Navigant Research Blog

Salt River Project, Others, Buying 700 MHz Spectrum for Smart Grid Applications

— July 2, 2015

Utilities have long bemoaned their lack of access to appropriate, affordable wireless spectrum for their smart grid communications networks.  But this year, a handful of utilities have taken the plunge, acquiring 2 MHz of licensed 700 MHz band spectrum from private investors.

Salt River Project (SRP), based in Phoenix, Arizona, has made one of the largest purchases to date in terms of population covered. Earlier this year, SRP acquired the Phoenix-Mesa economic area (EA) license #158, which covers an estimated 4.3 million people (pop) in central Arizona.

The license includes two 1 MHz swaths of spectrum at 757 MHz to 758 MHz and 787 MHz to 788 MHz. Access Spectrum was the seller; the company, along with Columbia Capital and Beach Point Capital, is marketing similar licenses nationwide for $0.75/MHz pop (pops x MHz).  This implies a price tag in the $6.45 million range for the SRP transaction.

I spoke with Ron Taylor, senior principal engineer for SRP, about the purchase and what still needs to happen for this spectrum band to meet utilities’ needs.

“We have to find the right vendors; we’re working with standards bodies right now,” he said, to develop a standard protocol.  “We’re not interested in a proprietary solution; we don’t want a single point of failure.”  Taylor added, “We took a bit of a risk [buying the spectrum].  Others were waiting for someone to put a foot in the water.”

As of April 2015, two other utilities—NorthWestern Energy and Great River Energy—had also contracted to acquire spectrum in this band.

Distribution Automation Is the Goal

SRP intends to use the private network to fill the connectivity gap between its substations, which are all connected by fiber, and its advanced metering infrastructure (AMI) networks.  Taylor noted that they are interested in distribution automation applications like voltage control and fault location, isolation, and service restoration (FLISR), adding that it is also looking at smart inverters for solar installations and monitoring of distribution transformers and dynamic line rating applications.

When asked if 2 MHz of spectrum is enough to do it all, Taylor admitted that SRP won’t be able to do it all.  “We did the math.  What is smart grid?  We had to trim our list,” he said.  But he added, “Everything that’s critical, and even nice to have, should be accommodated for 10 years.  It all fits except meter reading; that would overload our network.”

Prior to the acquisition, SRP leased the license and tested for interference with Verizon Wireless’ adjacent licenses and network.  The field test validated the license for SRP’s planned purposes.

Just a Start

SRP and other utility buyers of this slim license band are hoping the vendor community can standardize around a single technology, yielding economies of scale for utilities still seeking an efficient communications strategy for high-performance-need applications in the distribution network.

But as SRP’s chief engineer pointed out, just 2 MHz really does limit the options for longer-term smart grid goals—but with no sign the Federal Communications Commission (FCC) is  considering dedicated spectrum for power utilities in the near term, the availability of this contiguous, nationwide set of licenses is a start.

 

Regulatory Focus on Air Transit of Li-ion Batteries Increases

— July 2, 2015

Lithium-ion (Li-ion) batteries have been highly touted for their long lifespan, high discharge rate, and ability to perform effectively in a number of different energy storage applications, which has led to their widespread adoption across the consumer electronics, automotive electrification, and utility grid energy storage sectors. The key factors driving the design and application of Li-ion battery technologies include power capacity, energy capacity, cost, lifespan and safety. On the cost side, Navigant Research sees the maturation of the automotive and energy storage manufacturing and supply chains creating market forces that are expected to drive costs to new lows. However, the safe transport and use of Li-ion batteries is paramount and must be factored into each step of the manufacture, sale, transport, and use phase of the battery.

Since Li-ion cells are shipped partially charged to maximize their lifespan and reduce the chance of oxidation over time, they are classified as dangerous goods for transport, according to the United Nations (UN) Model Regulation for the Transport of Dangerous Goods.  Further, it has been well-documented that heat generation coupled with metal contamination and poor battery management systems can increase the risk of thermal runaway and fires during the use phase of a Li-ion battery. Whereas design, manufacturing, and quality control improvement have been implemented to reduce these risks during battery use, new scrutiny is being placed on the air transport of partially charged Li-ion cells and battery packs due to combustion risk from extreme temperatures. These developments are creating a challenge for Li-ion battery manufacturers that are considering export strategies due to the increasingly complex set of regulatory challenges facing airline carriers.

For example:

Assessing and Addressing the Risks

To address safety risks during transport and use, scientists at NTT Facilities, Inc. have tested adding a chemical flame retardant called phosphazene to lithium batteries to increase their safety in different applications. Their study has shown that fully charged 200 Ah packs, like those commonly used in portable electronics, did not explode, ignite, or undergo thermal runaway when undergoing significant laboratory testing protocols. Further, larger battery packs were also tested and operated for 400 days in a state of floating charge with positive results and minimal impact to battery capacity.

Though this advancement is still in the early stage of development, the prospect of integrating a material that is commercially available with a high voltage resistance and low cost to further improve safety while balancing costs merits a watchful eye. Whereas battery manufacturers are loath to add materials, those battery manufacturers and energy storage system integrators looking to ship (or procure) Li-ion batteries from long-distance manufacturing sites will want to track these developments.

