NIST released a draft report on the SmartGrid interoperability standards yesterday.  The roughly 80 initial standards and 14 priority action plans are available for public review and comment for 30 days.  Following this comment period the first phase of NIST’s 3 phase approach will be completed with the final release of the NIST Framework and Roadmap for Smart Grid Interoperability Standards, Release 1.0.

2008 proved to be a year of extremes for both the economy and energy around the world.  Not surprising since fuel prices are so closely tied to world economic growth and in 2008 one of the longest periods of sustained economic growth can crashing to a halt.  This sent record oil prices of $140 per barrel plummeting by more than 70%.  See the details in BP Statistical Review of World Energy – June 2009.

Department of Energy Secretary Chu announces $93 million from the Recover Act to support the development of additional wind energy in the United States. The money will support R&D and testing for wind turbine drivetrains, support university and industry consortia focusing on critical wind energy challenges, advanced technology development in the private sector and a National Wind Technology Center in Colorado.

Chu also announced the National Renewable Energy Laboratory will receive $100 million for infrastructure projects. The largest is the development of an energy efficient LEED Platinum certified office, constructed at the same cost as that of a low efficiency commercial office building. The others are to use solar and other green energy sources to reduce the labs carbon use and to upgrade the integrated bio-refinery research facility used to develop commercial scale cellulose to ethanol technologies.

During his visit to the Golden, CO facility Chu stated that $26 billion of the more than $100 billion in the Recover Act for renewable energy projects had already been authorized with the goal of 70% being authorized by early September. He also discussed streamlining the DOE loan approval process with the goal of reducing the time to getting a loan application approved to a few months. It has been known to take years under the current process.

It is great to see some of this huge spending bill is being directed to innovation and more importantly that this is being coordinated with private industry. There continues to be a gap in funding for the commercialization of proven technologies. Until this gap is filled, the great innovation from the labs and universities will be delayed in helping solve our energy issues.

Bob Metcalfe, using the history of the Internet as a guide, provided his list of things to look for and look out for in the changing energy sector.

Metcalfe gave an optimistic view of the environmental challenge suggesting not only are we in a Global Warming Bubble but that cheap, clean energy will be so abundant, it will easily be squandered.

He suggested the best place for research is in the research universities and not in government labs which are “nothing more than local earmarks”. In this model, professors along with their graduate students, will commercialize innovation with the help of entrepreneurs and venture capital.

Metcalfe warned that energy and environment are two overlapping issues and they should be viewed as two things. Otherwise, we may solve energy without solving the environment or vice-versa. Oh, and he offered a new color for clean energy, blue.

McKinsey’s Matt Hirschland interviewed economist Nicholas Stern in Brussels this past January. You can read the transcript here or click below to watch the video.

Trading activity picks up for carbon financial instruments (CFIs) after the release of President Obama’s budget. Even though the budget does not include revenue from carbon allowances until 2012, future contracts prior to this date moved higher. Some people believe these instruments can be used as early action credits in a federal cap and trade system.

Between 2012 and 2020, nearly $645 billion could be raised from the sale of emission allowances, the budget outline says.

According to Point Carbon (subscription) estimates, that would assume around 80 per cent of the economy would face caps on their greenhouse gas output starting 2012 at 2005 levels, or roughly 7.2 billion tonnes of carbon dioxide equivalent.

This means the budget is banking on carbon prices of nearly $13.70 per tonne by 2012.With the cap declining around 2 per cent per year after 2012, Point Carbon estimates the price of carbon in 2020 would go up to $16.5 per allowance.

So just what is a cap and trade system and how does it work? MSNBC has a Frequently Asked Questions page that answers this question. While President Obama signaled his desires in his budget, congress is required to pass the legislation and the details. Many experts are suggesting legislation is unlikely this, however “Powerful Democrats such as House Energy and Commerce Committee Chairman Henry Waxman, D-Calif., have said they would work hard to get legislation passed by this summer.”

Earlier this week, the White House stated a climate bill passed in 2010 would be fine as long as it included the critical components President Obama included in his campaign promises. This is consistent with President Obama’s budget which includes revenue for carbon cap and trade allowances of $658 billion in total for the years 2012 through 2019. $150 billion of this will be committed to invest in clean energy along with tax credits.

