Navigant Research Blog

KPIs Essential to Managing Energy Efficiency, Sustainability

— July 10, 2018

Influenced by initiatives such as the United Nations Framework Convention on Climate Change, stakeholders in sustainable energy and environmentally conscious professionals gathered in May for the Environmental Leader and Energy Management Conference at the Tech Center in Denver, Colorado. The conference represented a nexus of industry leaders eager to explore trends and share best practices and solutions to some of the biggest energy challenges businesses face today. Along with maintaining a competitive advantage, other economic trends for sustainable energy that were explored by the conference included:

  • Establishing baselines for managing energy efficiency
  • Building a business case for monitoring energy use and Internet of Things (IoT) by establishing benchmarks
  • Understanding how energy is being used and possibly wasted through key performance indicators (KPIs)
  • Partnering to achieve sustainability goals through mission driven strategies
  • Understanding the circular economy and tracking the supply chain for designing sustainability

Do Not Underestimate the Importance of KPIs

These trends, among other topics, were discussed during multiple workshops and plenary sessions over the course of 3 days. I attended the first day of the conference, which included talks led by the US Department of Energy, Tesla, and National Renewable Energy Lab, to name a few. Several sessions emphasized the importance of establishing baselines and determining KPIs for managing energy efficiency and sustainability. Key takeaways from these talks included understanding what constitutes a quality KPI, realizing how KPIs can negatively impact a company, and realizing that not everyone uses the same metric for measuring efficiency.

Although businesses may have common end goals, the means to those ends can vary widely as strategy plays a fundamental role in determining the success of a company. Part of that strategy involves setting the right benchmarks and using the right metrics. For managers of generation, it’s important to be clear about their goals in order to understand which benchmark to optimize. In his plenary presentation, Tim Ritchie from Buddy Platform explained that the business case for IoT is built on finding the right benchmark. His firm’s Buddy Ohm is one such product that can monitor critical systems and reduce energy inputs. Understanding baseline energy use is crucial for developing meaningful KPIs and effectively targeting underperforming areas.

Companies Turn to IoT

As IoT is heralding a new age for commercial buildings, energy companies today are turning to IoT technology to monitor and reduce energy use and resource consumption. IoT is starting to unlock value for smarter commercial buildings, which is helping to connect aggregators of data for managing and processing information and provide real-time insights. These solutions offer non-energy benefits as well, such as occupancy health and satisfaction, enabling scalability and optimization for customers.

 

Learning from Facebook’s Mistakes

— May 17, 2018

For those of us who abstain from social media, the ongoing scandal with Cambridge Analytica has validated this decision to opt-out. However, the decision to opt-in or opt-out of data collection and still be able to use Facebook is not available. The Facebook and Cambridge Analytica debacle shines a light on the issue of collecting data from unassuming consumers and on how that data is used and manipulated. No matter how policymakers respond to this event, their decisions will have wide-reaching implications for all data-sharing industries, especially for the Internet of Things (IoT) ecosystem.

Can Lawmakers Bring Clarity to Data Collection Ethics?

Data protection laws in the US are relatively new and continue to evolve on an ad hoc basis in response to ongoing data hacks and security breaches. Addressing these issues requires a more sophisticated regulatory environment that considers how data is being collected and used. This brings up an ethical concern—when a company’s profitability depends on sharing user information, the ethics of data collection become muddled. Lawmakers in Europe are some of the first to respond to these issues. In April, the EU’s General Data Protection Regulation (GDPR) was finally approved after 4 years of preparation and debate. GDPR will replace the EU’s Data Protection Directive 95/46/EC and will take effect May 25, 2018. Changes to the directive include extending the law’s jurisdiction to apply to all processors of personal data, regardless of whether the processing takes place in the EU or not.

Laws like GDPR will have a significant impact on the data-sharing industry, especially for businesses that rely on tracking consumer behavior through IoT-enabled devices. These laws require that companies clearly and succinctly spell out their intentions for data collection in their user agreement contracts. Ensuring that all parties clearly understand the service terms strengthens conditions for consumer consent and gives consumers more control over their personal data. The policy’s push for greater transparency may force some businesses to rethink their approach to data collection. Manufacturers of smart devices are thus encouraged to move away from long terms of service and instead, provide real-time information with opt-in choices.

Industries Must Build Trust with Consumers

Informing consumers on how their data will be collected and used will help to alleviate privacy concerns and build trust. As technology continues to advance in making phones, cars, and buildings smarter, it’s important for businesses operating in these data-driven industries to build a trusting consumer base. Doing so will enhance the competitiveness of those buildings as customers will be more willing to consent to new user agreements. Manufacturers of smart devices can avoid making the same mistakes as Facebook by taking note from the EU and being more transparent in their user agreement contracts. Both providers and consumers of smart devices stand to benefit from stronger protections to prevent future abuse.

