The Future, This Week 17 March 2017

Introduction:  The Future, This week, Sydney Business Insights. Do we introduce ourselves? I'm Sandra Peter, I'm Kai Riemer. Once a week we're going to get together and talk about the business news of the week. There's a whole lot I can talk about. OK let's do this. 

Kai: Today on The Future, This week: why electric cars are nothing like fax machines, does Elon Musk have the solution to Australia's energy problems and the strange experiment that the German space agency. 

Sandra: I'm Sandra Peter. I'm the Director of Sydney Business Insights. 

Kai: I'm Kai Riemer. I'm a professor here at the business school. I'm also the leader of the Digital Disruption Research Group. 

Sandra: So Kai what happened in the future this week? 

Kai: Our first story for the day discusses what fax machines can teach us about electric cars. This was published in Salon on the 13th of March. The republication of a conversation piece by a professor of history from Texas A&M University. The problem he discusses is that the electric cars that are appearing in the market by Tesla and other manufacturers do not all use the same power plug. So the problem is that when you go out and about with your electric car you might not be certain how far you can get in. You might need to pull up next to a charging station and you cannot be certain whether the charging station has the same plug as your car needs. So he has identified the need to come up with standardisation and he says that fax machines can teach us something. So when the first fax machines appeared there wasn’t a standard so you didn’t know when you bought a fax machine whether you could actually communicate with other people that have fax machines and it took a little while for a standard to appear in the market and then to be legislated to make sure that all fax machines could talk to each other. And so what he says is that we need a standard so that all cars in the market can actually pull up at any charging station much like you can pull up with your petrol car and refuel at any petrol station because you can be certain that they will stock your fuel. 

Sandra: Indeed he's asking us to think about the fax industry and the fact that we had about 20 years from the 60s up until the 80s when faxes couldn't really communicate with each other. Where there was a small market filled with machines that were running on different standards and that this compatibility issue stopped the industry for almost 20 years and he's asking for us to introduce standards for cars. 

Kai: Yes, in fact he's worried about the future of the electric car industry and that the market might not progress as quickly as it should in the absence of a standard and there is currently four different flux, I understand. 

Sandra: Yep there's a Japanese standard, there's a European, and indeed an American standard for electric vehicles. And there's also the Tesla supercharger, right, Tesla's own standard for that. Now a couple of issues - the purpose for why we would create the standard in the first place. So fax machines needed to create standards to communicate with each other? 

Kai: Yes. If I buy a fax machine then I want to talk to all other fax machines in the market. 

Sandra: And you couldn't do that if you had an incompatible standard. But what purpose does a standard for an electric plug feel for a car? 

Kai: Well presumably you don't want to be unpleasantly surprised when you pull up at a refueling station and they do not have the plug that you need to recharge your car. You might be stuck there because you ran out of gas so to speak. 

Sandra: So would standards for cars make them run any better? 

Kai: No. No they wouldn't. And this is where the analogy breaks down because the problem with electric cars is nothing like the problem with the fax machines. The problem with fax machines is that they need to talk to each other. Right, so the utility of my fax machine depends on all other fax machines having the same standard. But the utility of my electric car does not depend on all other electric cars having the same plug my car doesn't run any better or less well if I have the same plug. The problem is of a very different nature. So the solution might be of a different nature too. 

Sandra: Well one of the solutions that Tesla has already introduced is adapters. For four hundred and fifty dollars you can actually have an adapter. Industry has introduced other solutions looking a bit more forward focused so we're looking at wireless charging for cars. 

Kai: Exactly. And we can actually look to other industries that exist now like mobile phones where we have different charger plugs and adapters are really the solution aren't they. They're not cheap, sometimes. They're not pretty but they do the job in essence. So the problem is of a very different nature. In the fax example, we have what we call positive network externality. So the whole network benefits from having a standard because all entities have to communicate with each other in the electric car example. We have cars that need to talk, so to speak, to the infrastructure network but we can achieve that by way of adeptness at the car level. We do not have to introduce one standard at the network level. So the analogy really isn't what the author claims to be, it's not useful to understand electric cars. We are much better off looking at mobile phones or other markets that we have today where the problem is a similar one like charging and the interaction of devices plaques and adapters. 

Sandra: And we're seeing that in the mobile phone industry moving towards USB type adaptor for most phones which also raises the question that in the mobile phone industry why didn't we get a standard earlier on. It might be to encourage the development of that industry, and the introduction of standards in an industry will slow down the development of that industry as much as it will encourage standardisation. We can look at the fact that we have a country like the UK let's say, where you've got almost twice as many charging stations as you have electric vehicles on the road. This might not even be an issue that needs sorting in the first place as opposed to countries like Australia or North America where you do indeed have very large distances. 

