Navigant Research Blog

Do Motors Define a Brand?

— November 30, 2010

I recently attended the German American Chamber of Commerce of the Midwest’s e-Mobility conference. The conference overall was very interesting and featured some great topics, but one thing at the very end of the conference really caught my attention. The panel was discussing international cooperation and featured Roland Matthe, Manager of Volt Battery Development, GM, Dr. Samit Ghosh, CEO of P3 North America, and Dr. Joachim Wolschendorf, CTO of FEV. The final question was: Are BEVs a better opportunity for global cooperation than internal combustion engine (ICE) vehicles because the vehicles won’t be as branded by their engines?

When one thinks about current cars or trucks, they often have a branded (or pseudo-branded) engines, such as Hemi in Chyrslers, Ecoboost in Fords, Vortec in Chevrolet trucks, VTEC in Hondas, etc. Even those that don’t have a specific brand name for their engines will often have a strong reputation based on their engines. One could make a solid case that BMW would not have the reputation it does without the performance and reliability characteristics of BMW engines (same could be said for most manufacturers), and then there is the reputation built from unusual designs such as the boxer engines in Subarus, Mazda’s rotary engines, or the whopping 16 cylinder Bugatti motor.

With BEVs, these key components are no longer a part of the equation. What becomes that part of the brand in their place?

There are actually three main components that the panelists centered on during the discussion: the electric motors, the battery pack, and the overall driving experience. Obviously, the last one will ultimately be a key brand trait (BMW, the “Ultimate Driving Machine”, is an expression of this). I would also argue that many BEV and PHEV manufacturers are setting the stage to claim that their battery packs are a defining feature:

• GM has developed their Voltec battery to use only about 50% of its total charge, while the Nissan Leaf uses closer to 90%.

• BMW, GM and Tesla believe battery packs have to have liquid temperature control to maintain quality, while Nissan stands behind their air cooled batteries.

These technical differences are what typically end up being marketing messages and part of the brand building (note that GM’s drivetrain even has a name already).

Conversely, there is little talk about the electric motors, probably because they are moving towards commodity status. The motors are already highly efficient (I’ve heard from multiple companies that BEV motors are over 90% efficient regardless of who builds them, and many already outsource their electric motors for traditional hybrids). Additionally, electric motors don’t require routine maintenance, are quiet, and buried within the chassis. So, the ownership experience with regards to the electric motor itself will be largely invisible to the end user.

Following the discussion, I asked Hans Hohenner, Development Drivetrain Product Manager for BMW, what he thought the answer to this branding question is. He said he didn’t have an answer, but then pointed out that BMW currently outsources their transmissions to ZF in their ICE vehicles, and clearly that is a critical component to the drivetrain.

So, coming back to the original question: Do BEVs offer better opportunity for international collaboration? Perhaps the answer isn’t that BEVs offer a better opportunity, but that today’s automotive market offers better opportunities overall.


Smart Appliances: Asian Players are Awakening?

— November 30, 2010

With the advent of smart grid, many sectors stand to benefits. These include: utilizes, heavy industrial electronics manufacturers, auto makers, software and integration providers, etc.

As time passes, we may be able to add home appliances manufacturers in the scope.

The Association of Home Appliance Manufacturers (AHAM) has identified six key features that distinguish smart appliances:

• Dynamic electricity pricing information is delivered to the user.

• A smart appliance can respond to utility signals, contributing to efforts to improve the peak management capability of the smart grid and save energy.

• Integrity of its operation is maintained while automatically adjusting its operation to respond to emergency power situations and help prevent brownouts or blackouts.

• The consumer can override all previously programmed selections or instructions from the smart grid while ensuring the appliance’s safety functions remain active.

• When connected through a home area network and/or controlled via a home energy management system, smart appliances allow for a total home energy usage approach. This enables the consumer to develop their own energy usage profile and use the data according to how it best benefits them.

• A smart appliance incorporates features to target renewable energy by allowing for the shifting of power usage to an optimal time for renewable energy generation (i.e., when the wind is blowing or sun is shining)

As of now, the smart appliances market has been led primarily by European players. They are actively launching pilot projects to test their initial models in the smart meter and AMI environment. The front runners are Bosch, Siemens, Electrolux, Indesit, and Miele. These companies have several pilot programs underway and many have already rolled out commercial product line-ups.

For instance,

• Electrolux started its smart appliance testing on powerline networks using the European Home Systems (EHS) protocol.

• In July 2010, Indesit unveiled a smart washer capable of communicating with the smart grid.

• Miele plans to roll out smart grid ready clothes washer by 2011.

• Siemens has tested its “Smart Watt” model compliant with energy efficiency in conjunction with smart grid in 100 households in Germany.

How about Asian players? They’ve been lagging behind. Asian manufacturers have taken a wait-and-see approach to the smart grid. As of a few months ago, Samsung and LG were still not aggressively pursuing deals and were content to sit on the sidelines watching the field.

However, Samsung and LG have recently changed their minds and are ready to become players in this new field. In Jeju demonstration projects, they set up ZigBee based smart appliances in their Smart Place practice demo sites (or Home Energy Management System and Service: HEMS). They are supposed to launch dedicated teams under control tower’s initiatives to spur their stance.

This new movement was to be expected as infrastructure upgrades in progress and smart meters moved attention inside the home.

Korea has an advanced power grid infrastructure resulting in supplying high quality electricity with merely 15.6 minutes of blackout time per household and a 99.9% or higher voltage holding ratio.

It also indicates that the time and investment for deployment in terms of utility upgrades could be bypassed or shortened. Further, the government has already started an aggressive procurement and deployment plan for smart meters with varying types of models for consumers. As a result, Korean manufacturers could be confident to move ahead.

