(Editor’s Note: Earlier today, I came across an article explaining how nanotechnology could ”revolutionize the natural gas industry.” It reminded me that it in 2006 I wrote a lengthy article for Management Quarterly entitled “Nanotechnology: A Cautionary Tale for the Electric Utility Industry.” Since the article isn’t on-line anywhere and because I was never paid for the article, I thought I would reprint the article in it’s entirety.”)
Nanotechnology: A Cautionary Tale for the Electric Utility Industry
In 1968, Swiss watch manufacturers controlled 80 percent of the world market in high quality watches. By 1973, their market share had plummeted to less than 25 percent and they were forced to lay off 50,000 watchmakers. The reason for the sudden reversal of fortune was quartz technology–a new, disruptive technology which ushered in an era of cheap, reliable electronic watches.
The story serves as a poignant reminder of the power of technological change. It is very relevant to the electric utility industry because nanotechnology–a new emerging set of technologies–has the potential to revolutionize the electric utility industry in much the same fashion as quartz technology changed the “timepiece” industry.
Nano What?
Before exploring some of the specifics of how nanotechnology will transform the electric industry, it is helpful to first define the term. There are two widely used definitions. In the broadest sense, nanotechnology is the precise control of matter at the atomic and molecular level to make new and better materials, products, and devices. A practical application of this is demonstrated with a simple example. Consider a lump of coal and a diamond. Both are made from the same material–carbon atoms–but how their atoms are arranged differs and matters greatly. One is a common source of energy, while the other is suitable for an engagement ring.
Nanotechnology has advanced to the stage where there are now a number of nanotechnology companies that have perfected the ability to manipulate carbon atoms and are manufacturing 2-carat diamonds, which are molecularly identical to natural diamonds, for less than $100 a stone. The significance of this advance is this: if a material as expensive and rare as a diamond can be turned into a “commodity,” then the applications of a variety of other materials, including everything from copper and ceramics to steel, can also be improved and utilized in different ways.
In practical terms, this suggests that many of the equipment and components used in the electric utility industry can be modified to yield incremental improvements in product performance. For instance, high-temperature and sulfur-tolerant nanomaterials can be manufactured to withstand the harsh conditions of coal-fired plants; or nanoscale ceramics coatings can be employed to protect steel, nickel and other metallic components from corrosion. The end benefit is that electric utility providers can increase their operating margins by making existing equipment both last longer and operate at higher levels of efficiency.
This, however, is just the tip of the proverbial iceberg. Nanotechnology’s greater value is revealed in the second definition which describes its incredibly small size; materials and devices measuring less than 100 nanometers are regarded as nanotechnology. The prefix “nano” is derived from the Greek term for “dwarf” and represents one-billionth of a meter. To put this in perspective, it is useful to consider the following analogy: if every character in the Encyclopaedia Britannica were 10 nanometers in width, the entire 30,000 page document could be replicated in the period at the end of this sentence.
This “smallness” is important because once materials are reduced in size to less than 100 nanometers, the realm of quantum physics takes over and materials begin to demonstrate entirely new properties. For instance, nanoscale materials are stronger, lighter, or have enhanced magnetic, optical, conductive or catalytic properties. The exploitation of these unique properties have a host of real world applications for the electric utility industry–not to mention virtually every other major industrial sector.
The Near Term Forecast: Cheaper and Cleaner
It has been said that “the more things change, the more they stay the same.” This is particularly true in the electric utility industry. In spite of the optimistic predictions of its proponents, alternative energy sources such as wind, hydro and biomass are unlikely to seriously challenge coal, oil, natural gas or nuclear power for a meaningful share of the country’s energy needs in the near future.
In fact, according to energy experts, worldwide demand for energy is expected to grow from 13 terawatts of energy today to 30 terawatts by 2050–a 150 percent increase. As a result, oil, gas, coal, and nuclear power will likely comprise a larger slice of the overall energy “pie” in the short- to mid-term, and the new emerging science of nanotechnology will help drive this growth by continuing to increase the yield of these energy sources.
However, how these traditional energy sources are produced will change. In fact, nanotechnology is already at work modifying how coal, oil, and gas are being produced. One of the more prominent examples can be found in the application of new nanoscale catalysts to the production and refining processes of our fossil fuel resources.