Kai: But there's also another aspect because at the moment the electric car manufacturers, they use the charging stations as a way to compete. So Tesla for example builds its own charging stations and makes that part of the offering that you can recharge for free. So for them at this early stage in the game it's actually part of the service to introduce these charging stations and they do not necessarily want cars from other makers to talk to their charging stations. Certainly as the market progresses we will see more standardisation and as petrol stations, for example, open up independent charging with all they have to do is have different charging plugs on the same station, so I don't see this as a big deal problem that will keep the industry from growing. If anything, the incentive for makers is to control in that early part of the market their network as an offering to convince customers to go with their brand over another. 

Sandra: And indeed quite often within the standards game governments have had a large role to play, and if we look at what's happening in the U.S. around 30 US cities are now poised to spend I think it's about 10 billion dollars on the electric cars and vehicles that might spur on the government to invest in infrastructure, and they need companies also to take different stances depending on the development stage that they're at. For example, Tesla open source their patents and gave everyone access to all of their electric vehicle patents back in 2014.  

Kai: Yes indeed. So I think the secret to making this all happen is that we create a large enough infrastructure of charging stations and governments will have to play a role. There might be tax incentives for creating those charging stations. The biggest problem for independent providers like petrol station providers is that you cannot make as much money out of charging an electric vehicle than selling petrol, which is precisely the point why you would buy an electric car. So governments and councils providing those infrastructures will play a key role. 

Sandra: And indeed large cities that are investing not only in private vehicles but also investing in buses or trucks or other electric vehicles would spur this on. 

Kai: Exactly. Electric cars are first and foremost a local phenomenon for local travel within cities so cities will build those infrastructure because they are interested in clean air, innovation and driving their own fleets as electric cars. 

Sandra: So what's the takeaway from this story? We really love historical pieces that inform the future. But what's the takeaway from this one? 

Kai: Indeed we love learning from history here at The Future, This Week, but it tells us that we need to pick our analogies wisely. If we want to learn from history to imagine and extrapolate into the future we have to pick those examples that actually show features of what is relevant to the current technology and I don't think fax machines were quite the right example here because they're a very different phenomenon because of their positive network externalities, which we just don't see with cars. 

Sandra: So our next story on The Future, This Week is one of the big stories in the news and it's around Tesla... 

Kai: ...Again... 

Sandra: ...Again. And also batteries. 

Kai: Again so Tesla twice today but this is a different story, right? This is also of different significance to Australia. 

Sandra: So Tesla made an offer on Twitter that they would solve South Australia's energy problems within 100 days. 

Kai: Almost overnight! And that was negotiated by Mike Brooks from Atlassian, and Elon Musk from Tesla in a couple of tweets for everyone to see. And that of course created a lot of media attention. 

Sandra: So Elon Musk has the offer to solve South Australia's battery problem by delivering a 100 megawatt per hour battery storage facility to which Mike Cannon-Brooks, who is the co-founder of Atlassian, and the only unicorn Australian company, worth I think about eight and a half billion dollars. 

Kai: He came out on Twitter. What did he say?

Sandra: He said “Holy shit. I asked Elon Musk how serious is he about this bet and whether they could make it happen. To which Elon Musk replied that Tesla will get the system installed and working within 100 days from contract signature or it will be free”. 

Kai: That's serious enough for you he said. So there you have it. Two billionaires are solving the Australian energy crisis on Twitter. No wonder that made it on over the media. But how good is the solution. Is this a solution to the problem? Is this a media stunt? Will this actually solve anything? Is 100 megawatts that they contemplate enough to solve the crisis? Is that just a small step forward? It's a big step for the industry because to my knowledge no such battery facility has been built at that size yet, so that would be a world first to be installed in Australia. How does that compare to other technology that we might utilize to solve this problem? 

Sandra: Which takes us back to a story that we started on The Future, This Week. 

Kai: Three weeks ago when we discussed batteries we discussed the Swiss ingenuity and the technology that has existed since the late eighteen hundredths which is called Pump hydro storage. And indeed it uses water to store energy or electricity. And that actually came out in the news in the wake of this media announcement by Tesla and Atlassian. So what was the news Sandra? 

Sandra: So as exciting as this new seems to be, experts have since come out and said well is this actually doable? Is there enough storage? And are there any other options out there that we are not considering? 

