Navigant Research Blog

In the United States, the NGV Games Have Begun

— July 31, 2012

Natural gas vehicles (NGVs) in the United States are often considered the low-hanging fruit of clean transportation.  The engine technology has been in use since the 1970’s, and has been around longer than that.  The fuel has been inexpensive for most of the last decade, and since the United States became a net importer of oil in 1997-1998, natural gas has been positioned as a domestic energy source.  Despite these advantages, the NGV market has progressed in fits and starts for many years for a variety of reasons, only really getting the spotlight again since gas and diesel prices started reaching sustained high levels in 2007 and 2008.  The low-hanging fruit is finally starting to get plucked in greater numbers.

When I last worked on a comprehensive analysis of the NGV market in late 2010 and early 2011, the market was seeing strong investment on both the infrastructure side and the vehicle side.  In the light duty vehicle market, both Ford and GM announced factory programs (of sorts) with vehicles that could be ordered from dealers.  Honda’s venerable Civic GX was soldiering on in a handful of key states.  And the EPA had just embarked on a much needed revamp of the certification process for NGV engines – something that promised to reduce paperwork and costs.

The medium duty market was essentially owned by converters of Ford trucks at the time, in large part because GM had just dumped their GMC MD truck lines as part of its cost-cutting strategy.  The heavy duty truck market was relegated to stop-and-go type vehicles (i.e., refuse trucks and transit buses) and was still relatively small.  The seeds for NGV growth were planted, but the sprouts were still very young.  That year, I forecasted total NGV sales of 15,636 vehicles for 2012.

A year later, and those sprouts are forming real growth.  As I report in my most recent NGV report, “Light Duty Natural Gas Vehicles,” the EPA’s new certification process is now in effect and the excitement on the light duty side is almost palpable.  Chrysler has launched a factory-built truck, a first for U.S. manufacturers, the RAM CNG pickup.  Ford and GM have expanded their product lines to include pickups, vans, and, in Ford’s case, the small van, Transit Connect.  Even Honda has made the Civic GX available nationwide.

On the heavier vehicles, a new 12-liter engine from Cummins Westport has the market buzzing with anticipation.  Liquid natural gas is seen as an increasingly viable option for heavy-duty long haul trucks and Navistar, Volvo, and Daimler Trucks all have conversions either available or coming soon.  This year is looking much stronger and I’ve increased my forecast to just over 20,000 vehicles sold by the end of 2012.

The infrastructure side feels like a tightly wound spring waiting to be sprung.  Fleets are adding infrastructure where the costs can be covered by vehicles, but many remain on the fence.  Meanwhile, GE, Shell, and of course Clean Energy Fuels have new investments in NGV infrastructure that make the next couple years look more interesting than the last few.  In perhaps the most intriguing development, the home refueling appliance is back, making home CNG refueling a possibility again.

In the old chicken-and-egg conundrum between vehicle availability and refueling station infrastructure, it looks to me like the vehicles are now leading the infrastructure, which is working hard to catch up.


Heat Wave Activates Utilities’ Demand Response Systems

— July 31, 2012

The 2012 summer has seen 2 weeks of brutal heat waves across large parts of the United States.  The first one occurred during the week of June 25, and the most recent one struck a few weeks later during the week of July 16.

A new 2012 peak for electrical demand, 12,836 megawatts (MW), was reached this year by Con Edison on July 17 when New York City hit 96 degrees Fahrenheit.  During the same week, the Midwest Independent Transmission System Operator (MISO), which operates all or part of the power grid in 11 U.S. Midwestern states and the province of Manitoba in Canada, reported that its entire territory hit well above historical average temperatures, contributing to record demand for power during several days.

To manage the high demand for electricity, some of the utilities and grid operators activated demand response (DR) systems to ensure grid reliability.  Con Edison, for example, asked its 3.2 million customers in the New York metropolitan area to conserve power during the steamy week of July 16.  The utility also took extra precaution by reducing the voltage used in New York City by, for example, dimming lights and letting hot water heaters take longer to heat water.  Thanks to these curtailment efforts, according to Con Edison, only 97 customers lost power, a remarkable accomplishment for a utility of its size.  At the same time, the New York ISO, which operates the grid in the state, requested that customers – both residents and businesses – who participate in its DR programs reduce their power usage.

MISO also had to take action to take some stress off its grid during the same week.  Besides declaring the need for energy conservation for 5 consecutive days, it issued numerous alerts for maximum generation by asking generators and transmission owners to put off unnecessary maintenance on the grid.  It also requested that generators in neighboring grids sell power into its system.  In addition, on July 18, PJM Interconnection (PJM), the biggest U.S.  grid operator, which serves over 60 million people in 13 Mid-Atlantic and Midwestern states and the District of Columbia, dispatched both short-lead and long-lead emergency DR in many of its eastern utilities, representing a total of 2,098 MW of capacity.

The hot weather has also kept EnerNOC, PJM’s largest aggregator, busier than usual.   So far, it has executed a record number of load-shedding programs this summer.  During the recent heat wave, it dispatched DR 32 times, accounting for about 3,000 MW of DR capacity, to its resources in 14 states, the District of Columbia, and Ontario, Canada.  Its automatic DR capability plays a significant role in enabling DR programs of many of the large grid operators, such as PJM, New York ISO, New England ISO, and California ISO.  This summer has certainly not been an exception.

