Why energy will be free in under 10 years

It’s easy to forget how many things we used to pay for that we now get to use and consume for free.
Energy is very close to becoming one of them. The global economy is very quickly transforming to an all electric economy. Yes, for both your house and your car. Very soon we’ll only have to pay a one off set up fee to go entirely off grid and generate all the energy (electricity) we need, for free. It will come from the worlds most powerful energy source, the original fossil fuel called the sun. I hear you saying a one off set up free isn’t free, and that’s true, but this is where the economy is changing and catching many existing industrial companies off guard.

 

In the past the factors of production were all centralised: Factories, Retail Stores, Power Plants, Media Channels, Computers. Sector by sector, they are being decentralised as technological advances allow these tools to be cheap enough for us to access them or own them for a very low cost. The super computer in your pocket comes to mind, or the factory you don’t have to own as you access manufacturing capacity via Alibaba. They way it will work is in 3 simple steps:
     

  1. Set up solar panels + Battery storage  = Price X
  2. When Energy bill > 20% of Price X
  3. Finance will fund the off grid set up. (cost of money around 7% for unsecured loans + principal repayment)

It will be much like what happened with our shift from the dumb phone to the smart phone. We have a contract to pay off the hardware (which actually includes hidden interest costs), but in this case, the hardware is paid for by the money we’d normally be paying the electricity company with a quarterly bill. But now it will go to the companies setting up a mini power plants in our homes.

So where are we today with the cost of going ‘off grid’ and having enough energy to power our homes?

The average home in Melbourne, Australia (where I live) uses 16 kwH per day. In order to set up a solar PV, inverter and battery system which can provide this level of energy on a daily basis, in all weather, it currently costs around $25,000 – just google “off grid solar 16kwH” to see the various options. The current average energy bill in Australia is $550 per month. Already the cost is very close to the switch covering the cost of finance and repayment in 3-5 years – the typical length of unsecured loans. The switch will happen very quickly when we consider the rapidly declining cost of both solar panels and batteries. Currently the cost of Lithium Ion rechargeable batteries is falling by 40% every 2 years driven by large scale production efficiencies. Based on the current price trend, within 5 years the cross over will start to occur.

And here is where it gets interesting. It will happen quicker than we think based on other non-battery based system efficiencies:

Solar Panels (PV cells) cost performance improvement 20% per doubling of manufacturing capacity – otherwise know as Swanson’s Law. This too will continue. Within 5 years their cost will be 75% less than they are today, and they will be more efficient at capturing energy, due to energy capture improvements. Since 2011 the average PV panel went from only capturing 11% of available joules of energy to 19% currently. Add to this the potential of a curve jump to better technology and we could surpass even our current optimistic estimates. A report just this week from the Journal of Material Science revealed a way to recharge Zinc Air batteries which could be 5 times more efficient than Lithium Ion. 

And finally, lets not forget that the amount of electricity / and energy we use in the home currently has wastage rates of up to 30%. New devices and IoT functional smart homes will significantly reduce the energy wastage in our homes. Once our houses become IoT enabled, not only will the efficiency and capture of an off grid system be much better, there is a highly likelihood we will not require as much energy as we do today. This is because most devices requiring energy in our homes will essentially become computers. This is where Koomey’s Law comes in. Koomey’s Law states that at a fixed computing load, the amount of battery you need will fall by a factor of two every year and a half. This will  have a more dramatic impact on the energy industry as most machines we use computerise.

When we add this up, all these pieces from different previously isolated sectors, it is clear to see we’ll have all the energy we need from the sun and other sustainable sources. Which means, that unless you sell oil or burn coal for a living, the future is certainly bright.

Check out my new book – The Lessons School Forgot –  thrive in the technology era.

