Navigant Research Blog

A Small Car for the Smart City

— January 31, 2012

Last week saw the official unveiling of the Hiriko electric car in Brussels, in front of the President of the European Commission Jose Manuel Barroso.  A trial manufacturing run of the vehicle is set to begin at Vitoria Gasteiz, outside Bilbao, next year and the first models are expected to reach the market in 2013.  Several cities have apparently already shown interest including Berlin, Barcelona, Malmö and San Francisco.

Developed by a consortium of seven companies based in the Basque region of Spain, Hiriko Driving Mobility is taking forward a design for a CityCar first produced at MIT.  The Hiriko has several city-friendly features, but the most striking is its size and the fact that it folds up to fit into the smallest of urban parking spaces.  At only 2.5m (100 inches) in length unfolded, when crunched up for parking it takes a measly 1.5m (60 inches) in space.  The vehicle’s wheels also turn at right angles to help sideways parking in tight spaces and the lack of conventional doors mean that you can still get in and out the vehicle.

The transport challenges facing city leaders were the subject of some of the most interesting sessions at last November’s Intelligent City Conference, in Hamburg.  Amongst lengthy discussions about multi-model transport strategies and the pros and cons of road charging schemes, several presenters raised the importance of rethinking the role of the private car within our cities.  This is not only about the need to encourage EVs, or to accelerate the shift to public transit systems, but also to foster new thinking about car design.  We need to design cars that meet the needs of cities, several speakers declared, and move away from shaping our cities to accommodate cars.

That’s the basic idea behind the Hiriko (which means “urban” in Basque).  The developers say that it’s well-suited to electric car-sharing schemes, similar to those already in place in San Diego and other cities.  Other options might include the use of advertising to pay for the car rental, or sponsorship by hotels, restaurants or other local businesses.  Operators and city transport authorities might also consider time-of-use pricing or incentives to encourage the use of alternative pick-up and drop-off points during busy times.

The Hiriko may horrify lovers of classic car design, but for anyone interested in the future of urban transport it offers some intriguing possibilities.


Kick-Starting the Bio-Based Economy

— January 30, 2012

Massive, varied, and intricately woven into the fabric of modern industrial society, the global chemical industry was valued at over $4 trillion in 2011, according to Pike Research’s Green Chemistry report.  The non-pharmaceutical chemicals industry in the United States is valued at around $700 billion per year.

The rise of bio-chemicals promises to transform that industry.  Bio-based chemicals and plastics – often referred to as bio-based products – are commercial or industrial products (other than food or feed) that are derived from biological products or biomass.  They serve as direct replacements for the building blocks used in petrochemical production.

At last week’s 3rd Annual Bio-based Chemicals Summit, in San Diego, upstart biomass innovators and stalwart petrochemical industry stakeholders converged to capitalize on opportunities in the emerging bio-based economy.  Excitement is high, but it is largely a derivative of unrealized potential in the biofuels industry.  That potential could be accelerated by federal action: this week, President Obama is expected to unveil his Blueprint for a Bioeconomy.  (The bio-chemical sector is covered under our Bioenergy Advisory Service, which was launched last week.)

The bio-based segment of chemical production looks poised for dramatic growth.  As discussed in our recent report, Biofuels Markets and Technologies, there has been a significant shift away from a primary emphasis on biofuels production towards high-value, low-volume bioproducts in the last couple of years.  Currently, the US Department of Agriculture (USDA) estimates that at least 20,000 bio-based products are currently being manufactured in North America.  USDA has certified dozens of products with a “bio-preferred” label, which denotes a high percentage of bio-based ingredients.

The shift in strategy away from biofuels and towards bio-based products aims to generate near-term revenue to facilitate broader scale-up efforts.  Ultimately, stakeholders envision a pervasive, renewable bio-based economy, comprising power, heat, fuel, and chemicals production derived from biomass resources.

The strategy flies in the face of existing biofuels policy in the United States, which one presenter in San Diego called “ass-backwards.”  From subsidies to loan guarantees to grants, the federal government has relied on a number of mechanisms to ramp up biofuels production.  Where there are bio-based chemical incentives, they are typically treated as complimentary to biofuels policy.

Shifting this paradigm is of chief concern among bioproduct advocates.  Bioproducts, the logic goes, are a natural stepping stone to biofuels production, which is tasked with supplanting an entrenched and highly profitable petroleum fuel industry.  The price tag for doing so is daunting – roughly $16 billion per year to meet the Renewable Fuels Standard (RFS) mandate.  Requiring less capital and feedstocks, widespread bioproducts production is viewed as a lower hurdle that can spearhead development in the utilization of biomass as a replacement to crude oil.

Despite its promise, the bioproducts market faces many challenging obstacles that will likely stifle growth in the United States over the near-term.  Three key issues are summarized briefly below:

  • First, EPA’s regulation of industrial chemicals under the Toxic Substances Control Act (TSCA) may lead to delays and increases in the time-to-market.  While bio-based chemicals are subject to review, many petroleum-derived chemicals were grandfathered in when the regulation came into force in the 1970s.
  • Second, limited access to feedstocks may confine production to areas with access to regional biomass supply chains, potentially stifling growth in the industry.  Even where feedstocks may be prevalent, cost remains a barrier to the commercialization of biobased production from advanced (non-commodity) feedstocks, such as camelina, jatropha, algae, and switchgrass.
  • Third, accessing capital for scale-up remains a difficult challenge.  Although higher-value bio-based products require less capacity than biofuels production, many investors are wary of building a first plant given the associated technology and market risks.  Without steel in the ground, it’s difficult for the industry to accurately assess the risks of subsequent investment.

