Lucrative approach to conserving energy

Audrey Zibelman isn't an engineer. But you might say she plays one professionally.

A lawyer, Zibelman talks electricity with the authority of someone who spent two dozen years running regional electrical grids - most recently as chief operating officer of PJM Interconnection L.L.C., the Valley Forge company that operates the nation's largest power pool.

In 2007, after four years of managing PJM's 13-state grid, Zibelman chose a new, entrepreneurial path. Last year, she cofounded Viridity Energy Inc.

Viridity's business model is not easy for a layman to understand. It takes the concept of "demand response" - in which large energy users enter contracts to sell unneeded power back to the system on, say, a hot summer afternoon when prices peak - to a new level.

Zibelman says the key is Viridity's high-tech software that can turn a mix of demand-response resources and "distributed-generation" units, such as wind microturbines or rooftop solar cells, into a virtual power plant.

With Viridity's help, for example, a university's electricity system could stop being simply an expense. It could become both an energy resource and profit center - and Viridity would share in that profit.

Zibelman says companies such as Viridity will help turn the "smart grid" - the catch-all term for a high-tech electric grid that manages resources far more efficiently than today's system - into reality. She recently answered questions about the part she hopes her new company will play in that future.

Question: How does your new business differ from traditional "demand response"?

Answer: We see that as a rather blunt instrument. When we talk about demand response, we're talking about the ability of customers to voluntarily reduce load during peak periods. What we're looking at with Viridity is recognizing that customers are making a lot of investments in distributed resources such as solar energy or ice storage, as well as building-management systems, and networking those - treating them as a single, unified unit.

Q: Ice storage?

A: There's a type of air-conditioning system called a chiller. You make ice during the night during the off-peak periods, then use the ice to cool your buildings during the day. So you shift your usage.

We also have the ability, through building management systems, for lights to dim or temperatures to change based on prices.

Q: What is Viridity's role?

A: What we're doing is recognizing that when you have institutional settings that have these various resources, they can be tied together through software. And their energy can be dispatched into the network - brought to market - as a single resource.

Let's say we're working with a university. If we optimize all their systems, which will include various devices to control usage and to produce energy locally, what are they going to be able to take off the grid? If they take 25 megawatts instead of 30 megawatts, that's five megawatts saved.

Or we could get 20 large power users in the region to use distributed resources and energy-management investments to reduce their total hourly consumption by five megawatts.

Why not take all these investments and turn it into one big, green power plant?

The customers save on the power they would otherwise have to buy, and get to turn their distributed energy and efficiency investments into revenue.

Q: What made you decide to become an energy entrepreneur?

A: Well, when I was at PJM, one of the things that we were looking at is, "How do you create efficient markets?" And in my opinion, having price signals, so that consumers actually know the price of what they're using, is the best way to get people to use energy more wisely.

It's the Prius Effect. Prius cars tell you their level of efficiency, and drivers start looking at that efficiency level as much as they look at their miles per hour to determine how best to use their cars. Markets are like that. We all know that the more we know about pricing, the better we're able to make decisions.

Q: Do you see a day where we don't rely on fossil fuels?

A: The economics are such that it would be very difficult to eliminate fossil fuels in the foreseeable future. So it makes sense to me to start looking at what I would call "the low-hanging fruit."

Let's use the technology available today to its maximum potential. Solar and renewable energy. Battery storage and electric cars. What's essential, to make that work, is a smart-grid environment, where you have this two-way communication. That, to me, is a much more sensible approach than trying to put a lot of money into creating clean coal, to the exclusion of thinking about, "What can we do that's pragmatic today?"

Age: 51.

Birthplace: Philadelphia.

Occupation: Lawyer, entrepreneur.

Hometown: Valley Forge.

Education: B.A.

in English, Pennsylvania State University; J.D., Hamline University Law School.

Personal: Married to Phillip Harris; two children, two stepchildren.

Hobbies: Hiking, reading, travel.

Last book read: " 'Blue Ocean Strategy.' It's about the idea that rather than trying to compete, one company against the other, you should look at opportunities to create new markets. That's what we're trying to do here."

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