The average stock market reaction in the 10 days after a cyber attack has become increasingly negative, write Constantin Gurdgiev and Shaen Corbe

Vieira, Helena

LSE Research Online

Vic	Shao:	‘You’ll	soon	be	able	to	have	unlimitedenergy	price	packages	for	your	home’Back	in	August,	when	a	solar	eclipse	darkened	parts	of	the	US	for	a	couple	of	minutes	during	daytime,	manypower	utilities	had	to	put	into	action	their	prepared	plans,	switching	from	solar	to	natural	gas-fired	power	andhydroelectric	plants	or	importing	energy	from	other	states.	The	event	highlighted	a	fact	about	energy:	it	is	largelyproduced	and	consumed	in	real	time.	Up	until	very	recently	the	idea	of	storing	energy	was	inexistent.	The	onlything	that	came	close	to	energy	storage	was	hydroelectric	power,	because	dams	store	water	to	produce	electricityon	demand.	The	development	and	upgrade	of	lithium	ion	batteries	is	now	changing	this	situation,	and	promises	topropel	the	market	for	renewable	energy.	‘You’ll	soon	be	able	to	have	unlimited	energy	price	packages	for	yourhome’,	says	Vic	Shao,	founder	and	CEO	of	Green	Charge,	which	produces	energy	storage	units	for	businesses,households	and	utilities.	He	spoke	with	LSE	Business	Review’s	managing	editor,	Helena	Vieira,	on	7	Novemberduring	Web	Summit,	in	Lisbon.What	does	Green	Charge	do?We	deploy	stationary	energy	storage	systems	across	the	country	in	the	US	and	we’re	starting	to	do	internationalprojects	as	well.	Stationary	energy	storage	means	a	couple	of	car	parking	spots	worth	of	equipment,	typically	inthe	500	Kilowatt	Hours	(Kwh)	to	1000	Megawatt	Hours	(Mwh)	range.	As	you	know,	the	problem	with	solar	andwind	generation	is	that	it’s	intermittent.	It’s	only	when	the	sun	is	shining,	only	when	the	wind	is	blowing.	Thebattery	is	there	to	firm	up	that	output,	so	that	the	output	is	consistent.	That	has	been	the	biggest	complaint	onclean	energy	up	to	date,	compared	to	coal,	which	is	a	base-load	output	product,	meaning	that	it’s	alwaysconsistent,	always	the	same.	The	same	is	true	for	nuclear.	Renewable	energy	doesn’t	mirror	that	style	ofgeneration	output.	But	now,	with	the	coupling	of	energy	storage	and	renewables,	you	have	a	final	output	productthat	is	comparable	to	the	traditional	fossil	fuel	generation.Why	haven’t	producers	been	storing	the	energy	they	produce,	because	of	some	technological	difficulty?LSE Business Review: Vic Shao: ‘You’ll soon be able to have unlimited energy price packages for your home’ Page 1 of 5		Date originally posted: 2017-11-27Permalink: http://blogs.lse.ac.uk/businessreview/2017/11/27/vic-shao-youll-soon-be-able-to-have-unlimited-energy-price-packages-for-your-home/Blog homepage: http://blogs.lse.ac.uk/businessreview/Technological	difficulty.	The	idea	for	storage	is	not	a	new	one,	it’s	been	around	for	decades.	In	geography	areaswhere	you	can	do	it,	the	most	prevalent	being	pumped	hydro,	which	means	you	send	water	up	the	hill	and	thenyou	let	it	come	back	down	at	night	time,	so	that’s	a	form	of	energy	storage,	if	you	will,	that	only	works	where	thegeography	allows.	For	any	other	part	of	the	energy	infrastructure,	storage	is	really	not	all	that	possible,	and	it’stoo	expensive.	Energy,	traditionally	speaking,	has	never	been	stored	very	much,	other	than	pumped	hydro,whereas	grain,	money,	water,	there’s	always	a	storage	mechanism	for	any	type	of	commodity	that	you	can	thinkof.	Except	for	electricity,	which	is	generated	and	consumed	in	real	time.	That	has	been	a	challenge	for	energyproduction	for	a	very	long	time.	