Navigant Research Blog

Materials Handling Sector Trends Upward with IoT and Automation

— May 4, 2017

As digitization and automation become mainstream, materials handling vehicles (MHVs) are evolving from passive tools to intelligent, connected pieces of the supply chain. Navigant Research believes that advanced technology options for MHVs are nascent in the materials handling industry and offer significant improvements over traditional options. As the needs of these users grow more complex, it will be important that equipment evolves as seamlessly and efficiently as possible.

The application of Internet of Things (IoT) technology is not limited to automation; it also increasingly enables data integration and using materials handling equipment as data sources. Businesses are turning to data-driven intelligence to guide decisions that improve operational efficiency and protect the bottom line. For MHVs, connected fleets and data-driven operations produce a wealth of small floor-level insights that are transformed into actionable business intelligence. Several companies recognize this and are making steps to ensure predictive analytics play a role in day-to-day operations.

IoT’s Role in Equipment Maintenance

Besides operational efficiency, IoT technology is playing an increasing role in equipment maintenance. Autonomously monitoring the condition of MHV components and generating trouble codes for service technicians can be used to detect failures and/or equipment wear before they affect the vehicle’s performance. For example, forklift manufacturer Linde is working on automating the procedure of troubleshooting fleet issues, ordering spare vehicle parts, and scheduling service engineers while simultaneously informing the customer about the order status. In turn, this makes it easier to streamline orders, identify bottlenecks, and provides transparency to customers.

Advanced Automation – Playing a Role in the Integration of Emerging Electric Powertrain Options

Communication-enabled battery data and chargers allow warehouses to:

  • Reduce or eliminate the battery room footprint by eliminating the need for bulky charging infrastructure
  • Improve forklift uptime by way of opportunity charging
  • Decrease the number of batteries and chargers onsite because of improved battery runtime

Navigant Research’s Advanced Electric Forklift Technologies in North America report states that advanced electric technologies for forklifts may have higher upfront prices. However, they can reduce operating costs with longer runtime and reduced fueling over the lifespan of the fleet.

Battery Advancements

Several battery manufacturers see increased interest in traction technologies nascent to the industry. One of the first companies to do so, Navitas Systems, recently announced it will deploy the Starlifter battery at a Defense Logistics Agency (DLA) in Pennsylvania. Navitas’ program objective is to evaluate the utility, feasibility, maintainability, and cost-effectiveness of replacing lead-acid batteries with fast-charging lithium ion (Li-ion) deep-cycle forklift batteries in DLA Distribution warehouses. The program also hopes to decrease total forklift battery costs of ownership and increase forklift operational readiness and productivity. Companies like Linde and Electrovaya also have recently announced new Li-ion options for forklift batteries as a result of the demands of current warehouse and logistics environments. Much different than the industry 20 years ago, modern warehouses have increased demand for operational efficiency, around-the-clock operations, and more advanced vehicles capable of working in cold storage climates.

Fleet managers look to operational data to improve efficiency and competitiveness. Real-time floor-level alerts are increasingly important so operators can address issues immediately. Customers also expect greater visibility into their lift truck fleet, support equipment, and ongoing asset health. In the future, vehicles will communicate with each other, decision-making will be at the user level, and batteries and charging infrastructure will combine with operator and truck data to inform fleet management across both forklift and powertrain platforms.

 

The Growing Importance of Recycling Spent Advanced Battery Materials

— April 27, 2017

Advanced batteries across all applications are proliferating the market in unfathomable numbers. Navigant Research expects advanced batteries to reach a cumulative 24.2 GW in new capacity globally by 2020—for stationary energy storage alone. As these assets have lifespans ranging from 4 to 20 years depending on the technology, the issue of what to do with these batteries when they reach the end of their usable lives is an important question that technology manufacturers, system owners, and customers must be able to answer. Second-use options are viable in some sectors, but recycling spent batteries will be a major market in the coming years. Manufacturers and governments around the world are recognizing the importance of recycling and how it translates to long-term sustainability goals.

