- Global warming poses an existential threat to life on Earth. This existential threat challenges our capabilities and calls into question the viability and effectiveness of mechanically conceived grid maintenance options.
- Solar Roadways’ smashing crowdfunding campaign success provides a terrific opportunity to assess the current state of business crowdfunding in relation to the future of solar power.
- Distributed investing and distributed electricity are part of a “grid revolution” that may structurally shift financial and political power globally from the 1 Percent to the 99 Percent and from the Core to the Periphery.
- The distributed grid paradigm echoes current philosophical, engineering and economic models grounded in an ecological metaphor that values species diversity, small-scale experimentation, and distributed risk and parcelized decision-making.
The Cracking of the Global Grid
With its Indiegogo campaign winding down, folksy technology startup Solar Roadways has raised well north of $2 million from 48,000 funders, released a YouTube video that has received more than 16 million views, and for the moment can proudly boast of being the third most funded project in the history of Indiegogo.
Solar roads are likely not the first-best option, nor perhaps even the 10th-best option, for widespread capture of solar energy. Nonetheless, Solar Roadways’ smashing campaign provides a terrific opportunity to assess the current state of business crowdfunding in relation to the future of solar power, what we will call sunfunding. The connections between crowdfunding and sunfunding exist. They matter. And they may surprise you. Let’s roll the tape.
Crowdfunding has grown approximately 80 percent year over year since 2009, a pace expected to continue for the foreseeable future. In 2014, global crowdfunding projections approach $10 billion, a 20-fold increase from the $500 million raised in crowdfunding campaigns in 2009. If trend lines persist, in 2020, crowdfunding will deliver $500 billion in seed capital to nearly 10 million projects, in the form of donation, reward, lending, and equity-based investments — generating millions of new jobs and more than $3 trillion in new revenue.
Sunfunding also has mushroomed. In 2013, solar power installations in the United States exceeded 4.5 gigawatts, a more than five-fold increase from installations in 2010. Because solar still only contributes less than 0.5 percent of electric power nationwide, the industry can assume a blue-sky future for years to come, with installation trend lines indicating potential capacity installation of 225 gigawatts in 2020, enough capacity in that single year to power nearly 40 million American homes.
Indeed, solar installations in the U.S. have rocketed so rapidly toward grid pricing parity with coal that analysts now predict utilities will construct few, if any, coal-fired power plants going forward. In the more optimistic of its future-oriented Scenarios, energy company Shell estimates that solar PV could account for 20 percent of global energy by 2060 and nearly 40 percent of the total by the end of the 21st century.
With remarkably aligned annualized growth rates of 75-80 percent, crowdfunding and sunfunding trends, depicted graphically, resemble nothing so much as the trajectory of space vehicles obtaining escape velocity from the earth’s atmosphere. But for those with boots on the ground, the impact of these trends more likely resembles displacement associated with the cracking of tectonic plates. Or perhaps more aptly, the cracking of the global grid.N
Part One of this essay focused on the grid-shaking growth of distributed investing and power generation, via crowdfunding and sunfunding. In Part Two of this essay, we will consider some of the more radical implications of crowdfunding. In particular, we will spotlight the emergence of an “acceleration ecology” based on principles of self-assembly that guarantee organic, “hive mind” solutions will always outpace traditional, “command and control” grid options.P
The Solar Roadways campaign provides a textbook example of how to plan and execute a crowdfunding initiative. However, the more important point may be that the Solar Roadways Indiegogo campaign also illustrates perfectly the underlying psychology of crowdfunding, and that this crowd psychology is tuned to an emotional resonance far different from, indeed orthogonal to, the investment psychology associated with institutionalized finance capital.
The solar roads concept has been around for more than 30 years, but had gained little traction until Scott and Julie Brusaw, hailing from Sandpoint, Idaho — a picture-perfect small town straight from central casting, nestled between staggeringly beautiful mountain ranges and the placid shores of Lake Pend Orville — launched their Solar Roadways Indiegogo campaign on Earth Day of April 2014.
Scott Brusaw is an electrical engineer who, since 2006, has explored the feasibility of replacing the 31,000 square miles of paved roads, parking lots, driveways, playgrounds, bike paths, and sidewalks that traverse the United States (about 1 percent of the nation’s total land surface) with a “smart” road system constructed of hexagonal, recycled glass-encased solar panels, capable of powering… well… and doing… well… pretty much everything! Through initial funding from the Federal Highway Administration, along with modest support from General Electric, the Brusaw team has designed and built roadworthy solar panel prototypes and completed initial construction of a prototype parking lot that integrates connected solar cells, LED lights, heating elements, and a textured glass surface. Funds raised from the Indiegogo campaign will support creation of a solar panel production capability.
