Navigant Research Blog

Two Big Reasons 2017 Looks Bright for Intelligent Buildings

— November 30, 2016

Intelligent BuildingInformation technology has permeated nearly every aspect of our daily lives, and the convenience, efficiency, and productivity benefits of utilizing our favorite apps has created a new set of expectations for workspaces. As we look to the beginning of a new year, this widespread demand for technology underscores two signals that 2017 will support continued investment in intelligent building technologies. First, customer satisfaction is paramount;  second, major corporations remain committed to sustainability. Intelligent building technologies, specifically Internet of Things (IoT)-enabled analytics and managed services, are cost-effective investments that provide broad business insights to meet these two top line goals.

IoT for Customer Satisfaction

The bottom line for business is growing revenue and building market share, and customer loyalty is fundamental to this success. IoT-enabled intelligent building solutions can help businesses by creating comfortable and productive space. From retail stores to offices, intelligent building technologies help facilities managers and building owners maximize equipment performance and direct the use of their spaces to maximize customer satisfaction.

Navigant Research recently hosted a roundtable webinar on IoT for small and medium businesses, and the conversation several times turned to the importance of customer satisfaction. The deployment of an IoT-enabled intelligent building solution can generate comprehensive data sets on equipment performance and space use, and analytics can then translate these data streams into valuable business information. For example, in retail stores, occupancy sensors can send data about foot traffic to direct improvements in HVAC and lighting for energy savings, but also provide insight for product placement and customer service needs that can ensure and enhance customer satisfaction. Once an IoT platform has been deployed, there are many software as a service (SaaS) analytics options to translate data into information for strategic business decision-making for any vertical.

IoT for Sustainability

According to a recent Forbes article, a recent international manufacturing conference in Japan provided some surprising new statistics on sustainability. In particular, the study found that 75% of US consumers account for sustainability while shopping, and an even more striking 7 of 10 millennials define themselves as social activists—as put in the conference presentation, “For millennials, CSR [corporate social responsibility] is the new religion.” Even more striking is the corporate commitment to combating climate change, underscoring the importance for business bottom lines. Companies including the Gap, General Motors, Levi Strauss, and Starbucks have signed a plea to the incoming administration to retain the commitments set in the Paris Climate Accord.

What does this mean for intelligent buildings? US businesses can tackle their sustainability footprint head on by optimizing operations to reduce energy consumption and associated carbon emissions.

Commercial buildings are notoriously inefficient, generating about 20% of the total CO2 emissions in the United States. IoT changes the game by delivering cost-effective devices (moving price points from tens of thousands of dollars to hundreds of dollars) that bring insight into waste that was previously invisible. Customers that manage smaller buildings likely never considered deploying automation and controls for energy management and sustainability, but with the IoT platforms and SaaS analytics available today, they can access facility information remotely, quickly identify inefficiencies, and improve performance to improve their sustainability.


Why VPP Software Vendors Are Vital to the Success of the Emerging Energy Cloud

— November 30, 2016

Ethernet CablesThe concept of a virtual power plant (VPP) means different things to different people. It’s really just a creative way to imagine the variety of grid services that can be harvested from the plethora of distributed energy resources (DER) that are rapidly populating power grids worldwide.

A VPP is the epitome of the changes transforming relationships between utilities, customers, and a host of other market participants that are building real solutions to the pressing energy and environmental challenges facing the world today. Navigant has coined the term the Energy Cloud to describe the evolution of our collective energy future. VPPs are just one aspect of this shift toward smarter, cleaner, and smaller power sources being aggregated into real-time solutions that benefit individual asset owners while contributing to the sustainability of existing infrastructure.

The Value of Software

Now that hardware assets such as solar PV panels, batteries, and other DER are becoming commoditized due to increased market penetrations and creative business models, the key to unlocking greater value from both new and existing DER is software—the fundamental technology driver underlying the VPP market.

Software is a broad category. It includes systems that connect DER in order to optimize synergies between like and unlike resources, in addition to the interface mechanics of interacting with utilities and wholesale markets for ancillary services. IT and related software is where the money is being made in the VPP market; according to Navigant Research’s Virtual Power Plant Enabling Technologies report, software spending is expected to represent nearly 90% of total VPP implementation spending by 2025. The same report also provides an analysis of the energy storage systems being wrapped into VPPs.

A sudden surge in energy storage deployments being aggregated into VPPs is tilting the market in dramatically new directions. How utilities and wholesale transmission grid operators treat energy storage as an asset may be the most important technology-related development affecting near-term commercial VPP deployments.

Ranking Vendors

Navigant also recently published a Leaderboard report ranking VPP software vendors. There is always an apples-to-apples comparison challenge with the Leaderboard format, but by stepping back and focusing on the overall trends in the market, insights bubble up to the surface.

Ranking software vendors active in the mixed asset VPP market is even more problematic than microgrid controls vendors given the lack of available transparent data on performance of software products. The lack of a universal definition for a VPP only adds another layer of issues in developing a ranking. These caveats aside, the rankings do reveal some market insights.

Some vendors claim vertically integrated utilities are the best near-term market for VPPs, since all ancillary services required to keep the grid physically in balance are purchased by one single entity. Others argue that deregulated markets open doors to new ways of monetizing value and harness the value of diversity and competition. I believe both opportunities will help build the VPPs of the future. It will be mix of pure-play software vendors, energy storage innovators, and large global technology companies that show the way.


How Can Business Contribute to Climate Targets in a Profitable Way?

— November 28, 2016

Energy CloudMaarten Neelis is a Principal Consultant with Ecofys. This post originally appeared on the Ecofys website.

