The shale is booming. Citigroup has already dubbed the U.S. "The new Middle East," as the country enters the era of energy independence. Shale will serve as a boon to the broader economy: Citi projects that shale oil and gas finds will add millions of jobs over the next decade and provide as much as a 3% boost to GDP.
Shale finds have already caused an unprecedented drop in natural gas prices, buoying its use as a source in power generation. But renewable energy growth hasn't slowed. 2012 was a record year for U.S. solar installations, the nation's fastest-growing energy source. Solar now produces enough electricity to power 1.2 million homes, and with the price of solar panels going through its own unprecedented slide in the past few years, the economic case for solar has improved as well.
So what is our energy future? Who will be the winners and who will be the losers? Is renewable energy going to disrupt the century long strangle hold of oil, gas and coal, or is the shale boom going to disrupt the green dreams of clean energy before it really gets going?
Disruptors will play a big part in deciding the balance of power between old and new energy sources, shaping not just markets, but global energy and climate policy. The five disruptive energy companies on the inaugural CNBC Disruptor 50 list are: LightSail Energy, MicroSeismic, Nest Labs, Opower and Picarro.
Take energy storage, the Holy Grail of the energy markets. For broader adoption of renewable energy at the expense of gas and coal, these intermittent sources of power need to be stored for use when the grid most needs a boost, rather than flooding the grid when more energy isn't needed. LightSail Energy is among the startups trying to crack the energy storage code, and with a twist: unlike many of the energy storage solutions focused on bringing down the cost of battery technology, LightSail has developed a novel compressed air process for energy storage and release. The road from lab curiosity to cost-effective, commercial breakthrough in the energy sector can take decades, but all it takes is one low-cost energy storage model to succeed for renewables to get a big boost in competition versus coal and natural gas as a primary source of power generation, and buoy the fortunes of U.S. solar companies looking to build more and more large-scale solar projects around the globe, including First Solar and Total-backed Sunpower.
Technology is also among the oil and gas drillers' arsenal. By some estimates, the current shale boom has been fueled by technology recovering only 5% to 7% of resource potential. That's already helped to crash the U.S. coal market, and make solar and wind energy companies have to work much harder to make their economic case. Now, imagine if shale reservoirs were recovering 25% to 30% of resource potential? That's the aim of oil services technology company MicroSeismic, which works with many big oil and gas exploration companies tapping the shale, including the two biggest shale drillers in the U.S., Exxon Mobil and Chesapeake Energy, and both of China's state-run oil giants, Sinopec and Petrochina.
All this give and take between shale and renewable energy is captured by the business of Picarro, a provider of gas measurement instruments that capture data on emissions. It's got a big deal with PG&E to ensure gas pipeline safety, but it has a more intriguing future. it is becoming the information age data provider to the public and private sector players at the center of energy and climate policy debate, tracking global warming and the impact of the shale boom on emissions. Its technique to track natural gas emissions is 1,000 times more sensitive than traditional gas leak detection methods, with parts-per-billion sensitivity, and it can accomplish this while being used in a moving vehicle. The rhetoric in support of shale gas as a "bridge fuel"--rhetoric used by the oil and gas industry, but also the White House, and business-friendly environmental groups--is predicated on it being 75% less emitting than other fossil fuels. Incontrovertible data on the impact of the shale boom in terms of natural gas emissions has been hard to come by, though.
The solution to the energy supply and demand treadmill isn't just choosing a method to find more oil and gas to run our cars and generate more power, but becoming more efficient and needing less of these sources. That's where Nest and Opower are leading the way. There's no greater disruption of the energy status quo than making energy users less wasteful. Opower now works with 75 utility companies and eight of the ten largest utilities in the U.S. to change behavior within 15 million homes. Its technology service already has cut down on 2.3 terrawatts of energy use.
Original iPod designer Tony Fadell has received a lot of attention for a newer invention. With its design simplicity and addictive nature, the $249 Nest programmable thermostat from Nest Labs is making home owners take a more active role in mapping their daily energy usage, doing for home heating what the iPod did for a person's interaction with music.
The definitions of disruption in the energy space show the range of approaches being taken in what is a century old energy complex slow to innovate, and a classic case of a lazy incumbent with huge revenue streams and little incentive to change.
Nest Labs' Fadell said, "Definition of Disruption = Frustration+Adv. Technologies+Passionate & Self-Reflective Execution."
MicroSeismic CEO Peter Duncan said, "Disruption is making more possible by doing the impossible. Before MicroSeismic's PSET seismic imaging technology, no one believed it was possible to detect the energy release equivalent of a human heartbeat through 10,000 feet of rock. Not only does the technique work, it has opened new ways for operators to improve their oil recovery previously not possible."
One CEO has patented technology to attempt to influence behavior on the scale of each energy user, while the other CEO has patented technology to get more and more fossil fuels out of the ground. There are lots of science experiments with the potential to disrupt the energy status quo, as deep-pocketed, entrenched oil and gas companies try to keep up with global demand at the same time that Silicon Valley tries to make that demand head down by way of efficiency. Global demand won't go away, so there's money to be made on either side of the disruption and debate.
The "agnostic" approach taken by General Electric and other industrial conglomerates including Siemens, represents the middle road. That seems to be the approach of General Electric, which has acquired more than $10 billion in oil and gas drilling service companies in the past few years, while also supporting its solar, wind, natural gas turbine, energy efficiency, and nuclear power business units.