While the Solar Roadways concept itself is pretty interesting, the response this concept has evoked from “simple folk” across the globe is yet more newsworthy, and for the following reason — “meta” analysis of Solar Roadways as an instrument of the vox populi captures information about shared, species-level hopes and fears for our future that might otherwise remain inchoate and elusive. With this information, we can not only track the deep movements of an organically activated human “mind”, but also connect these mental movements directly to policy-relevant and market-relevant feedback loops that short-circuit the existing decision-making loops in Washington, corporate America, and on Wall Street.The Solar Roadways campaign has channeled the vox populi by using messaging strategies that allow the intellectual concept of solar roadways to resonate across an emotional range – encompassing hope, fear, happiness, frustration, humor, excitement, and inspiration. The following “bridge” elements of the Solar Roadways campaign activate emotional receptors for communal bonding experiences around this intellectual content.
- Tell Me a Story — The Solar Roadways message is easy to understand, easy to trust, and scales in a narrative that conforms to a clear and simple logic — starting with parking lots and driveways in small-town America and ending with superhighways crossing every nation of the world.
- Sing Me a Song — Solar Roadways resonates melodically. As in a Broadway musical, the Brusaw crowdfunding campaign hits every note needed to harmonically score the right emotion in a larger drama. Like John Denver’s iconic song Country Roads, the Solar Roads concept creates a level of comfort that we associate with Mom or Dad tucking us into bed at night, the secure belief that a familiar pathway can transport us home, the conviction that we are safe and that everything will be okay.
- Paint Me a Picture — Were Scott Brusaw to approach Wall Street institutional investors, they would ask him tough questions and quickly expose logical problems with getting from A to Z, covering every letter of the alphabet. By contrast, Main Street crowdfunders will only respond to a simple, evocative picture of what it would mean to get from A to Z. They don’t even want to know what happens between B and Y. The technical merits and financial nuances of the project are simply not relevant to their evaluation.
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- Give Me a Hero — The Solar Roadways campaign is genius at communicating the tropes of popular American success mythology — the Sarah Palin view that anyone with good old American “spunk” and “grit” can change the world. Whatever the Brusaw clan may think of their fellow Sandpointillist (Sarah Palin was actually born in Sandpoint in 1964), they artfully attach their project to old-style, non-corporate, can-do values. And whether intended or not, their (somewhat passing) reference to a decentralized grid evokes similarly resonant themes of individual freedom, autonomy, and innovation.
- Make Me Smile — Unlike many crowdfunded initiatives, Solar Roadways does not promise to deliver its product — functioning solar surfaces — to donors. Rewards are merely symbolic. The absence of any need to justify the product except at the symbolic level, liberates the campaign instead to elicit excitement, astonishment, awe, and good feelings all around. The Solar Roadways gang makes solving a set of huge and scary problems look so easy! And fun! Compelling details about the myriad benefits of solar roads, such as programmable colored LED lights, evokes late-night television commercials for all-in-one devices like the Ginsu knife — But wait! There’s more! However, one cannot overstate the marketing value of these LED lights — we can solve global warming and pollution and also play Dance Dance Revolution on the grid!
If there is a childlike simplicity to the Solar Roadways vision, well, perhaps that is the point. Naive simplicity is an integral, and remarkably functional, element of crowdfunding’s appeal and effectiveness, making it possible for projects to surface, fund, live, or die, quickly and definitively.
Crowdfunding represents what one might call acceleration ecology, in which — as in nature movies that speed up annual cycles of birth, maturation and decline — allocation of small funding amounts from large numbers of individuals rapidly and continually distributes investment risk across a constantly shifting map of opportunity and possibility. The crowdfunding paradigm appears isomorphic to other currently fashionable philosophical, engineering, and economic models grounded in an ecological metaphor that values species diversity, small-scale experimentation, and distributed risk and parcelized decision-making – what Nassim Nicholas Taleb has called stochastic tinkering; what RAD software engineering advocates aim for with dramatically shortened planning, development, and release cycles; and what Thomas Piketty has imputed with his exposure of wealth-concentration dynamics within capitalist economic systems.
Not surprisingly, knowledgeable observers of the Solar Roadways phenomenon — pavement engineering consultant David Peshkin and solar energy physicist Zoltan Kiss — are skeptical about the practical details and feasibility of the Solar Roadways vision. Perhaps more surprisingly, Peshkin and Kiss marvel at the success of the Solar Roadways campaign and frankly acknowledge the larger significance of the attention crowdfunding has brought to ideas about solar power and the distributed grid. The innovation genie is out of the bottle. And given the difficulty in picking technology winners, no matter what selection process one adopts, both Peshkin and Kiss would probably agree with Taleb that the best approach is to let a thousand flowers bloom and minimize the risk associated with any particular outcome.
