Navigant Research Blog

5G Closer than You Think – or Is It?

— February 8, 2016

Network switch and UTP ethernet cablesIn the world of high tech trends, fifth-generation, or 5G, wireless networks can be seen as the new Internet of Things (IoT), full of early hype but still a ways off. In the case of 5G, quite a ways off. Recent rumblings from major players point to 5G networks being deployed before the end of this decade, which could have important consequences for utilities and for connecting energy-saving devices in smarter homes. But this still feels like a hype train, even if some stakeholders are trying to play down all the excitement.

The notion of 5G got a fresh boost at (where else?) Consumer Electrics Show (CES) in early January. Telecommunications equipment giant Ericsson showcased a 5G system at the show, with current data transfer rates of up to 5 gigabits per second and with the expectation that this rate will increase to up to 10 gigabits per second in the near future. The company and carrier partner TeliaSonera have since announced plans to launch limited 5G networks in Sweden and Estonia in 2018.

Similarly, AT&T has discussed 5G with U.S. Federal Communications Commission (FCC) officials. The network provider presented its vision to the FCC, outlining its architectural concepts for 5G technology, including a multi-radio access approach to support extremely high-speed mobile broadband along with low-speed IoT. To his credit , Glenn Lurie, president and CEO of AT&T Mobility, has downplayed the hype and said the company doesn’t want to overpromise and underdeliver on 5G technology.

Last fall, Verizon unveiled its 5G roadmap, noting it was accelerating the expected rate of innovation and that the technology would likely be introduced in the U.S. market sometime after 2020. Verizon also said it was committed to starting 5G field trials in 2016 along with partners Alcatel-Lucent (now combined with Nokia), Cisco, Ericsson, Qualcomm, and Samsung.

Specifics Still in Flux

With all this fuss, it is important to note that 5G is still not fully baked. The standard has yet to be written. Here are some basic specifications, courtesy of the TelecomEngine website:

  • Intended to handle data from more than 100 billion devices, which will require an increase of several thousand times the capacity of today’s networks
  • End-user data rates of at least 10 Gbps, with generally available rates of at least 100 Mbps, which will require substantially new levels of network capacity and robustness
  • A minimum end-to-end latency of 5 milliseconds, with 1 millisecond of latency when necessary, which will require the installation of a number of small cells at communication end-points
  • One-tenth the energy consumption compared with 2010 levels

5G networks are no doubt the future; applications for utilities, smart cities initiatives, and smarter homes could one day be the beneficiaries. But, as my colleague Richelle Elberg has pointed out, utilities are still relying on older networking technologies and are likely to do so for a number of years. The reality: We are going to live in a 4G—even 3G—world for a while. For now, most companies and individuals can relegate 5G to the fringes of their thinking.


The Upside of Efficiency Standards

— January 29, 2016

Network switch and UTP ethernet cablesAppliance efficiency standards generate little excitement for most of us. We expect appliances to operate efficiently, and we expect the latest versions we purchase to take advantage of the newest and most efficient technologies. But we don’t give it much thought beyond that.

It’s not that simple, of course. In the United States, there is a standardization process involving U.S. Department of Energy (DOE) officials, appliance manufacturers, utilities, distributors, efficiency advocates, and contractors. The latest milestone in that process comes courtesy of the Appliance Standards and Rulemaking Federal Advisory Committee (ASRAC), which recently approved a set of recommended standards for residential central air conditioning (AC) and heat pump efficiency levels.

Some key parts of the latest standards approved by ASRAC and developed by a DOE-sponsored working group include:

  • Effective January 1, 2023, standards are to achieve at least 7% savings—changes to the test method and equipment rating need to increase savings beyond the nominal change in Seasonal Energy Efficiency Ratio value.
  • Expected savings of about 300 million kWh over 30 years of sales, which is approximately as much power as is used by 27 million households in a year.
  • Based on current electricity prices, the value of these savings is expected to total about $38 billion in utility bill savings.

It should be noted that some 60% of U.S. homes have a central cooling system, and approximately 19% of these systems are heat pumps. In addition, nearly all new homes are built with central AC.

Some Background

These latest standards have a legacy dating back to 2006, when major improvements in AC and heat pump efficiency took effect, and also from a set of consensus standards from 2011, which took effect last year. According to experts, these combined three rounds of improved standards—those effective in 2006 and 2015 and the upcoming set in 2023—are expected to raise central AC and heat pump efficiency by some 50% in less than 20 years.

Standards may be somewhat dull, and some stakeholders may think the latest ones don’t go far enough. But standards like those mentioned above can have a lasting and broad beneficial effect when it comes to greater efficiency and reducing pollution. The next time the AC or heat pump kicks on, you can thank the organizations responsible for taking the long view in setting and maintaining standards that benefit us all.


