At the beginning of June, the Western Cooling Efficiency Center at UC Davis announced the Western Cooling Challenge, a more modest version of the X-Prize which challenged industry to “slash electricity use by rooftop air conditioners in the western United States by more than 40 percent.”  Yesterday the first winner was announced.

The target was a 40 percent reduction in energy use and peak
electricity demand compared to conventional cooling units. According to Director Mark Modera, tests indicated that the
Coolerado H-80 provides “almost 80 percent energy-use savings and
over 60 percent peak-demand reduction.”

Sure, it’s not developing the first spacecraft
capable of carrying three people to 100 kilometers above the earth’s
surface (twice within two weeks).  But the energy revolution—like all technology revolutions before it—won’t come from one giant leap. It will come from many small steps.

Rooftop conditioning is not as glamorous as space flight, it’s just an inextricable part of our daily lives: “Commercial rooftop air-conditioning units are used to cool 70 percent
of the floor area in nonresidential buildings in the western U.S.” Seeing as space conditioning is roughly one-third of the end-use energy consumed in commercial buildings, this is a sizable problem.

I have written before about the difference between moonshots and innovations in energy, and this is a great example of how change can happen.  Not because Coolerado has a great product, but because the Western Cooling Challenge could pull together the right network to make this technological leap and, at the same time, make the next one easier too.

Creating breakthrough energy technologies requires pulling together the variety of players that, in an old and established industry like space-conditioning, need to come together in support of a change.  Here’s the list of collaborators that the Western Cooling Efficiency Center pulled together:

• Cooling system manufacturers will invest in developing new
  technologies and bringing them into production. (Partners already
  affiliated with the Western Cooling Efficiency Center include large
  industry leaders Trane, Lennox and Munters, as well as smaller firms
  with innovative technologies.)

• Building owners and operators will provide a market for
  technologies developed for the Western Cooling Challenge. (Partners
  already affiliated with the Western Cooling Efficiency Center include
  industry leaders Wal-Mart and Target. The center also works closely
  with the California Department of General Services, which manages many
  state buildings in California.)

• Electric utilities offer financial incentives to
  building owners and operators who adopt efficiency technologies.
  (Energy partners who have already committed to providing incentives for
  Western Cooling Challenge technologies include industry leaders
  Southern California Edison, the Pacific Gas & Electric Co., and the
  Sacramento Municipal Utility District.)

• Energy regulators approve energy-efficiency programs
  proposed by utilities. (The California Public Utilities Commission has
  already set public energy-savings targets through their “Big Bold
  Initiative.” The Western Cooling Efficiency Center has incorporated the
  Big Bold Initiative into the Western Cooling Challenge goals.)

• Universities and other public institutions provide
  unbiased technical support. (Partners who have already committed to
  supporting the Western Cooling Challenge include the U.S. Department of
  Energy, the National Renewable Energy Laboratory, and the California
  Energy Commission, as well as the UC Davis Western Cooling Efficiency
  Center, the challenge facilitator.)

• Other nonprofit organizations that focus on energy
  efficiency. (Those that have committed to supporting the Western
  Cooling Challenge include the American Council for an Energy-Efficient
  Economy; the Southwest Energy Efficiency Project; the Northwest Energy
  Efficiency Alliance; the Retailer Energy Alliance; the Natural
  Resources Defense Council; and the New Buildings Institute.)

By bringing together the networks of collaborators whose support is critical, innovators focused on developing the next technologies can easily find, partner, and work with the major players in the industry.  Together, and around a common goal, they can (and this is the hard step) commit their support to turning these innovations into inextricable parts of our daily lives.

A recent NYT editorial, Energy Inefficiency, eloquently laid out the reasons why energy efficiency is the best, cheapest, and most abundant alternative energy.  It also revealed why energy efficiency is one of the greatest innovation challenges we will face in the coming decades.

So much attention has gone to advancing the usual suspects–e.g., solar, wind, and bio-fuels–with the hopes that each will one day compete with coal-based energy costs. Current energy efficiency alternatives already do.

Yet here we are, editorializing on the benefits of a set of technologies that are, on paper at least, the more economically rational choices.  The McKinsey Global Institute study mentioned in the editorial compared available solutions to the climate crisis and found energy efficiency (which they rebrand as "energy productivity") to be the best returns for investments.  

..the economics of investing i
n energy productivity—the level of output we achieve from the energy we consume—are very attractive. With an average internal rate of return of 17 percent, such investments would generate energy savings ramping up to $900 billion annually by 2020. Energy
productivity is also the most cost-effective way to reduce global emissions of greenhouse gases (GHG)… Moreover, the opportunities to boost energy productivity use existing technologies that pay for themselves and therefore free up resources for invest
ent or consumption elsewhere.

So why hasn't it caught on? Because embracing and advancing energy efficiency requires us to go against some dearly-held but false beliefs about innovation (and capitalism, for that matter).

First, that innovation is about two kids in a garage bucking the status-quo.  That's a fine story for starting new markets, where scale and performance won't truly matter for decades (imagine if our energy infrastructure had the reliability of Microsoft'
Vista). But the energy sector is one of the oldest and largest industries in the country, and has been heavily regulated since lamplighters first unionized and the gas companies first began funding politicians in the mid-1800s. Meaningful innovations in
the energy sector must coordinate with public policy, and few entrepreneurs and investors trained in Silicon Valley smash-and-grab capitalism have the savvy and willpower to engage in these long, politically sophisticated efforts.

Second and related, that the free market will, if left alone, solve major problems like the climate crisis and energy security. To suggest that federal and state governments should leave energy innovations to the "free market" is to deny that western governments have
always played central roles in shaping the energy sector, including the current political boundaries of the Middle East. The current structure is a product of past and present policies, which directly and indirectly subsidize the costs of petroleum- and
coal-based energy. Innovations of the scale and scope we hope for will require accompanying regulations and subsidies to level the playing field.

Third, that the best solutions are new ones. Most stories of innovation focus on invention, but
the real force behind breakthrough innovations lies in harnessing what's already been developed and practiced somewhere else.  The light bulb was 40 years old when Edison "invented" it; his contribution was being the first to tie that existing light
bulb to innovations in energy generation and distribution (including borrowing the business model from the gas utilities).  Spending more money to invent new technologies is not the answer. In the words of economist, Joseph Schumpeter, Innovation doe
not "consist in either inventing anything or otherwise creating the conditions which the enterprise exploits.
It consists in getting things done."   

The greatest challenge to energy efficiency is not to make an already economically rational decision even more so. It's overcoming the biases that give shape to policy, investment, and entrepreneurial activities favoring more expensive and less developed alternatives.

Until everyone involved–researchers, entrepreneurs, investors, corporations, and policy makers–acknowledge these challenges, the best, cheapest, and most abundant alternative energy available will go untapped.