EEStor the real thing?

I’ve been following the EEStory for a long time now and have remained skeptical yet optimistic for the duration. However, a recent interview with Dick Weir that was leaked to the web gives far more concrete information. It seems as though the first units will become available within the next year.

Just to recap, EEStor builds an energy storage unit that promises nearly instant charge time and 1/4 of the weight and 1/5 of the price of a similarly-sized lithium ion battery. Energy storage is currently the biggest hurdle to be overcome in the electrification of transportation.

Talk about game changing. Who else feels a sudden urge to buy Zenn stock?

Update on Sunday, August 9, 2009 at 10:10PM by Tristan Handy

An amusing little side note for those following this story…

Internship update

My summer internship with GE’s Renewable Energy Leadership Program is coming towards its end. I have about a week left and my final report-out is on Tuesday. The report-out is conveniently scheduled during “renewable energy week”, the week in which the leaders of GE’s renewables business fly to Schenectady from around the globe to do strategic planning and re-sync with one another. All six interns are going to present in an auditorium setting to about 80 people, including the VP of renewables. That scale of presentation will certainly be a first for me and is certainly a little intimidating, but it’ll certainly be a huge learning experience and a perfect opportunity to sell what we think is a really great idea to the key decision makers. My definition of success:the entire audience rises to their feet in applause and the VP handing us an oversized check to fund our project. I can hope, eh?

The overall experience has been amazing. I went through all of the phases that one goes through in a new professional experience—curiosity, overconfidence, frustration, and finally productivity. I’ve found everyone that I’ve worked with to be intelligent, thoughtful, driven, and very willing to help out whenever I had a question. I also got very lucky with my manager, who has given generously of his time and allowed Colin and I plenty of free reign to explore the problem witihout being led to any conclusions.

The work itself has been fascinating. We were thrown into a new product introduction (NPI) effort and have defined the solution, quantified the customer value, and figured out two potential business models that GE could use to capture a portion of that value. We talked to site technicians and executives, engineers and customer resolution managers, marketing and operations. We spent several weeks analyzing a dataset consisting of hundreds of thousands of turbine faults looking for patterns. We built consensus among key executives. We helped write product requirements document. And we built a straightforward set of financial projections based on reasonable assumptions combined with hard survey data that we collected.

And our project NPV is positive. How could I have asked for more?

Well, I suppose the one thing I would’ve liked is to get a better feel for how the industry operates at a more macro level. How saturated is the US grid? How does the grid regulate voltage and how does renewable energy penetration impact that? What are our competitors’ priorities? Where will wind be in five years (beyond a pure megawatt number)?

That said, 10 weeks is a very short amount of time, and the focus has definitely been on getting the interns to roll up their sleeves and get dirty. And I’ve really appreciated that. Over the past 10 weeks I have managed to develop the concepts behind what could be a pretty cool new product. If I read about it on greentechmedia in two years that’ll be pretty darn satisfying.

RELP Q&A

I got a couple general program inquiry from this post and wanted to relay the answer back so that others were aware of the answers. Full disclosure—I am a Renewable Energy Leadership Program (RELP) summer intern at GE and notpart of GE HR. This information is based on personal experiences during my application process.

How does RELP recruit for summer internship positions? Do they only take MBA candidates? Do they only take MBA candidates from certain schools?
You need to be finished your first year of an MBA program in order to be eligible.  RELP recruits summer interns from a small list of target schools. They come on campus to do recruiting at these schools. They also accept online applications, typically starting around January, from schools beyond the targets. Typically there are also a couple folks from the program that show up at the Net Impact conference with a recruiting booth set up.

What does a successful RELP internship resume look like?
Obviously you have to have the standard stuff. Good background, good education, etc. What will get you an interview is a demonstrated interest in renewable energy. The field is still small, so there isn’t an expectation that you’re an expert or that you’ve worked in the field for 5 years, but there is an expectation that you will have participated in activities, clubs, internships, or whatever else to explore your interest. Make this show through on your resume and in your cover letter.

How do I apply for the RELP summer internship?
The online application isn’t available until January every year and it can be a little tricky to find from the main GE Careers website. From what I hear the link tends to change from year to year, so if you can’t find it please contact me at the link above and I’ll find out what the current procedure is for getting to the application.

As always, if you have questions please contact me and I’ll answer them here.

Insurance By The Mile

Environmental sustainability is primarily an accounting challenge. If our economy fully accounted for all of the harm done by a good or service in its price, consumer incentives would drive environmental policy. This process is known as internalizing externalities.

The process of internalizing externalities is a difficult one, as it must be driven by government policy. Market-based mechanisms, such as a carbon cap-and-trade regime, can set prices or limits on certain types of emissions. Companies can be forced to pay for disposal of the hazardous materials in their products at end-of-life.

