Navigant Research Blog

‘Good Enough’ Isn’t Good Enough for Smart Grids

— April 6, 2012

I’ve had it with technology.  I’m through!  Why can’t things just work?  Isn’t it easier to make something work all the time than to dream up hundreds of cases where it won’t work?

Today my HP printer refuses to talk to my laptop.  This is the same printer I’ve used for four years, and the same laptop that has been sending print to it for over a year (but only after HP saw fit to release a Windows 7 driver for a printer already on sale globally).  I have not changed anything recently on either laptop or printer.

But today, nothing.  Nada.  Zilch.  And why?  “The document cannot be printed at this time because of a problem with the printer configuration.”  Of course.  I change the printer configuration every week because it’s so much fun and so easy to do.  Especially a 345MB driver that cannot seem to be patched, only downloaded and re-installed.  I’m down with that.

This vignette captures in microcosm how traditional IT must change to successfully support smart grids.  Can you imagine discovering that you can’t have a cup of coffee tomorrow morning because your coffee maker cannot interact with the power grid?  Multiply coffee maker by kidney dialysis, and things get serious in a hurry.  But IT seems to have no such worries.

Before I’d even finished fuming at my printer, I came upon an excellent article by Christine Hertzog, of the Smart Grid Library.  After reading a recent study from MIT on the future of the Electric Grid, she comments that the study is missing several key concepts.  First and foremost:  resiliency.  I agree completely: resiliency is the keyword for smart grids.

Systems must be designed so that they find a way to keep working even when things aren’t working perfectly  – not bail at the first sign of trouble.  Utility Operations have understood this for over a century.  IT service level agreements (SLAs) just aren’t good enough for smart grids.  The power has to stay on no matter what.  Who could imagine that, 130 years after the first large scale electrification of a city, we may be voluntarily signing up for an arrangement that no longer guarantees resilience?

Last week a vendor disputed my analysis of their product with a note that read in part, “I don’t think you’ve seen our current messaging on smart grids.”  That’s the problem we face:  bullet-proof reliability has been moved out of the engineering department and into the marketing department.  But crisp market messages won’t keep the lights on and the dialysis machines running.  I’m all for strong established vendors entering the smart grid market, as anyone could tell from my Pike Pulse reports.  But please give us stronger products, not just stronger web pages.

And finally… thank your lucky stars that I am a cleantech energy researcher.  That way you don’t have to endure a rant about my obstinate swimming pool pump.


Offshore Wind’s New Neighbor

— April 4, 2012

Results from a recent offshore wind industry survey show concern among offshore wind farm operators, manufacturers, and policymakers in Germany, Denmark, the UK, China, and Japan that other forms of offshore energy could eclipse wind.  Based on Pike Research’s reports on the offshore wind and marine and hydrokinetic (MHK) industries, we concur that MHK technologies have the potential to be more cost-effective than offshore wind, but it will ultimately depend on the specific technology and location of the installation.

Put simply, the growth of the MHK industry does not pose a direct threat to the offshore wind energy industry in the next five years.  In some cases, there might even be areas where the two technologies can be integrated or even share transmission costs.  All eyes will be on the UK which is home to 90% of offshore wind installations currently installed and may see as much as 700 MW of wave and tidal projects installed by 2017.

Pike Research’s analysis of the offshore wind market shows that with 4 gigawatts (GW) currently installed, the industry has proven it can overcome the major engineering challenges of installing colossal turbines in some of the world’s harshest operating environments.  While offshore wind installations typically generate more megawatt-hours (hence greater revenue potential) per unit due to their higher capacity factor (up to 45%, compared to 30% for onshore) and larger design (2.3-5 megawatt nameplate capacity), the jury is still out on its overall cost-effectiveness when you factor in operations and maintenance costs (which can be up to 60% of the lifetime cost) and transmission.

For comparison, the MHK industry is where the offshore wind industry was five to seven years ago – with several 10-50 MW commercial deployments expected in the next few years.  MHK companies are all targeting a levelized cost of energy that would make them competitive (or better) with offshore wind, when deployed at scale.  Like offshore wind, the biggest unknown is the operations and maintenance costs for these systems.  Pike Research’s recent MHK report revealed that although wave power companies have been in the spotlight for the past few years, corporate interest and investment in tidal power technologies could make it the lowest cost MHK technology in the near-term.  Rolls Royce has invested in tidal power for a number of years.  Siemens’ recent acquisition of Marine Current Turbines shows that they think the technology is ready for primetime.

There is a sense that both industries are facing a make-or-break  phase.  If MHK can replicate the experience of offshore wind in the next few years, with a slow and steady rollout, it will be considered a major success by virtue of the high level of difficulty for installing 700 ton machines under water.  But neither industry will be out of the woods.  Both will need to continue to find ways to reduce O&M costs and minimize their impact on marine life.  We’ll be watching closely.


Grid Net Gets a Win With Consumers Energy Deployment

— April 4, 2012

Using a public cellular network for managing smart meters got a big boost last September when Michigan utility Consumers Energy chose SmartSynch to provide the new advanced system for its 1.8 million electric customers. The partners in this project were announced recently, and one of them is Grid Net – a San Francisco-based startup and a champion of cellular-based technology for utilities.