The start of the end of the screen – Google Home

Why is no one talking about the things that really matter with Google Home? Like how it changes the economy, and how it might have the kind of impact mobile apps did on our web habits. I’ve read a number of articles about the Google Home device being launched in Australia this week. Lots of them discuss the effectiveness of the natural language processing and which apps it works best with. Like this article and this article. None of them seem to cover the issues that really matter on the topic. So here they are.

Ambient Computing: This is a shift away from typing to talking. We are now entering the age of ambient computing. The killer apps on interacting with artificial intelligence have just shifted from eyes and fingers, to mouths and ears. This is the start of a permanent change in the way humans interact with intelligent machines. The shift is as big as the smart phone was. The only difference is that this will take a little longer to establish itself. The reason it will take longer than the smart phone did is that there isn’t a direct substitute for such home devices. The smart phone had the advantage of replacing a tool we all already used – a feature phone. Most of which had a 12-24 month replacement cycle – like items under contracts typically do. Therefore, we can put this device in the Amara’s law category – a bit slower to take hold, but once they do arrive en masse, the impact will be greater than most people suspect.

The smart home killer app: Every new regime in technology requires a centre piece technology to augment and co-ordinate disparate devices. The graphical browser ushered in the era of the World Wide Web. Google home and friends, namely Echo and Homepod are the devices that will usher in the era of the smart home. A home where everything functional, mechanical, and electrical will interact with web. This is where we can expect to move to renewable energy faster than most predict. Currently just under half the energy we consumer in home is wasted. We don’t need more efficient PV Solar panels and larger batteries, what we need is homes that know how to efficiently allocated energy and resources to the devices inside it.

So what does a smart home look like? It’s a place where most everything has computational capacity, it knows everything that’s in it and it efficiently allocates energy and activities based on what it learns. We can expect energy usage in the home to decrease by at least 30% in a truly smart home. When technology makes our homes more efficient, the value equation and ability for renewables to create an off-grid solution increases exponentially. A positive cycle of both demand and supply side efficiency may change how we power our homes ahead of schedule due to the arrival of complimentary technologies. We can expect the centre piece AI to be a party to the dismantling of the coal and fossil fuel industries. Disruption is horizontal – it is usually a juxtaposed technology which changes things unexpectedly.

The end of SEO: Once people start talking to their devices and asking for and expecting verbal responses, being on the homepage of Google becomes irrelevant. There wont be a page at all. In a world of ambient computing, we need be the first recommendation which gets returned audibly. Which means any brand, product or service hoping to be recommended by a search engine needs to be asked for by brand, or be the best in category. Even worse, companies like Amazon and Google might not care what’s most relevant, and instead start recommending what is most profitable. So long as it ‘solves the problem’ of the end user it’s most likely to give them the highest margin option, for them. Remember, Google promises not to be evil – to it’s share holders at least. SEO, will become VPO – Voice Pod Optimization, a game where only a single option is mooted to the end user.

Privacy on steroids: This is the time when we allow multinational corporations with backdoor pipes to governments hear every word in our homes and learn every habit. All of which is permanently recorded. And if you think this only matters for people committing crimes, then never forget that the most extreme externalities are those we can’t plan for, or even predict. If this isn’t enough to convince you to think twice about privacy, this little post might at least open the mind a little. Privacy and secrecy are not the same thing.

Given these changes aren’t in the maybe category, best we start acting on them now.

The one word that ties this revolution all together

If I had to use one word to tie together this technology revolution we are living through it would be this:

Mobility.

Once we think about all the tools arriving and what they allows us to do, much of it revolves around geo graphic independence and mobility.

Smart phones – mobile computing in all it’s capacities. Mobile communications.

Driverless cars – increased mobility of people and things, independent of human touch.

Wikipedia / Blogging / Vlogging – Mobility of information and ideas, not locked down the the physical location of books or other data sources.

Social networks – Mobility of connections to people, what we are doing and saying flies across the globe at the click of a button.

Work – Ability to get information work done anywhere in the globe.

Drones – Mobility of things, visual footage and data points, and soon people.

Payments gateways – mobility of finance outside of physical banks.

