The IF-THEN Implementation Plan

We know that we have two brains – two systems. These are (variously) referred to as Hot / Cold or System 1 / System 2.

The Hot system is the limbic system, operated in the amygdala which sits just on top of the brain stem. It is activated by stress and results in your body taking flight or getting ready to fight.

The Cool part of the brain is sited in the pre-frontal cortex. Its stimuli is information and it has the ability for rational, reflective and strategic behaviour. It also has the ability to attenuate stress.

The ability to attenuate stress – to pay attention to the signs of stress and take action to cool it down is an important skill and needs to be learned as early in life as possible.

IF-THEN implementation plans are a way of linking cues to the Hot system and taking attenuating action.

The cue, or trigger has two parts:

  1. A situation
  2. A feeling

A situation can be

  • The time is 5 pm and work has just finished.
  • I’m at the garage and the car needs fuel.
  • I’m at the supermarket doing the weekly shop.

A feeling might be

  • I’m anxious.
  • I’m tired.
  • I’m stressed.

A cue leads eventually to an outcome – It’s five pm and I’m stressed and I walk past a pub so I have a drink that turns into several that then leads to whatever happens when I get drunk.

If you want to interrupt this process, then knowing what you are going to do by default in that situation has been shown to help.

The IF-THEN implementation works like this.

IF (something happens)

THEN (I will do something to distract myself)

In the example above

IF it’s time to go home,

THEN I will take the bus from the stop before the pub so I don’t go past it at all.

This method helps put the Cool system back in charge and override the HOT system, helping you make better choices.

The productivity problem

I was listening to an interview with Seth Godin and he brought up some interesting points about productivity.

First, he defined productivity as:

Productivity is an economic measure of how much you output per hour for the amount of time and resources you put in.

The UK has been talking about a “productivity puzzle” for a number of years. In 2014, the Bank of England said that labour productivity was very weak, around 16% below where it should be.

There are two main hypotheses on why this is the case:

  1. Companies are holding off on firing people because they believe that demand will return, but as there is less demand right now, they are making less per person as a result.
  2. Companies are investing less money into their businesses, meaning that workers are working with old tools and so can do less.

But, I wonder, is this missing the way in which work is changing.

A lot of the work we do now is knowledge work. We can’t build better machines to think better. We just have to start learning how to become more effective at doing the thinking work we need to do.

For many people in the workforce still getting used to digital technology the changes are overwhelming. There is a torrent of stuff coming at them, emails, twitter, video – all kinds of things that just take up time.

We still try and manage the complex work involved in businesses that do knowledge work by having meetings, talking to each other, spending hours moving around in cars to meet people face to face.

How is that productive? While you are doing all that talking and moving, nothing is actually being done that is of any use to anyone.

One company is doing things differently. Automattic runs its billion dollar company with no offices.

From the Business Insider interview with Matt Mullenweg, its CEO and the creator, by the way, of WordPress.

Automattic is a totally distributed company, so everyone works from wherever they are in the world. It could be a coffee shop, it could be their home, it could be a co-working space. We hire people regardless of where they are.

And also

The “Automattic creed” states that communication is the “oxygen” for a distributed company.

Matt’s view is that skill in writing represents clear thinking. If I can become a better writer, perhaps I can become a better thinker.

Perhaps the Automattic way of working is one more companies can learn from.

How to use non-traditional business models in the energy industry.

The world of energy and business are going through interesting transitions.

The growth in renewable energy generation has caused problems for operators of traditional generation such as coal, who have struggled to compete. Nuclear power, on the other hand, has been either faced with policy challenges, such as Germany’s decision to phase out its fleet, or Japan’s decision to turn off its generators following the Fukushima disaster.

Almost every business needs electricity. It is hard to imagine what one could do without any form of power.

And power is the operative word here. For a long time, control of the electricity system was control of power, and the institutions that delivered power had power over the businesses that relied on them. This reality is shifting, especially in the UK, where we are moving from a single source of power to multiple sources. This means that power is shifting from generators to consumers.

The energy industry is becoming customer-centric

Customer centric.png

Previously, you were supplied grid power by the local network and billed by your supplier. There was only one source of power, and it came through the wires connecting you to the local grid.

Now, you have more options. For example, you could generate some of your own power using solar panels. Or you could have a wind turbine. Alternatively, you could still get your power through the grid, but instead of having to negotiate a price with your supplier, you could agree a price with another generator and pay that price instead. Finally, if you are able to control the way in which you use power, then you could benefit from selling that flexibility to people who need it.

Because you have more options, suppliers have to compete for your business as never before. The result of this is that business models in the world of energy are going from linear models, where you have one contract with a supplier, to a customer-centric model, where many suppliers compete to give you multiple options for how you get your energy.

In this scenario, you move from being a consumer of electricity to a consumer of a bundle of power related benefits. It’s a more complicated set of choices, but there is more power in your hands than there was previously.