Kai: Indeed batteries might be actually quite an expensive solution to create a large scale facility that supports the grid. There's no doubt batteries have a place in local battery storage at the level of the house or the town level. But is this the right technology to put in place to support the grid by and large? And that harks back to a discussion about hydro storage. So there was an article not long ago in The Conversation that compares the cost of battery and hydro storage and also a study just released a couple of weeks ago by scientists at the ANU that makes the case for hydro storage as the solution to underpin an energy grid that is mostly run on sustainable renewable energy. And indeed it seems that the cost per unit of pumped hydro is vastly more affordable than batteries. It has very little loss in the way of energy loss. When you pump water and regain energy from it and it also uses much less resources that otherwise go into creating batteries. 

Sandra: So are we considering the sort of options now? 

Kai: Interestingly just this morning Prime Minister Turnbull is announcing an extension of the Snowy Mountains Scheme and I reckon he must be listening to our podcast. And indeed over the last three weeks since we started the discussion Elon Musk coming out on Twitter he must have really taken this on board because what they are now proposing is an expansion of the Snowy Mountains scheme with pumped hydro by two thousand megawatts of renewable energy. This is 20 times what the battery facility would be. And remember we haven't built a battery facility at that scale yet. So this tells us that we can readily use a technology that has existed for over a century and create something that is sustainable that will give us power storage for the next 50 to 75 years in terms of the lifetime of the pumps and machinery that goes into running those facilities. So what does that tell us about the way in which we approach those problems with high tech versus low tech? 

Sandra: It tells us that we need to have a crisis to get things moving and to get really thinking about the solutions that we already have in place. 

Kai: Yes, but it also tells us that we are always quick to discussing what high tech software Silicon Valley do for us, whereas the tried and tested technologies that might be available at a cost level that is vastly better, but they're not as sexy or as technologically advanced and might actually provide us with the same, if not better solutions, even though they don't make for great media stories like the discussion on Twitter. 

Sandra: I think we like innovation to be sexy and dramatic and so on. But we should never forget to look at the simplest solutions that we might already have tested and have working. That is not to say that the batteries are the only answer or hydro is the only answer. Bill Gates came out with an article this morning talking about the fact that batteries are one solution but probably the most efficient solution we would have. And this harks back to our story about electric vehicles but also our story about how do you prevent these blackouts. The fact that even better than batteries would be if we managed to develop something akin to a solar fuel because fuel is something where we wouldn't have to change any of our infrastructure any of the ways we're doing things and would be much better at solving our problems. 

Kai: Yes and I think all the experts agree that running a sustainable renewable energy grid is a complex problem that you need multiple technologies for to solve that problem. And it's a matter of horses for courses really. Batteries have a place but their place is probably not at creating large scale facilities that support the grid by and large. But at the level of the car, the house, at the level of councils and indeed there's a range of different solutions. There's just an article this week which I just want to touch on. There's an experiment going on in Brooklyn where a local community has come together to create a local energy market based on solar energy that they generate from their rooftops and Blockchain, the technology that underpins bitcoin, to create a ledger of energy sharing and setting each other this energy that they create that points to the fact that we will see a whole range of different solutions that all work together to over time, and hopefully the shorter timeframe give us a renewable energy future that really gets us off the climate change producing fossil fuels. 

Sandra: Exciting, want to keep an eye on and we will in the future. 

Kai: I'm sure it's not the last time we will discuss batteries and Tesla and technologies to that effect. Our last couple of stories really give us a sobering outlook into the long term if we do not manage to save the planet. I think scientists, governments are contemplating how we could take life to Mars. 

Sandra: So we've got two interesting stories, one coming out of the German space agency and involving tomatoes and one from the International Potato Centre. And yes that is an actual thing involving, well, potatoes. 

Kai: Yes indeed. And what does that have to do with Mars. Now both those stories involve growing food on Mars. The German space agency has come up with an experiment to grow tomatoes in, yes, human urine. And so the whole story muses about being in a laboratory which features large scale containers aquariums with this yellow liquid. And indeed they have managed to grow perfectly edible tomatoes. The skin is described as a little bit hard and the taste is a little bit bitter but it has all the nutrition that people would expect from tomatoes solely grown in the liquid that has been synthetically produced and sourced from volunteers apparently. So the author of this story muses, why it doesn't smell in the laboratory? And obviously they are using bacteria to break this down and the process is perfectly natural one that would happen in any breakdown of human waste that you would see in a sewage centre. And so they are using the nutrients in those waste products to grow food. Now what's the story with the potatoes? 

