Our team has lately found such snowballing energy savings in redesigning >$30b worth of diverse industrial facilities, from this Hewlett-Packard data center and Texas Instruments chip fab to Rio Tinto and Anglo American mines and Shell hydrocarbon facilities. Typically our retrofit designs save about 30–60% of the energy with 2–3-y paybacks, while our new-facility designs save around 40–90+% with lower capital cost. *

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Renewable Energy’s Costs Continue to PlummetWind and photovoltaics: U.S. capital cost trends

Photovoltaic modules Windfarms

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Needing less electricity would ease and speed the shift to new sources of electricity ... chiefly renewables. China leads their explosive growth and the plummeting costs shown here: photovoltaic module prices, the blue dots, have now fallen off the bottom of this logarithmic chart to todayʼs 80-odd ¢/W. Solar and windpower are already marketplace winners: some windpower contracts are priced at just 3¢/kWh, and in April, Californiaʼs photovoltaic auction cleared below 9¢, one-fourth below average U.S. residential rates, even though U.S. developers averaged twice Germanyʼs installed system cost.

Already in about 20 states, private installers can put those cheap photovoltaics on your homeʼs roof with no money down and often guarantee to beat your utility bill. Such unregulated products could ultimately add up to a “virtual utility” that bypasses power companies just as cellphones bypassed wireline phone companies. That gives utility executives nightmares and venture capitalists sweet dreams. But utilities could actually turn that competition into a major business opportunity, and weʼre helping them do so. *

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Global Markets are Shifting to Distributed RenewablesGlobal generating capacity: annual net additions, 1990–2011

WindPhotovoltaicsNuclear

December 2011PV worldwide annualmanufacturingcapacity (GW/y)

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This graph shows the extraordinary growth in the amount of wind and photovoltaic generating capacity added worldwide each year. Starting in 2008, half the worldʼs new capacity has been renewable. So is a fifth of the worldʼs electricity today. Last year, two-thirds of Europeʼs new capacity was solar and windpower. The world * became able to make over 50 billion watts of solar cells every year, rising by 60–70% a year. [The International Energy Agency forecasts that in five years, the world be making 1.5 times as much renewable electricity as the U.S. now makes from all sources.] Last year, the global clean-energy sector invested its trillionth dollar since 2004, bringing Europe 1.1 million renewable-energy jobs, and creating more American solar or windpower jobs than we have steel or coal jobs.Last year, renewables except big hydro got $225 billion of global private investment, added 84 billion watts, and reached 1.5 times the global capacity of nuclear power, whose dwindling annual net additions * turned negative after Fukushima. Global orders for nuclear and coal plants continue to fade because they cost too much and have too much financial risk. In the U.S., no new nuclear power plant has raised any private construction capital despite seven years of 100+% subsidies. So how else can the United States displace its nearly 500 coal-fired plants? Efficiency and cheaper gas can displace them all at below just their operating cost; since 2005, coal has already lost a third of its market share. Gas prices remain volatile and rising, but renewables have falling capital costs and no fuel. These modern competitors could displace all the coal plants many times over at below their replacement cost. Once suffices. *

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We’re often told, though, that only coal and nuclear plants can keep the lights on, because they’re “24/7,” while windpower and photovoltaics are “variable” and hence unreliable. *

!11% Downtime

!12% Downtime

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Actually, no generator is 24/7. They all fail. When * giant coal and nuclear plants fail, a billion watts vanishes in milliseconds, often for weeks or months and without warning. * Grids routinely handle this intermittence by backing up failed plants with working ones, * and in exactly the same way, grids can handle the forecastable variations of solar and windpower. [automated transition continues...]

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Hourly simulations show how largely or wholly renewable grids can deliver highly reliable power when forecasted, integrated, and diversified by type and location. In June, the National Renewable Energy Laboratory published a detailed analysis of reliable and economically interesting 80–90% renewable electricity supply for the United States. But that’s also feasible for smaller areas embedded within a larger grid. *

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For example, * the isolated Texas gridʼs summer electric loads can get much * smaller and less peaky with efficiency. Then we can install enough * wind and * solar power to make 86% of the annual electricity—and get the other 14% from dispatchable renewables like * geothermal, small hydro, solar-thermal-electric, and * feedlot biogas burned in existing gas turbines. This 100% renewable supply can then be matched to the load by using excess electricity for * two kinds of distributed storage—ice-storage air-conditioning and smart charging of electrified autos—then * recovering that energy when needed, and * filling the last gaps with unobtrusively flexible demand. * Only ~5% of the annual renewable generation in this hourly dispatch simulation is surplus. *