2008 was a bumper year for wind energy investment. The US added 8,300 megawatts (MW) of wind energy to lead the world with 25,170 MW. 42% of the country’s new power-producing capacity came from wind. The 50% increase in wind power generation also created 35,000 jobs bringing the total employee bast to 85,000.

Worldwide over 27 gigawatts (GW) of wind capacity was added. China doubled capacity to 12.2 GW and is on tract to double capacity again in 2009 and may reach its goal of 30 (GW) by 2010, ten years ahead of plan. All of Asia added about 8.3 GW with Europe and North America adding 8.9 GW each.

In the US, the financial crisis hit the wind industry and orders for turbines and components has slowed to a trickle. This needs to be reversed quickly if the US is to stay ahead of schedule to reach 300 GW of wind capacity, or 20% of our electricity needs, by 2030.

The New York Times reports that Venture Capitalist invest in 922 deals in the first quarter of 2008, compared to 861 in the same period last year. The total amount invested was down 5% causing the times to lead with the headline Venture Capitalists Invest Less In First Quarter – New York Times.

“We do not expect to see significant declines in investment levels in the coming year,” said NVCA President Mark Heesen.

Is this additional evidence that media outlets lean toward a doom and gloom outlook or are they just following the current sentiment of their readership? Just be sure to read past the headlines.

Speaking of the TXU purchase, Mr. Bonderman said the company was adept at running a profitable company and equally bad at politics from price increases to ecology to labor relations. These shortcomings lead tothe opportunity which focused on addressing these public concerns.Opportunities for private equity include exploiting public investorsfocus on short term focus, their dislike for debt or leverage, fixingbroken companies and putting companies together that changes thecompetitive landscape.His advice to students wondering which classes to take for a career inprivate equity, which job to take this summer, which classes to takenext year is to “Just relax”.In looking at the public policy of the US, Bonderman says ourlawmakers are thinking like it is 1975 when the US represented 50% ofthe world’s GDP. Now that we are less than 30% and falling the rest ofthe world has choices and will not play by any US tax code.Best run companies are those which build value over long periods oftime. However, fund managers often are looking for short term gains.This makes creating proper incentives for publicly traded companies’managers sub optimal if not downright harmful.

Meeting the fast growing energy needs of the world just may be the most daunting task mankind has faced to date.  No doubt many things must be done to address this issue before fossil fuels are depleted and without destroying economic progress or the environment.  McKinsey and Company has produced a paper on Energy Productivity which they claim is the key to curbing global energy demand growth.

Tom Evslin’s post Web 2.0 – Greater Initial Investments Required suggests that early Web 2.0 companies seized the advantage of low cost technical infrastructure and low cost marketing to gain cost advantages.  These companies were able to get big cheaper and faster than the first generation internet companies.  While he agrees with Fred Willson that the technology cost will remain low, he suggest the lower promotion expense is now behind us.  The low cost of technology results in a lower cost of entry and will in fact increase promotional spending and the need for capital.

In any event, both men are suggesting there will be capital required to grow these companies going forward.  Those who are putting their business plans together without consideration for this cost increase will at least have some tough funding questions or worse some serious costs overruns. 

During the next few years, western countries will face a more intense labor shortage than last felt in the first two years of this century. Very few companies are prepared for this with hardly any looking to utilize the aging workforce to fill this shortage. Initially, offshore workers will be able to handle some of the shortage. However, India and China are only a few decades from reaching a neutral or negative growth in trained workers.

A survey in America last month by Ernst & Young found that “although corporate America foresees a significant workforce shortage as boomers retire, it is not dealing with the issue.” Almost three-quarters of the 1,400 global companies questioned by Deloitte last year said they expected a shortage of salaried staff over the next three to five years. Yet few of them are looking to older workers to fill that shortage; and even fewer are looking to them to fill another gap that has already appeared. Many firms in Europe and America complain that they struggle to find qualified directors for their boards—this when the pool of retired talent from those very same firms is growing by leaps and bounds.

Why are firms not working harder to keep old employees?

