Navigant Research Blog

IoT Gains Ground among Corporate Executives

— September 28, 2017

Recent studies point to growing acceptance of Internet of Things (IoT) technologies among businesses. These studies provide more evidence that the concept has moved beyond hype and into a gray area of early stage acceptance, experimentation, and uncertainty.

Verizon’s latest report on the topic finds 73% of executive survey respondents are either deploying IoT solutions or researching the technology. The report also highlights compelling economics, citing that among business-to-business applications, there is the possibility to generate nearly 70% of the potential value enabled by IoT technologies.

Another study from enterprise software vendor IFS found that 30% of respondents from industrial companies say they use IoT data to support field service management, while 16% say their firms use IoT data in enterprise resource planning software. While this response did not come from the majority of respondents, the data shows a significant level of early adoption. The study also suggests the effects of IoT are likely to be greater in the industrial sector than among consumer products and services. And I concur; the drive to cut costs, improve operational efficiencies, and seek tangible ROI is more compelling among businesses. Consumers care about such things to be sure, but they seldom act with the same verve as corporations.

SAP had a similar study earlier this year that found 3% of corporate executive respondents saying their companies had completed companywide digital transformation projects, many of which involved IoT technologies. This is still a low level of adoption in view of previous industry expectations. Nonetheless, 55% of the same respondents say their firms are conducting pilot programs, which is a positive sign.

Case Studies Proving Necessary

What is lacking in the marketplace for IoT, or industrial IoT (IIoT), is a persuasive set of case studies that show how a company can move from where it is pre-IoT to a valuable deployment involving the latest tools. Business leaders tend to be skeptical about new technology and want to make sure the benefits are clear before moving ahead, especially with the complexities and new costs involved in IIoT projects. There are examples of companies making strides in this direction. One is Alpiq, a leading Swiss utility, which has adopted an IoT data strategy to transform its operations and now expects to see lower total costs. But more examples across many industrial sectors are needed before one can say the trend has truly taken hold. Until then, we shall be in an uncertain period as many firms test the waters and gradually learn what works best. Once more of the leaders set the stage, others will follow.

 

New Wind Turbine Battleground Focused on 4 MW Units

— September 28, 2017

The latest battleground in the ever tightening wind turbine market is with onshore wind turbines in the 4 MW range. Until now, this segment has had few offerings and only minor commercial deployments. No less than four turbine OEMs announced new 4 MW turbine models over the past few months. The overwhelming majority of annual onshore wind turbines installations are in the 2 MW to 3 MW range, and innovation continues to occur rapidly in that nameplate space.

Power Contract Auctions Prevail

However, a number of factors are pushing turbine OEMs to design more turbines with higher nameplate capacities. This includes the steady shift in Europe and other markets from fixed priced contracts for wind to highly competitive power contract auctions. These auctions squeeze power purchase agreement pricing for wind projects as low as developers and investors are willing to go, and taller tower, larger rotor, larger nameplate machines promise higher annual energy production (AEP). Larger turbines also maximize AEP in a geographically limited location. Europe in particular is already a population-dense continent and land availability for wind projects is becoming increasingly constrained.

There are also efficiencies of scale with producing the most megawatt-hours from each single wind turbine foundation and tower. This factor is more quantifiable with offshore wind, where foundations and installation cost is proportionally much higher than it is for onshore. In general, onshore turbines represent around two-thirds of onshore project CAPEX while offshore turbines represent one-third of offshore project CAPEX due to the higher foundation cost. This is why offshore wind turbines may double in size by 2025. The same principle applies (to a lesser degree) that the more AEP per turbine in the onshore realm, the better the project economics.