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Choreographing Variable Renewable GenerationEurope, 2010 capacity, average wind year

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Some utilities already integrate variable renewables in this way. * Four German states in 2010 were 43–52% windpowered, * Portugal 45% renewable-powered, * Denmark 36%. * In certain hours this spring, renewables made three-fifths of all German electricity, while just PVs met all peak demand. Indeed, Germany now gets 26% of all its electricity from renewables—quadrupled in the past dozen years. Now European experience supports a transition over decades to largely or wholly renewable electricity for the whole European Union.Among all major industrial countries, Japan is the richest in diverse, high-quality renewable energy resources—per hectare, 2x that of North America, 3x that of Europe, 9x that of Germany. Thus Japan is poor in fuel but rich in energy. Current Japanese policy seems to assume that renewable electricity in Japan costs about four times more than it does in other countries with seemingly similar resources, and I don’t understand why. The Feed-In Tariffs introduced in July to speed deployment are 3-4x those successfully used in Germany, and should start a “gold rush.” The tariffs can then be rapidly reduced, as Europe did, to mature the sector in an efficiently and orderly way as a truly Independent System Operator is added, I hope next year. Then real competition can best drive prices down and deployment steeply up. Some Japanese groups seem not yet aligned with this potential. Japan’s ten electric monopolies long had an informal policy that new renewables couldn’t total more than 1% of their electricity, so last year Japan’s capacity of these sources per capita was one-fourth that of Europe or one-eighth that of Germany. Japanese PV additions last year may be doubling this year, but that’ll still add less than half what Italy added last year. And the Japan Wind Power Association forecast this February that Japan in 2050 could make the same fraction of its electricity from windpower in 2050 that Spain did in 2010. This seems to me unambitious. Japan could deploy its own renewable technologies faster than anyone, creating vast new businesses. *

Similar DifferentRisksCosts

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America’s aging, dirty, insecure electricity system must be replaced by 2050. Whatever we * replace it with will cost about $6 trillion net present value—whether we buy more of what we’ve got, or new nuclear and so-called “clean coal”, or renewables (either centralized or more distributed). But these four futures, all costing virtually the same, * differ profoundly in their risks around national security, fuel, water, finance, technology, climate, and health. For example, our overcentralized grid is vulnerable to cascading and potentially economy-shattering blackouts caused by solar storms, other natural disasters like storms and earthquakes, or terrorist attacks. But that blackout risk disappears, and all the other risks are best managed, with distributed renewables reorganized into local “microgrids” that normally interconnect but can stand alone at need: they can split apart fractally and reconnect seamlessly. That’s where the Pentagon’s leaders are shifting their own power supply because they need their stuff to work—but so do the rest of us whom they’re defending. Pursued nationwide at about the same cost as business-as-usual, this resilient grid architecture would maximize national security, customer choice, entrepreneurial opportunity, and innovation. This approach would have special value in a country with Japan’s population density and seismic risks. I would recommend that policy favor decentralized deployment and use islandable inverters, which can operate continuously and safety with or without a grid connection, to be the default design. Japanese innovations like the “digital grid” from Abe-sensei at Todai also show promise of displacing proposed giant transmission corridors, which could increase vulnerability, with distributed microgrids that make major failures impossible. *

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Together, efficient use and diverse, dispersed, renewable supply are starting to transform the whole electricity sector. * Traditionally, utilities built giant coal and nuclear plants, then big gas plants, and maybe a little efficiency and renewables. Those utilities were rewarded, as they still are in 36 of the United States, for selling you more electricity. But now—especially where regulators instead reward cutting your bills— *

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...the market is shifting massively towards efficiency, renewables, cogeneration, and ways to blend them all together reliably, with less transmission and little or no bulk electricity storage. *

