Navigant Research Blog

In Germany, a Small Town Becomes an Energy Dynamo

— December 8, 2014

A small town in Germany has become a symbol of what is possible for renewable energy and of the challenges it presents to the traditional utility model.  Wildpoldsried, in southern Bavaria, produces 500% more energy than it needs.  The town of approximately 2,600 people does this through solar, wind, biogas, and hydro systems and a healthy dose of government subsidies.

The transformation of the town’s energy use enabled it to produce all of its electricity well before the target date of 2020.  The excess energy, however, presented the regional utility, Allgäuer Überlandwerke GmbH (AÜW), with a problem: How to integrate the surplus renewable energy into the wider grid? So the utility partnered with Siemens on a project called the Integration of Regenerative Energy and Electrical Mobility (IRENE).  Using sensors throughout the town’s energy systems, operators are able to measure various levels of current, voltage, and frequency, and then a self-organizing automation system balances supply and demand to stabilize the grid.  In addition, local homeowners who have energy-producing systems (e.g., solar PV) are now prosumers, and each has a small device that controls how much power is sold back to the grid and at what minimum price, creating, in effect, a small-scale distributed energy resource market that feeds into the larger grid.

Cars, Solar PV, & the Grid

Wildpoldsried is not alone in attempts to modernize and create a more efficient grid.  In the wake of the March 2011 Fukushima disaster, officials in Japan have been wrestling with how to create more sustainable cities.  The Japan Smart City initiative includes projects in Yokohama, Toyota City, Keihanna (Kyoto), and Kitakyushu.  In Yokohama, for instance, one of the trials involves a home energy management system provided by Panasonic that integrates solar PV systems with battery storage.  In another trial, automaker Nissan has been testing a vehicle-to-home system, in which electrical power is furnished to homes from the batteries mounted in electric vehicles. (For more on these types of vehicle-grid integration projects, please attend Navigant Research’s free webinar, Electric Vehicles and the Grid, on February 10, 2015, at 2 p.m. ET.  Click here to register.)

Net Zero

Similarly, in the United States, California continues to be a bellwether for renewable energy and sustainability.  The state’s Zero Net Energy (ZNE) policy requires all new residential construction to be ZNE by 2020; a ZNE home is one that produces as much renewable, grid-tied energy onsite, such as from a solar PV system, as it uses during a calendar year.  Homebuilder KB Homes has constructed such a zero-net home in the Sacramento area that features a rooftop solar PV system with battery storage, an advanced greywater recycling system, triple-pane windows, and heavy duty insulation.  In the city of Lancaster, builders are offering similar types of ZNE homes as that city attempts to become a leader in alternative energy.

What Wildpoldsried and these other cities demonstrate is that through technology, regulations, and cooperation with utilities, a smarter and eco-friendly grid is possible.  For skeptics, these are real world examples of what is possible.  Yes, this can mean disruption of current business models.  But it does not have to mean destruction.  As noted in Navigant Research’s free white paper, Smart Grid: 10 Trends to Watch in 2015 and Beyond, these and other smart grid trends are expected to unfold in the coming years, and stakeholders must adapt to this transforming energy landscape.

 

British Smart Meter Rollout Hits a New Snag

— November 24, 2014

There is another delay in the rollout of smart electric and gas meters in Great Britain.  The deployment of more than 50 million meters was expected to begin in the fall of 2015, but now that starting date could be up to a year later, meaning the fall of 2016.

The delay comes as the entity in charge of the communications system, known as the Data Communications Company (DCC), has said it is not feasible to meet the fall 2015 start date.  The DCC, which is run by outsourcing vendor Capita, blames the delay on U.K. government officials who changed the specifications that required redesigns for parts of the systems.  The delay is expected to add an additional $140 million to the expected $17 billion cost of the multiyear project.

This new delay follows an earlier postponement announced in 2013.  This new delay could mean that the mandatory completion target year of 2020 will not be met. However, the U.K. Department of Energy and Climate Change (DECC) maintains that the deadline will still be met.

Pushback for Vendors

For the meter vendors and technology providers involved, like Sensus, Landis+Gyr, and Trilliant, the new delay pushes out their delivery cycles and could negatively affect their financial pictures as well.