Today, most of the world’s oil reserves lie in distant, politically unstable regions. For years, the economics of oil have made this a vexing but intractable problem. Now, with the price of oil hovering near $90 a barrel, the heavy tars of northern Canada (home to the world’s second largest reserve of oil) are becoming an increasingly attractive option as a source of potential energy, and nanotechnology is helping facilitate this transition of the tar sands into an ever more viable (and profitable) source of oil.
A number of companies, including ChevronTexaco, are now actively exploring how nanoscale catalysts can be employed to make the thick tar-like sands of northern Canada into a lighter, more refined and, ultimately, more economic source of oil. Recently, Halliburton, Inc. has indicated it intends to employ nanocatalysts to remove more sulfur. The net result is increased yield and greater supplies of this important fuel. (Nanoscale catalysts, because they have extraordinarily large surface-to-area ratio are less expensive to use than regular catalysts–because less of the catalytic material is used–and they have the added advantage of creating little or no byproduct or waste.)
Nanoscale catalysts are even finding a niche in keeping old refineries productive. As refineries age, the possibility of accidents and disasters, due to wear and tear, necessitates that they be operated at lower temperatures and pressures. New nanocatalysts are now being developed that allow these facilities to continue operational production at these lower levels of temperature and pressure without sacrificing yield of refined oil.
Still another exciting use of nanotechnology resides in the use of nanofilters. Engelhard, Inc., a large material science and chemical company which is now owned by BASF, has created a molecular gate system that can separate nitrogen from natural gas which is currently to nitrogen-rich to be considered usable. The technology works by creating pores that are smaller than a nanometer. By manufacturing a pore 3.7 angstroms in size, Engelhard has created a filter that can capture nitrogen (which measure 3.6 angstroms) while diverting the slightly larger methane molecules (3.8 angstroms) into the pipeline. Company officials have estimated that employing the technology in mid-sized refineries could add 40,000 barrels of natural gas by removing nitrogen.
Other companies are attempting to utilize nanocatalysts to purify coal at the molecular level, and convert it into liquid coal–an advance which would dramatically increase where and how coal could be used as an energy source. Headwaters, Inc. has even partnered with China largest coal company, Shenhua Group, to construct a pilot plant in China.
Nanotechnology also offers advances in environmental protection when converting our natural resources to electricity. Due to their high surface-to-area ratio (the characteristics that makes them such effective catalysts), nanoparticles can render harmless many of the toxins that have made coal a less attractive energy option. And in 2005, a “mercury sponge” came on the market that treats stack emissions from coal-fired plants. The sponge is reported to capture 99.9 percent of the mercury that is released from a coal plant, and places the mercury levels well below the Environmental Protection Agency’s discharge limits. (In addition to capturing mercury, nanotechnology researchers are now investigating how they can capture other metals from power plant emissions.)
In other areas, researchers at Purdue University have developed a new nanoscale palladium catalyst that combusts natural gas more cleanly than conventional methods. Essentially, it eliminates the flame that burns natural gas and replaces it with a catalyst that combusts methane at lower temperature, while emitting less pollution-causing nitrogen-oxide.
Finally, given the increasing amount of political and public attention placed on global climate change, even nuclear energy, which is already experiencing a mini-resurgence in popularity as clean, carbon-free energy source, could gain further momentum because of nanotechnology. To date, one of the nuclear industry’s greatest liabilities has been the storage of nuclear waste. Nanotechnology may be poised to offer a solution in the form of nano-engineered materials that could provide highly effective and long-lasting barriers for the creation of safe nuclear waste repositories. If successful, it could clear the way for the U.S. to break its self-imposed 30-year moratorium on the construction of new nuclear power plants.
A Reduction in Demand and a Smarter System
Today, approximately 25 percent of the electricity consumed in the U.S. is used to power the lighting in homes and commercial properties. According to the U.S. Department of Energy, this level of energy consumption could be cut in half by 2025, and $100 billion saved in the process, if only the average consumer would switch to solid-state–or light emitting diode (LED)–lighting.
Presently, a variety of LED lights exist and are being employed in niche applications such as traffic lights, billboards and cell phone displays. Although they make sense from a cost-benefit analysis perspective, many consumers have been reluctant to switch to LED lighting because of the large, upfront financial investment. (Typically, they are three to four times as expensive as regular lights).
