Navigant Research Blog

MESA Standards Aim to Organize a Diverse Market

— December 15, 2016

IT InfrastructureLast month, the MESA Standards Alliance officially released the first draft of a protocol for communications standards between utility control centers and energy storage systems (ESSs). This marks an important development for the ESS industry given the relative lack of existing standards and the increasingly diverse range of products in the market. Founded in 2014, the MESA Alliance is an organization of industry groups including both product vendors and utilities working to accelerate the growth of the ESS industry. MESA is developing open, non-proprietary specifications and standards for multiple types of ESSs.

Compared with the broader energy industry, standards for ESS components and software have barely begun to develop. Yet there is a clear need for standardization. Many vendors and other stakeholders in the industry cite the diverse operational characteristics of ESS components and the differing utility interconnection protocols as barriers to growth and cost reductions. There are basic standards currently in place covering ESS design and the integration of systems into the grid, and efforts are underway to update these protocols or supplement them with more in-depth standards. To date, the main standards for ESS come from the International Electrotechnical Commission (IEC), most notably the group’s TC 120 standards. However, these standards are more high-level and cover aspects such as defining unit parameters, testing methods, environmental issues, and system safety.

MESA Standards

MESA’s protocols are among the most comprehensive standards in the industry, aiming to accelerate the market through greater system interoperability, scalability, safety, quality, and affordability. A key focus for the grid is on standardizing communications between components within an ESS and between a system and the grid. This type of standardization can give customers more choice in the market and reduce project-specific engineering costs. These standards will also hopefully reduce training costs and improve safety for field staff through uniform procedures for safety and efficiency. The two primary segments of MESA standards are:

  • MESA-Device: Addresses system design for the components of an ESS, including the storage medium (batteries), inverters/power electronics, and meters
  • MESA-ESS: Specifies how an ESS communicates with the utility’s grid control and power scheduling systems (and is built on the DNP3 protocol)

The recently published draft protocol is for MESA-ESS and primarily addresses ESS configuration management, ESS operational states, and the applicable ESS functions. MESA hopes that these standards will enable electric utilities and grid operates to more effectively deploy and manage ESSs—including fleets of multi-vendor systems—to meet various needs with minimal custom design or engineering.

As the ESS industry has matured, software and controls platforms that communicate with grid systems are emerging as key to the technology’s value. However, there are a growing number of software platforms available, each with differing characteristics. Navigant Research’s new Energy Storage Software: Aggregation, Asset Management, and Grid Services report explores these platforms in detail. More open and official standards in the industry could result in greater interoperability between the various platforms, thus enabling greater customer choice. These developments can allow technology suppliers to focus on their core competencies and will hopefully lead to more rapid cost reductions and innovations.


Defining Companies in the Digital Age

— December 15, 2016

Intelligent BuildingAs I mentioned in a previous blog, a company that does not have some form of automation or intelligence in its commercial building efficiency product or service will have little chance to compete in the changing market landscape. That’s a pretty strong statement, and maybe one that not everyone agrees with. It seems to be the direction that macro market trends are moving, however, and there are plenty of examples to back it up.

One of the most compelling observations about the changing face of automation and intelligence was made in a keynote address by Jeffrey Immelt, Chairman and CEO of General Electric (GE), at the Intelligent Platforms User Summit back in 2014. The comment he used to frame his speech was, “If you went to bed last night as an industrial company, you’re going to wake up this morning as a software and analytics company.”

Long Road to Change

This is easier said than done, and GE knows it. The company has been working on this strategy for over 5 years and through $1 billion in investment, and it is still not yet fully transformed. But this shift is the company’s goal. GE’s software business is growing 20% per year with a goal of $15 billion in revenue by 2020, a benchmark which would make the company a top 10 software player.

Not every participant in the field will end up as a software company; each must follow their own strengths and strategy. But it is imperative to build some form of internal capabilities to meet the demands of a new digital world. Each company has intellectual property (IP) that can only be completely understood and translated by internal resources that have boots on the ground. The job won’t get done with a software supplier or a software integrator alone. And who would trust this critical strategy solely to outsiders anyway?

The main point of my previous blog was that developing these types of intelligence and automation capabilities will not happen overnight, even by acquisition. Companies that did not have the foresight to start assessing the digital transformation years ago will be in serious catch-up mode in the years to come.


