Navigant Research Blog

Natural Gas Demand Response – Not Just for Electricity Any More: Part 1

— March 31, 2017

Coauthored by Jay Paidipati

Demand response (DR) in the electricity sector has been a common practice for decades for utilities and grid operators. When there are emergency situations or high prices, some residential customers and commercial and industrial (C&I) businesses are willing to reduce their electrical load or turn on distributed generation in return for financial compensation or the knowledge they are helping to maintain the grid. Historically, DR is less prevalent in the natural gas industry, but changing market factors have increased interest in the practice.

Similar to the electric side, some utilities offer large C&I natural gas users interruptible rates (IR). IR is an optional program between customers and the utility company that gives the utility company the right to shut off gas service to facilities in return for a reduced rate. It is a blunt instrument compared to customers shutting down parts of their operations to reduce gas usage. Some customers maintain backup gas storage onsite so they can switch to in case of interruption.

A more fine-tuned type of natural gas DR starts by putting communication devices at a customer’s site, then dispatching the device during critical times. The current implementation uses smart thermostats to control residential furnaces and slightly reduce temperature settings during peak heating times.

Why Natural Gas DR Now?

There is an indirect need for natural gas DR because of how it affects the electricity grid. In the past 5 years, natural gas has become the predominant fuel source for generation in many areas of the United States, often replacing coal and nuclear plants as they retire. However, the gas pipeline system was mainly designed to accommodate gas usage for end uses like cooking, heating, and cooling. The pipeline capacity did not anticipate large volumes flowing to power plants—especially in the winter when heating demand is highest.

The limited pipeline capacity was most evident during the polar vortex in January 2014, when pipelines were full but some gas generators could not get fuel, leading to electricity supply concerns and high energy prices. Since the polar vortex, other natural gas constraints and storage leaks have led to other fuel shortages. Some utilities and grid operators have instituted winter electric DR programs to address this concern, but curtailing natural gas usage is another.

The investigation into natural gas DR continues. Part 2 of this blog series will explore barriers to natural gas DR and which companies have successfully implemented it. Part 3 will explore what new concepts could develop in the future.

 

Questions Aplenty About Interacting with Automated Vehicles

— March 31, 2017

Over the past 130 years, the interface between human and machine has become relatively standardized. We have steering wheels, pedals, seats, mirrors, and other major controls in roughly the same location no matter what brand or type of vehicle we use. We’ve made adaptations for additional hand controls for those that have physical disabilities, but overall, the experience is consistent. But when those controls are eliminated in automated vehicles (AVs), as Ford will do in the AV it intends to produce in 2021, designers have opportunities to rethink vehicle cabins. And those opportunities raise a few questions about interacting with AVs.

User Experience

The more you know, the more you realize how much you don’t know. As we accelerate toward an era where humans are no longer in direct control of the vehicles we move around in, it’s clear that making a car drive itself is only the beginning of the task at hand. A panel at the recent Automotive Megatrends Autonomous Car conference in Detroit examined some of the questions around the user experience (UX) with automation.

A crucial aspect of the human-machine interface are the seats and what we see as we move through the world. Over the last several years, automakers and suppliers revealed a number of fascinating concepts for cars of the future such as the Mercedes-Benz F015, Nissan IDS, and the BMW HoloActive Touch.

One of the seemingly more appealing ideas about not having to drive is that vehicle occupants could be repositioned so they can interface with each other instead of the vehicle. However, a driving force behind the design of modern vehicles is the need to protect occupants in the event of a crash. They must be properly positioned in order for airbags to provide protection. While AVs are likely to cause far fewer crashes, they will still have to coexist with the more than 1.2 billion vehicles on the road today and for decades to come. That means that unless we ban human-driven vehicles, AVs still have to conform to the same safety standards and seat rotation will be limited to small angles.

Then there is the whole issue of motion sickness. Many people experience physical symptoms when there is a disconnect between what their eyes see and their body feels during motion. If we go from driving to watching or reading during our commutes, this could become a design issue.

Voice Recognition Systems

Another question regarding interacting with AVs: Will we let self-driving vehicles know where we want to go? For all the attention that devices like Amazon’s Echo have received in the past couple of years, voice recognition systems remain frustrating to use. Companies like Google and Nuance have made huge strides in improving the reliability of these systems when they are connected to the cloud, but even the most advanced machine learning systems continue to struggle with natural language semantics and accents. There is an enormous difference between recognizing individual spoken words and the meaning that is imparted by stringing a series of words together.

Humans are remarkably adaptable, and we will likely adjust our own speech patterns to the limitations of the machines before the machines themselves can reliably understand us. Or we may decide that if technology can’t make our lives less frustrating, we may reject it.