A host of nanotechnology-related developments may, however, tip the scale in favor of the energy efficient choice. For instance, carbon nanotube filaments, which use less energy, emit more light and last longer, could replace tungsten filaments in light bulbs. Similarly, nanocrystals, (also referred to as quantum dots) have been demonstrated to be seven times more efficient than the incandescent light bulb. Furthermore, because these nanocrystals can be incorporated into flexible plastics, the possibility exists that future lights will not only be cheaper, brighter and longer-lasting, they may also be molded into new, more flexible shapes and used in a host of new and innovative ways.
While lighting will be the area where nanotechnology has the largest and most immediate potential impact on energy consumption, other nanotechnology applications will also lower energy consumption. For example, “smart” windows, which can change reflective properties to attract or deflect sunlight depending on the customer’s needs, and smaller and more energy efficient computers and other electronic devices will also contribute to energy savings. Similarly, improved insulation materials, such as those manufactured by Aspen Aerogels, have two to eight times the thermal insulation properties of today’s best insulation materials, could have a noticeable impact on overall energy demand. All of these products are made possible by advancements in nanotechnology.
The greatest long-term cost savings, however, are likely to come from the creation of “Intelligent Energy Networks”—or integrated systems of computers and sensors that gauge and regulate customer energy use. To be sure, such network exist today, but as nanotechnology enables computers and sensors to become ever smaller–while becoming correspondingly more powerful–not only will the cost effectiveness of deploying such devices decrease, the number of possible applications will increase.
Currently, the Pacific Northwest National Laboratory is conducting experiments in a project called GridWise, which allows customers to modify their power-hungry home appliances (e.g. water heaters, dryers, and dishwashers) with sensors and built-in computers. The devices permit users to better regulate their energy use by setting those appliances to take advantage of off-peak pricing or, alternatively, controlling the devices so that they only operate when energy prices fall within a prescribed range. In this way, they will help an increasing number of commercial and industrial consumers better manage their energy consumption.
These smart devices/sensors can also be used by electric utility providers to better manage resources and meet fluctuating energy demand by monitoring energy use across a large geographic region and. More importantly, the next generation of nanosensors, which companies like Intel Corporation are actively working on developing, will be better able to detect everything from computer glitches and fires, and thus prevent problems on both the distribution and transmission system.
In addition to efficiency improvements at the consumer level and advances in distribution system monitoring, nanotechnology can provide immediate improvements to the electrical utility industry’s system of moving power. Industry experts agree that by most standards, today’s energy transmission system is inefficient, inflexible and subject to blackouts. While a variety of factors contribute to this problem, one of the largest is that a vast majority of the existing electrical grid utilizes copper wire to transmit the energy. Not only is copper relatively heavy, it also loses about seven percent of the electricity it conducts. Next generation superconducting cables are currently addressing this issue, but nanotechnology will soon lead to even more progress as material scientists figure out how to better arrange the molecular structure of existing materials to more efficiently transmit electrons, as well as create newer and even better superconducting materials.
The real pay-off may be carbon nanotubes, which are unbelievably thin, possess 100 times the strength of steel, and have only one-sixth the density of aluminum. Their most potent asset, however, is their amazing ability to efficiently conduct electricity. Carbon nanotubes are known to have a current carrying capacity of one billion amps–a thousand fold improvement over the carrying capacity of copper wires. This combination of strength and conductivity suggests that in the future, energy providers will neither have to place transmission poles as closely together nor even have to site new transmission lines or dig up city streets to lay new wires. The existing lines can simply be replaced with super strong, highly conductive carbon nanotube wires.
A secondary advantage of such “quantum” wires is that they may make it possible to generate electricity using oil and gas on location in distant, hard-to-reach places and then transmit that power via superconducting wires directly to an existing electric grid. The wires will remove the cost of transporting coal, oil or gas —by rail, truck, ship, or pipe —to a power plant. The cost savings could be immense.
A Change of Direction: Fuel Cells and Solar Cells
The aforementioned applications of nanotechnology, while real and significant, are merely the equivalent of the watch industry making a watch run longer and more accurately for less money. As such, they are important but they also represent just one side of nanotechnology. The longer term and, ultimately, more perilous aspect of nanotechnology is that for the electric utility industry it could be what quartz technology was to the watch industry–a paradigm shift of historic proportions.