Such policies are extremely important for long-term progress on environmental issues but are also slow to be implemented, as they must wend their way through the political process. It’s satisfying, therefore, to find that there are other incremental improvements possible in alignment of consumer incentives with environmental sustainability.

One example is pay-as-you-drive insurance. The concept is simple—as drivers rack up more miles, their claim risk increases. Therefore, charge higher premiums to drivers who drive more miles.

This simple change in the car insurance business model has dramatic implications on consumer incentives. From an accounting standpoint, traditional insurance is a fixed cost and does not factor into any decision-making. As soon as this cost becomes variable, however, every incremental mile driven costs the driver more money. This incents drivers to drive less, reducing congestion, fuel consumption, and carbon emissions.

PAYD adoption is driven by simple self-reinforcing economics. Low volume drivers would be immediately incented to switch to PAYD—they would be the primary beneficiaries of the lower premiums. In response, traditional insurance providers would need to raise their rates because their average customer would now drive more miles. The cycle would repeat until all customers had shifted over to PAYD.

This phenomenon is a classic case of adverse selection. While the effects are muted because of the legal requirement to purchase insurance, the point still stands. If some insurance companies collect information relevant to pricing risk and others do not, these companies will always win.  This portion of the Wikipedia article linked above is a particularly instructive analogy to life insurance:

Non-smokers, on average, are more likely to live longer, while smokers, on average, are more likely to die younger. If insurers do not vary prices for life insurance according to smoking status, life insurance will be a better buy for smokers than for non-smokers. So smokers may be more likely to buy insurance, or may tend to buy larger amounts, than non-smokers. The average mortality of the combined policyholder group will be higher than the average mortality of the general population. From the insurer’s viewpoint, the higher mortality of the group which ‘selects’ to buy insurance is ‘adverse’. The insurer raises the price of insurance accordingly. As a consequence, non-smokers may be less likely to buy insurance (or may buy smaller amounts) than if they could buy at a lower price to reflect their lower risk. The reduction in insurance purchase by non-smokers is also ‘adverse’ from the insurer’s viewpoint, and perhaps also from a public policy viewpoint.

Furthermore, if there is a range of increasing risk categories in the population, the increase in the insurance price due to adverse selection may lead the lowest remaining risks to cancel or not renew their insurance. This leads to a further increase in price, and hence the lowest remaining risks cancel their insurance, leading to a further increase in price, and so on. Eventually this ‘adverse selection spiral’ might in theory lead to the collapse of the insurance market.

To counter the effects of adverse selection, insurers (to the extent that laws permit) ask a range of questions and may request medical or other reports on individuals who apply to buy insurance, so that the price quoted can be varied accordingly, and any unreasonably high or unpredictable risks rejected.

I thoroughly expect PAYD to become the norm once the tracking technology and privacy concerns are worked out.  It’s very satisfying when simple, profit-maximizing changes in business models have positive environmental consequences.

RELP Overview

It’s been some time since I’ve posted anything here. The reason is fairly straightforward: my summer internship has been pretty intense. This is going to be the first of several posts discussing the experience, what I’ve tested about the wind industry as a result, and some thoughts on GE.

I’ll start out with the basics on the program of which I’m a part. GE’s Renewable Energy Leadership Program (RELP) is modeled off of the company’s Enterprise Commercial Leadership Program (ECLP) but is specifically targeted at individuals focused on renewable energy. Program members rotate through 3 or 4 positions within 2 years within GE’s wind, solar, and Jenbacher businesses.

For the past several years there are 5-7 summer internship offers and 5-7 full-time offers extended globally, although I have no particular insight as to whether that will grow or shrink in the future. RELP is only open to experienced hires and mostly draws from top MBA programs, although they take some internal and industry hires. For all of you undergrads who will read this, there is a new program called REDP for you.  I believe that program tends to hire engineers, however, so it’s a little bit different.

Myself and another intern from UNC, Colin Pistell, have been working in the wind business within the services and systems product lines.  The other four interns are working in wind operations, including product service & warranty and parts fulfillment, and have very different summer experiences.  Colin and I are building a business case for a new program; the other interns are working to streamline operations and make incremental improvements in existing products.

All of us have very defined scopes and the internship is well-structured and run.  Each of the teams will report out to the head of renewables, Vic Abate, and his entire staff during the final week of the program.

One of the problems that RELP has faced in the past is that there is very little information about the program online and so prospective applicants don’t know exactly what to expect.  With this post and the others that follow it I hope to address a small part of that need.  I’m more than happy to be a resource for future applicants; just contact me using the link above.