Climate change is a serious challenge for our society and for businesses around the world. As a company, we are focused not only on ways for us to reduce the environmental impact of our business, but also on the important business opportunity climate change presents. We believe that climate change is and will continue to drive significant changes in business and society; this is why last week Microsoft joined the growing number of companies who have signed on to the Climate Declaration, a nonpartisan statement from the business community that “tackling climate change is one of America’s greatest economic opportunities of the 21st Century.”
We not only believe in this change, but we are investing to help make this transformation happen. As we recently noted in a post on our CityNext work, Microsoft and its partners are helping cities reduce their carbon footprint and address climate change by using Big Data to make buildings smarter and more efficient. Through CityNext, Microsoft and its worldwide partner network hope to help cities leverage technology solutions, including cloud computing, mobile devices, and big data to operate more efficiently.
But the opportunity is much larger than just cities. At Microsoft, we are also working with utility companies around the world to help enable them to use information technology and the power of modern data centers and cloud computing to develop and operate new renewable energy projects as well as optimize their current energy generating and transmission assets. As part of our work, we recently updated our Smart Energy Reference Architecture (SERA V2.0) to provide a roadmap for utilities to enable smart energy advances. Part of the goal of SERA is to showcase how utilities can enable widely distributed sources of renewable energy from rooftop solar cells to electric vehicles to become a connected utility’s power sources. Utility companies have opportunities, today, to enable innovations which will have broad business benefits and help supply more renewable energy to the market.
In order for utilities and cities to change, we also need governments’ help to unlock the opportunities to realize the full potential of information technology in driving forward more sustainable energy production and use. We are excited about the positive opportunities for governments to help drive economic growth while accelerating greater environmental progress. Below are a few areas where we believe governments can play an active role in helping foster conditions which will accelerate economic and environmental progress:
Lead by example. Governments can help save energy and benefit the environment by seeking to apply the power of information technology to energy and sustainability challenges across buildings they own and across the jurisdictions they oversee. A great example of this can be seen by the work the City of Seattle is doing. These initiatives can yield significant cost savings and efficiency gains while demonstrating best practices and helping build the market for solutions that reduce energy use.
Invest in research to help accelerate new technologies. Governments need to further fund basic science research and research into renewable and sustainable low-carbon energy sources. By leveraging the power of cloud computing and investing in infrastructure such as the wide-scale broadband connectivity and broad deployment of smart meters necessary for many IT-enabled energy solutions, cities and governments around the world would be able to accelerate the infrastructure needed to drive dramatic improvements in energy efficiency and use of renewable and intermittent energy. For instance, Microsoft is working with the local government and many other partners in the French town of Issy-les-Moulineaux to provide residents with real time energy consumption data using cloud-based data storage and management tools, which has resulted in up to a 20% decrease in energy use.
Reform energy regulations to foster demand-side management. Regulators who oversee energy generation and distribution should consider adopting real-time pricing policies that enable the market to optimize generation and demand-side management. Ensuring a vibrant ecosystem for demand-side management and energy service providers requires the following elements:
- Free the data. IT systems can provide feedback that empowers systems and individuals to change their behavior. This will require easy access to critical supply and demand data as well as integration of other public and non-public data. Policymakers should consider opportunities to enable the appropriate sharing of near-real-time energy data. By ensuring that individuals and third parties have access to energy usage and pricing information, subject to appropriate privacy protections, businesses will compete to provide applications that leverage this data to drive energy efficiency gains. This will create economic opportunities for the formation of new companies and drives energy savings and increases in renewable energy use.
- Allow prices to vary. Regulators should promote large-scale adoption of variable pricing energy models to encourage the active participation of energy users in demand-side management programs. Because variable pricing will encourage businesses to use energy when it is cheap and often cleaner (available wind power at night may be unused today due to low demand and lack of pricing incentives), we will see the modification of manufacturing processes and other work to take advantage of more renewable energy and realize cost savings.
- Promote interoperability. Regulators and standards bodies should require interoperability and appropriate standardization for information access and formats, thus fostering a healthy ecosystem of energy service providers and preventing vendor lock-in with proprietary formats. Standardization should rely on existing Internet Protocol and Web services standards and leverage the XML and extensible capabilities of Web services standards.
We are on the cusp of a transformation around the way energy is generated and used. Cities, governments, technology companies, alternative energy companies, and anyone who uses energy (i.e., everyone) will benefit from a series of technology and policy advances which provide greater access to information; information that will transform the way we use energy. At Microsoft, we think that these changes are all possible and many are already starting to happen. We are excited to be a part of this transformation and hope that you will share your thoughts and feedback with us.