Going forward, the challenge facing established “financial grid” players — commercial lending banks, investment banks, private equity firms, venture funds, and angel networks — may not be whether they can match the growth arc of crowdfunding platforms. The financial grid itself may be at risk.
Few pundits would argue that risk and capital-allocation models used by financial institutions will disappear any time soon. But even those who assume that early-stage investment capital can absorb crowdfunding lessons and co-opt crowdfunding portals may be mistaken. Because almost by definition, the operational imperative of financial grid systems is a command-and-control gate-keeping imperative — the hierarchical, top-down deployment, organization, and direction of finance capital toward targeted ends.
The viral spread of the distributed, acceleration funding model obliterates the gate-keeping functions of institutionalized finance capital, and in the process deals a significant blow to the legitimacy of the financial grid itself. Because it directly activates the human hive mind — with the capacity to apportion risk more minutely, more quickly, and across the surface of the globe — crowdfunding is now structurally positioned to always run ahead of institutionalized, grid-integrated investment capital. The ascent of the crowdfunding regime surfaces altogether new perspectives on the eternal questions we face as human creatures: Who bears the risk? Who receives the reward?
Part Two of this essay extracted some broader lessons from the shockingly successful Solar Roadways crowdfunding campaign and used these lessons to develop a new lens for understanding global development in the 21st century, premised on the concepts ofacceleration ecology, hive mind, and peripheral vision. Peering through this lens can attune us to the pivotal impact of radically decentralized mobile technologies in providing access to money and power (electric and otherwise) to millions of people whom the 20th-century industrial grid could never reach.
In Part Three of this essay, we will consider the structural decay of traditional grid institutions and how the concept of peripheral visioncan attune us to pivotal impact of radically decentralized mobile technologies in providing access to money and power (electric and otherwise) to millions of people whom the 20th-century industrial grid could never reach.
The Future of Solar Power
Many moons ago, environmental philosopher, physicist, and entrepreneur Amory Lovins teased out the radically divergent social paths associated with nuclear power and solar energy. Even then, the political and social implications of nuclear – with its capital-intensive, highly regulated, densely centralized, military-industrial utility model – were pretty obvious, and the vectors all pointed in the same direction – toward an authoritarian, militarized, paranoid, lumbering, half-blind, declining great power. Pretty much what we see today, even without nuclear at the center of the grid.
Of course, Lovins’ radicalism emerged from this general insight about the grid, not his particularly pointed analysis of nuclear power. The organization of the grid itself is what matters, not necessarily any particular energy source. Scale, modularity, portability, redundancy, efficiency, sustainability, and affordability are presumably the key elements of a grid revolution, and the global political implications of this path could not differ more from the direction we take with the traditional utility model. For this reason, the acceleration ecology model also manifests a clear tension between solar energy and power storage companies tied to the centralized electric and financial grids (via utility-scale installations and both project and residential finance) – and those companies at least cognizant of the distributed grid beginning to arise both in developed and (perhaps more significantly) in emerging and frontier economies.
In late May of 2014, Barclays Bank downgraded the high-grade bond market for electric utility companies, a move analysts have declared as a watershed moment in the epic struggle for grid mastery between old-school carbon-based power companies and upstart renewable technology companies. In a nutshell, the problem confronting electric utilities is that the existing grid model depends on capital-intensive plant and infrastructure investments that only recoup slowly over time, with significant economic risk accruing to the ratepayer.
Leaving aside for the moment the irrelevance of the utility grid model for much of the developing world, even within advanced industrial nations this model is faltering rapidly, and it would be a mistake to assume utilities can simply incorporate solar into existing infrastructure in the same way that it would be a mistake to assume financial institutions can simply incorporate crowdfunding into their lending and investment practices. For utilities, the major issue will remain the capital costs of grid maintenance and the rapidly increasing benefits of point-of-use installations. And as with crowdfunding, the emergence of an acceleration ecology for distributed solar power and storage technologies indicates the approach of a tipping point that begins to spawn an independent global power “hive” that operates largely beyond the purview of the regulated electric power grid.In a number of thoughtful essays published by Seeking Alpha in the last year, Zoltan Kisshas:
- Exposed the deep structure of the solar future.
- Explained how the shape that future takes depends on the interactions between an array of technology, economic, financial, political, and environmental factors, including distributed energy, power storage, rare earth materials extraction, environmental risk, and SPV financing & securitization.