Recently	what	has	happened	is	that	the	cost	for	batteries,	lithium	ion	batteries,has	been	coming	down	dramatically	and	that	has	led	to	a	big	focus	now	on	the	storage	of	electricity	throughbatteries	to	firm	up	the	energy	output.Is	there	a	number	for	the	amount	of	energy	produced	every	year,	including	how	much	of	it	is	stored	andhow	much	is	lost?That’s	a	good	question.	I	would	hazard	a	guess	that	it’s	probably	well	under	5	per	cent	that	is	actually	stored.Because,	again,	there	isn’t	all	that	many	geographies	in	the	country	where	we	can	do	it.	It’s	really	pumped	hydrobeing	the	most	prevalent	storage	that’s	available	today.	There’s	really	no	other	means	of	doing	it.	Lithium	ionbatteries	are	an	up	and	coming	technology	that’s	allowing	that	to	happen,	but	that’s	really	I	would	say	only	in	thelast	couple	of	years	that	it’s	becoming	a	viable	solution.This	market	has	a	huge	growth	potential,	then…Yes,	completely.	Solar	energy	penetration	in	the	US,	rooftop	solar,	is	2	per	cent.	It’s	tiny.	In	Australia	it’s	12	percent,	a	lot	higher.	I	don’t	know	what	it	would	be	in	Europe.	I	would	guess	that’s	even	less	than	2	per	cent.	So,there’s	already	a	growth	trajectory	ahead	for	solar	even	though	it’s	been	in	the	news	quite	a	lot,	right?	In	the	lastfive	to	ten	years…	Storage	is	even	more	nascent	than	that.	But	what	we’re	finding	is	that	with	the	new	solar	andwind	projects	that	we’re	running	into,	a	lot	of	project	developers	are	asking	for	storage,	to	have	a	storagecomponent	in	those	projects,	because	storing	is	becoming	economically	viable.If	we	can	store	energy	from	any	kind	of	source,	clean	or	not,	how	is	storage	per	se	good	for	theenvironment?A	lot	of	the	dirtiest	power	generation	happens	during	peak	hours.	Peak	hours	in	California	is	typically	in	lateafternoon-early	evening	hours,	when	the	sun	goes	down	and	all	of	a	sudden	the	solar	generation	disappears	fromthe	grid.	In	late	afternoon-early	evening	is	when	people	get	off	work,	come	home,	turn	on	the	air	conditioner	in	thesummer	time,	and	you	have	a	steep	ramp-up	of	demand.	The	term	is	peaker	plants,	gas-fired	CHP	power	plantsthat	get	used	maybe	50	hours	in	a	given	year.	Only	50-100	hours	in	a	given	year,	and	they	get	turned	on.	Number1,	they’re	the	most	expensive	energy	that	you	can	use,	and	number	2,	they	often	use	the	dirtiest	type	of	energyproduction.	Storage,	then,	is	there	to	handle	those	50	hours	in	the	year	when	pricing	often	times	is	the	mostexpensive.	And	they	also	do	it	economically	because	it’s	storing	energy	from	solar	or	wind	and	deploying	it	whenthe	grid	needs	it.Can	you	explain	a	little	more	about	how	it’s	stored?	You	said	batteries,	right?The	types	of	systems	that	we	deploy	are…	You	can	think	of	a	lithium	ion	battery	cell,	but	multiply	that	by	athousand.	Typically	it	takes	up	an	area	the	size	of	a	couple	of	parking	spots	that	we	deploy,	for	instance,	for	ahigh	school,	for	a	small	city	building,	wineries	or	hospitals.	For	a	hospital,	instead	of	two	parking	spots,	maybe	it’sfour.	That’s	the	range	of	the	scale	that	we	deploy	for	commercial/industrial	customers.	For	small	utilities	the	sizewould	be	more	in	the	10	mw/h	range.	Maybe	we	would	be	talking	about	20	parking	spots.	Finally	for	a	largeinvestor-owned	utility,	it	would	be	in	the	range	of	hundreds	of	Mwh,	so	in	that	scenario,	then,	it	would	be	a	wholebunch	of	shipping	containers,	deployed	in	one	or	two	acres.Do	you	think	that	with	storage	solutions	at	hand,	solar	energy	adoption	rates	will	increase?LSE Business Review: Vic Shao: ‘You’ll soon be able to have unlimited energy price packages for your home’ Page 2 of 5		Date originally posted: 2017-11-27Permalink: http://blogs.lse.ac.uk/businessreview/2017/11/27/vic-shao-youll-soon-be-able-to-have-unlimited-energy-price-packages-for-your-home/Blog homepage: http://blogs.lse.ac.uk/businessreview/The	two	really	go	hand	in	hand.	