Navigant Research Blog

Oregon Boldly Enters the Road Tax Debate

— May 21, 2015

 The decaying road infrastructure in the United States is obvious to everyone, yet state and federal legislators have done nothing for decades. Despite the constant threat of injury due to failing roads and bridges, hiking the federal gas tax is viewed as a death sentence for politicians, who have not raised the levy since 1993. Back then the gas tax represented 17.1 % of the total retail price of gas; in 2014, it constituted only 5.3%.

Gas tax revenue has not kept up with inflation, which has resulted in tax revenue for the federal Highway Trust Fund to be taken from other revenue sources to remain solvent. The Fund, which is $52 billion in the red over the past decade, will run out of money at the end of May unless Congress acts to reauthorize funding.

The lack of federal funds is squeezing states to do more on their own to repair their infrastructure, and Oregon is one of at least 10 states that are attempting to raise revenue. In July, Oregon will test moving from a fixed per-gallon tax to a per-mile-driven fee. The challenge with testing the program with 5,000 volunteers is that the self-selecting audience is likely to save money since drivers with low fuel economy vehicles are unlikely to join, knowing that they would pay more by participating. However, if those who do participate react positively, then Oregon is more likely to move to implement the plan for all drivers.

Fee Hikes

The move to a per-mile fee is in response to decreasing use of fuel (and therefore tax revenue) per mile driven due to increasing fuel economy and the arrival of plug-in electric vehicles (PEVs). Some states have considered adding an annual registration fee for PEVs, which don’t pay road taxes on the electricity that powers the vehicles.
While this would raise revenue, it could reduce sales of PEVs if the overall fuel savings were then reduced. A more equitable solution would be to combine a per-mile-driven tax with annual registration fees that consider another negative impact of driving—greenhouse gas emissions. Having more costly registration fees for vehicles with higher emissions (i.e., low fuel economy) could keep the overall cost of driving a PEV, hybrid, or other fuel efficient vehicle sufficiently cheaper to encourage their purchase.

Other states considering changes to gas and road taxes to increase revenue include Illinois and Nebraska. The Nebraska legislature on May 14 overrode the governor’s veto of a law that would raise the gas tax.

Bridges Out Ahead

“Once again, the Legislature has chosen to prioritize tax hikes over tax relief measures that Nebraskan need and deserve,” Nebraska governor Pete Ricketts said, as quoted by the Associated Press.

On the federal level, Rep. Peter DeFazio, a Democrat who is also from Oregon, has proposed redirecting funds from the estate tax to the Highway Trust Fund rather than repealing it. This initiative, like most other bills related to infrastructure funding, has little chance of passing despite the considerable benefits, including creating 13,000 jobs per $1 billion spent.

Sadly, it will likely take a series of bridge collapses such as what happened recently in Jacksonville, Florida or other such calamities for the public to pressure state and federal legislators to take serious action on infrastructure.

 

Bristol, U.K. Plans To Be Open, Programmable City

— May 20, 2015

The City of Bristol’s selection as the European Green Capital 2015 is an example of the increasingly visible role that U.K. cities are taking in the evolution of smart city ideas and solutions.  The title may be largely symbolic, but it is one that many European cities covet as a validation of their innovation in sustainable living and development.  As with all such awards, there is plenty of skepticism as to how far the realities match the rhetoric, but the scope and ambition of the city’s program are impressive. Bristol has been keen to build on the award and use it to add significant momentum to an already impressive list of projects cutting across the energy, transportation, building, and technology sectors.

A good example of Bristol’s ambition is the recently launched Bristol is Open, a joint venture between the city council and the University of Bristol to develop an open, high-speed network that will foster innovation across multiple city applications. The project has funding support from the U.K.’s Department of Culture, Media and Sport and Innovate UK, and is also building on the supercomputing capabilities of the University of Bristol.

Experimentation as a Service

A core element of the project is a City Operating System (CityOS), developed by the University’s High Performance Networks research group. The CItyOS will manage the machine-to-machine communications across the city using a software defined network (SDN)  approach to improve manageability, integration, and accessibility.  The network is being developed according to OpenDaylight standards as part of the project’s commitment to openness, which extends to procurement and data management, as well as hardware and software.  All the data generated will be anonymized and made public through the city’s open data portal. The project team will also proactively share its findings with other cities, technology companies, universities, and citizens. The network will be used by technology companies, research organizations and small and medium-sized enterprises to develop and experiment with new solutions in urban mobility, energy efficiency, environmental monitoring, and health. The team has defined its approach as City Experimentation as a Service.

The project will make use of three networks: a 30-GB  fiber optic network, a series of Wi-Fi wireless networks along the Brunel Mile area of the city, and a radio frequency mesh network based on city lampposts.  The aim is to eventually expand the networks beyond the city center into the wider city region, creating an open, programmable region covering one million people. Among the partners already signed up for the project is Silver Spring Networks, which is providing the  mesh network technology to connect the city’s streetlights and to provide a platform for other applications, such as traffic monitoring, air quality control, and safety cameras.

Creating the Digital City

The Bristol project is an example of how  the Internet of Things (IoT) and smart city concepts are coming out of the labs and small-scale pilots and onto the streets of major cities.  Other examples include an extended smart street lighting network in Copenhagen and Barcelona’s plan to develop a multi-application Urban Platform.