 

Japan’s METI Supporting Smart City Projects

— July 2, 2015

According to Navigant Research, a smart city is characterized by the integration of technology into a strategic approach to sustainability, citizen well-being, and economic development. While there may be various definitions of a smart city, in many cases, smart cities are desired in order to cope with the growing urban population, achieve sustainability goals, and maintain economic competitiveness through innovation and technology development. In addition, city resilience—the ability to recover from catastrophic events—has become increasingly important in the context of climate change.

In Japan, smart city projects are being led by the central government and local governments, as well as by the private sector. However, due to the centralized political model and events requiring national response such as the Great East Japan Earthquake in 2011, large-scale smart city projects are usually initiated by the central government through the Ministry of Economy, Trade and Industry (METI). After the 2011 earthquake and Fukushima Daiichi nuclear accident, Japan had a distinct motive to promote smart cities as means to reconstruct affected urban areas.

Subsidized Projects

There have been two waves of smart city projects subsidized by the METI under its Science, Technology and Innovation budget. The first wave of projects is the Test Projects for Next-Generation Energy and Social System. In 2010, METI solicited local governments for smart city project applications. In April 2010, four cities were selected—Yokohama, Toyota City, Keihanna, and Kitakyushu—to receive METI subsidies that amount to ¥126.5 million. Initially, the pilot cities focused on improving the quality of life and showcasing innovative technologies. However, after the 2011 earthquake, there was a paradigm shift to work toward reducing energy consumption and improving energy efficiency.

These four cities have become the first successful operational pilots in Japan. Some areas of success include demand response programs, which reduced consumption during peak period by 20% in Kitakyushu; home energy management (HEM) programs in which 1500 homes in Yokohama had HEM systems installed in 2013; vehicle-to-grid (V2G) technology; and smart metering. Details on these projects and updates can be found on the Japan Smart City Portal.

In 2012, METI pursued a second wave of subsidized smart city projects to reconstruct cities affected by the earthquake to become more resilient. In 2012, 10 cities were selected for the Projects for Promoting Introduction of Smart Communities program with a budget of ¥8.06 billion. Also, because of the widespread shutdown of the nation’s nuclear power plants post-Fukushima, Japan has been decidedly promoting renewable energy resources to meet its demand. In 2012, the country introduced a feed-in tariff system, as well. While the second wave of smart city projects are still in the planning stage, thanks to the earlier success in the four pilot cities, Japan is getting closer to realizing its aspiration to create the Japanese model of smart cities to export.

 

Is the Gogoro E-Scooter Priced Too High?

— July 1, 2015

Taiwan-based electric scooter (e-scooter) battery swap company, Gogoro, has finally unveiled pricing for the most ambitious e-scooter program in the world. Gogoro’s e-scooter, called the Smartscooter,  and access to a battery swap network will cost consumers $4,100 and about $30 per month, respectively. For the company’s first deployment in Taipei, it is offering 2 years of free maintenance, 1 year of theft insurance, and 2 years of free battery swapping. The Gogoro Smartscooter became available for pre-order in Taipei on June 27.

There are several ways to interpret the pricing announced by Gogoro. On one hand, for an exceptional looking and performing e-scooter, the price seems fair. Gogoro’s Smartscooter has a range of 60 miles and a top speed of 60 mph (going from 0 mph to 31 mph in 4.2 seconds). Advanced features, such as smartphone integration, light-emitting diode (LED) headlights and tail lights, an intelligent security system, a digital dashboard, and an overall sleek design, make this scooter far more attractive than most other electric models. On the other hand, many consumers in Asian megacities, including Taipei, are accustomed to paying $500 or less for low-end gasoline-powered scooters. A higher-end, more comparable 125cc gas scooter costs roughly $2,600, which is still considerably less than Gogoro’s Smartscooter.

Lack of Battery Ownership Remains an Issue

Gogoro CEO Horace Luke had previously stated that the company’s e-scooter would be in the $2,000 to $3,000 price range. The Smartscooter was expected to cost about the same amount as a comparable gasoline scooter since consumers of the Smartscooter won’t actually own the batteries used in the vehicles (which constitutes a large portion of the overall cost and value of the e-scooter). Removing the battery from the purchase price was meant to drastically reduce the cost of the vehicle, using more of a leasing-style mobile phone business model, where the initial purchase price of the e-scooter is reduced to encourage early adoption, and subscription fees for the use of the company’s battery swapping network will eventually make up the difference over time. It is somewhat surprising that even without consumers having to pay for a battery, the e-scooter is still more expensive to buy than a gasoline equivalent.

Taiwan Subsidies a Factor

Nevertheless, Gogoro claims that when government subsidies and the cost-savings of using the battery swap network instead of gas are considered, the overall cost of owning a Smartscooter will be less than its gas counterpart after 2 years. E-scooters do receive subsidies in Taiwan, with the amount ranging from TWD21,000 ($663) to TWD34,000 ($1,074) in most regions. These subsidies should help narrow the gap in price differential and encourage larger adoption of the e-scooters.

While it remains to be seen if Gogoro can win over thousands of customers to support its battery swap network, if successful, a network like Gogoro’s could become the most impactful development in electric transportation since Tesla introduced the Model S. Nearby, enormous scooter markets such as China, India, and Indonesia could see battery swap networks in their megacities sooner rather than later if Gogoro is successful in Taiwan.

For more information on electric scooters, see Navigant Research’s Electric Motorcycles and Scooters report, which forecasts global cumulative sales of electric scooters will total over 42 million units from 2015 to 2024.

 

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