With the potential for more heat waves in the coming months of August and September, aggregators, utilities, and grid operators will be able to demonstrate further that DR has become a critical resource in managing demand for electricity during peak times and to avert power outages.


Turning Point for MDM

— July 30, 2012

“When you come to a fork in the road, take it.”

That sublime Yogi-ism mirrors where meter data management (MDM) vendors find themselves.  Will MDM become the data analytics of choice for utilities, or will it become a piece of critical yet mundane middleware, relegated to managing meters?  And will MDM vendors have any say in their destiny?  Understandably, they would like to believe that they do.  So they are not hanging about, waiting to see what happens.

One year ago, Pike Research published its report, Meter Data Management.  In researching the forthcoming 2012 version of this report, I’ve found quite a bit of movement since last year – much of it aimed toward the vendors’ continued existence.  The two most obvious trends are:

  • Acquisition: Nearly all of the major MDM vendors have been acquired.  Headlines include Siemens acquiring eMeter and Landis+Gyr acquiring Ecologic Analytics.
  • Data Analytics: Everywhere one looks, MDM vendors have repositioned themselves as data analytics vendors.  Some have stopped talking about MDM and instead offer MDA – Meter Data Analytics.  A year ago this was a green shoot; now it is in full bloom.

This near-unanimous repositioning of MDM vendors as data analytics vendors is understandable.  My favorite hype indicator is webinar announcements.  Today nearly every webinar invite talks about some version of “unlocking value through data analytics.”  If you’re an MDM vendor and your alternatives are to stay the course or to surf the analytics wave, the decision is obvious.

Unfortunately, the path from transaction-based MDM to analytics engine is much less obvious.  In extreme situations it may not be possible at all.  My colleague Carol Stimmel has recently blogged that utilities may make use of a great deal of data – some quite lacking in structure – to understand and influence markets.  (For more detail see her forthcoming report, Smart Grid Data Analytics).  It’s tough to imagine how an MDM system could digest unstructured data such as demographics and weather.

On the other hand, there is a middle ground where clever analysis creatively correlates transactional data only.  Survey results often do this.  Either MDM or an analytics engine could make those correlations.  But which will prevail?  I suspect that MDM will get those tasks, for two obvious reasons.  First, utilities are notoriously conservative and are likely to prefer the existing known quantity called MDM to something new and unknown.  Second, using MDM requires no new, expensive, and possibly disruptive software deployments.  However, MDM vendors may overreach into the world of unstructured data analysis.  Such a move could consume enormous amounts of resources for a low probability of success.

No matter what happens, there are certain features of MDM that will remain indispensable.  Validation, estimation, and editing (VEE) is essential for creating a high quality system of record for metering data.  VEE must process complex business rules over a massive data set, quickly.  This is where the transactional orientation of MDM remains an asset.  Likewise, utilities depend upon MDM to create ever-more complex billing determinants.  Such computations are not appropriate for an analytical engine.  No matter how much turf analytics ultimately capture, MDM will remain essential at every utility.

Perhaps the most logical summary of where MDM will end up vis-à-vis analytics is “horses for courses.”  MDM systems do lots of things that analytics engines cannot do, and vice versa.   And regardless, MDM vendors have survived years of being thrown into AMI deals as a no-cost extra.  Fighting off upstart analytical engines should be child’s play!


In India, 370 Million People in the Dark

— July 30, 2012

Early on the morning of July 30th, India experienced its worst power outage in nearly a decade as electricity supply was down for more than 8 hours to more than 370 million people, a number greater than the population of the United States.  The consequences of rising electricity demand and weak electricity infrastructure are now fully on display, as India attempts to identify the cause of the outage and develop a solution to prevent future widespread outages.  There are myriad technical solutions in development across the globe – smart energy, smart grid, and smart industry technologies and strategies – that India may now feel a more pressing need to adopt.

The power industry’s role in supporting economic development is unparalleled.  In India, the power outage in the north affected agricultural operations in Punjab, telecommunications and commuter services in New Delhi, military operations in Kashmir, and water treatment services in Uttar Pradesh, one of the most densely populated regions in the world.  What’s at stake are the food and water supplies to millions of people, the security of those people, and millions of dollars in gross domestic product.

As the real consequences of this power outage continue to emerge, this debacle is likely to become an impetus for Indian politicians to more aggressively pursue energy infrastructure development.  India faces the problems characteristic of other emerging economies – particularly power theft, heavy dependence on coal and other thermal resources, and a fragile power grid.  In the case of this power outage, rising electricity demand and coal shortages proved to be too stressful for the existing infrastructure.  With India’s electricity demand expected to rise five-fold to six-fold in the coming decades, according to the International Energy Agency (IEA), and GDP growth rate forecast to stay above 6% in the coming years, this is increasingly a liability for a country that has never been known for building and maintaining state-of-the-art infrastructure.  India needs a flexible grid infrastructure that can accommodate growth and encourage resource diversity.  Solutions such as advanced battery storage, distributed solar, and microgrids (India is already home to 17 microgrid installations) can provide such flexibility and diversity.  In the coming years, India will be a hotbed for such technologies.  Pike Research forecasts strong growth in many emerging sectors (solar, energy storage, and electrified transportation) in emerging markets, including India.

The power outage in India is a reminder that cleantech market development is not just about the growth and advancement of new technologies and markets; it’s also about new energy development strategies for emerging economies.  The distinct conditions and challenges faced by emerging markets such as India, China, and Brazil provide lessons for the broader market and may ultimately drive cleantech market expansion.


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