Navigant Research Blog

Going Small, Americans Seek More Efficient Housing

— March 25, 2015

If you have spent any time on social media lately, you’ve likely encountered at least one post or online album that features so-called tiny homes. Literally tiny, averaging less than a couple hundred square feet, tiny homes have inspired numerous periodical references, coffee table books, and at least one documentary. Given that Americans on average tend to inhabit more square footage than people from almost any other nation, it’s remarkable to see this change in attitude as a growing number of people not only accept, but also intentionally pursue smaller living spaces.

Though it’s a far cry from the idyllic rural landscapes that many tiny houses are photographed in, large cities like New York, where high demand for space has inflated rental and housing markets and regulators are pursuing more sustainable forms of urban development, are benefiting from this minimalist attitude. Recently, a collaborative micro-apartment project called My Micro NY received the city’s adAPT NYC award to design, build, and operate a 55-unit space in Manhattan, with each apartment to be less than 400 square feet.

Hold Please

From an energy-efficiency perspective, small-unit multi-tenant living spaces have many benefits. Individual small units require much less energy to heat and cool, and efficient multi-tenant spaces can benefit from shared climate control. If the resident struggles with personal energy management (e.g., they constantly push the hold button on their thermostat and forget to turn it off), much less energy is wasted in a shared climate. Most importantly, as with multi-tenant spaces in general, heating and cooling can be shared, so the per-capita energy requirements are much lower. And if the space is designed to be energy efficient—or even better, zero energy—then these effects are multiplied.

Of course, there are downsides, including the potential negative effects on one’s health that can be caused by spending too much time in a small, studio-like space. Experts generally agree that while this type of housing can be suitable for young professionals in their 20s, it can have detrimental health effects on individuals in their 30s and 40s who have different lifestyle preferences and forms of stress. Families and couples should be aware of possible issues surrounding privacy and the ability to concentrate in small, shared spaces.

Small Is Beautiful

Still, energy-efficient housing solutions are becoming widely available for people of all ages, incomes, and lifestyle preferences. The explosion of the energy-efficient pre-fab market, which is characterized by smaller overall spaces, is an indication that Americans are compromising space for efficiency—and not necessarily with cost as a major driver (aside from the fact that smaller square footage = less overhead cost).

Although tiny homes on wheels and pod apartments will likely remain niche markets, the growing buzz and number of options offer design and lifestyle benefits that are catching the interest of many Americans. As a culture, Americans are still far from being characterized as energy-conscious, but this growth in the small housing market signals a step in the right direction.

 

Utilities Enter a Brave New World of Customer Engagement

— March 9, 2015

Utility Dive’s State of the Electric Utility 2015, released last month, aptly states that “The greatest challenge for the utility industry may be its greatest opportunity.” The report is referring to distributed energy resources (DERs).  The survey of utility executives across the United States revealed that no less than 70% of interviewees see strong opportunities in exploiting the growing DERs market, despite regulatory structures and traditional utility business models that present obstacles. For now, the major legwork is focused on reforming those two critical inhibitors, but once that’s done, will utilities be prepared to navigate the competitive environment through effective marketing strategies for their products and services?

While many utilities still have to maneuver through operational, regulatory, and business plan challenges before they can wrap their heads around marketing strategy, the fact of the matter is that the private market for DER products and services is already very mature across the United States—and strong competition requires equally strong marketing.

Information Flood

To be clear, I do not consider utilities to be marketing laggards; pretty much every investor-owned utility (IOU) that I know of (and many municipal and cooperative utilities as well) has a marketing team that can shape, execute, and evaluate successful customer-facing programs.  The problem is that all of their future competitors also have skilled, innovative, and highly resourced teams that are experienced in conducting business in markets undergoing disruption.

One challenge is that marketing and branding have gone through enormous changes with the rise of the internet.  Consumers have an increasing number of outlets to research and review products. Unfortunately, the Internet is also unruly by nature, and it’s easy to be misinformed and end up misdirected. Marketers are held responsible for creating pathways for online users to obtain accurate information and get to the best purchasing point—no simple task, given that this requires a highly developed understanding of consumers and the obstacles they face online. For an example of how this might pertain to a utility that wants to, say, participate in the solar leasing market, just google “solar lease”; the results will speak for themselves.

Getting to Know You

Something that I’ve heard about a lot when I read about the so-called utility “death spiral,” is that utilities do not know enough about their consumers or how to interact with them, because they’ve never really had to. I actually disagree with this, but even if it were the case, utilities are still better prepared to get to know their customer than many think—just see Navigant Research’s report, Smart Grid Data Analytics for Customer Engagement.

Unlike the vast majority of the private sector, utilities already have access to many different types of information for their entire target consumer base. Customer information and billing systems are a starting point, but with advanced metering infrastructure and other forms of intelligent grid monitoring becoming commonplace, there is additional relevant data being collected across the grid.  Navigating data privacy correctly, utilities will be able to consolidate information on many different levels to track customers’ energy usage and pinpoint their needs–the first step to effective marketing.  This is something that competitors with limited data may perpetually be stuck guessing about, and might be the edge that utilities will be looking for.

 

Thermostat Studies Show Benefits of Being Smart

— February 16, 2015

This month Nest announced several studies that have been conducted on its learning thermostat.  One was conducted by MyEnergy, a Nest subsidiary that analyzes residential energy information. The others were conducted by the Energy Trust of Oregon and by Vectren Corporation, an Indiana-based holding company. The results boost Nest’s claims that the thermostat can pay for itself in only a year or 2.