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[So our energy future is not fate but choice, and]...that choice is very flexible. In 1976, for example, government and industry all insisted the * energy needed to make a dollar of GDP could never decrease. * I heretically suggested it could drop severalfold, and * thatʼs what happened—by twofold so far. Yet todayʼs far more powerful technologies, integrative design, and maturing delivery channels * can save another threefold, even cheaper. Combining our U.S. analyses, especially using integrative design, with the excellent latest work of Japanʼs National Institute for Environmental Studies, I believe the potential for energy savings in Japan is broadly similar to this U.S. tripling.To solve the energy problem, we just needed to enlarge and integrate it. The results may at first seem incredible. But as Marshall McLuhan said, “Only puny secrets need protection. Big discoveries are protected by public incredulity.” Now combine the electricity and oil revolutions, both driven by efficiency, and you have the really big story... *

Reinventing Fire: U.S. Economy Free From Oil and Coal

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...Reinventing Fire [explain]—where business, enabled and sped by smart policies in mindful markets, can lead the United States completely off oil and coal by 2050... *

158%+$5T 0in savings bigger economy oil, coal, nuclear

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...saving $5 trillion, growing the economy 2.6-fold, strengthening our national security, and by eliminating oil and coal, reducing fossil carbon emissions 82–86%. Now, if you like any of those outcomes—any one or more—you can support reinventing fire without needing to like all of them or to agree about which of them is most important. Focusing on outcomes, not motives, can turn gridlock and conflict into a unifying solution to Americaʼs energy challenge. *

Climate Change

Nuclear Proliferation

Energy Insecurity

Energy Poverty

Solutions to:

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These best buys are also the most effective solutions * to global * problems * that also * hazard every countryʼs security and prosperity.

Rocky Mountain Institute’s Implementation

Next-Generation Electricity RetroFit Superefficient Affordable Housing

Transformational Trucking 10xE: Factor Ten Engineering Project Get Ready

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Our team at the nonprofit Rocky Mountain Institute helps smart companies to get unstuck and speed this journey via six sectoral initiatives, with some more hatching. Of course, thereʼs still much old thinking around too: as oilman Maurice Strong said, not all the fossils are in the fuel. But DuPontʼs former Chairman Edgar Woolard reminded us that firms hampered by old thinking “...wonʼt be a problem, because they simply wonʼt be around long term.” *

Amory B. LovinsChairman and Chief Scientist

© 2012 Rocky Mountain Institute

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Iʼve described not just a once-in-a-civilization business opportunity, but one of the greatest transformations in the history of our species. We humans are inventing a new fire: not dug from below but flowing from above, not scarce but bountiful, not local but everywhere, not transient but permanent, not costly but free—and but for the transitional tail of natural gas and a little biofuel, grown in ways that sustain and endure, this new fire is flameless. Efficiently used, it really can make energy do our work without working our undoing.

Each of you owns a piece of that $5-trillion prize. Our new book Reinventing Fire details how each of you can capture that opportunity. *

Japanese frogs jump too!

The old pondfrog jumps inplop —Bashô, 1686

Japan can lead this global energy hiyaku (飛躍)

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Some say Japan cannot do such a thing. Five years ago, the Yomiuri Shimbun even said, “Japan’s energy efficiency level is unlikely to improve much, since it is already the best in the world.” But having observed Japan and learned from my Japanese colleagues for the past 40 years, I have a different view. Perhaps the writer forgot that kaizen applies also to energy; that Japanese industry is still the world’s best at kaizen; and that despite the political gridlock that afflicts both our countries, the amazingly cohesive Japanese people have a unique ability to carry out a new consensus with astounding speed. Today, three-fourths of Japanese people agree we need an energy leapfrog, a hiyaku — and we know that Japanese frogs jump too, because Bashô told us so: * furu ike ya / kawazu tobikomu / mizu no oto.

Please consider how you can grasp the opportunities for that big jump, and help make the world richer, fairer, cooler, and safer, by together reinventing fire. For we are the people we have been waiting for—and Japan could become the leader the world is waiting for.

Four years ago I had the honor to receive the Blue Planet Prize from Their Imperial Highnesses Prince Akishino and Princess Kiko. I responded with these words: [read text]

reinventingfire.com | www.rmi.org, ablovins@rmi.org | Twitter @AmoryLovins

www.ted.com/talks/amory_lovins_a_50_year_plan_for_energy.html

www.rmi.org/Knowledge-Center/Library/2012-01_FarewellToFossilFuels

ご静聴ありがとうございます

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So with the conversation just begun at reinventingfire.com, we invite you to engage with us, and with each other, to help make the world richer, fairer, cooler, and safer by together...reinventing fire.

Thank you for your good work and your kind attention. * Go seichô makotoni arigatô gozai mashita!