Navigant Research Blog

High-Voltage DC Unlocks Distant Offshore Wind Sites

— February 24, 2014

Germany is on track to commission close to 1 GW of offshore wind in 2014 and will follow up with another 3 GW between 2015 and 2016.  Goals have been revised downward recently, but the government still aims to bring 6.5 GW by 2020 and 15 GW by 2030.  These ambitious installation levels are driven by strong government-backed renewables goals and supportive incentives, but also by a novel solution to the challenge that most of Germany’s ideal offshore wind sites are very far from shore – most over 75 km.  At these distances, losses are so great over typical high-voltage alternating current (AC) subsea transmission cables that they can negate the construction of a wind plant.

The solution – a first in the offshore wind market – is the construction of a network of oversized high-voltage direct current (HVDC) converter stations and connecting cables that will allow much of Germany’s pipeline of offshore wind plants to efficiently deliver power to the mainland.  Direct current (DC) is neither new nor novel.  Its use fell out of favor many decades ago as AC power was cemented as the market standard.  But growing need for electricity and the increasing distances required for some generation projects has sparked a rebirth.  These factors have also sparked fierce innovation and competition among power giants such as ABB with its HVDC Light, Siemens’ HVDC Plus, and Alstom Grid’s MaxSine, each using advanced voltage source converter (VSC) technology.  Likewise, a relatively small number of companies provide large HVDC cables for subsea use, resulting in shortages and order backlogs.  This is prompting new entrants into the market and advances in cable technology, such as crosslinked polyethylene (XLPE) HVDC cable.

Towering Turbines

Offshore wind is a leading driver of the HVDC renaissance, and the scale of the effort is impressive.  The larger units look like offshore oil rigs, topping 93 meters in height and weighing upwards of 9,300 metric tons (not including foundation).  In the first German stages, the HVDC buildout is composed of four grid clusters in the North Sea known as SylWin, HelWin, BorWin, and DolWin. These initial phases combined provide around 5.9 GW of capacity and utilize around 800 km of undersea HVDC cable.  Multiple wind farms connect to the converter clusters in order to share and reduce the overall cost to build the HVDC network.

Germany is not alone.  The United Kingdom is also making enormous progress deploying offshore wind farms and will rely on HVDC for many new wind plants.  The first wind plants under the United Kingdom’s Round 3 offshore wind development are entering construction in 2014 at distances from shore that range from 30 km to 185 km. Close to 20 GW are located beyond 100 km and will rely on HVDC.  By 2020, as much as 30 GW of offshore wind will likely be connected by HVDC globally.  Corresponding HVDC export cable route lengths are expected to reach roughly 4,000 km.

The downside to HVDC is its high cost, driven by the large converter stations.  The challenge to the offshore wind industry, the hardware providers, and grid integrators is to bring costs down by standardizing hardware and voltages and by finding efficiencies of scale in converter component manufacturing and offshore construction.

More detailed information and analysis of the HVDC technology, deployments, cable providers, transmission integrators, and the pipeline of wind plants and their developers connecting to the systems are available through the following Navigant Research reports:  International Wind Energy Development: Offshore Report 2013, High Voltage Direct Current Transmission Systems, and Submarine Electricity Transmission.

 

NIST Cyber Security Framework a Major Step Forward

— February 21, 2014

NIST released its long-awaited Framework for Improving Critical Infrastructure Cybersecurity on February 12.  First, let us applaud NIST for meeting the deadline as required, no matter that it was mandated by an Executive Order.  Thankfully at least one D.C. agency gets its work done on time.

After one reading I find lots to like in this framework.  It covers aspects often neglected in cyber security.  For example, it’s impossible to overstate the importance of a glossary.  Inconsistent terminology is a sure way to undermine any undertaking.  Although some of the terminology in this framework is not used the way that I would use it, I can change.  We all can.

Another nice feature is the concept of an iterative approach.  The approach is security as an ongoing concern, not an annual ticket punch.  One of the worst business books I have ever read still had one nugget worth recalling:  “Finished Never Is.”  Cyber security is always ongoing:  threats are always changing.

I was also impressed that the framework was developed with use outside the United States in mind.  Of note, there is more focus on data privacy than we usually see in the United States – although it’s fair to note that that was a requirement of the Executive Order.  At nearly every cyber security conference I have attended in Europe, a speaker from NIST has presented.  NIST even sits on some of the ENISA standards committees, and I have more than once heard European policymakers suggest simply adopting NIST cyber security standards for Europe.

Change We Can Afford

Another nice touch is the pragmatism:  “While organizations identified as Tier 1 (Partial) [i.e., organizations that have only partially implemented risk analysis or cyber security] are encouraged to consider moving toward Tier 2 or greater, Tiers do not represent maturity levels. Progression to higher Tiers is encouraged when such a change would reduce cybersecurity risk and be cost effective.”  That must be the first time I’ve read a standard that said only do this if you can afford it and it will make your life better.

There are challenges.  Any organization that does not currently have an asset-based risk analysis will have to create that first.  I do not know of any utilities that have an asset-based risk analysis of their control networks.  Merely identifying all the assets in a control network can be challenging.  Quantifying the impact and probability of each risk for each asset can be a long and possibly contentious process.

