Navigant Research Blog

Emissions Plan Powers Energy Efficiency

— June 2, 2014

President Obama has finally unveiled the long-awaited draft carbon emissions regulations on existing power plants.  The goal of the Clean Power Plan Proposed Rule is to reduce carbon emissions from the power sector by 30% by 2030.  While most of the focus is on how this rule will affect coal power plants, it has huge ramifications for the demand-side management and renewable energy sides of the equation, as well.

This is the first time that the U.S. Environmental Protection Agency (EPA) will allow “outside the fence” solutions for such a major regulation.  Instead of requiring unit-specific actions to reduce emissions, regulators will allow each state the ability to submit its own compliance plan by June 2016.  States can choose from a menu of four sets of measures, or building blocks, that the EPA has identified as being eligible for Best System of Emission Reduction (BSER) status:

  • Make fossil fuel power plants more efficient
  • Use more low-emitting power sources (such as natural gas)
  • Use more zero- and low-emitting power sources (renewables and nuclear)
  • Use electricity more efficiently, with a goal of an annual increase of 1.5% in demand-side energy efficiency

Have It Your Way

In addition, states have the option to convert their emissions rate-based goals to emissions mass-based goals in order to set up cap and trade-based systems.  The agency also made it clear that states can develop their own individual plans or collaborate to develop multistate plans, including existing programs, such as the Regional Greenhouse Gas Initiative (RGGI), or new ones.  Finally, the EPA stated that states that have already invested in energy efficiency programs will be able to build on these programs during the compliance period to help make progress toward meeting their goals.

The draft rule is extremely accommodating to energy efficiency.  For states that have existing energy efficiency programs, this presents a new avenue to provide value and expand their reach.  For states that have yet to develop energy efficiency programs, or for those states (mostly out west) that have the highest emissions reductions goals, this rule can act as a jump-start for energy efficiency.  It also provides a roadmap to attain emissions cuts in ways that are more cost-effective than strictly targeting power plants and that have the smallest economic impacts – possibly even economic benefits.

There is still some ambiguity about how solutions like demand response and smart grids will be applied under the plan, but that can be hammered out through comments and negotiations prior to the final rule in 2015.  This is just the beginning of what will be a long, arduous, and likely litigious process – but the opening salvo certainly bodes well for clean demand-side resources.


LEDs Get a Makeover

— June 2, 2014

My colleague Jesse Foote noted in a blog earlier this month that high prices, formerly one of the major obstacles to consumer adoption of light-emitting diodes (LEDs), have begun to fall.  In 2012, LED bulbs cost about $40 apiece; now, the price has fallen to around $10.  Price aside, another remaining barrier to LED adoption is aesthetic: consumers dislike the harsh, bluish light emitted by LEDs.  Large lighting manufacturers as well as startup companies have responded to consumer preferences by releasing a variety of LED bulbs that mimic the light emitted from a traditional incandescent bulb.  Particularly as the U.S. incandescent phase-out continues, lighting manufacturers have begun to produce a more diverse set of LED bulbs for different lighting sectors.

Warm and White

Last March, Cree became the first company to produce a LED bulb for residential use that mimics the warm, white light of an incandescent bulb.  The TrueWhite bulb has also drawn customers due to its price (less than $10 per bulb) and design.

Since then, other lighting manufacturers have come out with their own versions of LED bulbs that look like incandescents.  Philips introduced a $12, 25,000-hour bulb in April 2014, and General Electric’s 60-watt equivalent Reveal bulb provides a dimmable LED option.  Ushio also offers a decorative LED lamp that gives off a warm glow.

The variety of players in the incandescent-like LED field is bound to continue growing as manufacturers recognize the market potential for visually appealing LEDs.  Recently, The New York Times ran a feature on a small company called Finally. The startup has developed its own bulb that looks like an incandescent, but is actually a refined form of induction lighting.

To the Streets

In early May 2014, the commercial sector saw the emergence of Cree’s LED T8 lamp.  By bringing down the cost of commercial LED lamps, this product captured some of the fluorescent-dominated market.  However, price remains a large barrier in commercial LED lighting, with the Cree T8 running around $30 per bulb, almost 10 times more than traditional fluorescent lamps.

The forthcoming update to Navigant Research’s Smart Street Lighting report will address the use of LED bulbs in street lighting, a move that has already saved cities around the world millions of dollars on electricity per year.  The emergence of LED bulbs that look like incandescents holds particular promise for more decorative street lighting applications.  Companies like Sternberg Lighting offer traditional decorative fixtures that are LED-compatible and offer a solution to installing energy efficient lighting fixtures in a nonresidential setting.