 

Builders Use Energy Efficient Technologies to Construct Better Homes

— March 31, 2017

Home builders today have many options for creating more efficient and smarter homes, and a survey says builders are actually using these products. According to a recent National Association of Home Builders (NAHB) survey, single-family builders in the United States are using an average of 10.2 different green products or practices, and 22% always or almost always have their home certified to a green standard. Energy efficient windows ranked at the top of the list, commonly used by 95% of builders, followed by high efficiency HVAC systems at 92%, programmable thermostats at 88%, and ENERGY STAR-rated appliances at 80%.

(Source: National Association of Home Builders)

At the bottom of the list are smart appliances at 16%, energy management systems at 11%, and passive solar design at 8%, among others. While these concepts are certainly growing in popularity, this survey is a reminder that in reality, energy efficiency in new construction still largely relies on more traditional energy efficient products. These more traditional products are not only tried, tested, and trusted by builders, but can also offer a clearer prospect for energy savings potential, as can be seen in the ENERGY STAR window savings estimates figure below.

(Source: ENERGY STAR)

A Step in the Right Direction?

The industry still has a way to go before smart home and Internet of Things (IoT) technologies become more viable options for home builders. Yet, the fact that energy efficiency products are being more commonly accepted and used among builders is a step in the right direction toward advancing the efficiency of newly constructed homes.

On the other hand, other builders are using much less practical methods for constructing more efficient homes. Apis Cor, based in Irkutsk, Russia, has developed a mobile 3D printer, which it used to print a 400-square-foot single-family home within 24 hours. The company argues that its printer not only produces more affordable homes, but is also more resource efficient. It uses geopolymer, which consists predominately of byproducts from other industries, and avoids the use of traditional materials like wood, which has led to extensive deforestation and environmental erosion. While this company’s methods are much less practical than utilizing energy efficient products in more traditional construction, it shows that the new home construction industry is moving forward in implementing more advanced technologies for building better, more efficient homes.

 

European Utilities Are Moving toward New Energy Platforms at Different Paces: Part 3

— March 29, 2017

The energy industry is experiencing a profound transformation as the sector moves toward more intelligent, more distributed, and cleaner use of energy. Utilities’ traditional business models are being challenged by disruptive firms offering new services that leverage more advanced technology, as described in Navigant’s Energy Cloud analysis in its Navigating the Energy Transformation white paper. In the first post of this blog series, I described six new energy platforms underpinning the energy transformation. In the second post, I showed that some European utilities have been more active than others in partnering with, and investing in, companies offering new energy platforms. In this post, I focus on the geographical distribution of activity to show that the majority of partnerships are with companies located in Europe, while most of the investments are made in organizations based in North America. In the next and final post, I will argue that in order to be successful in the transition toward a smarter, more digital energy future, utilities will need to strategically adopt the most relevant new energy platforms.

(Source: Navigant Consulting)

In terms of geographical distribution, while the majority of partnerships are with companies located in Europe, it is worth noting that most of the investments that eight major European utilities have made over the last 2 years are concentrated in North America—and California more particularly (see above figure). This is not surprising, when one considers that most startups offering services in Distributed Energy Resources (DER) Integration were created in California. These include AutoGrid (which raised funds from both E.ON and Total), Stem (in which RWE and Total invested), and Green Charge Networks (acquired by ENGIE). French utilities ENGIE and Total and German utilities E.ON and RWE have been the most active investors in California-based companies. While both French utilities have been focusing on companies offering DER Integration services, the German utilities’ activities have been more diversified across multiple platforms, such as Internet of Things (IoT), Electric Mobility, and DER Integration.

The majority of partnerships have been signed with companies located in Europe. An obvious reason is the ease of having operational teams able to work closely together across European countries and time zones—rather than across continents. In the Electric Mobility sphere, Enel has been partnering with automaker Nissan to offer a bundled product consisting of Nissan’s EV and Enel’s home charging point and smartphone app locating charging points across Italy. In the DER Integration field, E.ON and solar PV system provider SOLARWATT have signed an agreement to jointly offer a solar PV and battery storage system, an energy monitoring app, and a green electricity tariff to their German customers.

Lastly, utilities that are competitors in their home European markets sometimes invest in the same startup, while other times betting on competitor companies. Both E.ON and RWE have invested in Bidgely, which provides real-time appliance-level energy consumption applications for residential customers. The California-based startup will use both German utilities’ funding and customer bases to expand from North America to Europe. On the other hand, ENGIE acquired battery storage system and platform provider Green Charge Networks, which is a direct competitor of Demand Energy—the company acquired by Enel in early 2017.

In the next and final post of this blog series, I will argue that in order to be successful in the transition toward a smarter, more digital energy future, utilities will need to strategically adopt the most relevant new energy platforms.

 

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