Navigant Research Blog

Verizon and Hughes Shake Up the EV Telematics Market

— June 29, 2012

At almost every level of the nascent electric vehicle market, companies are hoping to be able to use the data from EV consumers to build better systems for the customer experience and the smart grid connection.  There’s a large amount of work being done by telematics providers, OEMs, and suppliers to reduce range anxiety and understand the vehicle use data.  What’s surprising, as I learned at the Telematics Detroit 2012 conference on telematics for electric vehicles, is that there is little specialization occurring to enable these telematics programs to take advantage of these unique customers.  It feels like an opportunity is either not being revealed or being missed entirely.

This doesn’t come as a surprise.  When I did the research for the EV Telematics report last year, I found that there was very little specialization at that time as well.  The few key areas of specialization were (and still are) identifying EV charging equipment locations, enabling trip planning, and offering the ability to reserve charging stations.  The focus of the telematics industry when it comes to EVs is reducing range anxiety.  In my opinion, that should be the cost of entry, not the end goal.

The big news in Detroit was the announcement of Verizon’s acquisition of Hughes Telematics for $612 million.  Most of the smaller telematics companies are not happy about Verizon’s vertical extension into their market.  And who can blame them?  One conference-goer groused, “Verizon stops advertising for an afternoon and can afford to buy one the largest telematics firms with revenue that bests us on a good year.”  I pointed out last year after this same event that “there are too many in this segment to be sustainable. This industry looks ripe for consolidation as it grows.”

The smaller telematics companies may not be happy, but the arrival of big service providers should fuel growing innovation in the EV telematics space.  Verizon has been rapidly building its machine-to-machine (M2M) capabilities, with purchases of nPhase and of cloud computing providers.  With Hughes, Verizon now has a very complete package it can offer automakers, and it has created a forum to identify new telematics services and needs that capitalize on the 4G LTE platform.

Hughes has already established programs with electric vehicles with more on the way.  Verizon is also no stranger to the electric vehicle market and is now partnering with Via Motors to implement PHEV vans into their fleet.  What does all this mean for the EV market?  Well, my hope is that the combination of Verizon’s innovation and the strength of Hughes in telematics and M2M will light a fire under the slow-to-blossom EV telematics opportunity.  The combination of a small market (only about 31,800 plug-in vehicles are on the road as of June 1) with buyers who are interested in technology and have a proven willingness to be first adopters, positions these drivers as prime targets for beta testers for new telematics features.  Bring on the innovation.

 

Despite EU Revisions, Energy Efficiency Will Thrive

— June 29, 2012

The status of one of the European Union’s keystone energy efficiency laws, the Energy Efficiency Directive, has been in flux over the last few months, as my colleague Eric Woods discussed in a recent blog.  The Energy Efficiency Directive, launched a year ago, gave legal teeth to the EU’s 20-20-20 targets, by obliging energy retailers to reduce their sales by 1.5% per year, among other measures.

That provision has been under revision over the last few months through amendments proposed by the European Council.  Most of the proposed amendments have focused on exempting certain customers or sectors on the basis that existing energy efficiency rules, such as the EU Emissions Trading Scheme, are already in place.  The effect has been an erosion of the original 20% energy reduction goal.

On one hand, this could be viewed as a considerable setback that will reduce the potential for energy efficiency activity in Europe.  To some extent, it will – as Eric wrote, the law is likely to result in an energy reduction by 2020 of only 17%.  And future amendments are by no means out of the question – in fact, the Energy Efficiency Directive itself was a replacement for erstwhile policies such as the Energy Services Directive, which encompassed similar but less aggressive energy efficiency goals.

On the other hand, the amount of energy efficiency investment over the next decade is expected to grow steadily.  As described in our recently published report, “Energy Efficiency Retrofits for Commercial and Public Buildings,” the market for energy efficiency retrofits, including energy services, HVAC and lighting system upgrades, and a range of other services, will grow from $35 billion today to over $55 billion by 2020.

 

Energy Efficiency Retrofit Revenue, Western Europe, 2011-2020

(Source: Pike Research)

Regulation plays an important role in driving investment in energy efficiency in Europe, and the Energy Efficiency Directive is one of many policy instruments at both the EU and national levels that are promoting energy efficiency improvements in buildings.  However, the market is also further bolstered by necessary building renovations, which virtually always yield more efficient building performance, as well as voluntary efforts by public and private organizations to reduce their energy consumption through efficiency.

Moreover, as standards such as the ISO 50001 energy management standard become more commonplace, the industry as a whole will shift its focus from building efficient new buildings to making existing buildings more efficient, leading to growing opportunity for the energy efficiency business.  So despite the dilution of the Energy Efficiency Directive, there is good reason to expect an expanding market for energy efficiency services in Europe.

 

Prepay Opponents Use Outdated Arguments

— June 27, 2012

Prepaid electricity services have been around for at least two decades in the United States, but they’re less common than in other parts of the world, such as the United Kingdom, Ireland, Australia, New Zealand, India, China, the Philippines, Brazil, Mexico, Turkey, South Africa, and many other African nations.  In these countries, prepayment for power is considered a very basic and standard form of utility payment.  Now, according to Pike Research’s report, Prepaid Electric Metering, more and more U.S. utilities are starting to offer prepayment options to their customers, especially with the introduction of new smart metering and communication technology to facilitate these types of services.  Pressure to improve customer service to give more choices to consumers is also a major driver.  In this new “demand” economy, offering more choices has become a corporate imperative.