Essentially, quartz technology shifted the watch-making paradigm from one of hand crafting mechanical timepieces to one of machine assembling electronic watches. In a comparable manner, nanotechnology could shift the electric utility industry from a centralized fossil fuel driven generation and power delivery system to a decentralized system, reliant upon alternative energy sources.. In particular, there are two sources of energy where advances in nanotechnology are enabling a significant amount of technological progress: fuel cell technology and solar cell technology.
To date, the safe production, storage and transmission of hydrogen required for fuel cell manufacture has been a difficult barrier to overcome. This is about to change.New nanoscale catalysts have recently been created which can separate high purity hydrogen from a number of reformed fuel sources. Furthermore, new nanoscale membranes can now conduct protons three times as efficiently as today’s state-of-the-art proton exchange membranes, and are nearing commercial scale production.
The combination of these two advances suggests that natural gas, methane, and possibly even ammonia and biomass may soon be viable sources of hydrogen; and the fuel cells utilizing this hydrogen will have a higher power density. This means that small fuel cells, such as Plug Power Incorporated’s new Home Energy Fuel Cell System, may soon be suitable for providing adequate power for a number of existing home and business functions.
The economics of solar cell technology is also rapidly improving, in large measure due to advances in nanotechnology. The progress made suggests that it is possible that the amount of electric energy derived from solar energy–now estimated to be a meager one-tenth of one percent–will soon increase significantly. A number of nanotechnology companies are incorporating new nanoparticles—which are very good at capturing and harvesting the sun’s photons—into flexible plastic sheets. The end result is expected to be solar cells so lightweight and flexible that they can literally be wrapped on the roofs of homes and businesses.
One company, Nanosys, has already received over $50 million in venture capital funding, and has signed a deal with Japanese manufacturing giant Matsushita to begin producing such thin rolls as early as 2008. And another company, Konarka, has received a comparable amount of funding–including large sums of money from ChevronTexaco, as well as France’s largest electric utility provider, Electricite de France–to produce plastic solar cells which may be even lighter and cheaper.
The possibility of economically manufacturing these flexible solar cells suggests that, at a minimum, solar energy could soon begin generating an increasing percentage of the world’s energy needs. Moreover, as the efficiency of the solar cell and fuel cell technology increases and the price drops, more consumers will be likely to purchase the devices. Homes and businesses that are currently purchasing their electricity from utility providers may soon be generating a sizeable portion of their own energy needs. Current electric utility customers might soon become the utility’s future competitors.
Sound unlikely? Perhaps. But then the notion of cheap, electronic watches threatening the Swiss watch industry probably sounded just as unlikely to the Swiss watch-makers.
Conclusion
Bob Gower, a former energy industry executive, offers perhaps the best advice for electric utility executives seeking to understand nanotechnology. He cautons: “Executives should be paying a lot of attention to nanotechnology as a way to improve their existing processes and systems, but they should be paying even more attention to the next generation of nanotechnology developments which will be potentially disruptive to the entire energy industry.”
It is good advice and it brings us back full-circle to the Swiss watch story. The Swiss watch manufacturers were not “blind-sided” by quartz technology. The technology was perfected by researchers at Swiss academic institutions and, ironically, many of the researchers urged their colleagues in the watch industry to utilize the technology. Unfortunately, Swiss watch officials simply could not comprehend either how quartz technology could replace the need for high quality mechanical watches, or why their customers would ever want an inexpensive electronic watch.
Nanotechnology is now nearing a position that is comparable to where quartz technology was in the mid-1960s. The only question that remains is whether officials in the electric utility industry will comprehend how nanotechnology can be harnessed to improve their existing products and, more importantly, how it might cause a paradigm shift of historic proportions in terms of the types of energy being produced, and who will be producing that energy.
Jack Uldrich is a writer, futurist, public speaker and host of jumpthecurve.net. He is the author of seven books, including Jump the Curve and The Next Big Thing is Really Small: How Nanotechnology Will Change the Future of Your Business. He is also a frequent speaker on future trends, innovation, change management and executive leadership to a variety of businesses, industries and non-profit organizations and associations.