Crypto Currency – mobility of money and payments, independent of any geography or government.

Blockchain & Smart Contracts – Mobility of promises independent of location, and premised on execution of that promise without parties having to meet physically.

3D printing – Mobility of manufacturing – send a file, make it anywhere.

Crowd Funding – Mobility of innovation outside of funding ecosystems.

e-commerce – Mobility of retail, sell to anyone, anywhere.

Cloud Computing – Mobility of data storage – it follows you around the world

Cloud Manufacturing – Alibaba providing access to the world of manufacturing with a few clicks

Freelance markets – Mobility of labour forces for information work.

Given all of this, we need to ask ourselves a simple question to future proof ourselves and or the company we work for;

How are we increasing the mobility of what we make sell or do. It’s a great place to start.

If you want to increase the mobility of your future join me for my new book launch – The Lessons School Forgot – on Tuesday night in Melbourne. Reserve your seat here for a night of inspiration & ideas with good people.

See you then, Steve.

The Language of Innovation

In my adult life, I’ve learned to speak two foreign languages. During my studies I came to the conclusion that it is very difficult to truly understand a culture, until you can speak its language(s). There are nuances and belief systems locked inside the words of a culture. The way a culture’s words are put together, how these words translate into actions, what its people believe and even the way they move are locked inside language. This is one of the reasons you can’t just translate phrases, or even some words directly. They need a cultural context to allow true meaning and required action to be drawn from them. It’s a process which has lots of layers, which when understood properly uncovers why different cultures believe different things, have different values, behave in unique ways and mostly go about things in a way which is, well foreign. Language and culture mirror each other.

Learning how to change, innovate and survive under a new technological regime is a lot like learning a new language.

For more than 10 years I’ve been out in the market learning and speaking our new business language, that of the accelerating technology economy.  Espousing that the era of stability is over and that there is a bunch of new tools and methods which not only circumvent industrial strategies, but are part of a permanent cultural shift in business. Here’s what I’ve noticed:

There are 3 clear stages that are recognisable parts to a successful transition.

Noticing the new language – We hear a bunch of words which are different. What seem like mere sounds and accents just washing over us gradually become more familiar. We see a smaller cohort speaking this new language in more and more places until we notice that it isn’t just different, but something different is happening around and to the people who speak this language. It is generating attention from outsiders and the language seems to have some advantages. Advantages that only those who speak it seem to understand and have access to. The initial recognition of this difference is first part of any change process. We must not only admit that we don’t understand it and that it’s not going to go away. But we must also be curious enough not to ignore it, but to dig deeper into it.

Understand the meaning – Next we must try and learn the new language. We have to study it, observe and listen, then try to speak it. We must learn the meaning inside the words – the foreign ‘culture’ it represents. This part isn’t just a translation process, it’s more about experimenting with the words until it becomes a physical response. A key part of this process is watching the body language and verbal language interact. Once we really understand the language, we understand its context and what makes it work. Understanding a language just little can bring about many positive changes and new actions. But it is a game of frequency and practice. To know it, we can’t just study it. We have to use it in non-classroom environments, in real life where mistakes can happen. We must converse with others who only speak that language. If we only practice with others who speak our mother tongue as well, we won’t really learn – we’ll always revert to what is more comfortable. Actions don’t just speak louder than words – they are the purpose of them.

Living the language – This is where most struggle.  At this point, we understand it well enough. We know enough to communicate and get inside the culture. But here we face a choice on whether we want to adopt it. To use it. To become at one with the language. Unless we decide to live the language, it will never be an automatic reaction and allow us to interact in its world without thinking. This is the chasm most never cross, because here’s where it goes beyond learning and becomes more about changing.

