Refining the business case and model for the NGO City Broker…

Yesterday I laid out the concept of a non-government organization or NGO as they are more commonly called, building and delivering the services of a City Broker for the city, regional, state or national government. It would be a 501c with no capability to make money. All fees and anything that was above cost for the NGO would be transferred to the city as tax. This tax income from the NGO would allow cities to reduce the tax base of users. The vast majority of regional, state and local taxes go to pay for services given to citizens. In this case the service is cloud, IoT and security provided by the NGO and the power provided by the power company and city partnership creating the Transactive Energy city grid.

First off, I got a great response yesterday as to the ease of setting up a City-Grid for solar power and wind power production. The point was well taken, so to clarify the intent of this system is not for a small city to authorize an NGO and build a small city grid. In order for the Transactive energy component to work it will need to be driven from a larger government and citizen base. The initial power system would need to be secure. Most likely you would build it with the intent of providing power for companies and the city/governmental unit. Citizens would be added over time, either as producers (at the home level) or as consumers (no home production). The reality here is because we are talking power, there has to be security and security management. As power costs from traditional systems continue to rise, this system would allow the city to cap costs for itself and more and more companies within the city. The city would maintain a partnership with the power company and the power company would be allowed to recoup costs plus maintenance fees. The end game here would be a 15 to 20% reduction in cost of power provided day one. With monies being available to then build the rest of the NGO City Broker, and keep the power company profitable. That City/NGO/Power Company partnership would then be able to fund the expansion into providing consumer services.

So two initial clarifications.

1. We are not talking about small cities offering this, a group of small cities may band together to offer this as a regional offering.

2. The initial savings will not be as great as later savings.

Now the need for security will bring out the rise of Microgrid. Microgrid allow you to segment the production and consumption systems to much small levels. With a series of Microgrid deployed in the City Broker model you won’t have the significant outages anymore. Any one grid, focused on provider and consumer could go down if the system fails or frankly if it is hacked or damaged. But only one Microgrid would go down. Today the grid is massive. 1000’s of homes. In the future with a Transactive energy model we would 100’s of smaller grids. No great outages, and a greater more resilient power system as long as we design secure first.

I have stated before and will continue to state that while I believe the IoT device numbers are in fact low, as estimated by analysts. As more and more homes automate their processes and activities more and more homes are going to have saturated networks. The problem with saturated networks is three fold.

1. Performance is worse

2. Intrusion is MUCH HARDER TO DETECT

3. YOU DON’T NOTICE WHY YOU FAIL YOU ARE USED TO FAILING

The last two are security issues. Big security issues. Ones that cause government and companies with remote employee’s heartburn. The other way we will pay for the NGO City Broker is the implementation of security boxes in every connected home. Using the concept of network quarantine, we will, when connecting to city or government services make a separate network connection from the security box in your home to the servers in the City Broker cloud. No box, then you are pushed to a web only connection with no saving. There is a huge flaw here, in that hackers will have internet access and therefore hands on access to the security module but that is a risk that can be managed. The easy way to manage that is a complete wipe and restart of the devices once a day, week, hourly or some timeline that isn’t shared or public. This would remove any malware on the actual security devices. The other advantage is that while a hacker can gain access to one box, they would not be as able to impersonate other people so we reduce the impact of any hack in the short term. In the long term we have to wipe that box and start over, but since that is our posture anyway it will work.

Two revenue streams before we even sign up a single cloud customer! The NGO Cloud Broker has additional ways to make money.

More to come!

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I have a Microgrid now, do you?