Navigant Research Blog

Slower Networks May Be the Answer for Cities, Utilities, and Buildings

— May 29, 2015

A communications technology that promises lower bandwidth and higher latency seems an unlikely proposition in an age when the demands for speed and capacity are rising inexorably. However, low-power wide area networks (LPWANs) are set to play an important role in expanding the possibilities for the Internet of Things (IoT) in cities, buildings, and utility networks. LPWANs are targeted at applications that have low or infrequent data throughputs but which benefit from low-cost modems (less than $5), cheap connectivity (a service cost of a few dollars per year), long-range access, deep penetration, and an extended battery life for devices (around 10 years on a standard battery).

LPWANs come in a number of flavors. In February of this year, the LoRa Alliance was launched by a group of technology suppliers and telecoms operators that support the LoRaWAN specification by developed semiconductor company, Semtech. Initial supporters of the Alliance include Cisco, IBM, Sagemcom, and Semtech, alongside telecoms such as Bouygues Telecom, KPN, SingTel, and Swisscom. One of the first project announcements is partnership between French IoT supplier Actility and Swisscom to deploy a LPWAN around the cities of Geneva and Zurich.

Other players in the LPWAN space are focusing on the evolution of 4G LTE standards that will enable low-cost, low-power communications to support machine-to-machine applications. Several telecoms and equipment providers have announced what is referred to as LTE-M projects, including Nokia and Korea Telcom. Vodafone has also announced its own low-power IoT service, dubbed the Cellular Internet of Things, which it has developed in partnership with Huawei.

Another significant LWPAN initiative comes from French communications company SIGFOX, which is working globally with network system operators to deploy LWPANs using its ultra-narrowband technology. In the United Kingdom, for example, Arqiva is rolling out a SIGFOX-compatible network to 10 cities initially.

Do the Pros Outweigh the Cons?

LWPANs offer the prospect of sensors and other intelligent devices being able to connect instantly into a communications network at a cost of a few dollars a year. LPWANs are suitable for applications where high bandwidth and low latency are less important. LPWANs are not suited, for example, to applications requiring high bandwidth (such as video streaming), low latency, or the continuous tracking of moving objects. LPWANs are largely complementary to existing network technologies, but may present competition to radio frequency (RF) mesh technologies for applications such as smart street lighting and smart parking, and even some forms of smart metering.

LPWANs allow for low-cost piloting and easy scaling of innovative applications. A supplier developing a smart city solution, for example, could quickly demonstrate the benefits of an application for air quality monitoring. Similarly, a utility could use a sensor connected to a LPWAN to monitor assets that lack local power (such as gas and water pipelines) or where the business case does not justify a more expensive solution. A facility manager could use LPWANs to fill gaps in their existing building management system or to retrofit sensors to older buildings.

The LPWAN market is in the innovation phase, where an explosion of different approaches is to be expected and indeed welcomed. However, multiple versions and standards are likely to confuse potential adopters, and industry players need to push ahead on the development of open standards and interoperability models. Over the longer term we will see a growing focus on the so-called HetNet environments in cities, which will allow seamless integration across network protocols depending on location and requirement. In the meantime, low-power networks can be an important accelerator for smart cities and other IoT markets.


A Retail Focus on Energy Efficiency and the Clean Power Plan

— May 28, 2015

Frank Stern and David Purcell contributed to this blog.

The U.S. Environmental Protection Agency (EPA) issued its proposed Clean Power Plan (CPP) rule in June 2014 to reduce carbon emissions from existing fossil-fired electric generating units (EGUs) over 25 MW. The rule is primarily focused on coal-fired plants across the United States. Total carbon reductions targeted by the EPA are substantial: the CPP proposes carbon emission reductions totaling 30% relative to 2005 emissions by 2030, with alternative approaches totaling approximately 23% in reductions by 2025. During the public comment period, the proposed rule received nearly 4 million comments from utilities, states, and other stakeholders. The EPA’s final rule is expected sometime this summer.

While the CPP does not propose state-by-state least-cost planning or specifically require energy efficiency (EE) for carbon reduction compliance, states should pursue EE because, as discussed below, EE is recognized by the EPA and numerous states as a highly cost-effective resource and a prudent investment. Reaching the EPA’s Building Block 4 (BB4) 1.5% annual EE savings goal is likely to require a focused effort in many states. A recommended approach to working toward the savings goal is developing an EE retail strategy.

Advantages of Using EE

Using BB4 to reach a portion of states’ CPP requirements is important since:

  • EE is typically a least-cost resource for reducing carbon emissions
  • EE provides positive economic benefits, while reducing carbon emissions
  • EE will decrease energy demand, allowing utilities greater supply-side flexibility to implement other Building Blocks through 2029

Considerations in Meeting BB4 EE Savings Targets

States with larger utility EE portfolios and growing programs are likely to meet BB4 goals more easily than states with less developed programs and low annual savings. Existing EE portfolios could require increasing EE measure incentive levels to drive participation. Rather than relying only on existing portfolios, it is more likely that all regions of a state and its utilities (including munis and co-ops) should be involved in reaching the BB4 goal.

The figure below shows that states that have undertaken EE program development have growing EE portfolio savings near 1.5% and have higher first-year costs than other states. Many states have not undertaken EE initiatives for extended periods and resulting incentive levels are low in comparison.

 Southeast Incremental Savings vs. First Year Cost of Savings: 2011

Southeast Incremental Savings

      (Source: Navigant Analysis)

While the CPP compliance period does not begin until 2020, states and utilities should consider increased BB4 efforts today to gain momentum toward the 1.5% savings goal. Potential studies can be used to determine maximum achievable EE savings. Such studies can reveal the range of electricity savings and benefits expected over time. In determining EE’s role in reaching CPP goals, states and utilities should assess EE potential to decide how to approach developing BB4 savings.