- Summarized how both limitations of the utility and financial services models of power delivery and larger philosophical considerations regarding sun “ownership” augur for the “3rd path”, the distributed solar ownership model (see Battle for the Sun, Solar PV Market, Trends in the Cost of Energy).
Kiss’s deep knowledge of and commitment to multi-junction thin-film technologies firmly aligns him with point of use technology advocates. Kiss’s sunowner paradigm, as with the concept ofsunfunding, also reinforces the idea of crowdfunding. The slippery duality of sunownership and sunfunding – which is that both terms can refer to solar installation financing or, more radically, to the sun itself “funding” our energy needs (instead of the banks) – resembles how the “crowd” can now fund our business capital needs (instead of the banks). Sunownership, sunfunding, and crowdfunding all evoke the unstable “quantum” dialectic (supporting 2 opposing realities simultaneously) that informs the accelerated ecology model.
Taking the long view that often deepens the wisdom of those who have lived a lot of life, Kiss (perhaps more than anyone else in the industry) appreciates the high stakes of the battle for the sun.
As crowdfunding and sunfunding claim the contemporary public stage, pundits pondering the meaning of global warming and the future of the centralized service grid reliably unspool a didactic narrative about the civilizing history of grid infrastructure, fossil fuels, and Oxford University (see, for example, George F. Will and Charles Krauthammer). Supported by their Don-like commitment to the past as primer, the 20th century history of grid infrastructure becomes a telescoping lens on the future of the grid everywhere else in the world.
But perhaps we are looking through the wrong end of the telescope.
Pavement Engineer Peshkin recently returned from a week-long visit to India that included meetings with contractors, consultants, and transportation agencies. While skeptical about the viability of solar roadways in the United States, at least in the near term, Peshkin’s visit heightened his awareness of the opportunity for solar roads in developing countries such as India. Just as these countries currently bypass hard-wired communications infrastructure, Peshkin (echoing Alexander Gershenkron) now wonders whether they might also use solar technology, including solar roads, to overleap less innovative and less future-oriented infrastructure development options, and whether seizing this opportunity in the developing world might be a wiser allocation of resources than installation of solar surfaces on top of existing driveways and parking lots in the United States.
Peshkin’s insight is that we might best understand 21st-century global development path potentialities by starting from the grid periphery – from the nations and regions of the earth presently least tapped into grid matrices. Posted at the periphery, we can most easily track the adoption rates, effectiveness, and future prospects of emerging options for the provisioning of basic human needs. We can then travel inward toward the economically developed core, and evaluate businesses and technologies with fresh eyes as advanced industrial societies navigate both grid realities and hive possibilities.
Much like a New Yorker map of the world, peripheral vision allows us to see through the eyes of the billions of people with only a tenuous grasp on, or no connection whatsoever to, centralized grid services. When we peer through the far end of the telescope, we suddenly see the pivotal impact of radically decentralized mobile technologies in providing access to money and power (electric and otherwise) to millions of people whom the 20th-century industrial grid could never reach.
Part Three of this essay considered the ideas of physicist Zoltan Kiss regarding structural limitations of traditional utility and financial services models of power delivery. Part III also introduced the concept of “peripheral vision,” which attunes us to new ways in which mobile technologies provide access to money and power (electric and otherwise) to millions of people whom the 20th-century industrial grid could never reach.
In Part Four of this essay, we will visit Kenya, where mobile telecommunications have birthed new ways to access money and power that touch millions of locals who live entirely or partially off the grid. We also will close by attending to the Longplayer project, which reminds us of the importance of enduring solutions to global problems that can stretch far into the future and benefit the lives of those who follow us for generations to come.
Long Tail Liberation
Crowdfunding models exploit online technologies and social networks to create new financing opportunities for a long tail of small business ideas and arts projects that otherwise would not find financial grid sponsorship. Similarly, microfinance initiatives exploit the mobile technologies that now globally connect a vast portion of the world’s population, providing millions of small-scale opportunities for local businesses to profit from meeting the basic financial needs of the “unbanked.” As with crowdfunding, we can measure the growth and success of an emergent global finance hive mind and acceleration ecology with reference to participation rates on both sides of the transaction.
Mobile Telecom / Microfinance
Historically, a vast percentage of the world’s population has been ill-served by grid financial institutions – approximately 2.5 billion working-age adults (about 50 percent of the total) presently lack basic access to financial services (see the Gates Foundation’s Financial Services for the Poor initiative). The challenge in serving the poor faced by traditional, centralized, capital-intensive banking institutions reduces to the generally high cost of doing business in long-tail markets – due to far smaller transaction sizes that high infrastructure and service costs cannot accommodate within any grid-based business model. Hence the promise for investors of low-cost financial inclusion business models that can scale rapidly to serve basic financial needs presently neglected by the grid.