Making the Paris Agreement a Reality

The annual Conference of the Parties (COP) is a multi-faced animal. On the one hand, there are the formal negotiations where, since this year, details of the implementation of the Paris Agreement are discussed in seemingly endless meetings resulting in slow progress on the key items conferred. This formal side of COP22 in Marrakech concluded after 2 weeks with the decision to finalize a Paris Agreement rulebook on the operationalization of the Paris targets by 2018 and the adoption of a respective work plan for the next 2 years. In the COP22 outcome document (Marrakech Action Proclamation for our Climate and Sustainable Development), developed countries further reaffirmed their commitment to mobilize $100 billion per year by 2020 to support climate action in developing countries, and all countries called on non-state actors to join them for immediate climate action, building on their achievements to date.

Separate from the formal negotiations, the COP is also one great buzz of climate action. Climate action presented in a wide variety of side events and climate action discussed among the thousands of participants in numerous different setups.

Partly this climate action is taken by governments, albeit the sum of all actions taken is not yet sufficient to make the Paris targets a reality, as Ecofys’ Climate Action Tracker analysis shows. However, climate action is also taken by the business community, and over time, this has gained a more and more prominent position at the COP. Rightfully so. While governments can set the right framework and provide the right incentives (e.g., by implementing effective carbon pricing policies), it is ultimately the business community that needs to implement the action. As such, it was great to participate in side events where new innovative carbon capture and usage technologies were presented and to have truly motivating chats with representatives from a wide variety of sectors.

Chats with clients in the chemical industry asking whether the negotiators realize that product innovations by the chemical industry do provide the solutions needed for a low carbon world. Chats with clients in the steel industry wondering whether there is enough recognition of the fact that a low-carbon world cannot do without basic materials. But also good discussions with less greenhouse gas (GHG) intensive sectors searching for ways to capitalize on the solutions they already provide: does my CEO actually know how much we already contribute to making the Paris targets a reality?

Maybe I was somewhat biased by the study Ecofys launched at the COP, tracking value creation and GHG emissions through all global value chains, the first output under a partnership on carbon pricing with Al Gore’s Generation Foundation. Nevertheless, I do have the feeling that at this COP, there was more attention on the role of the manufacturing industry and the wider business community in achieving the Paris targets. This is fully understandable. Our analysis shows that about 60% of global emissions are related to the consumption of materials and food. This implies that active contributions by the manufacturing industry are key, given they are both part of the problem and an essential part of the solution.

The interactions I had with the business representatives during the COP allows me to draw one single conclusion. In a way, every company in the world is confronted with the following question:

In making the Paris targets a reality, how can my business contribute in a profitable way?

Finding answers to this question is far from easy. The world is and will continue to be fragmented in terms of the policy framework provided to industry and business in general. Global cooperation mechanisms, such as those envisioned under Article 6 of the Paris agreement, will not yet be operational in the near future. Also, the risk that key global economies might step out of what was agreed does mean that for globally competing industries, the issue of diversified ambition potentially resulting in competitive disadvantages for those that do take action will remain in the agenda.

In Ecofys’ new setup with Navigant, we remain at your service to support you in finding the answers within the relevant context for your company. Our work on GHG target setting and on vital, undervalued topics such as the circular economy shows that we are at the forefront in providing solutions for a low carbon future.


New York’s Grid Restructuring Begins to Take Shape

— November 28, 2016

GeneratorAfter numerous rounds of conferences, discussions, and announcements, concrete results from New York’s Reforming the Energy Vision (REV) initiative have begun to emerge. Despite the initiative’s ambitious goals, limited on-the-ground changes have been made. The recent announcement that Green Charge Networks will deploy a network of 13 MWh of distributed energy storage marks one of the most significant developments to date and adds Green Charge to the growing list of companies driving the initiative.

The REV initiative aims for major reforms to both utility business models and market regulations to enable a transformation to a grid built around distributed energy resources (DER). Near-term targets include allowing for greater use of renewable generation and other DER to reduce emissions, improve the resiliency of the grid, and limit costs for upgrades passed onto customers. New York City and other urban areas face extremely high costs for replacing or upgrading underground electrical infrastructure, hence the initiative’s focus on using local DER.

Ambitious Goals

Perhaps the most notable project through REV thus far is the Brooklyn Queens Demand Management Program. This program seeks to defer a proposed $1.2 billion substation upgrade through a combination of 52 MW of demand reductions and 17 MW of DER investments. Most of the projects supporting this effort involve conventional demand response (DR), energy efficiency, and other demand-side management solutions. Utility Consolidated Edison is also looking at more reliable options, including distributed energy storage and microgrids. It first announced requests for information and proposals in March 2016. Following this request, the first major announcement of new DR capacity was released in August 2016, accounting for 22 MW of peak demand reduction capacity, with payments to providers ranging from $215/kW to $988/kW each year. This announcement is noteworthy for including distributed energy storage from leading providers Stem and Demand Energy.

The program has also established incentives for thermal energy storage, with system vendor Axiom Energy offering subsidized solutions to grocery stores throughout New York city. Through the program, customers can save on their monthly bills by using stored ice to provide cooling for refrigeration at times of peak grid demand rather than compressors; the utility is then able to reduce peak demand in constrained areas. These incentives are expected to result in 6 MWh to 8 MWh of utility-controlled demand reduction capacity.

Building on Success

The announcement for a further 13 MWh of distributed storage capacity from Green Charge Networks further builds on the progress made through the REV initiative. This progress positions New York as a leading state in shaping the structure of the emerging distributed energy ecosystem. A successful transition to a DER-centric grid requires a two-pronged approach. It’s necessary to both facilitate the integration of new technologies and also to reform utility business models so that all stakeholders—including utilities—benefit from the efficiency and resiliency that DER can provide. These recent developments have made New York’s efforts much more tangible, and it will be exciting to see what else the state has in store.


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