Navigant Research Blog

Overcoming Hurdles to Monetizing Value Streams from Energy Storage Systems

— August 19, 2016

GeneratorFederal Energy Regulatory Commission (FERC) Order 755 requiring regional transmission organizations (RTOs) and independent system operators (ISOs) to implement a pay-for-performance structure for frequency regulation service has been instrumental in demonstrating the benefits that fast-responding resources like battery energy storage systems (BESSs) can provide to the grid. For example, since Order 755’s implementation, PJM experienced a 30% reduction in overall regulation reserve requirements as more fast-responding resources have cleared the market. However, despite the early regulation successes in PJM, storage directly connected to a distribution system (known as front-of-meter, or FTM) continues to faces uncertainty and barriers in the United States associated with rate treatment.

On another front, energy storage stakeholders now recognize that BESSs connected to the distribution system from behind the meter at a residential and/or commercial & industrial customer’s property can deliver benefits to the host, RTOs/ISOs, and utility distribution system operators. This evolution is driving the development of software and hardware platforms that can analyze, control, and optimize not only a single BESS, but also aggregated BESSs. These advances are now giving rise to energy storage assets that can recognize multiple value streams by stacking grid benefits in virtual power plants (VPPs).

Regulations and Requirements

However, regulatory eligibility and performance requirements for aggregated behind-the-meter battery energy storage assets have not caught up with these technological advances. To date, there has been limited participation by energy storage in demand response markets, and several instances demonstrate how wholesale market rules are missing opportunities for these assets to provide multiple grid benefits. For example, the CAISO Proxy Demand Resource (PDR) prohibits a VPP from providing frequency regulation, even though the systems would be technically capable of doing so. And in ISO-NE and NYISO, Northeast Power Coordinating Council rules prohibit behind-the-meter energy storage from providing spinning/synchronized reserves.

At the Energy Storage North America (ESNA) expo in October, a panel discussion will feature case studies from across the country on the challenges, feasibility, and economics of how single BESSs and VPPs can stack energy storage value streams. Don’t miss out on the conversation—register for ESNA today.


Smart Cites Are Shifting the Focus from Technology to Outcomes

— August 19, 2016

SmartCityNavigant Research’s latest Smart Cities report highlights how the smart cities market is entering a critical phase. The drive toward connectivity, real-time data, and embedded intelligence is expected to accelerate the availability of smart solutions for core city services and operations over the next 2 years. However, many cities still need to be convinced that such solutions can deliver real benefits against their key priorities. One of the biggest challenges therefore is to make a link between successful technology pilots and large-scale deployments of solutions that benefit a broad spectrum of city service users. Pilot projects that focus on the viability of specific technologies have their benefits, but the real requirement is to show how specific solutions can deliver real outcomes for cities within a realistic payback period.

One challenge is that the relatively small scale of most pilots makes it difficult to build a substantial business case to support wider deployments. For this reason, leading cities are now shifting their interest to demonstration projects that show a strong emphasis on both measurable outcomes and supporting business cases rather than technical viability. However, as we highlight in the report, there is often a funding gap between smaller demonstration projects and larger scale programs that can provide real evidence of scalable benefits.

A Focus on City Outcomes

It will be interesting in this regard to watch the progress of Columbus, Ohio as it implements its program funded by the US Department of Transportation’s Smart City Challenge. The award was worth $50 million, but the addition of an extra $90 million from a group of local businesses puts Columbus in an enviable position and makes the project a particularly interesting experiment for other cities. The combination in Columbus of a strong focus on city outcomes around social inclusion and inequality and sufficient funding to make a real difference precisely meets the bill for the next generation of smart city initiatives.

An encouraging development generally is that both cities and suppliers understand the importance of this shift to a focus on outcomes in smart city projects. Navigant Research’s white paper on smart city progress in the United Kingdom, for example, found a strong emphasis on developing outcome-focused programs in leading cities. Similar thinking also underpins the latest European Union-funded large-scale smart city demonstration programs that are using the concept of lighthouse cities to develop replicable solutions that can be tested in associated follower cities.

Innovation and New Approaches

Examples of supply-side innovation include AT&T’s work with partners and selected cities to demonstrate the concrete value of multi-application programs to cities. Another interesting approach is Cisco’s work with a number of national governments on Country Digitization Acceleration programs that aim to address the barriers to the adoption of digital technologies in key sectors of the economy, including cities.

Smart Cities Week in Washington, DC in September comes at a timely moment to discuss these developments and review progress on smart cities across North America and globally. I will be attending and look forward to discussions with city leaders and suppliers on how cities can further accelerate innovation and realize the benefits of smart technology on city services. Let me know if you would like to meet up at the event.


Evaluating New Frontiers in Wind Energy: Saying Goodbye to Blades, Part 1

— August 19, 2016

TurbineThis blog is part one in a series evaluating new techniques in extracting power from wind.

Wind power is no different from any other energy technology in that it is constantly evolving and the quest to find the most efficient and cost-effective method is seemingly never-ending. As a result, there is no technology or design that is off-limits as long as it effectively creates power from wind. For over 3 decades, the bladed turbine has been the default technology in the market. To put it a better way, it has been the only technology in the market, and for good reason. It is effective and it has been researched and tested by hundreds of companies for years.

