Navigant Research Blog

Are Smart Devices Too Smart for Their Own Good?

— February 22, 2018

There is so much promise around how smart devices will make our lives more comfortable, convenient, efficient, and automated. These devices are supposed to learn from our lifestyle patterns, analyze this information in real-time, and perform tasks seamlessly in the background, without it even occurring to the user that all of this smart stuff is happening. I have bought into this promise, having adopted several digital assistant-enabled devices and connected products, because I can see a future when all of this tech comes together to create truly smart homes. And I’m not the only one—these futuristic ideas about tech seamlessly, automatically operating in the background of our lives can be seen in popular media like Black Mirror and Her. This future is imaginable, lingering on the horizon.

The Problem with “Smarts”

However, we are still at the precipice of the technology revolution supporting the future scenarios as seen in pop culture. Don’t get me wrong, technologies emerging today really are smart, and are already making our lives significantly better. But at this time, many these devices are not actually delivering on their promise, and they don’t work that well in our everyday lives. For example, my colleague, who is also an early adopter of smart technology, has been having issues with his ecobee3 lite. His smart thermostat has started preheating at such early hours of the morning that he wakes up before his alarm clock, sweating. ecobee customer support has suggested that the problem may be because he likes to sleep cold, at 60°F, and wake up warm, at 70°F, and that the large variance in setpoint means the thermostat must kick on the heating system well in advance to make up the difference in temperature by the time my colleague is awake. The issue makes sense logically, but ultimately my colleague shouldn’t have to compromise on his desired temperatures. A smart thermostat should be smart enough to figure it out. And his Nest isn’t any better—when the cooling season comes around, his Nest sends him alerts that it is unable to activate his cooling system, when his home doesn’t even have a cooling system. I’ve heard countless stories of people tearing smart thermostats out of the wall to replace them with programmable thermostats, never opening the digital assistant device they got for Christmas because they don’t really know what smart things it can do, and returning smart plugs for plugs with a simple timer.

As a consumer, these examples have put doubts in my mind about how smart these products really are. As a research analyst, when I attend shows like CES where some of the most impressive and innovative products are on display, it makes me skeptical about how these devices will actually perform in the home. These devices are peddled to consumers as seamless, automatic, and easy to use, but sometimes it seems we are spending more time managing them than they are managing our lives. Perhaps these devices are too smart for their own good, and consumers are not ready for how advanced these products can be—we just want the old, dumb devices that we know will work. The learning curve for smart technology is steep and we are still in an early stage of piloting and innovation, but as these technologies reach the hands of mainstream consumers, vendors need to ensure that their smart products are delivering on their promises of being smart.

 

European Utilities Will Never Tame Enterprise Data, but That’s Okay

— February 22, 2018

The last decade bore witness to the beginning of the energy transition. In 2018, the European energy transition is well underway. Without doubt, the next decade will be the most disruptive in the industry’s history. Investment in innovation is running at unprecedented levels as incumbent energy suppliers seek out the business models that will serve the 21st century customer. It is now commonplace for utilities to acquire technology companies; 10 years ago, this would have been largely unheard of. In addition, startups are bringing new products and services to market at a pace which the industry has never experienced. While the energy transition is concerned with decentralization, decarbonization, customer centricity, and increased competition, none of this will be possible without a concomitant digital transformation.

Energy Supply and Distribution Operation Will Significantly Transform

In Defining the Digital Future of Utilities, Navigant Research discussed what future business models could look like in 2030. European utilities are leading this transformation. The old utility supply businesses are rapidly shifting focus to energy services, based on a decentralized energy value chain. Many European utilities are already shifting focus away from traditional supply, recognizing that future value lies in helping customers reduce energy consumption, become greener, become more responsible for their own power needs, and create community-based business models for power generation and consumption. In the future, energy service providers will also help maximize economic returns on customers’ investments made into demand energy resources (DER). This will be done either by aggregating customers’ loads and supply to offer large-scale grid services, or by providing a platform for customers to buy and sell electricity with whomever they want.