One of the reasons why U.S. utilities have been slow to offer prepaid services is opposition from consumer advocacy groups, such as a recent report from the National Consumer Law Center (NCLC), claiming that these programs discriminate against low- and moderate-income households by creating an inequitable two-tiered customer delivery system.  This opposition is not new – over the years it’s been dredged up repeatedly by various consumer protection groups.  But a close examination of existing and new prepaid programs invariably shows that these objections are now outdated and no longer relevant.  Today, the majority of prepay programs don’t target a specific customer segment, such as “high risk credit” households.  Instead, most U.S. utilities target all of their customers with these programs, regardless of financial or socioeconomic status.  And many consumers – if given a choice – opt for prepayment because it provides them with greater flexibility in managing their finances, as they can choose the amount and frequency of payments.

Also, customers do not have to pay a large upfront deposit or face a credit check when initiating electric services and are able to avoid paying any disconnect and reconnect fees.  These benefits are especially valuable to the lower-income consumers that NCLC is so concerned about.

NCLC also points out that there could be an immediate loss of electricity when a customer’s credit reaches a threshold or zero.  Again, this concern is no longer valid.  Many utilities offer an emergency credit that can be used by consumers after their credit has been depleted, such as during the night, a weekend, or a holiday.  Furthermore, prior to any disconnect, the consumer receives an alert from the utility – via phone, email, and text message – which is sent far enough in advance to allow him/her to replenish the account balance.  And, if electricity has been terminated for whatever reason, the utility is able to turn the power back on relatively quickly (at least within a few hours) upon receipt of payment, thanks to the advanced technology that supports their prepaid programs.

The NCLC report also neglects to mention another important benefit to consumers.  By prepaying, consumers usually gain access to detailed information about their energy consumption, giving them the opportunity to manage their usage in order to save on their electricity bill.   Studies have consistently shown that prepaid programs can achieve a reduction in electricity use of about 12% to 14%.  This has been the experience of Salt River Project’s M-Power prepaid program, the largest and oldest electric prepay program in the United States.

Considering the general success of electric prepaid services as well as the high customer satisfaction levels among program participants, it’s unfortunate that consumer advocacy groups keep raising objections and stirring up fears that are based upon outdated assumptions and are contrary to the experience of most prepay customers.

 

Gripped by Heat, New Yorkers Stay Cool with a New Energy Efficiency Program

— June 27, 2012

The heat wave that is gripping the Mountain West and the Great Plains is expected to move east this week, bringing sweltering temperatures to the East Coast, including New York City.  That means all those window unit air conditioners in Manhattan will be working overtime – and consuming huge amounts of energy.

But with an energy usage program introduced last year by Con Edison in partnership with ThinkEco, called the coolNYC program, Manhattan residents are more easily and automatically able to control the energy use of their window ACs.  They will be able to do so by using ThinkEco’s smartAC kit, consisting of a modlet (an intelligent device that monitors the energy usage of appliances and can automatically control their settings) that plugs into an existing outlet and a smartAC thermostat.  The smart thermostat can automatically turn the AC unit on and off, based on the resident’s desired temperature settings, by sending a signal to the modlet.  The modlet, meanwhile, communicates wirelessly through ZigBee technology with the resident’s home computer so that energy usage can be tracked and monitored by the user remotely and in real-time.  The modlet has an internal memory and can store up to 10 days’ worth of energy use data.

Residents can purchase this smartAC kit at various Best Buy stores throughout the city for $69.99 and receive a $25 rebate upon setting up their smartAC account.  Every summer thereafter they receive an additional $25 in the form of an e-gift card if they continue to participate in the program.  (Because each modlet and smartAC thermostat works as a pair, users need these devices for each air conditioner.)

Besides being able to view their current room temperature, change the temperature for the room, or simply turn the window AC on/off from any smartphone or browser, users can preset on/off schedules for their unit through any web browser, so that their room is cooled only when needed.  In this way, the AC becomes a smart, networked device enabling residents to manage their energy usage, while at the same time saving money.

The coolNYC program is not only benefitting New York City residents, but it also allows Con Edison to execute its demand response programs by reducing electricity during peak times when the reliability of the grid is threatened.  With over six million window ACs in the utility’s service territory – many of which operate when residents are not home – it is important that Con Edison has the ability to manage peak demand by adjusting AC temperatures remotely and automatically – especially if New York is hit by another record heat wave like last summer.

Program participants will be notified a day ahead of any DR event, giving them an opportunity to opt in or out each time.  Con Edison expects, however, that such “emergency” events will not occur more than a few times each summer, and the utility adjusts the thermostat only to a slightly higher temperature, it says.

Con Edison and ThinkEco aim to achieve smart AC control through the smartAC kit on 10,000 New York City air-conditioners, in order to get 5 megawatts of demand reduction, which is enough power for 5,000 homes.  Con Edison plans to distribute the kits this summer in large apartment buildings throughout New York City, working with building owners and tenants to install the energy saving devices.

 

Blog Articles

Most Recent

By Date

Tags

Clean Transportation, Electric Vehicles, Policy & Regulation, Renewable Energy, Smart Energy Practice, Smart Energy Program, Smart Grid Practice, Smart Transportation Practice, Smart Transportation Program, Utility Innovations

By Author


{"userID":"","pageName":"2012 June","path":"\/2012\/06","date":"11\/26\/2014"}