Suppliers recognise this and are changing the way in which they work. In 2016 E.ON announced that it would split its business into two. 40 GW of fossil-fuel fired and hydro generating assets would be moved to a new company called Uniper, while E.ON would build its business around renewables, energy efficiency and network services. It’s rival, Npower, also announced similar plans.

The energy industry is talking about the need for new business models

People in the industry talk about the need for new ways in which energy businesses need to operate – so called Non Traditional Business Models or NTBMs.

In 2015 Ofgem published a discussion paper to ask how NTBMs could impact the energy system. The responses to this paper suggested that NTBMs could achieve outcomes like:

  • Increase competition.
  • Give more value to consumers.
  • Engage consumers more.
  • Make the system more resilient.
  • Result in lower bills.
  • Reduce environmental impact.
  • Improve the quality of service.

The NTBMs that were suggested, however, were not new. They have been around in some form for a long time. Key issues included more flexible capacity from generation, storage and demand side response and more local generation. The other issues raised around diversity, innovation are a little fuzzy and good consumer protection and service is simply good business.

Ofgem’s definition of a NTBM is:

“Business models offering new products or services, or new ways of delivering these, that are different to those traditionally provided in the existing energy market. Those offering such services have diverse motivations (technological, financial, social and environmental) and ownership arrangements, and operate at various scales.”

This, slightly counter-intuitively, defines a non-traditional business model as one that is not traditionally provided in the existing market. So, it’s not that the model is not well known, it’s just that it hasn’t been tried yet – perhaps because the regulations make it hard or the structure is not understood by consumers yet.

How many business models are out there?

A business is a system. In its simplest form, you can represent a system as something that takes things in, transforms them, puts things out and changes how it does things based on feedback,

System model.png

If a business does this then a business model tries to figure out how to get value from this activity.

There are three key players in this ecosystem: producers, middlemen and consumers. Perhaps the second lot should be called middlepeople if one wants to be politically correct…

Consumers pay for everything. The way in which they pay is the business model. This article in the Harvard Business Review goes into the idea of a business model in more detail and has a number of different definitions.

It seems to me, however, that the way in which consumers pay for something is the essence of a business model.

The same article has a list taken from a book by Mark Johnson called “Seizing the White Space”, where he lists a number of forms of basic business model. This list is shown in the picture below, adapted slightly.

I think you could argue that there is a difference between how you pay and what you pay. The first is more like a model and the second more like a strategy or tactic.

That may be a little pedantic, but the picture shows the first kind in red and the second in green.

Readers may disagree – but the point is that these are some of the standard, and hence traditional models that one can identify in businesses now.

Business models.png

The models are based around the idea of the three players: producers, middlemen and consumers. The main models (in my opinion) then are:

  1. Freemium: Where you get some things for free and have to upgrade for others, like with LinkedIn.
  2. Advertising: Google has possible created this category online but this started a long time ago with newspapers that carried adverts to lower costs to consumers.
  3. Direct sales: Selling direct to consumers – the model that Dell pioneered with computers.
  4. Pay as you go: Pay for what you use based on a rate and metered usage – the standard energy company charging structure.
  5. Product to service: There are terms now like software as a service, data as a service, infrastructure as a service.
  6. Subscription: A popular model for content – magazines have done it this way for a long time.
  7. Royalties: Paying a fee to someone for what they have or for access to who they know.
  8. Brokers: Facilitating transactions between two parties.
  9. Auction: One of the oldest models around – from cattle auctions to Ebay.
  10. Fractionalization: Timeshares to NetJets – making it possible to have shared use of something.
  11. Leasing: Making it possible to use something for a time and then move on without ongoing commitment.
  12. Bartering: Exchanging something of value – for example permission to email you in exchange for useful content or a sample product.

The price strategies on the other hand have to do with trying to work with the costs of the operation. The razor / Kindle strategy used by Gillette and Amazon is to sell products such as a Razor cheaply in order to make money on large numbers of low margin products, such as razor blades or sell products such as the Kindle cheaply to make money on higher margin products such as books. Benefiting from lower costs through economies of scale, standardising products to reduce operating costs and getting paid by consumers before you have to pay suppliers are cash flow and pricing strategies – but are they business models?

Summary – more models that could be used in the energy business

Going back to the HBR article, the one that most applies to the energy business is the Pay as you go model, where you pay for what you use. There is already a lot of innovation in how much you pay, as there is a traded market in the UK and the price you get depends on how you manage your portfolio.

The idea of flexible energy systems through the use of generation, storage, demand side response and more local generation are all technological innovations rather than business models. Batteries have only recently become good enough to consider for grid scale applications. Demand side has become possible through cheaper interconnected equipment and falling networking costs. Local generation is possible through falling costs due to a push globally to create a low carbon economy.

Which means there could actually be a huge amount of potential to apply real NTBMs to the industry.