The bladed turbine has established a firm foothold in the wind power industry, and it isn’t going anywhere. That being said, it has been brought up that the advancement in efficiency of bladed turbines has begun to plateau. Whether or not this is truly the case, the notion has inspired engineers around the globe to break the mold of traditional wind power. One idea has been to get rid of blades altogether.

Vortex Bladeless

One startup that is looking to capitalize on this concept is Spain-based Vortex Bladeless. Still in the R&D phase, the company developed a narrow, cone-shaped structure to siphon power from the wind. The concept is completely different from the traditional bladed turbines which, simply put, use wind to turn the blades, which rotates a shaft and runs a generator. The Vortex design creates turbulent eddies in the wake of the tower. These spinning vortices create an oscillation, typically a no-no in the architecture and engineering world as it induces unwanted stress on the surrounding structures. Vortex, however, is using these oscillations to generate electricity using an alternator that multiplies the oscillation frequency.

Vortex Bladeless Tower Design

Vortex 6m Prototype

 (Source: Vortex Bladeless)

Market Skepticism

The company advertises two different systems: the Vortex Mini and the Vortex Gran. The former is a 4 kW system and the latter is (supposedly) capable of producing 1 MW+ of power. The benefits of these machines, according to Vortex, are that they cheaper to build and maintain due to fewer moving parts and less wear and tear. Furthermore, the company says they are quieter and more environmentally friendly. These claims have yet to be fully vetted and some are already showing skepticism. It is too early to really confirm or deny the company’s claims of a 53% reduction in manufacturing costs and 51% reduction in operating costs. Initial concerns stem from the fact that the oscillation frequency would continuously change as the wind speed fluctuates and thus the frequency of the electricity generated would be nearly impossible to control or predict. It would require a complex and likely very expensive electronic control system in order successfully export this power to this grid. History doesn’t appear to be on Vortex’s side, as a similar concept was introduced several years ago and never made a dent in the market.

The Spanish startup claims to have raised $1 million from private donations and government funding and is hoping to complete a round of donations in the United States. Additionally, Altair has stepped in to provide support in the form of free software licenses and training. Altair’s finite-element analysis and computational fluid dynamics packages are expected to help Vortex move toward a more simulation drive approach in their design. There are some favorable signs for Vortex to become a legitimate market presence in the wind industry, but the company has a long road ahead. A 100 W prototype is in development and the 41-foot Vortex Mini is expected to be ready by 2018. The company must overcome countless obstacles before inking a contract is even conceivable, and winning over the skeptics might be the biggest challenge of all.


Ford Sets a Date for Its Autonomous Vehicle Future

— August 19, 2016

Connected VehiclesOn August 16, Ford held a press conference to announce its plan to launch a fully autonomous vehicle in 2021. Even though the response at the live event was strangely unenthusiastic, there were a number of points that were important for the future of autonomous vehicles and the automotive industry in general.

The headline news was that in 2021, Ford intends to launch a Level 4 (SAE Standard J3016) fully autonomous vehicle. To clarify the nature of the car, CEO Mark Fields made it clear that it would not have a steering wheel or control pedals, even though last year Ford said it had no plans to sell wheeled pods in which people are merely along for the ride.

The company also said that it would be several years after 2021 before individuals can buy it; it is aimed at carsharing and ridesharing fleet operators. Ford Smart Mobility LLC may become one of the first customers. Ford and GM are already piloting their own systems on shuttles for their employees, as noted in a blog earlier this year by my colleague Sam Abuelsamid.

Skipping a Step

Ford also said it would continue to develop and improve its driver assistance features up to Level 2 (partial automation), but it would not be introducing any vehicles with Level 3 (conditional automation) because company researchers had concluded that there was no safe way to ensure that drivers would remain alert enough to resume control in an emergency after an extended period of automated driving. Ford vehicles in the future will either have a range of assistance features or be driverless.

This is a change from the gradual automation theme that has prevailed in the industry until now, although Ford has been saying for the past year that it doesn’t believe that Level 3 is viable. Solving the Level 3 handover issue has been an important topic at recent technical conferences, and Ford has now confirmed its position. While most other OEMs have been working on Level 3, many are now coming around to the idea that the Level 2 to 4 jump is inevitable.

Although convenience and mobility were the focus of the announcement, Ford also acknowledged that safety is a big part of the reason to promote more driver assistance and eventually fully autonomous vehicles. Providing mobility to those without access today, such as the elderly and infirm, was another of the high-level goals. There are also potential opportunities in local package delivery.

Future Investments

Also included in the press announcement were investments in a series of companies providing key pieces of the future autonomous vehicle:

  • Velodyne: A supplier of lidar sensors
  • SAIPS: An Israel-based computer vision and machine learning company
  • Nirenberg Neuroscience: A machine vision platform for performing navigation and object recognition
  • Civil Maps: A provider of high-resolution 3D mapping capabilities

However, Ford made it clear that it was not interested in simply installing autonomous driving software developed elsewhere. It sees its future as a system integrator and will keep most of the development and integration roles in-house.

When asked about powertrain for this new vehicle, Ford said that it would leverage one of its global platforms, but would not confirm whether it would be all-electric or not. The company noted that it has experience with hybrid drive as well as electric and the powertrain has not yet been chosen.

Ford intends to expand from being primarily a vehicle manufacturer to become a mobility company and has drafted a timeline for this shift. This aligns with Navigant Research’s Transportation Outlook white paper that was published in early 2016, and the timing validates the forecasts in our Autonomous Vehicle reports. It will be interesting to see how other OEMs react.


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