Navigant Research Blog

Fuel Cell Seminar 2013: An Industry at a Turning Point

— September 10, 2013

Barring another natural disaster striking the East Coast of the United States, my colleague Lisa Jerram and I will be attending this year’s Fuel Cell Seminar in October, in Columbus, Ohio.  Each year the industry convenes to share updates on progress made in the last year and argue amongst ourselves about what steps should be taken next.  The good news this year is that the industry has broken the $1 billion annual revenue mark, and shipments are up.  The bad news is that costs are still too high, lead times for orders still too long, and so on.

Some of the technical tracks this year should be quite interesting.  The track on “Solid Oxide Fuel Cell – Recent Developments” has some beguiling presentations in it, including one with “subsidy free” in the header.  That should certainly gain some attention!  One track I know I’ll attend is on unmanned vehicles (UVs) – not because of the military focus but because of the increasing use of UVs in the civilian sector, in areas such as wildlife monitoring.  This niche has the potential to make some serious gains in the next 5 years, as money is invested in upgrading many monitoring services in various applications.

The Global View

Unfortunately, though, some of the more market-based tracks are full of backward-looking analysis.  Unpacking and unpicking economic decision-making tools is not useful when customers have already started bypassing capital investment adoption models in favor of power purchase agreements.  Debating the minutia of hypothetical modeling exercises is futile at best and a waste of money at worst.

With this year’s seminar in Ohio, the heartland of the Fuel Cell Corridor, there will be many opportunities to hear from the people on the front lines.  Companies like Catacel and Nextech rarely make global headlines, but they are critical to the development of a robust and healthy supply chain.  One emerging company I look forward to meeting with is WATT Fuel Cell, which is developing a portable solid-oxide fuel cell (SOFC).  With the global focus on SOFCs increasing, it will be good to talk to WATT FC on their proposed time to market –  that’s important since our recent Fuel Cells Annual Report 2013 forecasts this market to grow at double-digit pace for the next decade at least.

One other comment is that the seminar is too focused on the U.S. market.  The theme of the conference is “Fuel Cells and Natural Gas: Securing America’s Energy Future.”  This is an international conference for a global industry, with many attendees and speakers arriving from non-U.S. countries.  I’d love to see the organizers focus more broadly on the challenges facing the industry, such as developing a global supply chain, promoting robust job growth, and developing better training and job prospects, rather than taking a narrow, U.S.-centric point of view that is sure to drive a wedge into the sector.

 

Nissan Joins the AV Club

— September 9, 2013

As media coverage of autonomous (or self-driving) vehicles continues to grow, Nissan is the latest to announce that it will be all set to join in when the playing field is ready.  The company says that it will have products ready for the market by 2020, without actually promising that they will be on sale.  The timing of this launch would match the introduction of the technology that we projected in the latest Navigant Research report on autonomous vehicles.

Nissan has been working on the technology for years already, and its latest investment will create a dedicated proving ground near its R&D headquarters in Japan.  Notably, in February 2013, the company opened an advanced technology center in California with its French Alliance partner, Renault, with a focus on autonomous and connected vehicles and the development of appropriate human-machine interface technology.  Proximity to research facilities run by Bosch and Google undoubtedly played a part in the choice of location.

Nissan has been active in self-driving vehicles before.  In October 2012, the company provided a demonstration of its NSC-2015 concept vehicle.   The car, a heavily modified LEAF, could drive and park itself, as well as be controlled by a smartphone application.  As evidenced by the vehicle name, Nissan hopes to have some of this technology available commercially by 2015.

Crash Avoidance

At the end of 2012, the Elgrand multipurpose vehicle (MPV), which is available in the Japanese market only, became the first Nissan vehicle to feature its Emergency Assist function.   This technology is aimed at reducing acceleration accidents in parking lots and other spaces where cars could collide with walls if a driver mistakenly depressed the accelerator instead of the brake pedal.  Using the four cameras of the Around View Monitor together with ultrasonic sensors, the system detects if the car is currently in a parking space and if there are obstacles in the direction the vehicle is traveling.  The function automatically controls acceleration if necessary and applies the brakes before a collision can occur.

Nissan’s latest announcement acknowledges that, while the technology is nearly ready for production, testing is going to take a few years.  The Japanese automaker will be working with a broad range of research organizations to make sure that the systems are safe and affordable.  It also briefly outlines the benefits that will come from safer roads and more productive commuting.  However, what it doesn’t say is that regulatory changes are needed before any OEMs will be allowed to offer such vehicles to the general public in most countries.  Some legislatures are now working on temporary law changes to permit on-road testing by auto manufacturers and suppliers, but there will have to be convincing demonstrations that autonomous vehicles are safe for public use before laws are changed to allow their sale.  Original equipment manufacturers (OEMs) will also be looking for clarification of liability issues.  Clearly, though, the world’s biggest automakers are moving forward slowly but steadily in anticipation of those changes.

 

Concentrating Solar Thermal Market Losing Steam?

— September 9, 2013

Many in the cleantech industry 5 years ago (myself included) believed that concentrating solar thermal electric (CSTE) technologies represented the only way to get to competitive solar electricity pricing in the near term.

Very smart people saw the same opportunity in 2008:

“With the current plants, those in construction, those under consideration, and the pace of development, it is clear that some tens of gigawatts (GW) of cumulative production over the next decade – possibly as much as 50 GW – of concentrated solar power (CSP) capacity will be installed by 2020.”