Take bartering for example. Let’s say you have a site that runs a process that generates waste heat and a site nearby that needs heat but also produces excess electricity. Perhaps there could be a trade there.

Auctions have been used in the energy business before, but perhaps they could become more innovative. Traders already trade energy, but perhaps it might be possible to make it easier for end users to put in bids for energy at certain times.

The response to Ofgem’s paper publishes a number of ideas that came back from energy market participants. They do seem, however, to be relatively traditional still, driven either by technology or a rearrangement of responsibilities between parties. Could any of the models listed above be useful as well?

What is this blockchain thing that people are talking about?

The first few explanations of blockchains that come up when you search for the term seem incredibly complicated.

So, what is it and why should you care? Here are some notes to help.

Blockchain is the technology that makes the virtual currency Bitcoin possible.

It has created the ability for people to create a currency and buy stuff with it without going through a bank, completely bypassing the existing financial system.

For example, if you want to agree a contract with someone, buy a house or just pay for a snack, you are agreeting a transaction with someone else.

To seal the deal, you will have to hand over some money, or sign a piece of paper. That is the evidence the transaction took place.

The records of that transaction are kept in banks, land registries and big paper files. When you want to transfer money or property, you ask the bank to send money or hand over the deed to another person.

The problem starts when record keeping is bad or can be hacked. If you live in a country where land records can’t be found, or can be lost easily, then you could lose your house.

It’s the same with many other transactions: contracts can be faked; bank accounts can be hacked and the amounts modified.

So the key to keeping things safe is recording them in a safe place.

So, if you could take the information that you want to keep safe, create a way of encrypting it so that it can’t be changed, store that in a place where it can’t be deleted and be able to always prove which piece of information is right and which is wrong, then you would have a more secure system.

In essence, this is what Blockchain does. It creates an unbreakable code that is updated with careful rules that mean that information is much safer than before.

Some people think that this will change everything about the way in which we transact with each other, from money to contracts and more.

Others think that this is such a radical change which creates an entirely new way of recording what you own that it could take years to be accepted.

Over 2,000 years ago, people used clay tablets and sticks to record who owned what.

Blockchain pretty much helps do the same thing now.

How is battery storage being used in business and industry?

The launch of the Tesla Powerwall in April 2016 was the start of a rush of interest in battery storage technology.

The Powerwall is a rechargeable lithium ion battery system rated at 6.4 kWh of storage capacity with a 10 year warranty.

It retails at $3,000, with installation costs targeted at $500. A household in the UK uses around 3300 kWh per year or 9 kWh per day.

The Tesla Powerwall should be able to power it at night with its 6.4 kWh of capacity.

Battery storage itself is not new, and Germany has led the way for several years in its renewable energy transition.

As of 2015, 1.5 million photo-voltaic (PV) power plants have been installed in Germany, of which 35,000 are hybrid PV and battery system.

Using a battery increases the amount of electricity used from own-generation from 30% to 60% and 50,000 PV-battery systems could be installed a year by 2020.

Younicos, a Berlin-headquartered, private equity backed energy storage startup built the first commercial battery park in Europe for Wemar AG – the German green utility in 2014. The park has a rated power of 5 MW and a peak capacity of 5 MWh.

It is fully automated, used to stabilize grid frequency and is connected to a 110 kV substation.

The park houses 25,600 lithium-manganese oxide cells guaranteed for 20 years by Samsung SDI.

Younicos’ experience in the chemistry of batteries, the rack systems to store the batteries and on-board Battery Management System (BMS) software at its €15m, multi battery test site helped it become the only system so far to get a 20 year warranty from a major battery producer.

Younicos also has an insurance agreement where a battery will be replaced and 97% of any lost revenue will be protected.

There are 327 projects, making up 869 MW of lithium ion battery storage capacity operating worldwide as of May 2016. In total, there are 921 electro-chemical projects in various stages with a total capacity of 2,708 MW.

The main types of batteries used in energy storage are lead-acid, lithium-ion, sodium sulphur and flow batteries.

Lead-acid batteries are the most widely used rechargeable batteries. They are cheap, respond quickly, don’t lose power while not being used and are efficient.

But they use old technology and perform less well than lithium ion in cold weather. As a result, they are not used much for energy storage applications around the world.

Lithium Ion batteries respond quickly, within milliseconds, are light and efficient.

But they need on-board controls to maximise their lifetime and to operate efficiently. They can be used for grid balancing and frequency response applications.

Sodium-Sulphur batteries hold a lot of energy – they are energy dense, lose virtually no power when standing, non-toxic and recyclable and have a higher capacity than most other technologies.

They run very hot, however, at temperatures of 574 – 624k with molten electrodes which increases their operating and management costs. They can help to match power demand and supply over time.

Vanadium-redox-flow are efficient, can respond quickly, and discharge over more than 24 hours, making them good for long term storage applications.

Control software that can control every generator in a microgrid, from PV to diesel generators will be crucial to optimizing the performance of the system and extending the lifetime of the batteries.