If you go back and read through the 3 steps again and think about disruptive technology or business innovation, you’ll see they are the same thing. The reasons most large companies, and people with established stable career skills struggle to adapt to innovations is because they are not prepared to live it. Mostly they want to learn a few words, be able to order a sandwich and introduce themselves, but mostly they’d prefer to just speak and act the way they always have. It’s usually window dressing. They don’t truly believe in it and they want to maintain their current culture. We’ll never truly innovate speaking an outdated language, or more precisely, living in an outmoded culture. We must immerse fully and leave the past behind.

For a company, and even a country, we’ll only ever be future-proof once we are so immersed in the language of innovation that we develop our own slang, dialect and accent with it. This is not easy. It’s a radical and permanent shift. Ask anyone who moved to a new land and had to learn to speak all over again.

Just remember this, if you don’t like change – you’re really going to hate irrelevance.

Blog readers in Melbourne – I’m inviting you as a reader to The Lessons School Forgot – Live – to celebrate the launch of my new book. 

Hope to see you there, Steve. 

Low tech jobs in a high tech world

look alike robot

The robots are taking over. Seriously, they are. They are taking a lot of the crappy and dangerous jobs we’ve done in the past. They’re taking a few of the good ones too. So here’s a thought, why not try and own some robots? Maybe save some money with your robot – oh, like your phone which saves you buying music…

Here’s another thought experiment: If a person has $100 in their wallet, and instead of spending 30 of those dollars on a CD, where does the money go? Does it just evaporate? Of course not. Money doesn’t evaporate, it just changes places. It is relatively easy to see where it will dry up and where it will get invested instead. The transition is obvious to people who pay attention to the world they live in. Good news, that new place where old new money gets spent also has new new jobs associated with it – most will be low tech. They always are.

Here’s another little known fact – the worlds most profile tech company ‘Google’ is not the nerd nest of techies you think it is. More than half of its global workforce are sales people. Yep, that same person who would normally have sold TV ads, cars, vacuums, real estate and health insurance is now a sales person at Google.

Humans invent jobs as new industries and technologies emerge. We surround the new thing with people – it’s like a force of gravity. People aggregate around money and commerce. And yes, some good paying jobs do disappear, but some other high paying ones arrive too.

If you want to be on the high paying end of things, here’s what to do, go out and learn some new skills few people have, there are enormous skill gaps in the market today. And these skills are free to learn on line. Here’s a website I love called the ‘No Excuses List’ – which is full of things you can learn for free. Skills companies and people need today!  If you make the effort to reinvent yourself in times of great change, the prize is big, I know I’ve done it myself.

But of course there’s a catch, I can’t do your push ups for you.

Questions established companies must ask themselves

future

“How could our customers do this thing without us?”

“What can be removed from the process and still solve this problem?”

“How could this problem be solved without using a physical product?”

“What technology is likely to be introduced into our things?

“What will happen to prices of the thing we sell when more technology is introduced.?”

“What would a new entrant into this market likely do to meet customers needs?”

Once these questions are answered sufficiently and honestly, they ought go ahead and do these things. They are going to happen anyway aren’t they?

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Tesla Model 3 & the start of the end of petrol cars

The hype of the new Tesla model 3 is understated as far as I can tell. While it is true Tesla hasn’t actually sold any of the cars – they haven’t made any yet – it is also true that there has never been a car in history (any product?) which achieved $8.86B in pre-order sales. Yes, 253,000 on order at the time of publishing.

Tesla Model 3 Launch

The hype is understated for a simple reason: most people are yet to discover their annual fuel bill costs will cover a $35,000 car repayments. So it will be a curve jump transition to electric cars, not a phase in.  I refer you to this earlier vitally important post I’ve written on the subject. 

The interesting bit is how it impacts the industry beyond Tesla. We are about to go through a war time like reconfiguration of manufacturing facilities as the world rapidly moves to electric cars. Every auto player in the world will need to fast track and maybe even scramble to have relevant cars on the market. A shift the likes of which we’ve not seen in any industry since World War 2. It’s gonna be big.

Giddy up.

Follow me on SnapChat – search ‘Sammartron’ for more business insight.