Central to an EE retail approach is understanding and using potential studies, benefit/cost analyses, and evaluations of EE portfolios to gain an understanding of the benefits and challenges of expanding EE portfolios. Designing and implementing EE programs with proper financial incentives and cost recovery mechanisms can lead to positive net benefits for utilities, customers, and regional economies.

Initiatives, Policies, and Programs

There are a number of approaches to support development of EE initiatives at a utility or in a state to meet the EPA goals. Some initiatives include:

  • Establish energy savings targets within a company or at the state level
  • Assess state performance incentives and cost-recovery mechanisms that move EE toward being equal to other supply-side resources
  • Integrate EE into the resource planning process in regulated markets– incorporate EE into electric integrated resource planning as an equal resource option to generation
  • Require stringent evaluation, measurement and verification of EE programs

State policies should be assessed to create proper incentives and foster growth. Cost recovery as the sole incentive to implement EE portfolios is insufficient to foster savings. Financial incentives and policies that place EE on similar or equal footing to supply-side resources is needed for utilities to actively move toward the 1.5% target.


More EVs Might Mean Changes to Parking Garages

— May 27, 2015

The adoption of electric vehicles (EVs) seems to be unstoppable. In Electric Vehicle Market Forecasts, Navigant Research estimates that plug-in EVs will make up 2.4% of total worldwide light duty vehicle sales by 2023. EVs will thus have a profound impact on the electrical grid, but how will they affect buildings?

Currently, the most visible impact has been the proliferation of electric vehicle charging stations. Driven largely by LEED requirements and state-level incentives, many commercial buildings have dedicated parking spaces for EVs. Indeed, in some markets, EVs have enough of a presence that commercial buildings are installing charging stations in response to demand from the market. But, increased adoption of EVs may necessitate new paradigms for the design of parking garages.

The Solution to Pollution Is Dilution

Parking garages need ventilation. In addition to the carbon dioxide that contributes to climate change, internal combustion engines also emit a lot of other pollutants that are terrible to breathe. Parking garages need to exhaust these pollutants and replace them with fresh air in order to be compatible with human life. Building codes dictate the amount of air that needs to be exhausted based on the worst-case scenario: if every car in the garage was running at the same time.

This approach made sense when sensors and controls were expensive and difficult to use. However, with the sophistication of modern systems, demand-controlled ventilation (DCV) is becoming an attractive alternative to reduce energy consumption. DCV uses sensors to monitor air conditions and match the delivery of ventilated air with the actual need of the space. DCV saves substantial energy because the airflow that a fan provides has a cubic relationship with the power needed. As a result, halving the airflow of a fan reduces the power consumption to one-eighth of the full airflow. Some systems can reduce peak kilowatt-hour demand by up to 95%.

Unlike internal combustion engine vehicles, EVs do not create emissions that need to be exhausted (that happens at the power plant). So, in a future with all EVs, garage ventilation requirements can be drastically reduced. But, in the meantime, the presence of EVs in parking garages translates to greater savings through DCV operation.


Submarine Cable Project to Link Canada, New York

— May 26, 2015

The Champlain Hudson Power Express Project is an epic example of the creative solutions that major transmission utilities and third parties are undertaking to interconnect adjacent markets across borders. This hybrid 337-mile project will carry more than 1,000 MW of renewable power from Canada to the New York metropolitan areas. The project includes sections of high-voltage direct current (HVDC) submarine power cables running through Lake Champlain, the Hudson, East, and Harlem Rivers, with other sections using HVDC underground with the existing Delaware & Hudson Railroad and CSX Transportation railroad right of ways.

The $2.2 billion dollar project is expected to be completed and commissioned in 2017, linking the Montreal area to the New York City neighborhood of Astoria, Queens.  The transmission link between Canada and New York is being developed by Transmission Developers Inc. (TDI), a Blackstone Group, L.P, and is designed to transport electricity from hydropower and wind resources in eastern Canada and feed it directly into the New York City electricity market. The Quebec section of the line and high-voltage alternating current (HVAC) to HVDC converter station is being built and will be operated by TransÉnergie, the transmission division of Hydro-Québec, one of the largest Canadian utilities.

The following graphic shows the scope of the project, starting out at the Hertel converter station in Quebec, where HVAC is converted to HVDC.  The HVDC line runs under Lake Champlain for over 100 miles and then through railroad right of ways for 126 miles.  It then runs under the Hudson River to New York City over about 100 miles, with a few underground transitions in New York City.

Champlain Hudson Power Express

Champlain Hudson Power Express

(Source: Transmission Developers, Inc.)

It’s clear that these HVDC submarine and underground systems are complex solutions that have less environmental impact than overhead transmission lines with associated right of way and eminent domain issues.

The majority of HVDC submarine electric transmission projects are being planned and completed in the European market, where tremendous off-shore wind resources in the Nordic countries, Germany, and the United Kingdom are coming online. It’s great to see that creative projects such as the Champlain Hudson Power Express transmission system are also happening in North America. Over the next 5 to 10 years, this type of interconnection/intertie between independent system operator/regional transmission organization (ISO/RTO) regions and countries will be critical to delivering adequate and increasingly renewable power resources. For more information, look for my upcoming report (expected to publish in 2Q 2015) on submarine electric transmission, which will include regional and global forecasts for capacity and revenue through 2024.



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