Across the studies, evaluators found average annual reductions in electricity use between 13.9% and 15% for cooling and 10% and 12% for heating loads.  For natural gas, the Vectren study confirmed an average annual reduction of 12.5%.  In terms of cost savings, Nest states that adopters showed an average of 9.6% savings on their gas bill and 17.5% on their electric bill.

Last year, competitors EnergyHub and EcoFactor released third-party studies that indicated reductions in electricity use of 6% to 17% after thermostats controlled by their back-end platform were installed in users’ homes.

The Limits of Studies

Smart thermostats have become increasingly numerous in recent years. According to Navigant Research’s report, Smart Thermostats, North American household penetration of these devices is expected to exceed 20% by 2023. Until recently the market was concentrated in warm weather states, but adoption across colder climates is becoming more common, and utilities are becoming interested in smart thermostats for year-round energy efficiency and demand response (DR) programs.

Regardless, the high prices—$150 to $300 for the device alone—are still a barrier. Hence, smart thermostat vendors have trumpeted third-party studies that indicate positive return on investment (ROI) through energy bill savings. Analyses of products from EcoFactor, EnergyHub, and now Nest indicates annual energy savings in the 8% to 15% range.

But such studies can be interpreted in several ways. The most obvious conclusion is that the chances of incurring similar savings are good given the variety in the studies’ methodology and sample populations. On the other hand, factors like the locations of households, weather varying, and simultaneous energy efficient behaviors all affect study results.

Your Results May Vary

For states where heating and cooling are a small part of the utility bill, the savings from a smart thermostat will look different than those in an area where the costs are high. In such cases the results could be misleading.

The MyEnergy study included households from all over the country in its sample, and Nest claims that it is fairly representative of their adoption base—but is that representative of U.S. consumers as a group? The average reported savings might not fall in the middle of the spectrum of all consumers, so someone using this information as a basis for purchase of the $250 device could be anywhere from greatly or slightly disappointed to slightly or very pleased depending on how similar they are to the majority observed that indicated decent savings.

And if the consumer doesn’t really care enough to break down this information in the first place, much less nitpick findings from a variety of disparate studies? These types of adopters might be drawn to purchase the device simply for its user delight qualities. Nest has created an iconic device that by most accounts works really well and that has a lot of informational features designed to trigger more energy efficient behavior. That would be a great outcome.

 

Into the Wild, with Clean Technology

— February 2, 2015

Yosemite National Park remains among the largest preserved wild spaces in the world, but with over 4 million visitors annually, it’s becoming more and more difficult to find solitude there. This month, Yosemite was thrust into the media as the United States became aware of (and potentially a little obsessed with) two rock climbers trying successfully to free-climb the Dawn Wall, which is the most difficult route on one of Yosemite’s iconic rock faces, El Capitan.  Through mobile phones and hotspots, climbers Tommy Caldwell and Kevin Jorgeson shared and received real-time updates (including photos and streaming videos) with friends, family, and of course the media.

The climbers spent 19 days off the ground, much longer than the typical iPhone battery could ever last. So, they hauled solar powered chargers up the wall with them to power their phones, lights, cameras, computers, and other gadgets.  Their solar gear came from Goal Zero, one of a few companies that fill the niche for mobile/recreational solar power kits for athletes and travelers.

All the Mod Cons

These devices, although they lower demand for energy infrastructure in wilderness areas, are among many new technologies that are allowing visitors to enjoy modern niceties while enhancing preservation efforts in the face of record numbers of visitors.  Over the years, the park has had to develop strategies for transportation, sanitation, power, and communications that support preservation.

Another big issue is constant, full bandwidth connectivity.  On the Dawn Wall, the climbers enjoyed a relatively strong cellular connection.  But for areas without such access, the connectivity problem can be solved with a two-way satellite phone, an old technology that can now carry enough bandwidth to upload and send photos and videos.  A couple of years ago, these climbers remotely produced and shared a short film from a peak in Nepal.  Edmund Hillary would be astounded, not to say depressed.

The Waste Issue

Aside from managing new demands for connectivity and power, one of the biggest issues for the national parks and other preservation bureaus is human waste.  As the number of visitors grows, so does the need to deal with their … leftovers.  There are basically two ways to deal with human waste in areas without sewage systems.  The first is to carry it away and put it somewhere else. Most commonly, companies are contracted to collect and transport the waste, which is expensive.  In British Columbia, Bugaboo Provincial Park uses a helicopter to transport waste out of the park.

The second method, much less common, is to deal with it on site.  A park in Colorado began constructing an evaporative system for human waste in 2001, with reported successful outcomes.  Organizations like the Bill and Melinda Gates foundation have recently poured money into research for developing isolated toilet systems for rural developing communities, which could also be appropriate for public outdoor spaces (I wrote a blog about the Gates program in 2013).

Caldwell and Jorgeson stored their waste and disposed of it offsite, which is common practice for mountaineers and climbers. This system, made by a company called Metolius Gear, comes highly recommended.

In any case, the Dawn Wall ascent and the worldwide interest it generated, highlighted a keen interest in natural spaces and human activity therein.  More than ever, companies in various markets have begun to realize how their technologies can support this growing wave of outdoor enthusiasts who desire to visit these spaces in comfort and with a good connections.  That’s a good thing, because these spaces are now able to support more visitors with heightened needs while retaining the beauty that makes them so special.

 

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