The Butterfly Effect is a part of popular culture. It essentially states that if, when, and where a butterfly flaps its wings activates a chain of reactions that culminate in a big weather event like a hurricane or tornado in some distant part of the world. For the Smart Grid, we don’t know which events will be judged by history to be most momentous to its pace of deployment and realization of benefits. But there are lots of butterflies in motion these days, and at least some of them will create interesting outcomes.

Innovations

US patent filings for clean energy (such as solar, wind, electric vehicles, fuel cells, hydro, and geothermal) jumped to an all time high in 2011. The complete report is a fascinating read that breaks down patent filings by type of technology, country and state rankings, and identification of filers. Patents are typically an indicator of the pace and quality of innovation. Patents are also a way to measure the success of investments in research and development (R&D). Here’s one interesting factoid. While California leads the nation in overall patent filings, when it comes to clean energy, Michigan rules. US auto manufacturers have been quite busy in getting patents for fuel cell and hybrid electric vehicle innovations. That portends good news for consumers as cars get weaned off of dirty oil.

In April a Silicon Valley business delegation went to Washington DC to lobby for a local Patent and Trademark Office branch to accelerate the patent approval process, which now averages 3 years. It is rumored that a decision later this week will affirm the success of that trip. Will a local patent office move California from second place in clean energy patent filings to first place, supplanting Michigan? After all, the Smart Grid is more than renewables, energy storage and vehicular technology. Silicon Valley excels in software, communications, social media, and cyber security – all technologies that will play important roles in modernizing the electric grid.

Wind and solar technologies are rapidly innovating. Today’s gloom about domestic manufacturers being wiped out by foreign competitors who can make solar equipment cheaper could be temporary as new inventions may obsolete existing products. Beyond technology, there are innovations in business models too. Solar installation/finance companies offer attractive options that reduce financial risks for homeowners and as a result contribute to the doubling of deployments in the past two years. Some of these thriving companies are based in California, including SolarCity, SunRun, Sungevity, and SunEdison, where a favorable climate (weather, legislative, entrepreneurial) helped them ramp up to national success.

Policy

The state of California has long been on the front lines of electricity policy innovation. The state has been quite successful in encouraging renewables and energy storage integration to the grid, and continues to play a policy leadership role. There are new bills in the legislative process that encourage technology adoption, open markets, and offer new funding options for local governments. For instance, AB2135 would create a model ordinance and standards guidelines for California communities to use for residential and commercial rooftop solar buildings, which would be available for other states to adopt too. SB843 lets retail customers participate in community-based renewable energy production, expanding the market for new, non-utility participants in the distribution grid. AB 2131 lets cities and counties take increase funding for Property Assessed Clean Energy (PACE) bonds or projects. PACE programs let local governments raise money to fund energy efficiency and renewable energy projects. Just think what that could do to help municipal utilities reduce peak loads.

Individually and collectively, these many activities may have significant ramifications for Smart Grid progress. But California is not alone. Europe and China are doing very interesting work in smart cities along with grid modernization. Africa intends to bypass large centralized generation configurations with local microgrids using renewable energy to power communities. It takes a Smart Grid to maximize the benefits that new technologies, policies, and business models can bring to consumers around the globe.