Backward compatibility in energy technology

Posted on July 26, 2008

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If you’ve ever worked for a manufacturing or software development company, you’re probably familiar with the concept of backward compatibility. The basic idea is that any new product needs to be able to utilize the old product’s hardware and/or software so that development costs are kept down and so that current customers can migrate to your new product more easily. Most people are most familiar with this idea from their experience with Microsoft Office products – when you upgrade Word from on version to another, you don’t have to re-write all your documents – the new version can open and manipulate the old version just as easily as it can a newly created document.

But while backward compatibility is a laudable goal for any product, there inevitably comes a point when a company’s old hardware or software is so out of date that the only thing to do is develop an entirely new approach that’s smaller, faster, lower power, more features, and tuned for the new markets of today rather than the markets of 5, 10, or even 20 years ago. It’s one of the hardest decisions a company ever has to make, because it carries with it a great deal of monetary risk, especially if the company can’t come up with a handy conversion tool like the one that Microsoft Word 2007 uses to convert older 2003-format .doc files into XML-formatted documents. But sometimes abandoning the old in favor of the new is absolutely necessary.

Ever since former Vice President Al Gore’s energy speech last week at D.A.R. Constitution Hall, I’ve been struggling with both if and how I could come to terms with his call for the United States to abandon all carbon-based energy sources over the next ten years. After all, abandoning coal, natural gas, and oil entirely over that short a period and transitioning to solar, wind, geothermal, and other zero-carbon energy sources strikes me initially as dramatically beyond the possible. So does building a smart transmission line system that links the entire country together and transmits electricity from where it’s sunny, windy, and where the ground is hot to the U.S. cities and towns that need the electricity, although it’s certain that the country desperately needs better transmission infrastructure.

I’ve finally come to the conclusion that Gore’s proposal, wildly optimistic as it seems to be, actually represents a call for the U.S. to abandon backward compatibility with our existing energy systems – electricity and transportation from carbon-based fuels. We need new technologies (non-carbon energy sources such as geothermal, wind, solar, tidal/wave, etc.), smart new interconnections (new DC electricity transmission lines linked in a smart national grid), improved power efficiency (a wholesale tightening of building codes, removing gas guzzlers from the road and replacing them with fuel efficient vehicles), and so on.

Whenever a company chooses to ignore backward compatibility, they take a major risk – a company is never sure that the customer will buy their new product, so they only do it when the new product is so dramatically better than the old product(s) that the customers can’t help but be wowed. In Gore’s words, “[w]e’re borrowing money from China to buy oil from the Persian Gulf to burn it in ways that destroy the planet.”

Avoiding backward compatibility in this case breaks all three of those issues. We won’t need to borrow (as much) money from on of our global competitors, China. We won’t need to buy oil from our nations that are, or support, our enemies, such as Venezuela, Russia, Saudi Arabia, and Iran. And we won’t be burning carbon fuels that emit gases that are heating up the Earth.

Companies usually expect a 10x to 100x improvement in price or performance to justify abandoning backward compatibility in a product line. The good that would result from abandoning our old energy sources makes 100x look paltry by comparison.

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