Microfinance Case Study – M-PESA
Most East Africans have never gone to the bank. But now the bank goes to them. Kenya leads the world in mobile money. In Kenya, mobile provider Safaricom delivers a broad range of connected financial services via M-PESA, the world’s most successful mobile payments platform. M-PESA (loosely, cash in Swahili) is ubiquitous in Kenya, supporting a base of 20 million users, 80,000 payment agents, and more than $1 billion of monthly transactions. Approximately 50 percent of Kenyan GDP passes through M-PESA, which presently offers money transfers (P2P, P2B, B2B, and international), airtime top-up, product purchases, bill payments, and salary payments. If processed through the financial grid, each M-PESA transaction would, on average, require 2-3 hours of time and a cost of $3. M-PESA allows Kenyans to instead invest this savings of time and money in economically productive activities, purchases of food, and savings. A sister service, M-Shwari, offers mobile savings and loan options.This New WorldThe current capitalist system is broken. Get updates on our progress toward building a fairer world.
Mobile Telecom / Micropower
As with global finance, the most rapid and sustainable energy sector growth opportunities over the next decade will address markets and populations historically under-served or neglected by power grid utilities. While journalists and bloggers freely toss around exciting, disruption-sounding terms such as micro-grid and smart-grid , and rural electrification in Africa, Asia, and Latin America may eventually adopt these technologies, for the moment the most exciting development in the creation of distributed access to electric power involves a simple solar lamp. And as it turns out, mobile technology also provides the key to understanding an emerging acceleration ecology in the provision of off-grid power services in Kenya.
According to the World Bank, over 1.2 billion people worldwide – 20% of the global population – still live off the electric grid and lack access to reliable power. This total includes about 550 million people in Africa and another 400 million in India. In Kenya, the national electricity grid bypasses nearly 80 percent of the households, leaving families to rely on lethal kerosene fuels, candles, coal, or biomass for cooking, lighting, and heat (around the world, nearly 1.5 million people, primarily women and children, die annually from exposure to the fumes from these energy sources). However, leveraging the same mobile communications and payments systems supported by Safaricom, innovative pay-as-you-go services such as M-KOPA have developed sustainable business models that can deliver basic power services – for lighting, cell phone charging, and radios – to many of these people who have labored without light and literally lived in darkness.
Micropower Case Study – M-KOPA
The mobile technology economy in Kenya and in East Africa now supports a highly transactional and participatory ecosystem, characterized by thousands of simultaneous interactions conducive to rapid, frictionless self-assembly of markets and services. The key to the success of this mobile economy is risk mitigation. People without resources cannot manage significant risk. The mobile economy slices risk into such minute particles that transactional rewards, small though they might be to a capital-intensive utility, are vastly asymmetric to the associated risk quanta for both parties to the transaction. M-KOPA extends this risk model into the provision of solar power as a supported service, similar to a regulated utility in the commitments to service reliability and customer support.
From a risk-management perspective, M-KOPA grasps that people living within environments of scarcity neither possess – nor typically desire – the luxury of limitless choices. They only need what is enough, and settling for enough radically constrains systemic risk. The ability to provision power and lighting needs for millions of people at just this basic level is a novel concept to centralized grid operators for whom more choices – fueled by financing incentives – represent more revenue. While large electric power companies – including solar power companies – generally operate financing divisions as significant profit centers for the business, innovative companies such as M-KOPA that serve off-grid markets view pay-as-you-go financing as a low-cost lever to crack open the market for its transactional power services.
At midnight of December 31, 1999, a musical project called Longplayer launched in London. Longplayer is a one thousand year-long musical composition created specifically for bronze singing bowls, and dedicated to human reconsideration of existential concepts such as resonance, endurance, and time.
Longplayer reminds us that resonation – which can refer both to a deep, full, reverberating sound and to electrical or mechanical waves or cycles – may be the defining feature of emergent, flexible, and durable forms of communication connecting members of the human species to each other and to their common home, the planet called Earth.
Global warming poses an existential threat to life on Earth. This existential threat challenges our capabilities and calls into question the viability and effectiveness of mechanically conceived grid maintenance options. What one might call quantum options, which I have associated with the concepts of hive mind and acceleration ecology, have now begun to self-assemble in finance and energy domains (as well as in education, health-care, and national security domains) governed in the past century by grid paradigms. If we attune ourselves to the signals that resonate, it may be that we can find our way home.