Aclara to Buy GE Meters Unit Amid Shifting Strategies for Smart Grid Vendors

— December 7, 2015

Aclara Technologies pending acquisition of General Electric’s (GE’s) electric metering business underscores the shifting strategies among smart grid vendors. For Aclara, the move strengthens its goal to beef up its smart grid infrastructure. For GE, shedding its metering business fits in with its aim of becoming a more digital company. If the deal goes through by the end of 2015 as planned, Aclara would take over GE Meters’ global headquarters in Somersworth, New Hampshire. This includes 300 employees, as well as a satellite manufacturing plant in Chicago and a center of excellence in Bilbao, Spain. Terms of the deal were not disclosed.

St. Louis, Missouri-based Aclara intends to leverage GE Meters’ expertise in support of its concentration on important technology trends such as advanced metering infrastructure integration, cyber security, and cost-effective field upgradability, according to a management statement. Most of Aclara’s current smart metering business is among small and midsize municipal and rural electric utilities in the United States.

The Aclara-GE Meters deal follows a similar pending transaction by Honeywell, which announced in July its agreement to buy smart meter manufacturer Elster from Melrose Industries, a United Kingdom-based investment firm that specializes in buying and spinning off manufacturing firms. The Honeywell-Elster transaction is valued at $5.1 billion and is expected to close in the first quarter of 2016. In terms of scale, the Honeywell purchase of Elster is much larger than the Aclara-GE Meters transaction, given that Honeywell is expected to take over management of about 6,800 employees and the business includes gas and water meters, and not just electric versions.

For major smart meter competitors like Landis+Gyr, Itron, and Sensus, these pending deals have to give them some pause as they ponder what type of landscape they will compete in when 2016 rolls around. Do they double down on their own strengths, or do they seek new pathways, deals, or partners to stay relevant in the market? Along with other stakeholders, they need to also consider the fact that the smart metering business is undergoing some important changes, and that the pathway ahead is unclear in a somewhat down market. Major deployments of smart meters in Europe are stuck in slow gear, Chinese manufacturers are sniping from below on price and capabilities, and the U.S. market remains sluggish, though bigger deals are expected in the next year or two.

On a personal note, it is also somewhat sad to see a venerable brand like GE leave the meter market after some 130 years, but then again, business will be business.


Utilities Embrace Innovation at EUW, but Struggle with Culture

— November 25, 2015

There was a palpable buzz at European Utility Week in early November centered around change, innovation, and outsiders. For instance, one of the crowded presentations I witnessed was Neil Pennington’s talk about smart thermostats. Dr. Pennington, the director of innovation for RWE npower in the United Kingdom, noted that smart thermostats are a logical first step, but utilities should consider going beyond these devices and offer products and services that are highly personalized, connected, and automated. Move outside the heating, ventilation, and air conditioning (HVAC) system, he says, and think about home security and customer lifestyles if you want to succeed as an innovator.

Pennington’s message was effective. It generated some enthusiastic questions, and people in the audience were hungry for insights into how to engage customers in new and effective ways.

Other vendors and presenters at this trade show, which set records for attendance (some 9,000 visitors from 77 countries), offered similar stories about innovation and change. Joris Jonker, one of the founders of residential energy management company Quby, told me his company’s offering was gaining traction as a dashboard for the home, and that Netherlands-based utility Eneco would be installing 1 million units over 2 years. Indeed, Eneco has embraced Quby’s solution so much that it acquired the firm just ahead of the trade show. Eneco’s move demonstrates it is no longer business as usual for some utilities.

Other discussions included the outsiders, or non-utility companies like Google (or Alphabet, Google’s parent company), and how these firms might alter the utility game. Might Google, or perhaps Apple, or an unknown startup move aggressively with a customer-centric and data-driven business model to disrupt the utility status quo? Possibly, but others were not so sure, saying it would be hard to disrupt the incumbents, especially for smaller players. Still, the question about potential disruption sparked debate.

Beyond these change and innovation issues, several other themes played out at the show. The smart cities concept is gaining wider attention (as my colleague Eric Woods so aptly demonstrated in sessions he moderated), with companies like Itron and Sensus touting their capabilities in this area. And, of course, the Internet of Things (IoT) concept seemed to be on just about everyone’s lips. In that vein, one company that stood out was Sigfox, a French firm promoting its unique cellular communications technology that is designed for low-throughput connectivity among IoT devices. Very buzzy.

But for all the talk about innovation and change, there was an interesting poll conducted among attendees that revealed an Achilles heel for the utility business: an ongoing lack of innovation. The poll asked “What is the biggest threat to the utilities?” The results of the unscientific survey among about 400 people were:

  • Falling/flat demand: 6%
  • Revenue loss/distributed solar: 12%
  • Challenge Renewable/Integration: 12%
  • Regulatory/Policy uncertainty: 23%
  • Lack of “innovation culture”: 46%

So a key takeaway for me from the Vienna conference was that while there is a welcome mat set out for change and plenty of talk, true innovation is still some ways off. And the staid utility culture in Europe is ripe for a shake-up, internally, externally, or from both perspectives.


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