Competitors Abound

The following are summaries of the most recently announced turbines competing in this new 4 MW battleground:

  • GE Renewable Energy: GE Renewable Energy announced its first turbine offering in the 4 MW range with a new 4.8 MW unit that features a 158-meter rotor enabled by carbon blades. GE has historically avoided carbon fiber for most of its blades, but the demands of longer blades for this oversize turbine may have made carbon use unavoidable. The turbine will have around 30% higher AEP than GE’s previous 3 MW range turbines. Tower heights are 101 meters, 120.9 meters, 149 meters, and 161 meters. GE’s acquisition of Alstom Wind, LM Wind Power, and Blade Dynamics likely played a role in this new 4 MW platform.
  • Vestas: Vestas upgraded and uprated its 3 MW range to now include three models in the 4 MW range. This includes the high wind V117-4.0/4.2MW, which is designed to handle wind gusts up to 80 meters per second that would enable it to handle hurricane and typhoons. V136-4.2MW and the V150-4MW/4.2MW are medium to low wind turbines designed for most areas in Europe and other global markets.
  • Nordex: Nordex is uprating its 3 MW Delta series into a 4 MW-4.5 MW turbine with a 149-meter rotor for medium wind speeds. The turbines are planned for prototype testing in the third quarter of 2018, followed by several pre-series turbines and series production starting in 2019. The company touts the turbine’s wide power range from 4 MW to 4.5 MW, which is ideal for adapting individual installations to a specific grid operator’s requirements and to local wind conditions or noise restraints. Steel towers come in 105- and 125-meter hub heights and concrete-hybrid towers offer hub heights of 145 and 164 meters.
  • Enercon: Germany’s Enercon has been ahead of all other turbine OEMs with 4MW class turbines, having had its EP4 turbines (4-4.2 MW) E-126 and E-141 already commercially available roughly 2 years ahead of Vestas and others. In fact, the newest E-series turbines are downrated from a previous E-126 model that had exceeded 7 MW nameplate capacity as far back as 2012. The E-141 units feature concrete-steel hybrid towers to enable a 159-meter hub height. Enercon is also rapidly evolving its 4 MW class turbines with some radical design departures, which is thoroughly explained by Windpower Monthly.
 

Integration of EVs Becoming a Priority for Utilities

— September 26, 2017

Utilities are rapidly coming off the sidelines and tackling the opportunity to integrate EVs head on. Sales of plug-in EVs (PEVs) in the United States have reached nearly 120,000 units so far in 2017, up 28% from the same period last year, according to HybridCars.com. Utilities are more actively planning to accommodate the growing numbers of cars plugging in at residences, workplaces, and in public spaces. Utilities also are working toward using the largely controllable load to balance renewable generation assets.

PacifiCorp Making Moves

In Oregon, PacifiCorp reached an agreement with the Oregon Public Utility Commission (Oregon PUC) and other stakeholders to invest $2 million in EV charging infrastructure that will include the “incorporation of emerging technologies, such as renewable generation, energy storage or direct load control.” PacifiCorp joins fellow Oregon utilities Portland General Electric and Avista in piloting EV charging investment in order to better serve EV drivers and provide more flexibility in managing the grid.

Developments in Ohio and California Enable Integration

In Ohio, AEP and a group of stakeholders reached an agreement to provide rebates of up to 100% for installing charging stations. The $9.5 million deal will include both Level 2 and DC fast charging stations, including a provision to spend 10% in low income communities. Pending approval, the spending plan would be implemented as part of the Smart Columbus electrification program that will coordinate with power provider AEP Ohio’s efforts to increase the amount of renewable generation.

In the PEV leading state of California, utilities and automakers are working to standardize and expand vehicle-to-grid integration. The Vehicle-Grid Integration Communications Protocol Working Group is developing recommendations for the California PUC in response to an earlier executive order that mandates that EV charging be integrated into grid operations. The working group is expected to complete its recommendations in October 2017.