Who is leading the market in grid connected battery solutions?

Clean Technica has a list of 43 battery storage companies to watch. The Energy Storage Association lists members that include names like EdF, Johnson Controls and ABB.

Five companies to watch, according to Chet Lyons, a consultant with over 30 years of experience in commercialising advanced energy solutions and author of Grid-Scale Energy Storage in North America 2013: Applications, Technologies and Suppliers, are:

  • ABB: A global leader in power technology, with a 40MW nickel-cadmium system in operation.
  • AES Energy Storage: Operates 86 MW of energy storage and has the largest fleet of battery storage assets.
  • Convergent Energy Power: Small, but a contender with finance and construction capability
  • EOS: An innovative company getting interest from utilities and a low cost zinc-air energy battery.
  • S&C Electric: Lots pf practical experience for large scale projects and delivering turnkey solutions.
  • SEEO: High energy lithium-ion batteries with backing from VCs like google.org and Khosla Ventures.

The challenge with batteries are storage capacity, cost and how long they take to recharge.

How much do batteries cost?

The cost of battery packs for electric vehicles has fallen from around $1,000 per kWh in 2007 to $410 per kWh by 2014, a reduction of nearly 60%.

The biggest manufacturers can get costs down to $300 per kWh.

Take a look here for a worked model with some of the issues that you might come across.

Examples of proposed and installed battery storage systems

Moosham Community Energy Storage

The “Energy Neighbor” project at Moosham, is a 200 kWh system installed in Spring 2016.

The system has 8 racks, each of which has 13 battery modules with a battery management system and power electronics. Each battery module has 192 battery cells. Each rack has a capacity of 25 kWh, which means the capacity can be increased in 25 kWh steps by adding a rack to the system.

UK Power Network’s Smarter Network Storage

Sheffield University’s demonstrator at Willenhall

How to reduce energy usage in hotels

Cutting energy and carbon use in hotels

This post looks at hotels, how they use energy and what the industry is doing to cut energy use and emissions.

The hospitality industry is big. Globally, it generates revenue of over $500 billion and is a huge employer of permanent and temporary staff. Hotels are often located in areas of natural beauty and have an impact on their local environment.

It takes a lot of energy to run a hotel.

The largest use is normally electricity. Gas is used for cooking and then diesel for backup generators.

The energy intensity of hotels varies around the globe, as different seasonal weather profiles require different cooling needs. In summary, however, a hotel that uses between 200 – 300 kWh/m2 appears to be doing well, while the norm for one that is average or poor is over 500-600 kWh/m2.

Architecturally, hotels bring together three very different types of spaces:

  1. Guest rooms: Guests stay in bedrooms, with attached bathrooms and often large expanses of windows. They can control the temperature and lighting in their rooms and use small appliances provided by the hotel or that they bring with them.
  2. Common areas: These include the reception, lounges, meeting rooms, swimming pools, gyms, saunas and similar areas. They are usually large spaces and lose energy to the environment around them.
  3. Service areas: These areas such as kitchens, laundries and offices where there is equipment, specialist air handling and ventilation equipment and computers and office equipment.

This means that you have more options in each area to reduce energy usage and the challenge is to select a mix of measures that you can implement within the constraints of the hotel.

Energy costs may be insignificant – but still large

In a typical hotel, the costs of energy may be only 4-6% of the operating costs. It might be a much smaller fraction of overall revenue.

But it can still be the second largest operating cost – and a line item where any saving goes straight to the bottom line.

How can you start to understand how your hotel uses energy?

Hotels, like most organisations, focus on energy costs on the bill. The problem is that knowing how much energy you use in total is of little use when trying to work out where you use it in the hotel itself.

This is because there is rarely any metering that is in place apart from the main billing meter.

There are, however, studies that shows how energy typically is used in hotels. For example, lighting can be 12-20% of the total load. Domestic hot water can use up to 15%. If there are chillers that are metered, the cooling energy requirements can be worked out quite accurately.

Let’s say you have all this data – then what?

Research suggests that most hotels are actually quite poor at managing energy efficiency over time. They are most efficient when initially commissioned, and do well after a major retrofit. Over time, however, performance starts to fall, which is inevitable without some kind of management system in place.

The other thing is that the largest driver of hotel energy consumption is something that you have little control over – the weather. Electricity consumption in particular correlates well with outside air temperature.

So, what does that leave you with as an option to control? Well there are the guest rooms and common areas where you could control temperatures. But you have customers there – and keeping them comfortable is much more important than saving a little bit on energy costs.

Where hotels are doing their bit is using labels to try and get their customers to help them save energy, for example by putting labels in bathrooms asking people to reuse towels if they can.

How do you tell how well a hotel is performing?

Enter what seems like a seriously cool online hotel footprinting tool.

The International Tourism Partnership (ITP) and Greenview have released a free online tool based on data from the Cornell Hotel Sustainability Benchmarking study.