Sandra: The story with the potatoes is not quite what we've seen in the Martian, where we see Matt Damon living off potatoes in lives potatoes that have been cultivated in... 

Kai:...Human manure... 

Sandra:...Shit. The story is a bit nicer where potatoes are grown in synthetic soil. So the International Potato Centre is actually trying to see that if people were to colonise Mars, how could we get staple diets grown in these synthetic soil, or no soil. And we've seen success it appears, that potatoes can tolerate the conditions that you would actually have on Mars. 

Kai: So what they did is they created soil that resembles what we would find on Mars, is that what we're saying?

Sandra: They not only created the synthetic soil but also the conditions that come with it. So the very dry climate the air pressure all the other conditions and they went to the deserts of southern Peru and they mimic the conditions and they actually succeeded in growing potatoes. 

Kai: So what do those potatoes taste like, does it say? 

Sandra: We don't yet know what they taste like. I imagine better than the tomatoes, but probably a bit worse than what Elon Musk wants to feed people on their journey to Mars. 

Kai: Yes indeed. So a lot of these articles make the point quite convincingly that in hindsight, if humans are ever to live for long periods on the moon or Mars, they will need a self-sustained food supply – you will need more than protein bars it says. And that's indeed the point. What I find really interesting is that this is but two articles in a whole flurry of articles that all of a sudden have to do with life on Mars and a future in outer space. There has been another article that says colonising Mars might require humans to radically alter their bodies and minds and it uses about micro gravitation and radiation exposure, the way in which we work and live in outer space, what group problems that might create even, you know, the ways in which human reproduction might not be working in space and how do we test this and come up with experiments to make sure when we indeed colonise Mars, will we actually sustain that colony?

Sandra: It comes, as you've said, on the back of a whole range of articles we've seen articles on Elon Musk wanting to build an entire civilisation on Mars. We've seen articles looking at the human psyche, looking at the fact that a day on Mars is about 40 minutes longer than a day on Earth, which would mean that you are actually flying two time zones Westward every three days while you're on Mars. So these are people who are consistently jetlagged, the people who are tired, who find it quite difficult to adapt. 

Kai: So imagining forward, the future of business, so we have reimagined business practices. What does work life balance look like when work day so much longer. These are not immediate questions, but certainly something that we will have to talk about once we work to create the Mars colonies. 

Sandra: And indeed were laying the foundations of those conversations now. Two days ago a talk by Buzz Aldrin at South by Southwest conference together with Time Magazine discussing his plans for creating a permanent human supplement on Mars. So these conversations are going on. But what has sparked this flurry of articles and interest into living on Mars?

Kai: I don't know. Maybe the Martian movie? When we embarked on the moon landing in the preceding years, science fiction as a genre was quite big so maybe this is the arts providing the narrative for science and business to follow. 

Sandra: And we do think it is quite important for a business to have imagination. Indeed one of the things that we tried to do around the future of business is not only understanding it or shaping it, but also imagining it. So what does not only life on Mars look like but business on Mars –

Kai: Or work on Mars. And what are the implications? And that might not be too far off when we think about embarking on exploration missions on experiments on bringing the first people to Mars. This will become a real issue. 

Sandra: And indeed what we are learning from growing food on Mars, whether it's tomatoes or potatoes, can help us feed growing urban populations a growing world population and teach us important lessons about how to grow staple crops. Something that even companies like Google are struggling now to do with projects like the vertical farming project, one of their moonshots in Google X, that was looking at creating vertical farms where we use 10 times less water and 100 times less land than conventional methods. And they haven't managed yet to grow staple crops like rice or indeed potatoes. But there is a way. 

Kai: Yes, as we prepare for colonising Mars we have a much more pressing problem and that is how do we feed growing populations in large urban centres. And so technology companies start-ups working towards that problem might cross over with those projects that try to feed future Mars colonies. So it's not actually a problem that is too far in the future. The problems of feeding populations under new circumstances is something that becomes very pressing in the very near future. 

Sandra: And I think that's all we have time for today on The Future, This Week. Thanks again for listening. 

Kai: What are we having for lunch? Tomatoes or potatoes? Thanks for listening. Bye bye. 

Outro: This was The Future, This week brought to you by Sydney business Insights and the Digital Disruption Research Group. You can subscribe to this podcast on SoundCloud, iTunes or wherever you get your podcasts. You can follow us online on Twitter and on Flipboard. If you have any news you want us to discuss please send them to sbi@sydney.edu.au.