Revenue Rises in Next 3 Years

By 2020, annual EV charging services revenue in the United States will reach $900 million, according to Navigant Research’s report Electric Vehicle Charging Impacts. By necessity, utilities will play a pivotal role in delivering and managing the power delivered to PEVs. Due to the flexibility in timing when vehicles are charged, and their benefits as mobile energy storage units, utilities increasingly view EV charging as integral to management of distributed energy resources (DER).

EV charging services company eMotorWerks is building products to integrate charging into grid operations The company, which according to ChargedEVs is working with Pacific Gas and Electric and Sonoma Clean Power to intelligently manage its EV charging units, has reduced the price of its smart charging stations by $50.

Learn about PEV Integration

A great place to learn about how PEVs are being integrated into grid operations is the EVs & The Grid Summit, which will be held October 17-19 in San Francisco. The event will feature panels focused on the impacts of fast charging and utility EV rate programs, and I will be moderating a panel on regulatory programs from across the United States.

 

Making More with Less: Maximizing Generation in Lower Wind Resources Regions

— September 26, 2017

Wind turbine manufacturers are constantly evolving their turbines to maximize power output in areas of lower wind speeds, which opens much more geography for wind projects. A simple metric for quantifying wind resource areas for turbines is specific rating (or specific power). Specific power is the ratio of a turbine’s rated power output in watts to its swept area in square meters. A turbine with a higher specific power is designed for areas with high wind resources and vice versa. Higher specific power indicates that a turbine can generate more power with less swept area (i.e., a smaller rotor diameter). These turbines need high winds to adequately perform. Otherwise, capacity factors and associated power output are too low to make the turbine cost-effective. If the average winds are not sufficient for high specific power turbines, a turbine with a lower specific rating will be used. For developers and owners looking to find the right turbine for their location, it’s all about finding the right balance based on wind resources. For example, a 2 MW turbine with a 90-meter rotor might produce 6 GWh with an average annual wind speed of 7 m/s. A 120-meter rotor turbine with the same rating would produce 8.5 GWh in the same conditions. The 120-meter rotor turbine will be more expensive to manufacture, transport, and install, so the higher power output comes at a price—but the tradeoff can be worth it.

Changing of the Times

There are four different classes of wind turbines based on average annual wind speed, among other parameters: I, II, III, and IV. Two decades ago when wind energy costs were high, typically only wind farms in high wind resources regions with Class I turbines made economic sense. As wind costs continue dropping, wind turbine OEMs are prioritizing Class II and Class III turbines. According to the US Department of Energy’s 2016 Wind Technologies Market Report, the average wind class for turbines in the United States shifted from 1.2 in 2000 to 2.7 in 2016. As noted in the figure below, the average specific power of installed turbines in the United States has plummeted in the last 20 years, dropping from almost 400 W/m2 to 230 W/m2. Typically, a Class I turbine has a specific power of 400 W/m2 or higher. Class II turbines will be between 300 W/m2 and 400 W/m2 and Class III between 200 W/m2 and 300 W/m2. Class III turbines are the popular choice around the globe and have been for several years now.

Average Specific Power, United States: 1998-2016

(Source: Office of Energy Efficiency and Renewable Energy)

Navigant Research’s Wind Turbine Order Tracker follows the average specific power for turbines to be used in upcoming projects. Major turbine OEMs like Vestas and Siemens (now Siemens Gamesa Renewable Energy, or SGRE) have seen dropping specific powers. The average specific power for Vestas turbines dropped from 297.3 W/m2 in 1H 2016 to 250.9 W/m2 in 1H 2017. In the latest version of the Tracker to be published next month, Vestas, SGRE, Nordex, Senvion, and GE have specific ratings between 240 W/m2 and 270 W/m2. Class III turbines account for over 90% of the turbine capacity awarded between January and June 2017, and less than 2% went to Class I turbines. Clearly, the times have changed in the wind industry and low wind resources are no longer a deal breaker for potential wind sites. As costs continue to drop and technology improves, project developers and owners will continue to gain what they didn’t have much of 20 years ago: options.

 

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