We’re	starting	to	see	that	now	in	places	like	Germany	and	Japan.	In	Japan,	forexample,	homeowners	are	starting	to	purchase	energy	storage	systems	just	like	they	would	place	a	refrigeratorinside	their	homes,	they’re	likely	to	purchase	an	energy	storage	unit.	The	rationale	behind	it	is	that	not	only	couldit	be	economical,	but	also	a	solution	in	case	power	goes	out,	in	case	the	grid	fails.	In	Japan	you	haveearthquakes,	right?	And	that’s	a	big	driver	for	adoption.	In	the	last	three	months	around	the	world,	we’ve	seen	ahurricane	in	the	Caribbean,	flooding	in	Houston	and	wildfires	in	California.	In	all	three	cases	the	grid	wassignificantly	impacted.	If	you	have	solar	and	storage	in	combination,	you	wouldn’t	be	offline.	In	Puerto	Rico,	theyhad	a	100%	power	outage.	So	if	you	start	to	deploy	solar	and	wind	storage,	then	Puerto	Rico,	instead	of	a	100%outage,	maybe	25%	would	have	gone	out	and	it	would	have	been	brought	back	on	quicker.	Not	only	is	renewableenergy	starting	to	become	economical,	it’s	actually	a	lot	more	reliable	and	resilient	than	centralised	generationand	distribution	of	energy.I	heard	that	the	city	of	Rome	offers	tax	discounts	to	people	who	install	solar	panels	on	their	roofs	if	theyallow	the	excess	energy	to	go	to	the	municipal	grid.	I	assume	that	with	this	storage	solution,	thisprogramme	would	make	even	more	sense…Yes,	in	the	US	there’s	a	similar	scenario.	It’s	called	ITC,	incentive	tax	credit,	in	which	the	federal	governmentoffers	business	or	residential	owners	a	30%	tax	credit	for	deploying	solar	energy	and	accessories	to	solar,	andstorage	counts	as	an	accessory	in	this	case.	So	in	the	US	you	can	deploy	solar	and	energy	storage	and	thewhole	system	gets	a	30%	tax	credit.Is	finance	a	challenge	for	the	storage	industry?It	was	a	challenge	up	until	a	few	years	ago.	I	think	there’s	general	recognition	now	in	the	financing	communitythat	storage	is	coming.	And	they	need	to	get	experimenting	with	storage,	just	like	getting	finance	for	solar	is	nobig	deal.	Everybody	offers	financing	for	solar.	And	that	community	is	recognising	that	storage	is	absolutelycoming	fast	and	they	need	to	get	educated.	The	biggest	challenge	for	storage,	I	would	say,	is	like	solar	ten	yearsago.	It’s	just	at	the	beginning	of	that	ramp-up	curve.	There’s	still	a	lot	of	education	that	needs	to	be	done	in	theindustry.	There’s	no	standard	contract	yet	for	storage,	like	there	is	for	solar.	The	performance	guarantees	andwarranty	from	manufacturers,	all	those	things	will	take	a	little	bit	more	time	to	get	ironed	out	and	standardised.But	I	would	say	that	it’s	coming	very	soon.Will	artificial	intelligence	help	your	industry?Yes,	and	my	company	is	also	on	the	very	frontier	of	that,	of	using	AI	in	what	we	do.	In	California,	the	model	fordeploying	solar	and	storage,	the	storage	system	is	there	to	offset	what	is	called	demand	charges.	For	commercialindustrial	user	in	California,	there’s	two	parts	of	their	energy	bill,	one	is	Kwh	usage,	and	that’s	just	energy	that	itconsumes.	The	other	part	is	called	demand	charges.	These	charges	are	the	highest	15	minutes	of	usage	in	agiven	month.	So	the	economical	way	to	deploy	in	California	is	to	reduce	those	demand	charges	because	oftentimes	that	portion	of	the	bill	is	rising	the	fastest	for	C&I	(commercial	and	industrial)	customers,	including	privatebusinesses,	grocery	stores,	hospitals,	public	school	systems,	etc.	So	that’s	where	the	software	and	the	artificialintelligence	come	in,	to	make	an	educated	guess	on	what	time	of	the	day,	or	the	day	of	the	week,	are	likely	forthat	customer	to	hit	the	peak.	