Europe Overtaking United States in Autonomous Vehicles

— June 2, 2014

In the last few years, as the technology to make self-driving vehicles has neared production-readiness, vehicle manufacturers have begun to press legislators to ensure that the technology will be legal to use on the road when the cars go on sale.  In some countries, anything is legal unless it’s specifically banned, but in others everything is illegal unless it is specifically allowed.  One of the major pieces of legislation that concerns automakers globally is Article 8 of the 1968 United Nations (UN) Convention on Road Traffic (also known as the Vienna Convention on Road Traffic), which stipulates: “Every driver shall at all times be able to control his vehicle or to guide his animals.”

An amendment to this statement, agreed to in March by the UN Working Party on Road Traffic Safety, would allow a car to drive itself as long as the system “can be overridden or switched off by the driver.”  This, of course, means that a driver must be present and able to take the wheel at any time, so it does not open the door to fully autonomous vehicles on public roads.  Provided the amendment clears the usual bureaucratic hurdles, all 72 countries that are party to the convention will then have to work the new rules into their laws.  The convention covers European countries, Mexico, Chile, Brazil, and Russia, although it does not cover the United States, Japan, or China.

Wake Up and Drive

The big benefit of this agreement is that the European carmakers can continue to develop and introduce more advanced driver assistance systems, such as lane keeping, motorway cruising, and traffic jam mode.  Many of these systems have been under testing for a few years and are now allowed on public roads under specific licenses from local authorities, such as described in my recent blog on Google cars.  But these self-driving functions have been held back from production by the requirement that the driver must be in control at all times.  So it now looks likely that European customers will be able to order these and more advanced systems much sooner than people in Japan, China, and especially North America, where litigation is a way of life.

The automotive manufacturers are working hard to develop suitable protocols for handing back control to a driver who may not be paying attention.  While allowing technology to take over routine driving tasks is likely to improve safety, especially on long journeys, the nature of the systems will lead inevitably lead to drivers falling asleep or focusing on other tasks such as email or reading.  If an automated driving system encounters a set of circumstances beyond its capability, it will need to return control to the driver immediately.  If the driver is unprepared, this could have serious consequences.

There is still a long way to go before bringing fully autonomous vehicles to the road is practical.  The long-term societal benefits mean that it is not a question of if, but of when.  This change to the Vienna Convention is a small but very significant event, and it surprising that there has not been more media coverage of the announcement.


Buildings Battle Moves into Finance

— June 2, 2014

As mentioned in an earlier blog, the U.S. Department of Energy (DOE) is holding a competition to see how much energy commercial buildings can save using different energy efficiency techniques.  The DOE’s Better Buildings Challenge is aimed at large portfolio owners who committed to reduce their energy use by more than 20% over 10 years.  So far, the program claims over $100 million in energy has been saved by participating partners, associated with a 2.5% reduction in energy use.  The program is organized into three sets of partners addressing different sectors.  The first is focused on the majority of the building sector, including large corporate tenants, multifamily residential (public and private), government, and educational buildings.  The second extends to the industrial sector with the Better Buildings, Better Plants Challenge.  This part of the Challenge also aims to reduce energy use by data centers, which is growing at 9.5% a year.

The third phase of the Challenge is focused on utilities (though only California utilities have signed on to date) and financial institutions that have been developing financial packages that promote energy efficiency.  To date, 21 “Financial Allies” have committed to extend $1.77 billion in financing for energy-savings programs.  These companies have agreed to publicize their involvement in the Challenge, attribute and measure the energy savings from their program, and report quarterly to the DOE.  For many of these companies, this is hardly a stretch.  For companies like SCIenergy and Green Campus Partners, energy efficiency financing is the core of their business model.  General Electric (GE) Capital is using the program to highlight its lighting retrofit program.  Still others are using the program as way of advertising their products to government agencies.


(Source: U.S. Department of Energy)


As evident from the chart, the “reinvestment of equity” pathway is the most popular.  This service is aimed at the identification of energy savings at the institution’s customers, and using different programs to tag those savings for reinvestment.  It’s interesting that more financial institutions haven’t joined the bandwagon, as the Better Building Challenge gives them free publicity for their active business models.

The DOE has also included water in the Challenge.  The Water Savings pilot will enable concerted tracking of water savings investments.  Some of these will focus on IT-based solutions, like smart water meters and information management.  The utility approach to these topics was the focus of a recent Navigant Research report, Smart Water Networks.  Incorporating water will align with many companies’ sustainability goals, which include water and carbon in addition to energy.  However, the extension of water in the Better Buildings Challenge could further confuse the average consumer as to which U.S. government entity aims to reduce which resource.  The Environmental Protection Agency (EPA) is typically responsible for maintaining clean water regulation, yet it also runs the Energy Star Portfolio Manager Program, which tracks building energy.   The history of these departments is rich, and sure to be the subject of many political science dissertations.  We’ll just stick to the challenge of understanding these entities for now.


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