However, these Asian policy changes are not the primary reason for their interest in the market. Both Samsung and LG are inspired by European players because the Euro zone is one of the primary markets for Samsung and LG.

For general consumers, smart grid may have a narrow scope because most market attention and conventional ideas for smart grid may mean upgrades toward transmission and distribution, smart metering, and constructing offshore wind turbines. Hence, the market perception tends to more watch on B2B business deals and massive national power grid enhancement projects.

With local network management, home area network (HAN) integration, and the ability to connect intelligent devices to the network, smart grid will open up the consumer-driven smart grid market. In addition, opening the market door to smart appliances will result in enhanced energy efficiency in the home environment. General consumers will be interested in this benefit of the smart grid.


Distribution Automation – A Virtuous Cycle?

— November 29, 2010

In our recent “10 Trends to Watch” white paper, we identified distribution automation (DA) as the next smart grid technology to find the spotlight. This is further confirmed by Pike Research’s new Distribution Automation report, which forecasts a sizzling 33% growth rate for worldwide DA revenues between 2009 and 2015. It is worth taking a brief look at how this technology continues to evolve.

Long before “The Smart Grid” became the catch-all phrase for all grid automation technologies, sensors and communications were beginning to be applied toward reducing distribution network monitoring and operating costs. Distribution Automation was simply adding some remote control capability to far-flung devices. The power of this simple idea to significantly increase system reliability quickly became obvious, especially for utilities’ more troublesome feeders. Hence DA business justification shifted toward demonstrably improving typical reliability metrics (SAIDI and CAIDI). The technology incorporated more distributed, even autonomous, processing intelligence to speed circuit fault detection and restoration.
Today, even as reliability improvements remain a primary driver for DA, the ability to, in the words of EPRI, “operate these assets in an optimal manner,” is moving to the fore. Volt/VAR control technology is being used to impact system losses and even reduce overall consumption. Some utilities, including Progress Energy in Florida and the Carolinas, even see this technology as part of their potential demand response asset mix, tweaking distribution system operation to reduce peak demand in ways that are completely transparent to consumers.

The next challenge for DA systems will likely be the management of widespread distributed generation (DG) and plug-in electric vehicles (PEV) resources in the distribution network. While common-sense system upgrades of weaker transformers and other elements are likely to accommodate initial deployment phases, longer-term DG and PEV elements will need to be integrated with DA technology to optimize operation.

Perhaps the ultimate expression of DA will be a distribution network that autonomously balances local loads with intermittent local DG resources on a real-time basis, in harmony with the upper layer grid tiers, completely transparently to local consumers. Outside of some microgrid demonstrations, this may seem a long way off. However I was reminded of the possibilities during a recent discussion with Enbala Power Networks, who is working with ISOs to deliver grid regulation services via interesting real-time management of industrial and commercial demand. Though their type of service is not likely to be aimed at the local distribution feeder anytime soon, it is a clear reminder of the possibilities.

All this foreshadows a kind of virtuous cycle: DA technology initially aims at obvious reliability improvements, evolves toward efficiency optimization, comprehends distributed renewable generation and PEVs, and thus ultimately circles back toward assuring reliability in a brave new distribution network paradigm.
This may seem a stretch from current DA business cases, but perhaps not really that far!


Greenbuild: The Impact of Energy Legislation on Green Building

— November 24, 2010

I’m back from Greenbuild 2010. It was a great showing from 30,000 professionals across various segments of the green building industry. While the one-on-one conversations are often the most important parts of the experience at a conference, I attended several speaker sessions that were highly valuable at Greenbuild.

One of these was a talk on the impact of energy legislation on green building and efficiency given by Dan Probst of Jones Lang Lasalle and Duane Desiderio of the Real Estate Roundtable. While their discussion on the legislative landscape for building efficiency in the United States hit on many of the same themes I’ve written about before (mandatory disclosure legislation, the role of incentives, and building codes), I wanted to pass along some fresh perspectives into the current state of many of these policy tools.

Dan Probst discussed the role of mandatory disclosure programs (which I previously addressed here), also known as commercial benchmarking laws. In short, these pieces of legislation require building owners to disclose the energy consumption of properties they are planning to sell or rent, thereby creating an incentive for owners to engage in efficiency upgrades to attract customers. In his presentation, Mr. Probst discussed new programs on the horizon in new cities and states such as Maryland, Oregon, San Francisco, and Portland. These programs follow legislation in place currently in California, New York City, Seattle, and Washington, DC. Needless to say, these pieces of legislation are quickly becoming more commonplace in many of the major commercial building markets nationwide.

The fate of PACE financing, another hot topic in the real estate industry (and on this blog), came up. The main issue with PACE financing, which ties repayments of loans for energy efficiency upgrades to a building’s property taxes and reduces or eliminates up-front capital outlays for efficiency upgrades, would subordinate a bank or other lending institution’s interest in the collateral, which the Federal Housing and Finance Agency, one of the largest lenders in the U.S., doesn’t like.

Mr. Desiderio indicated that there’s little clear progress in reviving PACE financing, at least for now. But he did make a good point: The federal government provides loan guarantees for certain types of capital-intensive and litigation-prone projects such as nuclear plants. If the government can back these, surely they can also back loans for efficiency, which are far less capital-intensive than nuclear plants and less likely to lead to court time. We’ll have to wait and see if this keen observation is ever borne out in reality.

While efficiency in private buildings in certain regions of the world, such as Europe, tends to be driven by legislation, the United States green building market prides itself on the fact that many efficiency gains have been made through market-based efforts such as corporate social responsibility. But it’s important, still, to remember that the policy landscape is getting tighter every quarter.


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