Implementing this framework will be an enormous amount of work for a utility.  Outside help may be necessary.  IBM has already announced an offering to help implement the framework.

Next, there’s that word voluntary.  That is not a weakness in the framework itself, but utilities have, in general, shown a willingness to invest only in cyber security that is required by laws or regulations.  Will this framework drive more cyber security investment?  It might by giving both vendors and utilities a common target.  The framework’s ability to give all stakeholders a shared vision is a major step forward.

 

Growing in Tough HEM Sector, Opower Files for IPO

— February 19, 2014

News of Opower’s filing for an IPO comes as little surprise.  The privately held company hired investment bankers months ago, and speculation about going public dates back several years.  Nonetheless, it is worth noting what Opower has done right to survive what has been a rocky road for other companies navigating the home energy management (HEM) sector – and what the competition will look like.

Opower offers software-as-a-service (SaaS) to utilities to help customers reduce their energy consumption.  In essence, Opower combines customer data and behavioral analytics into tools that encourage residential customers to reduce their energy use in part by comparing their energy habits to those of their neighbors.

What’s noteworthy is how Opower has sustained measurable growth.  In 7 years, the company has gone from a small startup to employing more than 400 people.  It also counts more than 90 utilities as customers and its software connects with 22 million homes, most of them in the United States.  One of the keys to this growth has been Opower’s investment in research and development (R&D).  The company has invested some $25 million annually on R&D, which has enabled it to adapt to the changing needs of utility customers.  In its confidential IPO filing, the company is taking advantage of the Jumpstart Our Business Startups (JOBS) Act, which permits companies with less than $1 billion in revenue to begin the IPO process with the Securities and Exchange Commission (SEC) without having to divulge financial details.

Market Savvy

Another factor in Opower’s success has been the quality of its analytics.  The company’s methodology and the insights it provides get high marks from a variety of independent sources, including the American Council for an Energy-Efficient Economy (ACEEE), The Brattle Group, Navigant Research’s parent company Navigant Consulting, and public utility commissions (PUCs) across the United States.

What’s more, Opower has been a savvy marketer, promoting its wins and casting doubt on results from competing vendors.  For instance, the company makes a strong point of highlighting its randomized control trial (RCT) methodology to distance itself from the competition.

For these and other reasons, it was no surprise either that Opower topped Navigant Research’s recent study, Leaderboard Report: Home Energy Management, which ranked suppliers of HEM software.  But Opower cannot stand still.  Plenty of competitors are poised to challenge that company’s dominance.  Firms like Google (now in control of Nest Labs), Silver Spring Networks, EcoFactor, and C3 Energy will battle for market share in the coming quarters.  The IPO only means that the target on Opower’s back just got larger.

 

Battle of the Buildings Addresses Split Energy Incentives

— February 18, 2014

Among the hottest topics in city-scale energy is the use of building energy benchmarking and disclosure data.  As explained in this blog by my colleague, Eric Bloom, benchmarking is the process of comparing a building’s energy use to others in its sector or class.  Disclosure refers to the reporting of energy data when a building is sold or refinanced.  Many of these practices fall under smart cities programs.  The cities, states, and, in the case of Australia, the country employing these metrics aim to make visible the energy being used by commercial buildings in order to provide carrots and sticks to encourage building owners and operators to reduce energy demand.  The adoption of these programs is now global (see buildingrating.org for the breadth of these programs).  This movement could enable a process of market transformation where energy efficiency and sustainability become the norm, not the exception.  The Institute of Market Transformation has been a leader in promoting and tracking these programs, identifying the additional benefits to cities, including jobs and greenhouse gas reductions.

(Source: Buildingrating.org)

In the United States, many of the city-based benchmarking programs efforts are leveraging the ENERGY STAR Portfolio Manager program, administered by the U.S. Environmental Protection Agency.  Using ENERGY STAR has helped cities with the heavy lifting of capturing and standardizing building energy data.  Using ENERGY STAR has also helped open the conversation around improved building energy performance.  The ENERGY STAR site spotlights individual buildings that are making significant steps toward improved efficiency.  We may not see the realized savings of benchmarking programs for a few years, given the challenges of measuring and attributing energy savings.  But a series of case studies reported by the Institute for Market Transformation shows that an average of 7% energy savings have been demonstrated in cities across the country.

ENERGY STAR is also running its fourth annual Battle of the Buildings competition, pitting buildings against each other to achieve the greatest percentage-based reduction in energy use intensity over the course of the year.  This year’s competition (drawing on 2013 data) includes commercial tenants.  This is a novel change, addressing the classic split incentive issue.  The split incentive refers to the nature of the tenant-owner relationship; in most cases, the building owner pays for the capital upgrades to a building, while the tenant reaps the benefit in smaller electric bills.  A different, but similarly challenging, situation arises when tenants’ leases are not tied to energy use in any way, potentially negating the building’s energy efficiency improvements through naive behavior changes, like leaving the lights on over the weekend, or installing a server near a thermostat.  One approach is a green lease, under which the tenant and owner are aligned on energy savings goals, with financial incentives built in.  Of course, the tenant can pursue energy savings individually and try to win the ENERGY STAR tenant competition.  The results of the competition will be released in April.  Stay tuned for an assessment of the results.

 

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