Navigant Research Blog

Busy Start to 2015 for Smart Grid Companies

— January 22, 2015

Smart grid companies must have gotten their wishes granted during the holidays, because they are in a sharing mood to kick off the new year.  A burst of merger and acquisition and partnership activity shows that the ecosystem is growing and there’s enough room for everyone to get a piece of the bigger pie.

Trilliant and Innovari announced the completion of interoperability testing of the Innovari Interactive Energy Platform (IEP) and the Trilliant Smart Grid Communications Platform (SCP).  This combination enables utilities to improve operations and benefit customers with a shared communications infrastructure for smart grids.  The Innovari IEP provides automated demand response (DR) for commercial and industrial customers.  The Trilliant SCP complements the IEP with a two-way communications network to deliver grid situational awareness that enables real-time demand side management and the integration of distributed renewable energy resources.

Analytics and Engagement

Silver Spring Networks acquired longtime partner Detectent, which provides software to improve advanced metering infrastructure and utility grid operations, ensure revenue protection, and deliver enhanced customer engagement programs.  Detectent’s utility analytics solutions will be offered both as a standalone solution or powered by Silver Spring’s smart grid big data platform, the SilverLink Sensor Network.

Schneider Electric, meanwhile, announced two recent partnerships.  The first is a partnership with PlanetEcosystems to provide utility service providers with Efficiency Advisor, an integrated suite of software-as-a-service customer management offerings.  Combining Schneider’s Wiser Home Management system with PlanetEcosystems’ P-ECOSYS customer engagement platform, Efficiency Advisor will offer features like behavioral usage efficiency, home usage reporting, personalized recommendations, and an energy marketplace for customers to find contractors and financing options for energy efficiency programs.

Schneider’s second announcement involves a partnership between its European DR division, Energy Pool, and Hyosung, a South Korean industrial conglomerate, to offer DR in the newly opened South Korean marketplace.  Energy Pool will provide its DR expertise and manage operations, while Hyosung will tap into its network of industrial partners and provide IT support.

Just Couldn’t Wait

Often, companies will wait for the DistribuTECH conference to make big announcements about partnerships and new technologies, but these deals apparently couldn’t wait.  They’ll be discussed at this year’s DistribuTECH in San Diego, running February 3 to 5.  Last year, the theme at the conference seemed to be data analytics, as vendors showed how they can extract usable information from the plethora of data now available from meters and devices.  Based on these early announcements, it appears that the one-word summary for this year’s conference will be “interoperability.”

Now that the analytics are available, vendors are realizing that they likely can’t offer all possible analytical tools for utilities on their own, so collaboration will be necessary.  Whether that is through mergers and acquisitions or partnerships, I expect this trend to continue and am sure there will be more announcements at DistribuTECH from those who held back their surprises.

 

What It Will Take To Transform Buildings in Large Cities

— January 22, 2015

From New York to Los Angeles, a growing number of the largest U.S. cities are recognizing that tackling building efficiency translates into progress toward climate resilience.  The underlying assumption is that better information leads to action.  As these cities compile baselines on commercial building energy use and educate the public on the cost-effective opportunities for energy reductions, the next question that arises is whether building owners will take action.

New York State of Mind

New York City was the first to launch a comprehensive strategy to tackle energy waste in commercial buildings through four local laws under the Greener, Greater Buildings Plan.  The complementary laws not only mandate energy benchmarking but require performance upgrades to meet local energy codes for citywide renovations, major retrofits in buildings over 50,000 SF to meet lighting efficiency standards, and the installation of submeters by 2025.  Mayor Bill de Blasio has continued the commitment to improving the city’s climate readiness and, in September, announced a new goal for a citywide 80% reduction in greenhouse gas emissions by 2050.   According to a recent article in The New York Times, the mayor’s office estimates that the energy efficiency advances in buildings deliver tremendous economic benefits.  According to the director of the Mayor’s Office of Recovery and Resiliency, the city spends $800 million a year to run its facilities, and energy efficiency retrofits could generate $180 million in annual savings by 2025.

Best Practices

The City Energy Project (CEP), a national initiative directed by the Institute for Market Transformation (IMT) and the Natural Resources Defense Council (NRDC), aims to help 10 cities design energy efficiency plans and share best practices for promoting change in their largest commercial buildings.   Atlanta, Boston, Chicago, Denver, Houston, Kansas City (Missouri), Los Angeles, Orlando, Philadelphia, and Salt Lake City have each joined the project, according to the CEP fact sheet. As outlined on the CEP website, in 3 to 5 years, the initiative will create transparency on building energy use and create financial vehicles for investment in energy efficiency.

New financing channels are a critical element in the mission to tackle commercial building energy efficiency.  While many of the most attainable energy efficiency improvements can be low-cost or no-cost improvements through scheduling and procedures, transformational changes require capital investment.  The challenge is how to engage building owners with financing mechanisms that enable those investments.

Opening the Purse

At the 2014 World Energy Engineering Conference, held in October in Washington, D.C., several sessions honed in on the challenge of financing energy efficiency.  The market recognizes the opportunity and benefits associated with energy efficiency, but the reality is that capital budgets are tight.  Former President Bill Clinton, the keynote speaker, declared, “Financing is holding back the energy revolution.”

In Navigant Research’s view, the challenge is two-fold.  On one hand, there is the opportunity to adjust perspectives on energy efficiency investment.  Advocacy efforts, such as the CEP, could help building owners broaden their views from a focus on payback to a longer-term view of how energy efficiency and intelligent building investments enhance the value of their facilities.  On the other hand, our research suggests that a change is underway in the performance contracting and shared savings models that have helped fuel investment in energy efficiency historically.   Watch for a new report on energy service companies and the transformation of intelligent buildings financing in 2015 as a part of our Building Innovations Service.

