The McDonnell Group

ATLANTA  - Aug 3, 2009 – Does today’s smart grid fever embody the long anticipated societal tipping point for energy efficiency advocacy and a renewed consumer energy consciousness in the United States? For some insight, I revisited one of my favorite books published thirty years ago this year, Daniel Yergin's co-edited Energy Future: Report of The Energy Project at The Harvard Business School. 

Fast forward eleven years to 1991.  As a US Naval Officer, I watched and smelled the oil fields of Kuwait burn up close and personal and participated in a record 14 transits of the Straits of Hormuz protecting oil tankers. This experience gave me an even stronger conviction about our need to strategically rethink our approach to energy in the USA.

Out of the Navy, I secured my first civilian job at Servidyne Systems and my boss Milt Bevington, a Harvard alum, gave me a copy of Energy Future from his library to read as part of my orientation. It has informed many of my views around energy since then.

So what has changed in the 30 years since Yergin so eloquently laid out his argument for energy efficiency -- what he called “conservation energy”-- in chapter six of his now classic text?  For starters, the world now recognizes the dangers from CO2 that Yergin pointed out when he presciently noted that one of the benefits of conservation energy was that it “does not emit carbon dioxide into the atmosphere.”  This is the biggest thing that has changed. Also, the former consensus majority view among policy makers that energy consumption and GDP growth were inextricably linked has recently given way to more enlightened policy perspectives, despite some holdouts.

Three things Yergin pointed to thirty years ago remain largely the same today.  First, Yergin cited major challenges posed from the fragmentation of the energy efficiency industry and the role that cultural attitudes framed by Jimmy Carter’s ‘sweater suggestion’ played when he wrote, “productive conservation….it is a highly fragmented subject that certainly lacks glamour. Conservation is prosaic, even boring.” 

I’d like to believe that growing consumer engagement around home energy efficiency and smart grid programs is helping to change this, but I still don’t have any neighbors espousing the virtues of their home energy audit results or HVAC replacements as evidence of this. Growth in the energy technology and demand response marketplace is evidence that these sentiments are slowly changing, but the verdict is still out for me.  Clearly the record high oil prices in 2008 'shocked' US consumers into an increased awareness around transportation energy efficiency and some of that has stuck and spread into the electric sector.

Secondly, as Yergin pointed out thirty years ago, energy supply side interests and lobbying still have a dominant influence on energy policy in the USA at both the State and Federal levels. 

Finally, what remains largely the same today is the calculus that Yergin laid out around the tremendous potential for national savings available from energy efficiency.  With some updated technology examples and some slightly revised numbers, Yergin’s strong national “business case” for the potential for energy efficiency still holds largely true today. Whether this is a complete indictment on the past 30 years of US energy policy, or a fantastic harbinger for the future depends on your current perspective.  As an optimist, I’m holding out hope for our energy efficient future.

If you are a utility executive, engineer, or smart grid market participant and you want to join our discussions on these topics, please consider joining our Smart Grid Executive Forum at:

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A July 2009 McKinsey Report on energy efficiency can be downloaded at:

 http://www.mckinsey.com/clientservice/electricpowernaturalgas/downloads/US_energy_efficiency_full_report.pdf