The image below is a screenshot of the tool for the UK. It reports metrics based on 6 key measures:

  • HCMI Rooms Footprint Per Occupied Room (kgCO2e)
  • Hotel Carbon Footprint Per Room (kgCO2e)
  • Hotel Energy Usage Per Occupied Room (kWh)
  • Hotel Energy Usage Per Square Meter (kWh)
  • Hotel Energy Usage Per Square Foot (kWh)
  • HCMI Meetings Footprint Per SQM-HR (kgCO2e)

That’s a fair number of metrics.

From a combination of studies over the last 20 years, it seems that energy usage per square meter close to 200 kWh/m2 represents a very efficient hotel.

400 – 500 kWh/m2 is the mid-range performance while 600 kWh/m2 and above is an inefficient hotel or one with very high energy requirements resulting from the kit is has in the building or the climate in the area where it was built.

Measuring the energy used in hotels

The hospitality industry spends over $7billion on energy every year. So it’s worth putting in place systems to measure and manage this cost.

HCMI stands for the Hotel Carbon Measurement Initiative, developed by the World Travel and Tourism Council (WTTC), ITP and KPMG.

The resources for HCMI can be downloaded here http://tourismpartnership.org/resources/.

Another method of measurement is the EarthCheck Certified program, which appears popular in Australia.

In the US, Energy Star have a benchmarking fact sheet. Although the Energy Star programme may be under threat under the current US administration.

Technology in hotels

Energy use could be cut dramatically by introducing new technology into hotels.

For example, Zen Technologies is offering technologies such as smart thermostats, motor controls, LED lighting and ozone water treatments.

Zen claim that there are savings of 30-40% of utility costs based on such technology.

Other technologies include:

  • Laundry units that use less water
  • Low power Organic LED (OLED) TVs
  • Keycard activated lighting
  • Touchpad controls
  • Software to schedule shifts more efficiently

LED lights can deliver savings of between 50 – 80% according to providers.

On the generation side, you have solutions like an industrial fuel cell at the Radisson Blu in Germany. Supported by Germany’s Federal Ministry of Transport and Digital Infrastructure through a programme called the “National Hydrogen and Fuel Cell Technology Innovation Program”, the fuel cell will supply 3 GWh of electricity and 2 GWh of heat, removing the need for energy from the power grid for the hotel.

Taking action to cut energy and carbon

The tourism partnership has a useful guide on how hotels can go green.

The main areas to focus on are energy use, water use and waste.

This snapshot from the guide is a useful summary.

The areas where you can look to achieve savings include:

  • Heating
  • Lighting
  • Hot Water
  • Air conditioning
  • Refrigeration
  • Kitchen equipment
  • Laundry equipment
  • Swimming pools
  • Building envelope

Typically the energy required to condition spaces, heating or cooling large areas is the largest energy consuming activity, followed by domestic hot water. A rough breakdown could be as follows:

  • Space conditioning: 70-75%
  • Domestic hot water: 15%
  • Lighting: 12-18% and up to 40%
  • Catering: 15%

Lot cost / no cost tips from providers include turning down temperatures, installing energy efficient appliances, defrosting and cleaning behind fridges and freezers, using low energy lightbulbs, and having occupancy sensors.

It is also important to make sure that building energy management systems are commissioned correctly and are responding in the right way to sensors and settings. It is surprising how often systems are heating and cooling the same space at the same time.

In a best practice guide from Hotel Energy Solutions, the authors suggest an order in which to approach how to integrate energy efficiency in hotels:

  1. Evaluation: assess where you are and benchmark
  2. Organisation and behavioural solutions: involve staff and guests for long term change, with information leaflets and training.
  3. Technical solutions: These include reducing the energy needs through modifying the building, installing more efficient equipment and moving to renewables

These are 18 hotel case studies in this document and they provide useful tips and ideas to anyone looking at the options for energy efficiency measures in a particular hotel.

What can you achieve in practice?

The Ritz-Carlton saved over $11 million in energy costs and reduced energy consumption by 13% over three years. They did this by assessing 32 North American hotels, identifying 790 energy conservation measures (ECMs) and implementing 433.

Hotel Rafayel, a 5 star hotel in Battersea saved over £18,000 by installing LEDs and refrigeration control devices.

In India, the Godrej Bhavan office building invested $99,000 in energy efficiency retrofits, reducing energy use by over 11% the following year.

One aspect of this case study that should be followed by more business case modellers is that the team at Godrej modelled paybacks based on three scenarios:

  • 4.7 years under an actual bill scenario
  • 8.9 years under a fixed tariff scenario
  • 9.6 years under an escalating tariff scenario

This approach gives you a greater insight into possible outcomes and what happens when you spend money on energy efficiency measures – helping you spend money wisely.

In 2011, this building became the first one in Mumbai to achieve LEED gold certification.