FactCheck.org Bush’s State of the Union: Social Security “Bankruptcy?”:

FactCheck.org MoveOn.org Social Security Ad

The folks at FactCheck.org are equally critical of Bush’s use of agressive projections and language as he pushed his plan to revamp Social Security in his State of the Union address and MoveOn.org’s use of false claims regarding cuts in benefit payments.

“In his State of the Union Address, President Bush said again that the Social Security system is headed for ‘bankruptcy,’ a term that could give the wrong idea. Actually, even if it goes ‘bankrupt’ a few decades from now, the system would still be able to pay about three-quarters of the benefits now promised.

Bush also made his proposed private Social Security accounts sound like a sure thing, which they are not. He said they ‘will’ grow fast enough to provide a better return than the present system. History suggests that will be so, but nobody can predict what stock and bond markets will do in the future.”

Moveon.org
“MoveOn.org launched a false TV ad in the districts of several House members, claiming through images and words that President Bush plans to cut Social Security benefits nearly in half. Showing white-haired workers lifting boxes, mopping floors, shoveling and laundering, the ad says ‘it won’t be long before America introduces the working retirement.’”

Do Pharmaceutical Companies Have an Effective Business Models?

Has the Pharmaceutical Blockbuster Model Gone Bust?
Bain & Company Press Release 12/8/2003

Rebuilding Big Pharma’s Business Model
In Vivo 11/1/2003
by James Gilbert, Preston Henske and Ashish Singh
The blockbuster business model that underpinned Big Pharma’s success is now irreparably broken. The industry needs a new approach.

Here are a few of my own observations:

• OUTSOURCING · It looks like a hit-or-miss business but every company wants to do it. The key for the provider is getting to scale quickly enough to be able to provide services superior to in-house folks at a cost effective price. Also the expertise needs to be the biggest differentiator. Its all the same model as Law Firms, CPA’s etc… and it was the same with Viant. Like any other product or service, you need to differentiate on Cost or Quality … you either need to manage/train/hire a workforce in a “LCR” or low-cost region (China, India, Mexico) or have in-house expertise that business can’t develop cheaply on their own.

• INCREASED IT SPENDING · I’ve heard a lot of chatter about it in the press, but I didn’t start seeing it until last quarter when orders started coming in and folks started complaining about being swamped. But that’s just a microscopic view … will it last? will it improve? It’s anybody’s guess and there are a lot of things that could change it: world events ( Terrorism, Iraq, Afghan, SARS); the Fed (raising rates); and the election.

• NEW TECHNOLOGY · There’s a lot of buzz about Nanotechnology these days but I think it needs a “killer app” to get everyone to spend money on it. I don’t know anything about how to get into it but its something that offers the promise of disruptive technology (like computers, the internet, biotech).

Offshoring – Relocating the back office
Dec 11th 2003 From The Economist print edition

The Organizational Implications of Offshore Outsourcing
24 October 2003
Diane Morello
Acrobat Version

Offshoring: Is it a Win-Win Game?
McKinsey Global Institute
August, 2003

The Irony of Outsourcing
By Kevin Laws on November 18, 2003 09:03 PM supports the argument that economic activity flowing to the most efficient provider creates the greatest total value and in the long run the greatest value for each country involved. He points out the engineers who “thought” manufacturing workers out of jobs are now seeing their own jobs reduced and sent offshore.

This posting by Kevin Brancato suggest that our view of healthcare cost in the US is distorted. While the data seems to lead to the conclusion that we’re buying much more healthcare at sky-high prices, economists doubt the validity and applicability of the offical data because it does not appropriately adjust for quality.

Technology Review unveils its annual selection of hot new technologies about to affect our lives in revolutionary ways—and profiles the innovators behind them.

Universal Translation
Synthetic Biology
Nanowires
Bayesian Machine Learning
T-Rays
Distributed Storage
RNA Interference
Power Grid Control
Microfluidic Optical Fibers
Personal Genomics

TM Lutas provides an alternative economic analysis of the Internet to those provided by Adam Thierer at Cato, Howard Dean’s Principles for an Internet Policy, David Weinberger’s analysis of the Cato article, and Lawrence Lessig’s commentary on same.