Building Automation’s Babel Problem

— January 30, 2012

There’s a lot of promise in energy management systems.  Buildings produce tons of data every minute of the day, and much of it is fed into building automation or building management systems so that facility managers can monitor and control energy and operations.  In our recent report, Building Energy Management Systems, we observe that these systems are starting to take that data one step further by visualizing and quantifying energy in buildings for CEOs, building occupants, and other key decision-makers.  Getting this information to the right users, though, involves pulling data from a number of separate systems (lighting, HVAC, security, etc.), which becomes an exceedingly difficult process when systems communicate using different protocols, such as BACnet, LonWorks, Modbus, and many others.

Here’s the problem: While it is certainly possible to tie together systems (say, an HVAC automation system based on BACnet and a lighting system based on LonWorks) into a single energy management system, the cost of the labor required to integrate systems cannot always be economically justified.  Moreover, in many cases, the automation functionality of two independent systems on different protocols is often higher than a system that integrates the two, as much of the data is lost in translation.

So how did we get to this modern-day building automation Tower of Babel?  BACnet was originally developed in the late 1980s in association with ASHRAE, the HVAC industry association, and is one of the leading protocols in the U.S., particularly for HVAC and lighting control systems.  LonWorks, the other top protocol in the U.S., was developed in the 1990s by Echelon, one of the leading smart grid and automation technology firms in the world.  While BACnet’s association with ASHRAE has curried favor among HVAC vendors, LonWorks has been a favorite among lighting controls manufacturers given its rapid response time.  Other protocols serve other niches or are favored by specific vendors as a way of discouraging mixing-and-matching of products from competitors.

The result is a world in which systems that perform very similar functions can’t communicate with each other.  Imagine if Blackberry owners couldn’t call iPhone owners.  That’s the basic reality in the building automation systems world today.

Last week, Echelon made a major step toward breaking these barriers down through the launch of a suite of tools and products aimed at integrating systems based on LonWorks and BACnet.  This is a particularly fitting move for Echelon, which is the gatekeeper of the LonWorks protocol and is carving out a leading role in developing technologies at the “edge of the grid,” the interface between buildings and the utility distribution network.  Through the platform, which involves hardware, software, and service components to translate between LonWorks and BACnet for rich energy management, Echelon will be able to connect with whole buildings, not just isolated systems within buildings, and prepare them to play a role in overall grid management through demand response and other types of utility programs.

Over time, automation systems will likely shift to IP networks for new buildings, doing away with the polyglot automation world of today.  However, the existing building stock will continue to speak many languages, and solutions such as Echelon’s will play an important role in synthesizing building energy data to make buildings smarter and more energy-efficient.


Smart Grid Governance a Work In Progress

— January 30, 2012

After a month’s researching smart grid governance for our upcoming report on smart grid governance, I’ve been reminded of this exchange, from the classic BBC sitcom Blackadder:

Blackadder:  Baldrick, your brain is like the four-headed, man-eating haddock fish-beast of Aberdeen.

Baldrick:  In what way?

Blackadder:  It doesn’t exist.

It’s a bit harsh to say that smart grid governance doesn’t exist, but we have a ways to go before there is widespread deployment of genuine GRC – governance, risk management, and compliance – in smart grids.  Especially in industrial control networks.  To set the scope, I considered the following as part of GRC:

  • Cyber asset discovery and identification
  • System of record for cyber assets
  • Cyber asset-based risk assessment tools.
  • Document architectures, policies, and standards
  • Change management
  • Configuration management
  • Accept asset, event, and compliance feeds from many systems
  • Legislative and regulatory compliance capabilities
  • Pre-built templates for relevant smart grid standards and regulations such as NERC CIP
  • Preparation for and management of audits

This list comes with the standard cyber security disclaimer that many of these capabilities may be assigned to other areas of cyber security as well as GRC.  As with nearly every assessment of smart grid cyber security vendors, I ended up with a mix of vendors that fit roughly into three categories:

  • Large companies who offer their general purpose GRC products to utilities as well
  • GRC Specialists – companies that were formed specifically to sell GRC
  • Niche specialists – who target a narrow, and possibly very successful, subset of GRC

All three sets of vendors have innovated, each in their own ways.  Some of the specialists have been doing GRC for nearly two decades.  That is surely impressive for a market often thought to be no older than Sarbanes-Oxley.  But there is no vendor offering an entire GRC suite based upon the above list of capabilities.  Maybe that’s okay, as the scope is rather wide.

Still, forced to choose between large companies with general purpose offerings or small companies with more focused offerings but not the same resources, I concluded that there are no leaders in this industry.  That’s not surprising for a relatively new industry.

More challenging than identifying an industry leader was to identify a client base for any of the vendors that were profiled.  Some very large vendors – and some of the innovators – could quote a list of utility customers in the 5-10 range, but clearly no GRC vendor has taken the utility market by storm.  The obvious corollary to small client bases is that very few utilities have deployed smart grid GRC yet.  Hence the reference to poor Baldrick.

So, Smart Grid GRC can be summarized as a new industry, with no established leaders, no company with a commanding market share, and the prospect of much legislation that has not yet been written.  That looks an awful lot like a growth industry, and for me, fun to watch.  But which way will it go?  The way of cyber security, with many point solutions that may or may not someday form a working whole, or similar to the meter data management market, wherein vendors compete to offer the most all-inclusive business-oriented solution for the market?

GRC solutions place a premium on business awareness and thoroughness – not something that can be said of cyber security disciplines such as encryption or embedded device protection.  So let’s hope that GRC will go the way of MDM.  There’s one other aspect of the MDM market that must be recalled: nearly all the MDM innovators have now been acquired by much larger companies.


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