In North Carolina, the Proximity hotel spent less than $7,000 on sustainability improvements during construction but saved $2,000 a month just through HVAC system monitoring controls. A detailed case study for this hotel is included here.

Summary

The hospitality industry uses a lot of energy but also has a lot of options when it comes to reducing the amount of energy it uses.

Unlike some other businesses, the way in which customers behave has a huge impact on hotel energy use.

You need to do things to Influence and motivate customers to make the right choices, such as reusing towels and turning lights off. You also need to make it easier for them to understand and control temperatures.

The hotel industry is also making efforts to make it easier for hotels to benchmark where they are and what they can do to make a difference.

And, according to the Carbon Trust, hotels could cut costs by 20% quite easily at little cost. So why wouldn’t you look at this if you aren’t doing so already?

Also, you might want to check out the UK’s first hotel energy conference, organised by Vilnis Vesma and the hospitality industry.

Cyber security for commercial firms

Are you being hacked right now? 

Your internet connected devices, including smart energy systems, could be spying on you right now, or be controlled by others carrying out attacks around the globe.

Internet security became headline news in 2016 with reports of Russian involvement in the leaking of emails from the Democratic party during the US Presidential elections.

Just in the last 24 hours (16th March 2017), there are 5 pages of news results on google news for the search term “cyber attack”.

These include:

  • An attack on the Abta travel website affecting 43,000 individuals
  • Stolen pictures of Emma Watson
  • Russian spies charged over a hack on Yahoo affecting at least 500 million users
  • A North Korean hack on Poland’s biggest bank lobbying group ZBP
  • An hack on Licking County’s system where the attackers demanded a ransom of $30,000
  • An attack on Amnesty International and UNICEF’s twitter accounts among others in support of Turkey’s president Recep Tayyip Erdogan

In 2007, an attack on Estonia’s internet system was blamed on Russia as an act of cyberwar.

In Wales, firms have paid ransoms amounting to thousands of pounds to get access to their own data.

In these ransomware attacks, what happens is that an email is sent to employees containing a link to ransomware software. The software then encrypts everything on the company’s network. When it is done, a ransom demand pops up.

Ransomware attackers now have guides in different languages, customer service and support teams to make it easier for you to pay ransoms. The ransoms are typically paid in bitcoins, a virtually untraceable online currency.

The cost of cybercrime in the UK could be as high as £27 billion. In the US, the FBI said that ransomware attacks totalled $209 million in the first three months of 2016, up from $24 million for all of 2015, an increase of over  2,500% for the quarter.

In September 2016, Bruce Schneier, an expert on cyber security, wrote that it was possible that a large nation state like China or Russia was testing how far it could hack into the companies that run critical parts of the internet.

If you want to kill the internet or a part of it, the best way is to launch a distributed denial-of-service (DDoS) attack. This method pushes so much data at sites that they are overwhelmed and stop operating.

The attackers typically take over home computers that they have infected and use them to launch the attack.

Again, in September 2016, an attack on Dyn, an internet infrastructure company that supports dozens of major websites was launched.

What made this attack different is that the attackers used internet connected devices such as webcameras and digital video recorders. This was the first use of millions of everyday devices rather than computers to launch such an attack, turning them into an army of “botnets”.

As companies use increasing numbers of internet connected printers, phones, energy meters and control devices in their businesses, the possibility that these devices can be used to gain access to your systems or be used in a DDoS attack increases exponentially.

It is very easy to launch an attack. The software is free to download. The Dyn attack was a system called Mirai, the source code is free to access and more attackers have built the code into their software. Or you can hire groups to carry out the work for you.

If you connect a GSM router to the internet with SSH capability and monitor its traffic logs, it is likely that you will notice probing attacks trying password combinations from servers that are located in China very quickly.

According to the quarterly Verisign DDoS trends report, attacks increased by 63% in Q4 2016 over the same period in 2015.

Verisign DDoS trends report
Verisign DDoS trend report Q4 2016

49% of attacks target IT services, cloud, and SAAS companies. 32% target the public sector and 7% of attacks target financial services companies.

Why is this relevant in the energy industry? Because the feeling is that the makers of consumer devices don’t really care about internet security.

But, when the devices you are connecting to your company turn the lights on and off in a building, or the power to an MRI scanner, or an operating theatre, then making sure they can’t be attacked needs to be one of your top concerns.

In the UK, the National Cyber Security Centre (NCSC) was set up last year to improve the UK’s cyber security and cyber reliance.

This blog post by Ian Levy sets out what the NCSC is planning to do about an Active Cyber Defence (ACD) programme. Ideas include:

  • Make it harder to hijack UK machines
  • Make email harder to spoof
  • Get hosting providers to take down offending sites
  • Figure out how to help people not access bad sites
  • Create better software, better government, encourage innovation
  • Help owners and operators of critical national infrastructure

Finally… and I quote

“We’re still going to do things to demotivate our adversaries in ways that only GCHQ can do”

So… GCHQ is at cyber war…

Cyber-security and the impact for businesses and what they do is not going to go away anytime soon.