The top 12 topics of interest to our readers in 2003 as seen by the editors of Portals Magazine:

1. Consolidation
2. Outsourcing
3. Mid-Market Grind
4. Portals
5. Integration Evolves
6. Supply Chain Gains
7. BI/Analytics
8. CRM Crossroads
9. Offshore
10. IT meets Business
11. RFID
12. Business Process Management

Rob Greenlee, Host WebTalk Radio, predicts:
1. The decline of the web browser usage on the desktop as a way to get to web content
2. The growth of Internet applications – the executable Internet
3. All things wireless
4. Digital media enters the living room
5. Professional journalistic weblogs are syndicated through RSS
6. Microsoft mobile platforms
7. Voice over IP (VoIP) makes mainstream calls
8. Internet radio growth and revenue
9. Online search extends beyond web
10. How online popularity is creating world wide celebrities

Stephen Downes in his predictions for 2004 suggest that a form of “non-blog blogging” will begin to emerge. He describes this as a way to tap into the views and opinions held by the vast majority of people who will not write publicly.

Downes also predicts that 2004 will be the year of personalization. He focuses this personalization around topic based feeds, which deliver only the content that is of interest to that user.

Connections: The Impact of Schooling
December 2003 – Jay Cross

Cross writes, “Most learning is informal; a network approach makes it easier, more productive and more memorable to meet, share and collaborate. Emotional intelligence promotes interoperability with others. Expert locators connect you to the person with the right answer. Imagine focusing the hive mind that emerges in massive multiplayer games on business. Smart systems will prescribe the apt way to demonstrate a procedure, help make a decision or provide a service, or transform an individual’s self-image. Networks will serve us instead of the other way around.”

This last sentence is critical. The individual taps into the network in the way she prefers. Yes, she is a part of the network, but she is not compromised by the thinking of others in the network. Not only does she not have to agree with others in the network, she does not have to “agree to disagree” with others in the network.

Let’s compare this to “brainstorming” sessions. We’ve all been party to “group think” sessions where one or two people have dominated or controlled the actions and outcomes of the group. Often resulting is sub-par results. (Remember those survival exercises where one member of the group scores better than the group collectively. Where two heads are worse than one?) It can be due to the person’s personality, debating skills, authority relative to others in the session or knowledge of the subject. It may be, but does not have to be intentional.

These “group think” sessions, usually corporate sponsored, have a limitation that the learning network does not have. They have to come to a single conclusionn. In the learning network, each member has the opportunity to take the network information and come to her own conclusions.

So just maybe two heads are better than one, and four heads are better than two and eight heads are better than four and so on and so on…

I’d like to see that happen here.

Let us begin analyzing the investment trends for 2004 by reviewing the predictions for IT spending in 2004. What better way to begin a discussion around the near term performance of technology companies than with near term IT spending?

Here is a summary of common themes from the articles listed here. It is by no means inclusive of all the predictions.

IT spending growth returns in 2004 with growth in the 4-8% range
Computer sales growth is higher than software growth
Infrastructure growth is higher than applications growth
Suites continue to be winners in the application battle
Business Intelligence bucks this trend with pure plays beating suite purchases
IT vendors struggle to adapt their marketing strategy toward solving business needs
Pricing pressure continues, as cost controls remain a high priority
IT services does not enjoy spending growth as movement to offshore providers doubles in 2004

CIOs Still Have A Cautious Outlook For 2004 IT Budgets
Forrester Business Technographics
November 7, 2003

Outlook for 2004 App Budgets: Conservative Growth
Forrester Business Technographics
December 1, 2003

Tech Resurrection Will Be Accompanied by Significant Structural Change, According to IDC Predictions 2004
09 Dec 2003
See full report. Registration is required.

Predicts 2004: IT Management and IT Services & Outsourcing
Gartner
24 November 2003 Acrobat

Gartner Sees IT Spending Rebound
November 11, 2003
By Roy Mark

Some IT Purse Strings May Be Loosened Next Year
DECEMBER 01, 2003 ( COMPUTERWORLD )

IT Spending to Rebound in Early 2004, Says SIIA Survey;
Web services, Security, Wireless to Benefit from Recovery

SIIA Technology Spending Horizons Survey
October 2003 Acrobat

Tech spending ‘to surge in 2004′
BBC