Grid Net has been hanging around this space for several years, but without a major U.S. win to build upon – until now.  As part of SmartSynch’s team, Grid Net’s software will be a key component of this deployment.

The other partners in this project besides Grid Net include:

  • GE Energy – which will provide the meters themselves
  • Qualcomm – which will provide the broadband chipsets that enable cellular connectivity in the meters
  • Verizon Wireless – which will provide the communications network

    Soon after the partners were announced, I spoke with Scott Truitt, Grid Net’s marketing director, who told me why he thinks his company’s machine-to-machine network operating system is superior to mesh-based systems:

    • Flexibility that allows for either gradual deployments of devices and applications or full rollouts, depending on a utility’s needs
    • More robust communications over cellular networks than mesh can provide
    • Greater intelligence on every device in the system, not just at the head-end
    • Higher value applications for advanced metering (AMI), demand response load control (DRLC), distribution monitoring and control (DM&C) and premise area networking (PAN)
    • Comprehensive security throughout the system that is government-grade and not a partial solution

      Truitt also mentioned this won’t be the first big rollout for Grid Net.  The company is already part of a similarly large AMI deployment in Australia by Ausgrid, which is rolling out 1.6 million meters and using a 3G-4G cellular network.  Grid Net has also been involved in a separate utility deployment in Australia with SP AusNet, and is taking part in two other trials in that country.  But clearly, the Consumers Energy deal is a defining achievement for Grid Net in the U.S. market.  The first meters are scheduled for installment in August 2012, with a phased approach through 2019.

      As a side note to this project, there is a reasonable chance another meter manufacturer could enter the picture in addition to GE Energy, given two factors: one, the length of deployment over seven years, which is plenty of time for Consumers to warm up to a different vendor (or two) later on, and the fact that SmartSynch itself has been acquired recently by meter-maker Itron.  Just speculation at this point, of course, but it should surprise no one if Itron meters are eventually involved.

      The bigger question is how this deployment proceeds for Grid Net and its partners.  Competitors will be tuned in to see if a large-scale residential deployment over public cellular can muscle in on the traditional mesh turf.  My hunch is this will succeed.  Consumers is a smart utility and has no doubt done its homework.  Partners Qualcomm and Verizon are solid as well.  All will have to execute to prove their worth in the smart grid market.

      What do you think?  Submit a comment below to let me know your thoughts on how viable cellular networks are (or are not) for major residential smart grid deployments.


      “Failed” PEVs Outpace Hybrid Launch

      — April 4, 2012

      The failure to reach the sales targets for the Chevrolet Volt and Nissan Leaf has led to considerable finger pointing about so-far disappointing attempts to mass market plug-in electric vehicles (PEVs).  PEVs have increasingly become fodder for politics as every misstep reinforces what opponents call their inevitable failure.

      But the real problem was in the original lofty expectations for PEV penetration by both the auto makers and the government, which were unreachable given the cost of the vehicles.  As we’ve said all long, the government’s projection of 1 million PEVs on US roads by 2015 was too aggressive given the short timeframe to get new vehicles to market and the nascent state of the technology .  (You can listen to the reasons why in this recorded webinar.)

      The automakers failed to consult their history and economics textbooks when projecting how many PEVs they could sell during the first few years of production.  Hybrid vehicles are the closest recent precursors of today’s PEVs, and they didn’t sell in close to the numbers that auto manufacturers hoped to achieve.

      The below chart shows the actual sales figures for hybrid sales in the US from 2000 to 2006, compared with the actual sales of PEVs in 2011 and then Pike Research’s projected sales through 2017.  As we can see in the chart, during the first full year of US sales of the Toyota Prius and the Honda Insight 9,350 hybrids were sold, while PEV sales in 2011 were near double that.  When you consider that PEVs cost much more than a hybrid and require significant changes in consumer education and behavior (e.g.,understanding the charging of the vehicles), the PEV launch can be viewed as a relative success.  Lest we forget, the US light duty vehicle market was actually smaller in 2011 (13.7 million) than it was during the 2000s, which makes the PEV launch that much more impressive.

      Pike Research forecasts that during their respective first seven years on the market, PEVs will outsell hybrids (in the corresponding years of their launch) every year, and by a whopping 90 percent in total units sold throughout the seven year period.  Despite a higher price tag (that must and will come down), PEVs have many advantage over the hybrids from more than a decade ago: Gasoline cost about half as much in the early 2000s as it does now, and it’s unlikely that we’ll ever see $1.30 gas again.  Thus, the potential for saving money by plugging-in is much greater than was switching to a hybrid during the previous decade.

      • The twin motivators of national energy security (for both military and economic reasons) and reducing global greenhouse gas emissions are much stronger now for governments around the globe.
      • The selection of vehicle models and number of automakers participating will be much greater for PEVs than it was for hybrids.
      • PEVs have the potential to benefit the grid by helping to offset the variability of renewable energy generation, and business models that pay for that benefit will evolve.

      All of these reasons add up to PEVs successfully taking hold in the market, while not reaching the stratospheric sales originally envisioned.


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