Why does it matter if all the ice melts anyway?

Scientists say that the effect of climate change will be most seen in the polar regions. The ice will melt, sea levels will rise and temperatures will increase.

A number of ice shelves have cracked or become much smaller over the last few decades. A crack in the Larsen C ice shelf, shown above, will create a giant iceberg in the Antarctic when it breaks.

Water levels could rise by 40cm to 80cm, with a central estimate of 60cm by 2100, according to the IPCC.

A small rise in sea levels can have a big impact on coastal areas. Salt water can cause erosion, flooding, contaminate drinking water and soil and destroy habitats.

The ice also helps keep our planet cool. All that white ice reflects back 80% of the sun’s energy that falls on it.

It also takes 81 times as much energy to melt ice as it does to raise the temperature of the same amount of water by one degree.

So, once the ice is all gone, there is nothing stopping the sun from heating up the dark oceans.

All that extra heat, without the cooling ice, means drought in continental areas and a loss of food production, leading to famine in parts of the world least able to cope.

To return to pre-industrial temperatures, all that ice needs to freeze again, which means the heat in the water needs to be taken out first – adding to the heat in the atmosphere.

Warmer oceans occupying more volume mean that storms are going to be bigger and more powerful.

Hurricanes, cyclones and tsunamis will be harsher, more violent and reach further inland, washing away everything in their path.

Hundreds of millions of people will need to move, leaving their homes and moving inland and uphill.

Low lying islands will be submerged entirely.

So, the problem is that a small change in the polar climate – and the melting of the ice could have a devastating impact on the rest of the world, well beyond just the increase in sea levels.

6 charts every analyst needs to know

Sketchnote showing 6 charts every analyst needs to know
6 charts every analyst needs to know

If you are interested in charts, there are three books that should go on your reading list.

These 6 charts will help you structure the way in which you interact with data – and help you get insights in a systematic way.

1. Time Series

Much of the data you will analyse will have an order in which it was collected.

The Time Series chart is the way in which you get a first look at the data.

A simple line chart will tell you how something is changing over time. Is it:

  • Going up?
  • Going down?
  • Remaining constant?
  • Fluctuating?

This chart is the one you use when you want to talk about trends and patterns.

2. Histogram

A histogram tells you how frequently a value appears within a range.

This is the basis of the well-known “bell curve”.

In any data set, a large number of values will be close to the average.

A small number will be outliers at the lower end or the upper end of the distribution.

A histogram helps you understand the shape of the data by asking questions like:

  • Does it look normal?
  • Is it skewed in some way?
  • Are any values isolated?
  • Are there odd peaks?
  • Does it fall off like a cliff?

The shape of the distribution tells you a lot what could be happening.

In energy data, a peak at the wrong time could alert you to equipment being left on.

A well-controlled system might have a sharp rise at exactly the time all your equipment is switched on.

3. Pareto chart

A Pareto chart is the basis of the “80:20” rule that says that (roughly) 80% of the effects come from 20% of the causes.

If you order the causes from largest to smallest, and draw a line that shows you the cumulative percentage, you will be able to quickly identify the factors that matter.

You can then focus on fixing the problems caused by these factors, and that will have the most impact on your operations.

For example, if you identify three pieces of faulty kit that uses most of your power and repair or replace them, you will have more impact than carrying out 20 maintenance jobs that have a small impact.

The Pareto chart helps you focus and direct your efforts on the things that really matter.

4. Scatter plot

A scatter plot shows you the relationship between two factors. Are they linked, or is there no connection between them?

The main purpose of a scatter chart is to help you understand the relationship between cause and effect.

For example, the temperature outside affects some organisations more than others.

If you have a commercial building, a cold day will probably result in you increasing your energy usage for heating.

A factory on the other hand, where most of the energy is used by process equipment may not be dependent on the weather at all.

A scatter plot will help you to identify the relationship between factors and make sure that you draw the right ideas about cause and effect.

5. Rank chart

A pie chart is almost always the wrong thing to use to show data. Instead, a rank chart gives you much more insight.

A rank chart is a bar graph, sorted so that the largest item is on the top and the smallest at the bottom.

You can draw attention to the item you want to show by highlighting it in a different colour.

This helps you show the relationship between items or between one item and the rest.

This means you can say things like:

  • Things are about the same
  • One thing is more or less than the others

6. Control chart

The control chart is a little used chart, but probably one of the most useful.

A control chart is created by adding two lines around a time series or run chart.

These lines are calculated by the amount of relative movement in the data, worked out using standard deviations or a similar method.

The purpose of the lines is to tell you when one of changes in value is statistically significant.

Why does this matter?

J.P Morgan, the famous American financier, was once asked what he thought the stock market would do today.

His answer – “It will fluctuate”.