We	have	to	constantly	guess,	I	mean	the	algorithm	is	constantly	guessing,	what	isthe	highest	peak	that	this	building	is	experiencing,	and	dispatching	the	energy	from	the	storage	bank	exactly	atthe	right	time	to	offset	that	peak.Has	the	fact	that	the	US	has	withdrawn	from	the	Paris	Agreement	made	it	more	difficult	for	an	industrylike	yours?LSE Business Review: Vic Shao: ‘You’ll soon be able to have unlimited energy price packages for your home’ Page 3 of 5		Date originally posted: 2017-11-27Permalink: http://blogs.lse.ac.uk/businessreview/2017/11/27/vic-shao-youll-soon-be-able-to-have-unlimited-energy-price-packages-for-your-home/Blog homepage: http://blogs.lse.ac.uk/businessreview/You	would	think	that	it	would	have	a	bigger	impact	than	it	actually	has,	and	the	reason	is	because	in	the	US	thestates	set	the	policies,	not	the	federal	government.	We	have	a	handful	of	states	in	the	US	that	are	being	veryprogressive	at	the	moment.	California,	Massachusetts,	Hawaii,	they’re	being	very	progressive	in	promotingrenewable	energy.	It	hasn’t	been	a	problem	for	us	at	all.	Secondly,	big	businesses	in	the	US	are	recognising	thatclean	energy	is	ultimately	going	to	be	the	most	economical	solution	for	energy	production.	The	reality	is	that	solarenergy,	the	latest	number	I’ve	heard	is	below	2	cents	a	Kwh.	Wind	is	even	cheaper	than	solar	right	now,	wellbelow	2	cents	a	Kwh.	Comparing	that	with	a	coal	power	plant	(forget	about	the	capital	cost	to	build	this	plant	from20	years	ago),	even	processing	lumps	of	coal	costs	you	more	than	2	cents	a	Kwh.	Comparing	that	to	building	abrand	new	solar	farm,	and	offering	energy	at	less	than	2	cents,	I	mean..	Clean	energy	is	actually	the	lowest	costof	energy	going	forward	in	the	future,	and	my	personal	belief	is	that	we’re	going	to	get	to	a	point	in	the	industrywhere,	just	like	you	pay	for	unlimited	voice,	unlimited	data	on	your	cellular	bill,	you’re	going	to	be	able	to	pay	a	flatfee	for	unlimited	energy.	All	the	energy	you	can	possibly	consume.	You	just	pay	a	flat	monthly	fee	and	be	donewith	it.	The	reality	is	that	energy	is	getting	to	a	point	where	it’s	almost	too	cheap	to	meter.	Why	bother?	Themarginal	cost	for	energy	production	in	solar	and	wind	is	virtually	zero.So	businesses	have	a	leadership	role	in	fighting	climate	change…Yes,	businesses	as	well	as	the	more	progressive	states.	They’re	the	ones	driving	thought	leadership	in	cleanenergy	right	now.	Not	so	much	the	federal	government	in	the	US.	They’re	just	making	themselves	irrelevant,unfortunately.♣♣♣LSE Business Review: Vic Shao: ‘You’ll soon be able to have unlimited energy price packages for your home’ Page 4 of 5		Date originally posted: 2017-11-27Permalink: http://blogs.lse.ac.uk/businessreview/2017/11/27/vic-shao-youll-soon-be-able-to-have-unlimited-energy-price-packages-for-your-home/Blog homepage: http://blogs.lse.ac.uk/businessreview/This	Q&A	is	part	of	a	series	of	interviews	during	the	Web	Summit	conference	in	Lisbon,	6-9	November	2017.	The	conversation	was	edited	for	clarity.	The	post	gives	the	views	of	the	interviewee,	not	the	position	of	LSE	Business	Review	or	of	the	LondonSchool	of	Economics	and	Political	Science.Featured	image	credit:	Courtesy	of	Green	Charge	Networks.	Not	under	a	Creative	Commons	licence.	Allrights	reserved.When	you	leave	a	comment,	you’re	agreeing	to	our	Comment	Policy.			LSE Business Review: Vic Shao: ‘You’ll soon be able to have unlimited energy price packages for your home’ Page 5 of 5		Date originally posted: 2017-11-27Permalink: http://blogs.lse.ac.uk/businessreview/2017/11/27/vic-shao-youll-soon-be-able-to-have-unlimited-energy-price-packages-for-your-home/Blog homepage: http://blogs.lse.ac.uk/businessreview/

Hacking the market: Systemic contagion from cybersecurity breaches

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