Benefits of Recycling Batteries

Lead-acid batteries have been utilized in the market for several decades, but advances in more sophisticated technologies like lithium ion (Li-ion) and flow batteries have encroached on lead-acid market share. The spent lead-acid assets are retired and recycled in large amounts on a daily basis. An example of this is China’s announcement of doubling its lead recycling target to 2.5 million tons by 2020. China arrived at this target because the average lead-acid battery life is 4 years; batteries made in and around 2015-2016 will be available for recycling by 2020. Lead-acid battery recycling efforts are also ramping up in the United States. California lead battery manufacturers and consumers have to pay a $1 fee for each battery they make or buy following the implementation of the Lead-Acid Battery Recycling Act (AB2513). Among other recommendations, several California government officials requested adding an additional $15-$20 to each lead battery sold to help process it after its usable life.

Li-ion batteries are a bit trickier to recycle. Available in items ranging from consumer electronics to EVs, extracting the most valuable materials inside—namely, lithium and cobalt—are important to consider when reprocessing these batteries. Compounded with forward-looking lithium availability and supply chain issues, securing lithium access will be important for the industry in the future. Li-ion battery recycling is in its early stages, and there are only a handful of these plants in existence today. With few Li-ion battery chemistries available, the lack of standardization plays a role in limiting the emergence of more recycling facilities and best recycling practices for these batteries. Today, recycled lithium can be up to 5 times the cost of newly mined resources; the cost differences have limited demand for lithium recycling to date, but future price increases and new regulations can change this.

Raw material prices for advanced batteries have sporadically changed this past decade and lithium prices alone have nearly tripled. Other factors like demand in competing sectors (e.g., pharmaceuticals, construction, etc.), geopolitical relationships, and environmental concerns will also play a role in the future of battery material supply chains. Recycling advanced batteries is likely to be one of the principal methods to combat against volatile raw material prices and resource availability.

New Revenue Streams

Battery OEMs should look to partner with raw material suppliers, users, and governments to gain a strong position in their respective supply chains and increase collaboration across different sectors. Considering alternatives (e.g., second life usage), the battery recycling industry has the potential to generate significant returns. Companies that position themselves to take advantage of retiring assets will be able to access new revenue streams on top of existing businesses.

 

Three Innovative Energy Storage Projects Announced in 1Q 2017

— April 7, 2017

The energy storage industry is heating up in 2017 because of several new projects. Navigant Research’s Energy Storage Tracker 1Q17 report provides a comprehensive list of global energy storage projects and identifies new and emerging market leaders in the industry. This blog discusses some of the most notable new projects that show how these systems don’t necessarily provide just one type of service. Energy storage systems can come in several different flavors and provide multiple benefits.  

ENGIE Deutschland Kraftwerksgruppe Pfreimd Storage Plant

ENGIE Deutschland currently owns and operates a pumped hydro station in Kraftwerksgruppe Pfreimd, Germany, but the company sought to profit more effectively from the load leveling and peak shifting market. To do so, ENGIE awarded a contract to Siemens AG to install its SEISTORAGE Li-ion battery technology, power electronics, and battery management system. Rated at 12.5 MW and over 13 MWh, the battery system works in conjunction with existing pumped hydro resources and will enable the plant to provide all levels of reserve capacity—from short duration frequency regulation services to long duration bulk storage. ENGIE believes that this hybrid energy storage system illuminates the vision of its future energy storage business predicated on how to balance the volatility of renewable energy generation while providing multiple grid services. This project is set to come online in late 2017.

Vattenfall Wind Farm Battery Energy Storage System Installation

State-owned Swedish utility Vattenfall plans to install up to 1,000 Li-ion batteries to address the intermittency issues of several of its wind farms. The batteries, supplied by automaker BMW Group, are the same as the batteries used in the BMW i3 electric car, effectively providing an additional revenue stream for BMW’s existing business. Vattenfall plans to build the first a battery energy storage system (rated at 3.2 MW) at its Princess Alexia wind farm near Amsterdam. A larger 22 MW installation will be constructed at the company’s Pyn y Cymoedd wind farm in South Wales on a later date. This project is a part of National Grid’s Enhanced Frequency Response (EFR) tender issued in 2016. 