Managing future distribution networks gets much harder with high concentrations of DER. Consequently, distribution network operators (DNOs) are undergoing their own transition to distribution system operators (DSOs), shifting focus from managing assets to active network management and the provision of distribution platforms that will be the mainstay of new energy services. This transition is essentially digital: the first step must be to improve visibility into distribution networks. Once a DSO has visibility, it can then improve control. Flexibility markets will be increasingly important in the future and their data demands are even greater. If flexibility markets expand into residential loads and supply, the DSO must allocate a time-sensitive value to each of these assets. This is not an easy task, and requires the integration of existing grid management applications, plus additional functionality not yet in existence.

Digitization Requires a Pragmatic Approach to Data Management

Neither the energy service provider nor DSO business model is viable without data. Data is critical to the energy transition and data flows are critical to electrons. European suppliers and DNOs must prepare for the energy transition by undergoing a digital transformation. While most understand the benefits, few fully understand the requirements for digital transformation, the full costs involved, or the enormity of the task.

The exponential growth of connected devices with relevance to the energy transition (devices like smart grid monitoring and control and in-home smart thermostats) create an exponential increase in data. Few, if any, utilities will ever tame this data; however, the smartest utilities will create IT infrastructure to maximize the value derived from this data. They will invest in platforms that are sufficiently flexible to stack increasingly sophisticated use cases, rather than reinvent technologies whenever requirements change.

However, this investment in platforms must be matched by more prosaic investments in data management. A digital platform is only as useful as the quality and completeness of the data on which it relies, and the analytics algorithms that provide insights.

 

RenewableCOIN: A Cleaner, Useful Global Cryptocurrency

— February 20, 2018

Cryptocurrencies are reported to be contributing significantly to electric demand, accounting for approximately 48 TWh of demand globally according to a study by digiconomist.com. This is equivalent to the electric consumption of approximately 4.5 million US households. The unfortunate part of this is that this electric usage is being wasted in the pursuit of solving arbitrarily complex cryptographic puzzles, known as mining, for the sole purpose of artificially managing the increase of a cryptocurrency’s supply.

For example, Bitcoin and Ethereum, the two most popular cryptocurrencies, engage a proof of work process in which a growing chain of hashed content is further hashed at an increasing level of complexity. To solve the puzzle, a miner must apply a series of random numbers against a hashed blockchain. If the miner is successful in finding the right number sequence, the solution enters into the growing transaction log, which can then be quickly and efficiently verified by the bitcoin network as proof. The successful miner receives a set block award of coins. However, the mining process is energy intensive, requiring high powered mining equipment that runs round-the-clock at a significant energy cost.

The Pros and Cons of Blockchain

Blockchain technology is a sophisticated and secure digital transaction register that can store and confirm transactions. It was originally intended to solve real-world problems, not contribute to them. At the moment, energy is being used (wasted) for the purpose of mining cryptocurrencies of phantom value. Accordingly, an alternative, more appropriate use for blockchain technology is proposed—RenewableCOIN—a global, blockchain-based virtual currency and compliance mechanism that is intended to further enhance the transactability of what are currently known as renewable energy credits or RECs.

Incentivizing Renewable Energy Generation

RECs are issued in compliance jurisdictions for the purposes of tracking compliance against renewable energy procurement targets. Load serving entities (typically, your local utility) buy a set number of RECs that is equivalent to the target percentage of renewable energy set by a state mandate. Similarly, RECs are minted for every 1 MWh of renewable electric generation. The key difference is that it incentivizes the production of clean energy, not wasteful use. Accordingly, one Renewable Energy Coin (RenewableCOIN) could be awarded for each megawatt-hour of renewable generation.

State Standards Vary

Every state in the US has varying requirements with respect to which technologies comply with its own renewable portfolio standards (RPSs). For example, while wind and solar are widely accepted as a renewable resource, others also accept biofuels-based generation facilities which emit CO2 gases.