 

With Gas Prices Low, EV Drivers Adjust to Timely Price Info

— January 22, 2015

While the falling price of gasoline is welcome news for many drivers, it undercuts the financial argument for driving a plug-in electric vehicle (PEV).  On a per-mile basis, electricity in the United States is between 20% to 35% of the cost of driving a gasoline-powered car, depending on the utility rates and gas taxes.  Avoiding paying $50 or more for a weekly fill-up on gas compared to around $40 per month for charging an EV gives EV drivers financial satisfaction.

Gas has dipped below $2 in some states, and U.S. sales of plug-in hybrids have simultaneously slumped, falling 26% in November 2014 versus a year ago, according to HybridCars.com.  However, EV economics can be further improved by charging off-peak, and recent studies show that not only are significant savings possible, but also that consumers will adjust their charging to take advantage of the lower rates.

Time to Charge

A recent demonstration that provided EV owners with timely information about the cost of electricity and grid health indicates that the cost of charging can be reduced by up to 60% through smart charging.  Customers in the study had access to hourly utility rates through a connection to the Siemens energy cloud, and charging power levels were alternated based on the needs of the grid.  The study was performed by Duke Energy and Siemens and delivered charging information to mobile phones, tablets, and computers, enabling EV drivers to schedule charging based on the anticipated costs given the varying rates at different times of the day.

Siemens delivered electricity rate information via its computing cloud using the OpenADR demand response protocol, which enables energy-consuming devices (including charging stations) to respond to grid conditions.  The Society of Automotive Engineers (SAE) has established many standards for communications between charging stations and EVs; others, including the CEA-2045 modular communications interface standard, enable communications between charging stations with smart meters and home networking devices.

A Bad Connection

Meanwhile, in December, the U.S. Department of Energy published a report summarizing six projects related to EV charging that were funded in 2009 as part of the American Recovery and Reinvestment Act.  Entitled Evaluating Electric Vehicle Charging Impacts and Customer Charging Behaviors, the report states that when provided with discounted overnight rates for EV charging, consumers will adapt their charging habits.  “Customers took advantage of time-based rates to save on overnight residential charging” when they were able to pre-program charging, according to the report.  Convenience in managing charging is viewed as essential to minimize the cost of EV charging.

The report also points out that work needs to continue on connecting EV chargers with smart grid devices.  The Sacramento Municipal Utility District (SMUD), which was one of the six utilities managing the projects, found that charging equipment “successfully connected to SMUD meters about 50% of the time for several reasons, including poor ZigBee radio signal quality (often range related), problems with power supply circuits in the EVSE [electric vehicle supply equipment] communications module packet loss recovery, and environmental interference.”

Simplifying and reducing the cost of EV charging is critical to convincing more consumers to opt for EVs over conventional vehicles –  especially when prices at the pump are low.

 

In Growing EV Market, Volkswagen Is On the Rise

— January 20, 2015

Navigant Research estimates that plug-in electric vehicle (PEV) sales in 2014 surpassed 320,000, 60% above 2013 sales.  The U.S. market accounts for over one-third of all sales; however, the largest growth has come from China, with 2014 sales estimated to have nearly quintupled those in 2013.  The biggest developments of 2014 were BYD’s introduction of the Qin and BMW’s global introductions of the i3 and i8.  The two automakers, which combined only accounted for about 2% of the global market in 2013, now account for more than 10%.  Although 2014 wound up being a good year for the PEV market, with double to triple-digit growth in every major region, 2015 will be far better.

In Navigant Research’s report, Electric Vehicle Market Forecasts, we forecast that PEV sales in 2015 will surpass 570,000, growing nearly 80% from 2014.  The U.S. market, which grew around 30% in 2014, is expected to grow by more than 70% in 2015.  Similar gains will likely be made in China and Europe.  The bump in 2015 comes from the introduction of Tesla’s next vehicle, the Model X, alongside a number of new PEV models, primarily from Volkswagen (VW).

Late Bloomer

Likely the most significant development in 2015 will be the dramatic expansion of VW’s PEV market share.  VW has been slow to enter the PEV market, but it is now one of the largest players.  Eight PEV models (six plug-in hybrid electric vehicles [PHEVs] and two battery electric vehicles [BEVs]) are available in various regions through different brands: VW (two PHEVs, two BEVs), Audi (one PHEV), and Porsche (three PHEVs).  In 2013, VW accounted for less than 1% of the global PEV market; in 2015, Navigant Research expects the automaker to account for 10%.  This will likely make VW, along with Mitsubishi, the third-largest PEV maker, behind Nissan and Tesla.

 

PEV Market Share, World Markets: 2015

(Source: Navigant Research)

The German Wave

Further strengthening VW’s position in the PEV space are its plans to roll out even more PEV adaptations to existing luxury vehicle model lines from Audi, Porsche, and Bentley to compete against Tesla.  Navigant Research believes that VW is likely to overtake Nissan in 2017, but still trail Tesla.

VW’s broad adoption of PEVs is similar to the strategies of other German automakers, including BMW and Daimler.  These types of commitments are uncommon in Japan and the United States, where major automakers, besides Nissan, have been hesitant to enter the PEV market in force.  The net effect of this trend could produce a PEV industry synonymous with German engineering, not unlike Japan’s preeminence with hybrids.

 

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