E.ON Texas Waves Wind Farm Installation

Multinational energy company E.ON looks to become one of the premier industrial energy storage businesses in the world. E.ON recently announced it will colocate short duration energy storage systems at its Pyron and Inadale wind farms in the western part of Texas. Dubbed Texas Waves, the project will collectively utilize 18.8 MW of Li-ion battery technology from Samsung SDI. The system will provide multiple ancillary services to the Electric Reliability Council of Texas market, namely wind ramping and smoothing, load leveling, and Volt/VAR support. Energy storage software provider Greensmith will provide the battery management system to each of the installations to help ensure the stacked revenue streams of the system.

The Improving Landscape of Energy Storage

Storage is shifting to become an essential component of new energy systems to ensure projects can reach maximum profitability. To match this growing popularity, companies like Tesla and Alevo are expanding internal resources to ensure they have the best and brightest minds to capitalize on new technology and opportunity in the market. Overall, the global energy storage industry is poised to continue growing quickly over the next several years. Energy storage industry stakeholders should explore new and seemingly unconventional methods to become involved in new projects. Doing so could help develop untapped markets, create new technology, and spur innovation in the industry for years to come.

 

Kauai and the Quest for More Renewable Energy

— March 13, 2017

Remote islands and microgrids have been a hotbed for renewable energy resources throughout the past several years. Historically, remote systems have relied on small diesel generators to support electricity needs, but volatile fuel prices can be high in comparison to renewable alternatives. According to a recent International Finance Committee (IFC) and Navigant Research co-sponsored white paper, more than 80% of growth in renewables and energy storage for both energy production and consumption will come from new and emerging markets by 2035. Remote islands will play a huge role in this development based on evolving grid and end-user needs, physical infrastructure, and decreasing technology costs.

Ambitious Goals

Specifically, on Kauai in Hawaii, the Kauai Island Utility Cooperative (KIUC) laid out an ambitious renewable energy goal in 2008. The strategic plan previously aimed to reach 50% renewable energy by 2023, but the cooperative now expects to hit that goal in 2018, 5 years earlier than expected. The new target is to reach 70% renewables by 2023. To put this goal in context, Kauai had just 5% renewables penetration in 2009. In 2015, the island reached 37.4% renewable generation.

One of the most notable projects in Kauai’s pipeline is a 28 MW solar array paired with a 20 MW/100 MWh lithium ion (Li-ion) battery system; this will bring the island’s renewables penetration up to 58% when it comes online in late 2018. AES Distributed Energy, Inc. and the KIUC also established a power purchase agreement of $0.11/kWh, below the cost of fossil fuel power currently used to provide baseload generation to the island. Several other renewable projects dispersed around the island are up and running, pushing the plan forward. The KIUC wants the island to reach 100% renewables by 2045.

Most of the Hawaiian islands experience peak solar generation during the day, and consequently have diesel generators ramp up during peak demand at night. Several new projects are being paired with storage to help eliminate the use of these generators. Diesel plants on islands typically operate at high variable load, resulting in high variations of demand, which often is incongruent with the large size of diesel plants. Islands generally have more fluctuating power demand than mainland areas; over a year, generation can fluctuate significantly due to seasonal variation in tourism, for example. The AES project alone is expected to reduce the KIUC’s fossil fuel usage by over 3.7 million gallons annually.

Cutting Edge

Kauai and the KIUC are committed to ensuring that customers are on the cutting edge of the energy industry. By deploying emerging technologies like solar, energy storage, and smart metering systems, the cooperative is giving its members more transparency in how they can track their own energy use and set personal goals for efficiency. Making these investments and meeting these short-term goals pushes the KIUC’s vision forward to being a leader in shaping a thriving state for future generations.

Other small island nations and areas can learn from the KIUC’s goals. By engaging customers, testing grid stability, and aggressively looking for new projects, smaller markets can drastically change their energy outlook in a short period of time. Additionally, smaller markets can change rapidly in terms of renewables or storage penetration with just one or two large projects. Every market faces its own unique challenges, so it will be important for the government and private and public sectors to engage in efforts to push for ecologically and economically sustainable futures.

 

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