So far, the other large European smart meter deployment in France (as noted in Navigant Research’s report, Smart Meters) is still on schedule, with the installation of the first 3 million meters expected to begin sometime in the third quarter of 2015.

No doubt there is plenty of frustration among the parties involved in the British project, but what they plan to do is undeniably complex.  Connecting one type of smart meter, electric for instance, poses enough of a challenge, but connecting both an electric and a natural gas meter at the same time and expecting the communications elements to run smoothly is asking a lot.  Further delays, or at least a speed bump or two, are more than likely.

 

Residential Solar Market Roiled by Proposed Rate-Basing Scheme

— November 3, 2014

There is a growing debate about the financing and subsidies of residential solar PV systems.  How this turns out could have a significant impact on the market’s future.  At the center of the discussion are Arizona Public Service (APS) and Tucson Electric Power (TEP), two regulated utilities that have proposed new rate-based solar programs for residential customers.  Such a move threatens private solar installation-financing companies such as SolarCity and Sunrun, which currently lead the growing market by offering no-money-down leasing schemes that have attracted thousands of new customers.

The private solar companies argue that allowing the utilities to sell rate-based solar systems would create an uneven playing field.  They believe the regulated utilities should set up their own separate, unregulated companies and compete for rooftop solar business with the independent installer-financing companies.  That’s precisely what electricity providers operating in other states have done.  For instance, NRG and Edison International have entered the rooftop solar market by establishing unregulated business units that operate in the Northeast and California, thus avoiding the controversy.

Keeping the Playing Field Level

This is a thorny question for Arizona, and both sides have convincing arguments, as my colleague Taylor Embury pointed in a recent blog post.   The solar installers argue that permitting the Arizona utilities to go ahead with their rate-basing plans would set up unfair competition because of their monopoly status.  The utilities say they just want to expand into solar because of customer demand for distributed generation (DG) and because it helps the utilities meet mandated goals for DG.  But the solar installers and their financiers have advantages they can leverage as well, in the form of the 30% income tax credit and a depreciation method called Modified Accelerated Cost Recovery System (MACRS) that can make the investments quite attractive.  A decision on whether to allow the utilities to move forward with their solar programs is pending before Arizona’s utility regulator, and a ruling is expected before the end of the year.

This topic is certain to be part of the upcoming discussion during Navigant Research’s The Home as Micro Power Plant webinar, which takes place on November 11.  Besides the rooftop solar issue, panel members will examine the potential for residential energy storage, how plug-in electric vehicles could be used as grid assets, and whether residential combined heat and power can gain market traction.  To register for the webinar, click here.

 

Big Retailers Boost Home Energy Management

— October 28, 2014

Home energy management solutions have struggled to gain traction beyond early adopters and consumers enrolled in a sprinkling of utility programs for demand response.  That could be changing as more retailers push connected home devices that have advanced energy controls as a component.

Best Buy, for example, has been selling a handful of smart home products for several years, and for a time it tested dedicated home energy management sections in three of its locations.  But now the electronics retailer plans to set up new connected home departments within about 400 of its 1,400 stores.  These new sections are expected to show up around Thanksgiving, and will be staffed with blue-shirted experts who will be trained to offer smart home solutions for homeowners.  Products on the energy side will include smart thermostats from Nest and Honeywell and smart lighting controls from Philips and Belkin, ranging in price from about $50 to $350.

Out on the Floor

Beyond hardware products, Best Buy will also highlight services for the connected home from a variety of providers, including Comcast, DirecTV, Time Warner, ADT, and others that can tie the hardware to services geared toward automation, security, and energy management.  This could be a key to wider adoption of home energy management, since many people have not heard much about energy management services.

Other retailers, such as Walmart, Lowe’s, and Home Depot, offer similar products and services for increased home automation, security, and energy management.  Office supply giant Staples now offers Connect, which combines a hub with a single mobile app to connect door locks, thermostats, and lighting for homeowners or small business owners.

One of the main inhibitors to growth for home energy management products and services has been a lack of awareness among consumers, as noted in Navigant Research’s Home Energy Management report.  This current wave of retailers promoting a variety of solutions to create a more intelligent home should help increase customer knowledge and drive adoption.  It will likely take a couple of more years to reach widespread consumer adoption, but this current retail push is a start.

 

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