 

Stop and Smell the Market Indicators

— May 17, 2018

Last month, Philips Lighting revealed its new Philips GreenPower LED toplighting with a light spectrum optimized for cut rose cultivation. The toplighting technology allows growers to increase light levels year-round without increasing heat, which allows for increased yield production. However, the rose market has advanced in recent years to the point that growers are now more concerned with quality of production. Addressing those concerns along with energy efficiency needs, Philips collaborated with research institutes to provide growers with a toplighting spectrum that improves the quality of the roses and is 40% more energy efficient compared to high pressure sodium lighting. While the technology is important for horticulturalists and agriculture research globally, why would a lighting manufacturing giant like Philips focus on grow solutions for roses? The answer is twofold.

The Wall Street of Flowers

The Netherlands is the trade capital of the global rose market and home to the world’s largest flower market, Royal FloraHolland. Every day, 30 million plants and flowers from all over the world are auctioned at Royal FloraHolland, with operations covering over 14 million square feet—equivalent to 243 football fields. Almost half the world’s flowers and plants pass through one of the 11 cooperatively-run regional flower auctions, with buyers and sellers bidding on trading floors just like a typical stock exchange in financial markets. The sheer scale of this market alone gives reason to why manufacturers would want to specialize in lighting solutions for rose cultivation. Yet bidding wars at Royal FloraHolland are just the beginning.

More Competition, More Opportunities

Developing countries in Africa are starting to take up a larger share of the European market for cut flowers and foliage. The CBI Ministry of Foreign Affairs reports that major suppliers Kenya, Ecuador, Ethiopia, and Colombia have seen a 20%-60% growth in exports of flowers and foliage to Europe. Producers in these regions are strengthening their position in global production and trade, mainly due to favorable growing circumstances, rising demand for competitively priced flowers in Europe, and improved transportation. To remain competitive, European growers are looking to advanced lighting solutions for delivering quality, reliability, and consistency in supply. This is why major lighting manufacturers like Philips and OSRAM have noticed and are taking stock in this burgeoning market. Companies may want to tap into this blossoming market as investment opportunities and demand for unique lighting solutions continue to grow out of this competitive space.

For more details, a recent report from Navigant Research, LED Lighting for Horticultural Applications, examines the global market potential for horticultural lighting.

 

Cannabis and Cryptocurrency: The American (Green) Dream

— March 6, 2018

Legal ambiguity surrounding the cannabis industry has slowed the marijuana business in the US. Stakeholders are uncertain of the potential legal ramifications that currently threaten the business environment. Despite ongoing setbacks, the legalized marijuana industry remains valued at over $7 billion in the US, which means high value transactions are occurring. Yet, for profits to continue, the industry must find a way to overcome hurdles at the federal level. Possible solutions for navigating the shifting legal landscape involve methods that provide greater transparency and assured accountability. With the explosion of millennial-led investments in cannabis stocks and cryptocurrencies, it comes as no surprise why stakeholders are looking to blockchain technology to help settle these legal debates.

The Latest

In November 2017, IBM proposed a blockchain solution to Canada as a way to regulate and authenticate transactions of legalized marijuana. Further fueling this movement toward a blockchain-backed cannabis industry, California-based analytics company, Budbo, recently made headlines after selling out its token presale 10 days before its official release date. The sale represents a common fundraising strategy in the world of blockchain, where companies sell virtual coins that represent hard currency. Selling a whopping 20 million tokens at presale is a big deal, especially for a startup involved in such a nascent industry. This instance shows that regulators are not the only ones calling for greater transparency for the cannabis industry, consumers want it too.

From Seed to Sale

Coined the Tinder of weed, Budbo’s software utilizes a GPS-enabled tracking system. The app provides real-time data by tracking the total lifecycle of the product from seed to sale. Yet the real value lies in the technology’s cooperative-like design, which requires inputs from stakeholders along the entire value chain. In this way, users can stay up to date with the latest information concerning the marijuana marketplace, an important feature that would prove useful for cannabis traceability.

Insert Blockchain

My colleague, Johnathon de Villier, explains that blockchain technology does not operate under a central authority, which makes transactions arguably more secure and easier to validate. In addition to its decentralized architecture, blockchain provides full and permanent disclosure of all data entries, meaning market participants are equally informed. This would allow for government officials to track the supply and demand side of things, creating an appropriate regulatory space for a market plagued with inconsistencies. Cannabis businesses and consumers both stand to gain from a more defined policy space. Setting standards would push for higher value products and encourage companies to compete on a quality basis rather than quantity alone. However, the worth of any information system lies in the quality of its data. Cryptocurrency for the cannabis industry is particularly susceptible to the pitfalls of poor data as the network effect relies heavily on input from the cannabis community—blockchain in and of itself does not ensure reliability. While blockchain’s immutable ledger could provide some much-needed clarity for the businesses’ grayer areas, the novelty of blockchain continues to represent significant barriers to technological and institutional change.

 

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