Values go up and down. Too many people think they have to explain every variation, but this is hardly ever useful.

The thing you need to figure out is which bits of the series is noise, where values are simply fluctuating like they did in the past and will do in the future, and which bits are signal – indicatnig something different is happening.

The control chart gives you a way to do that.

When the line chart goes above or below one of the control lines, something significant has happened.

For example, in a manufacturing process, perhaps something was moved unexpectedly, or a fault occurred and the power went off.

A control chart lets you only act when you need to – and lets the “voice of the process” tell you when something is happening that is unusual and needs to be looked at in more detail.

Summary

These charts can be used in the following ways:

  1. Time series charts to understand the trends in the data.
  2. Histograms to understand the shape of the data – is it normal or is something odd going on?
  3. Pareto charts to focus on the things that matter.
  4. Scatter plots to connect cause and effect.
  5. Rank charts to compare items with others.
  6. Control charts so you can take action only when something significant happens.

There are more references in the books mentioned at the start of this post, but mastering these 6 charts is a first step towards carrying out good data analysis.

Practical home and business battery storage – podcast notes

Sketchnote on practical home and business battery storage
Practical home and business battery storage – podcast notes

Battery storage systems are one of the most anticipated technologies in the energy market at the moment. But will they save you money and how do you put together a business case?

These are my notes from a podcast by Barry Cinnamon of Cinnamon Solar from May 2016, along with some additional research and comments. The whole podcast is well worth listening to and you can find it here.

First, what do we mean by practical? A practical system has to first be affordable, and second be useful. Above all, this means it must save you money.

In the United States, there are around 450 battery storage systems in homes and around 5000 commercial installations. Germany, on the other hand, has over 25,000 installed systems.

Policy makes a difference when it comes to battery storage

Energy storage systems are seen as a crucial part of the energy transition happening in Germany (Energiewende).

There are already more than one half million solar installations with a capacity of 40 GW in the country.

It makes sense to add battery storage systems to these installations so you can squeeze the most energy out of them.

Germany Trade and Invest (GTAI), forecasts that 50,000 battery solutions could be installed each year by 2020.

Battery storage will not solve all your problems

Batteries are not a good choice for backup power for a few hours to a few days.

To provide a full supply to a normal house you need a big battery system. It’s much larger than the normal capacity of a grid connected wire.

You also need additional circuitry, permits and contractors to carry out the work.

The system will struggle to give you continuous power for a long time, especially if you lose power for days.

It’s much easier and cheaper to just buy a generator for backup power, but it’s obviously more polluting.

The main opportunity lies in energy arbitrage

People are very excited about battery storage because it will help you store energy where it is cheap and use it when it is more expensive.

But is this really the case?

One easy way to work out the numbers that matter is to think about the lifetime of a battery system. Using the example from the podcast:

It costs $10,000 for a 10kW battery system that has 4,000 charge / discharge cycles.

This means it has a life of around 10 – 11 years if used once a day.

The cost per day of the system is therefore $10,000 / 4,000 = $2.5 per day.

If the system runs for 1 hour and generates 10 kWh of energy, the cost per kWh is $2.5 / 10 = 25 cents per kWh.

Let’s say the cost of electricity from the grid during the day is 50 cents during the day and 15 cents during the night.

So, if you were able to charge the battery at night and then use it to offset expensive power during the day, you have just saved 50 – 15 = 35 cents.

At the same time, putting in the battery system has cost you 25 cents. So, your saving is 35 – 25 = 10 cents.

There is a saving, but it’s marginal and you need to get everything right.

What happens when you put a battery storage system into a solar PV installation?

This does not automatically make you money – unfortunately…

If the saving from your solar generation is less than 25 c/kWh, then you will lose money by adding a battery system that costs 25 c/kWh into your installation.

This excludes any rebates or subsidies that apply, and just looks at a straight business case.

How can you make the business case work in the UK?

The secret is getting your stack of benefits right in addition to simple storage arbitrage?

In the UK, successful projects have used many of these schemes and opportunities:

  • Renewable energy direct time shift
  • Peak load time shift
  • Extra electrical capacity
  • Transmission congestion relief
  • Relief from the capex needed for network upgrades
  • Frequency Regulation
  • Voltage regulation.

In Q3, 2016, National Grid bought around 200 MW of frequency response services, mainly through battery systems. Their balancing services page is a good place to start if you want more information.

Summary and conclusion

In summary – you can make money by putting in batteries, but it’s not going to be as easy as you hoped.

It’s important to understand the different ways in which the cost of power stacks up in your country and what this means for the savings you can make.

For the UK in particular, schemes change all the time. That means you cannot guarantee your savings and need to create a business case can handle this.

One way is to introduce probabilities into your model and work out the “expected value”, and “confidence level” of the schemes.

Doing this means you can say that you are 95% confident of achieving a saving of X.

This can help you build an overall business case so you know how much you could make.

The next challenge is getting your funders to sign off on the project…