By the end of 2013, only roughly 3 GW of CSTE will be installed worldwide, and only 1-2 GW is expected to be added annually through 2018.  Meanwhile, in 2018, more than 60 GW of solar PV will be installed in that year alone, according to Navigant Research’s recently released Solar PV Market Forecast report.

Drying Up in the Desert

Visions of mega-projects in the Mojave Desert, which at one point reached 24 GW on U.S. Federal Bureau of Land Management property alone, have seemingly evaporated.  Plans for similarly ambitious installations throughout North Africa and the Middle East have progressed slowly.  The first phase of a targeted 500 MW CSP plant is expected to come online in 2014 in Morocco.

To be sure, some impressive projects have moved forward in the United States, including a 377 MW project being built in partnership with Brightsource, NRG, and Google in the Mojave Desert that will be the largest solar thermal facility in the world when completed at the end of the year.  However, the industry is clearly not reaching its full potential.  There are a number of reasons for this.

The economic crisis crippled project financing in leading markets such as Spain and the United States, and environmental concerns over transmission lines and water usage have cast a shadow over promising projects in the U.S. Southwest.  Political turmoil has delayed project planning in the Middle East.  Natural gas prices have fallen precipitously in the United States (although, they’ve rebounded somewhat in the last year), while, at the same time, the rapid price decline of solar PV modules has enabled both utility-scale and distributed solar projects to come online more quickly and affordable than anticipated.

Focus on Value

This has forced many CSTE developers to focus on the key value that the technology brings to the table, namely hybrid and storage applications.  Utilities, including Florida Power & Light and Tuscon Electric Power, have experimented with integrating solar thermal technology into existing (or co-located with) natural gas-fired plants.  In 2011, GE announced a hybrid natural gas solar thermal plant in Turkey with target for completion in 2015.  But the market for these applications has not taken off as expected either.

The benefits of storage are more appealing since the use of molten salt and other thermal storage technologies enables greater flexibility in dispatching power to the grid.  A recent NREL study found that the value of CSTE with storage is $32/megawatt-hour (MWh) to $40/MWh higher than the value of a solar PV plant.

Brightsource expects the global market for CSP to be approximately 30 GW by 2020, with growth from the Americas, China, Middle East, North Africa, and South Africa.  That’s highly optimistic.  Even though the two are not mutually exclusive, CSTE is expected to remain only a fraction of the solar PV market for the foreseeable future.

 

In Germany, A Yellow Light for Smart Meters

— September 9, 2013

While Great Britain marches on with its grand plan for a nationwide smart meter deployment, Germany has decided that a pragmatic approach is better suited to its energy strategy.

After a statement by the German Federal Ministry of Technology and Industry at the end of July, we now know that the country will not follow the European Commission’s program for 80% deployment by 2020.  Instead, it will adopt a phased approach that will address its specific requirements around energy efficiency and renewable energy integration.  Germany has stood alone among the Big 5 European Union (EU) countries in not having made a national commitment to the deployment of smart meters.  In the absence of a comprehensive national policy, smart metering in Germany has been left to market forces and has thus been restricted to pilot projects and a few commercial offerings.

The European Commission required all countries that did not commit to a national program to produce a cost-benefit analysis justifying their decision and any alternative approach.  In response to this requirement (12 months after the original deadline), the German government released a report commissioned from Ernst & Young: Cost-Benefit Analysis for the Comprehensive Use of Smart Metering.  The report assesses several scenarios for smart meter deployment in Germany, including the EU model for deployment to 80% of households, a business-as-usual scenario driven by market forces and current metering legislation, and a modified rollout based on amendments to that legislation.

Roll-Out Scenario Plus

Under current rules, new buildings and major renovations,  customers with an annual consumption of more than 6 megawatts (MW), and new sites producing more than 7 megawatt-hours (MWh) of distributed generation (DG) must have an intelligent meter.  The report estimates that by 2022 these measures alone will only extend smart meter coverage to around 23% of the total German market, which at around 48 million meters is the largest in the EU.

The Ernst & Young report determines that smart meters will provide little benefit to small consumers.  This, along with factors such as differential regional requirements, apparently undermines the case for a rollout to 80% of households.  The report does recognize the role smart meters can play in supporting the restructuring of the German energy market around renewable energy and in lowering overall energy consumption.  It recommends an alternative approach called the Roll-Out Scenario Plus, which involves some amendments to current legislation to require smart meters for smaller DG sites and areas where grid conditions necessitate urgent action (e.g., where there is a large amount of renewable energy feeding into the distribution network).  It involves the deployment of both smart meters (with two-way communications capabilities) and intelligent meters without the communications capabilities.  This approach would create a market for around 24 million new meters by 2029, with an estimated 50% of those being smart meters.

A Qualified Yes

The German government is not required to follow this plan, but the Ministry of Technology & Industry has reacted positively, noting that the findings “show that we in Germany need to design our roll-out of smart metering systems in a targeted fashion which meets the needs of our energy reforms.”

The German assessment is not as positive as many in the smart metering industry had hoped, but it’s not a rejection of smart meters, either.  The value of smart meters for large consumers and for addressing critical grid management issues is clear.  The new plan presents a balanced approach that is tailored to the particular requirements and context of the Germany energy strategy.  It should be welcomed.

 

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