Community Solar Program Design and Procurement Considerations

— December 12, 2016

Wind and SolarWith interest in community solar continuing to grow, utilities are asking questions and facing similar challenges as they work through program design and solar procurement. As part of the US Department of Energy’s SunShot-funded Community Solar Value Project (CSVP), Navigant has spent the past year conversing with utilities, developers, and program designers that are experienced in developing community solar projects with the goal of sharing best practices and lessons learned. Navigant advises both utilities interested in developing community solar programs and developers/financiers that are considering entering the market.

On December 1, CSVP hosted a recorded webinar titled Smarter Procurement for Community Solar Solutions. During the presentation, I led a conversation between Erin Buchanan from Cedar Falls Utilities in Iowa, Karen Poff from Austin Energy, and Ricardo Luna from CPS Energy in San Antonio discussing the choices utilities face in procuring community solar resources and support services and the measures that these utilities have taken to increase the net value of their community solar programs and lower overall project costs.

Last week, the CSVP also released additional financing and procurement resources, including:

Based on our conversations, Navigant also recently published an article in Renewable Energy World listing tips for utilities that are considering community solar. If you will be at the Renewable Energy World International Conference in Orlando this week, check out the panel where I’ll be speaking about community solar and the CSVP. If you’re a utility looking for expertise in developing a community solar program, don’t hesitate to reach out.


Autonomous Vehicles as Both a Sustaining and Disruptive Innovation

— December 9, 2016

Electric Vehicle 2While listening to a recent episode of the Exponent podcast, co-hosts Ben Thompson and James Allworth had a vibrant discussion on one of their regular topics: sustaining versus disruptive innovation. The topic was in the context of whether Apple should acquire Netflix, but as the hosts’ conversations often do, it got me thinking about the auto industry. With self-driving vehicles, transportation is on the precipice of a dramatic change that many argue will be exceptionally disruptive. I’d like to take a slightly contrarian view by arguing that autonomous technology will be sustaining to parts of the auto industry and disruptive in ways that many in the tech industry may be missing.

Sustaining vs. Disruptive

Disruption is an often abused word in the world of technology, but as defined by Harvard University’s Clayton Christensen, it boils down to innovations that create new markets and value networks and eventually displace existing market leaders. Sustaining innovations evolve existing markets and improve value.

An example of the latter is the way that manufacturing automation improved productivity and quality in the way cars are built over the past several decades. However, as in any complex analysis, these things are never simply binary. While new manufacturing technology was sustaining for automakers, it was extremely disruptive to the people that worked in their factories. Similarly, any argument that autonomous vehicles will be purely disruptive of the auto industry is a vast oversimplification. If automakers had followed the path of Nokia in the mobile phone business and ignored the threat posed by Apple when it introduced the iPhone in 2007, incumbent automakers would be facing extinction in the face of autonomy.

Instead, I would argue autonomy will instead be sustaining for many (although probably not all) automakers. Someone will need to build these vehicles regardless of whether they are piloted by computers or humans, and the companies that already have design, engineering, and manufacturing expertise are well-positioned to do so.

Just as other real-world examples are rarely black and white, there will be disruption from the autonomous vehicle. Most obviously it will affect those that make a living from driving, whether by taxi, bus, or truck—society will have to address this employment displacement in the next decade.

Retail Side

Perhaps the less anticipated and more impactful disruption is faced by the retail side of the auto industry. There are nearly 17,000 franchised car dealers in the United States currently selling about 17.5 million vehicles a year with more than 1 million employees. If transportation shifts as expected over the next several decades (i.e., from an individual ownership model to on-demand autonomous mobility services), the business of these retailers will evaporate. It won’t be overnight, but it will almost inevitably happen.

However, someone still needs to own these vehicles, right? Sure, but unlike the Silicon Valley investors that pumped Uber’s valuation to more than $60 billion, I doubt it will be standalone ride-hailing companies. I’m increasingly of the opinion that mobility services will be provided by the manufacturers themselves, leveraging their existing expertise in building, logistics, and financing along with strategic investments in the software platforms needed to connect people with rides.

Disruption by its nature takes people by surprise. The self-driving car will be both sustaining and disruptive, and probably not in the obvious ways.


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