If successful, the Bristol model could be a showcase for how network infrastructure and a CityOS can provide a shared capability for access and innovation.

 

Wind Turbine Manufacturers Shuffle Market Share in a Record 2014

— May 20, 2015

Each spring, Navigant’s annual tally of previous-year wind turbine installation market shares are a closely watched barometer of how all the major wind turbine vendors are progressing in the global marketplace. This analysis is a key part of the 20th annual World Wind Energy Market Update 2015, produced by BTM Consult, a part of Navigant.

Last year was a high water mark for the industry overall, with 25,474 wind turbines installed, representing a record of 51,230 MW. Cumulative installed capacity climbed to 372 GW by the end of the year. China again held the title of the world’s largest annual market with 23.3 GW of new wind power installed in 2014, and Germany remained a distant second with 5.1 GW, followed by the United States with 4.9 GW.

The revival of the U.S. and German markets caused a significant shake-up in the rankings of the world’s top 10 wind turbine suppliers in 2014:

  • Vestas remained the No. 1 supplier after strong sales both onshore and offshore.
  • Siemens jumped two positions to second in 2014 due to strong sales in the offshore sector and the good shape of the German market. Interestingly, had more planned 2014 offshore wind been fully commissioned and grid-connected, Siemens would have challenged Vestas’ position for the first time in wind power history.
  • GE Energy recovered after a renewal of wind tax credit support in its home market in the United States and rose from a ranking of fifth to third in a technical draw with Goldwind. Only 31 MW separate the companies in 2014.
  • Goldwind dropped from No. 2 to No. 4 despite its strong performance at home. Its small footprint outside China means it did not benefit from the good year in Germany, Brazil, and the United States.
  • Enercon moved down two places to No. 5, as it relies largely on the growth of its home market Germany, in which it supplied nearly 40% of the turbines installed in 2014.
  • Suzlon Group rose one position to No. 6, supported by its then subsidiary Senvion (its divestment has just been finalized) and its operations in India. Navigant Research expects that with the division of the group, both Senvion and the remaining part of Suzlon will drop from the top 10 rankings in 2015.
  • United Power moved up one position as the world’s No. 7 supplier on the rush to install capacity in China in 2014.
  • Gamesa had a strong performance in the Americas and India, which allowed it to remain as one of the top 10 suppliers globally, coming in eighth place for 2014 installations, down from sixth in 2013.
  • Ming Yang remained in ninth position in 2014, pulled by the growth of its home market, China.
  • Envision crept into last place in the top 10 supplier list in 2014 thanks to the spectacular growth in its home market, becoming the fourth Chinese manufacturer in the top 10 chart. In 2013, Envision was No. 11.
  • Nordex had a record year, installing nearly 1.5 GW, up from over 1.2 GW in 2013, when it made it into the last spot in the top 10 group. However, it slipped out of the top 10 ranking based on the huge volume of wind plants installed by the other major vendors, particularly those in China. The next five in line after the top 10, in addition to Nordex, are all Chinese: XEMC, Sewind (Shanghai Electric), Dongfang, and CSIC. Acciona and Alstom are ranked a distant 23rd and 24th.

For more information, see World Wind Energy Market Update 2015.

 

Greek Construction Booming … In the United States

— May 19, 2015

Today’s outlook for construction in Greece is bleak. A standoff between the country’s Syriza government and its European creditors could spark a default of government debt and potentially lead to an exit from the European Union, and the Greek economy is in shambles after 6 years of recession. Furthermore, the head of one of Greece’s largest construction companies was arrested on charges of tax evasion.

Greek construction activity has fallen more than 95% from its pre-crisis peak and, in all likelihood, has little chance of rebounding any time soon. Across the Atlantic, though, Congress is considering a bill that could have a profound effect on a different type of Greek construction—the Greek-letter fraternity and sorority houses across the country.

Currently, a donation to a college or university Greek organization for housing provides a tax deduction of 30% of the donation amount (and, perhaps, a feeling of giving back). However, the Collegiate Housing and Infrastructure Act would allow donations to Greek groups to be fully tax deductible. The Fraternal Government Relations Coalition, a group representing 100 fraternities and sororities, is urging Congress to pass the bill. The group says that $1 billion in construction and renovation projects could begin if the bill is passed. Some of the buildings date to the 1930s, and some have seen few if any upgrades in the past several decades. The impact of $1 billion toward renovations on aging housing could have huge ramifications on energy consumption.

From Frat House to Green House

Improvements to the building envelope, more efficient HVAC equipment, better lighting, and, importantly, smarter controls could not only reduce operating costs but also improve the comfort of building occupants. Navigant Research’s Energy Efficiency Retrofits for Commercial and Public Buildings provides insight into the major technical and market trends related to these types of projects. Indeed at some universities, fraternities and sororities are already leading on energy improvements. The Kappa Alpha Order chapter house at the University of Maryland installed ceramic film on their windows as part of a sustainability initiative. Also, the Beta Theta Pi fraternity of University of Florida installed solar panels on the roof of its campus fraternity house. Broader Greek construction may have an impact positive enough to counteract all of that other stuff fraternities do.

 

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