To keep track of whether a coin is jurisdictionally acceptable, coin denominations which specify where the coin was generated and under which RPS rules it qualifies are established for these ends. If a local market becomes oversaturated with renewable generation, which we certainly hope it does, then further generated coin may be converted into a global RenewableCOIN of global value.

Companies, individuals, and others who wish to meet their own renewable energy targets can purchase and retire coins in the global market through transfers into a special digital wallet which, once entered, will not permit further transfers and sales of the coin. Should the demand for the global coin increase, developers would be incentivized to mine the currency by installing more renewables anywhere in the world, contributing to the global reduction of greenhouse gases.

RenewableCOIN could serve as the global network for jurisdictional, compliance-based REC markets and a global market for RECs used to meet the needs of corporations and countries seeking to match energy consumption with renewable energy.

 

Indoor Farming: Land of Opportunity

— February 20, 2018

Plenty, a vertical farming startup, has generated lots of media buzz. So far it has raised $226 million and is associated with big names like Alphabet’s Eric Schmidt and Amazon’s Jeff Bezos. Plenty promises to grow crops efficiently while shortening supply chains and catering to customer preferences. However, there is more than just hype behind Plenty’s big names and big numbers. There are important political and environmental drivers that are pushing market incumbents into urban farming, signaling that indoor farming is not just a passing fad.

Enter China

National self-interest is driving China to invest in agtech solutions like indoor farming. The state-run Agricultural Development Bank of China has pledged $437 billion in loans to finance agricultural projects through 2020. This is $31 billion more than the value of the US’ entire agricultural production last year. Currently, China faces food security issues stemming from pollution, uncertain trade relations with foreign countries, a history of food safety crises, and a growing middle class. Pairing China’s food security issues with a well-funded farming startup like Plenty is a no brainer.

Securing Food In-House          

However, China isn’t the only player with skin in the game. Other countries facing food security issues are interested as well. Qatar, for example, relies heavily on expensive agricultural imports due to water scarcity and unproductive farming land, leaving the region vulnerable to supply shortages and price spikes. Saudi Arabia faces its own food security issues, which the country is attempting to alleviate through investments in foreign countries such as Sudan, Pakistan, and Ukraine. However, as indoor farming becomes more affordable, it will likely attract investors away from foreign agro-investments and toward local indoor solutions, which would strengthen resilience to issues stemming from food insecurities.

In addition to national self-interest, environmental issues are also prompting greater interest in indoor farming. As climate change threatens to disrupt weather patterns, indoor farming allows farmers to control the weather—and a number of other variables—allowing companies like Plenty to produce greater crop yields and higher quality food than traditional farmers. Indoor farming consumes less water, which will surely be on the minds of farmers and policymakers as climate change threatens to exacerbate drought around the globe. These farms also allow food to be grown safely away from pollution and contamination, which are becoming increasingly problematic as farmers overuse pesticides and fertilizers and as developing countries are faced with mounting pollution.

Headed to Greener Pastures?

Despite its wide-ranging benefits, LED technology for indoor farming is relatively new and is not yet economically viable on a large scale. In fact, a 2017 Agrilyst report found that only 51% of indoor farms in the US are profitable. This is the case for most young farms, as older facilities averaging 7 years or more have had time to realize greater returns from energy efficiency and operational savings. In order to gain traction, urban farmers should focus on crops that are in local demand and that will always be in demand, like salad crops, in order to establish their business. Once farmers begin generating a profit, they can then devote more resources to experimenting with other possibilities.

Tech innovation is on its way, helping to make indoor agricultural operations more efficient through enhanced applications like LED and data analytics. The problem is funding these investments. Hopefully, there are more Jeff Bezos of the world to support the indoor farming movement and help make the world a greener, more sustainable place. For more information on horticulture lighting, watch for our forthcoming report, LED Lighting for Horticultural Applications.

 

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