Navigant Research Blog

Stop and Smell the Market Indicators

— May 17, 2018

Last month, Philips Lighting revealed its new Philips GreenPower LED toplighting with a light spectrum optimized for cut rose cultivation. The toplighting technology allows growers to increase light levels year-round without increasing heat, which allows for increased yield production. However, the rose market has advanced in recent years to the point that growers are now more concerned with quality of production. Addressing those concerns along with energy efficiency needs, Philips collaborated with research institutes to provide growers with a toplighting spectrum that improves the quality of the roses and is 40% more energy efficient compared to high pressure sodium lighting. While the technology is important for horticulturalists and agriculture research globally, why would a lighting manufacturing giant like Philips focus on grow solutions for roses? The answer is twofold.

The Wall Street of Flowers

The Netherlands is the trade capital of the global rose market and home to the world’s largest flower market, Royal FloraHolland. Every day, 30 million plants and flowers from all over the world are auctioned at Royal FloraHolland, with operations covering over 14 million square feet—equivalent to 243 football fields. Almost half the world’s flowers and plants pass through one of the 11 cooperatively-run regional flower auctions, with buyers and sellers bidding on trading floors just like a typical stock exchange in financial markets. The sheer scale of this market alone gives reason to why manufacturers would want to specialize in lighting solutions for rose cultivation. Yet bidding wars at Royal FloraHolland are just the beginning.

More Competition, More Opportunities

Developing countries in Africa are starting to take up a larger share of the European market for cut flowers and foliage. The CBI Ministry of Foreign Affairs reports that major suppliers Kenya, Ecuador, Ethiopia, and Colombia have seen a 20%-60% growth in exports of flowers and foliage to Europe. Producers in these regions are strengthening their position in global production and trade, mainly due to favorable growing circumstances, rising demand for competitively priced flowers in Europe, and improved transportation. To remain competitive, European growers are looking to advanced lighting solutions for delivering quality, reliability, and consistency in supply. This is why major lighting manufacturers like Philips and OSRAM have noticed and are taking stock in this burgeoning market. Companies may want to tap into this blossoming market as investment opportunities and demand for unique lighting solutions continue to grow out of this competitive space.

For more details, a recent report from Navigant Research, LED Lighting for Horticultural Applications, examines the global market potential for horticultural lighting.

 

The Case for Electrified Delivery Fleets

— May 17, 2018

With the ever-growing global economy comes larger delivery fleets on the road, in the air, and on the seas. Short delivery times are expected by customers, thanks to shipping programs like Amazon Prime, but with more transport comes more pollution. In 2016, transportation made up 28% of US greenhouse gas emissions, and every package delivered to our doorstep represents a slew of emissions scattered throughout the supply chain.

The Emissions Case

To tackle growing emissions from the transportation sector, we will need to do more than electrify just the light duty vehicle segment. Delivery fleets, in particular medium duty vehicle fleets, may offer an optimal solution to curb emissions in the near term. In fact, to reduce emissions, new delivery alternatives like last mile logistics are being piloted to eliminate the need for a delivery truck to make multiple visits before actually delivering a package. Among these are Amazon Key and other home access options. These programs, in addition to electrifying delivery fleets, will aid in emissions reduction.

Due to the current battery size of Class 3-6 all-electric vehicle options (roughly 100 miles in range, for now), delivery fleets that make frequent stops throughout the day are primed for electric adoption. Class 3-6, or medium duty, vehicles range from 10,001 to 26,000 pounds. The electric delivery vehicles could be used during the day and charged at night, with no interruption to their driving patterns. With nighttime charging comes the potential to use wind energy to charge the vehicles, further reducing the emissions from the transportation sector and integrating renewables.

Workhorse All-Electric Walk-in Delivery Van

(Source: Green Car Reports)

The Cost Case

While electrified delivery fleets have many benefits, the lower cost of operation and maintenance over time helps make the economic case for these vehicles. According to one study, the average cost of gasoline over 300,000 miles at $3.00/gallon comes out to $150,000, while driving 300,000 miles on $0.12/kWh electricity would cost only $42,000. Electric delivery fleets require no oil or fuel filter changes and require fewer maintenance hours off the road, meaning the vehicles would be more reliably utilized. These factors help offset the initial heightened purchase price of electric medium duty vehicles (compared to internal combustion engine vehicles) and receive a ROI more quickly.

The Supply Case

Electric medium duty vehicles are slowly entering the US market (with companies such as Workhorse, Chanje, and Motiv), but are more prevalent across Europe and China. Several recent announcements indicate a larger variety of medium duty vehicles in the US market in the next 5 years. For example, in January 2018, Volvo announced it will sell battery electric delivery trucks in North America in 2020, following introduction in Europe next year. Given that supply constraints currently play a role in market actors’ electrification decisions, the increased market activity will likely spur electrification. Stakeholders—most notably utility companies—can also play a role in incentivizing delivery fleet electrification through subsidized vehicle costs, charging infrastructure incentives, or partnering with OEMs to electrify their own fleets. Stakeholder incentivization could help grow the demand and supply sides of the market, leading to more electrified delivery options and fewer transportation sector emissions.

 

Making Food Supply Chains Resilient to a Changing Climate: Opportunities Are Everywhere

— May 15, 2018

We all like to talk about the weather. And with the last 3 years being the warmest years on record, there is even more to talk about. This year, the World Economic Forum reported that the top three global risks in terms of likelihood and impact were climate related: extreme weather events, natural disasters, and failure to meet the required actions to adapt to and mitigate climate change.

The Vulnerability in Agriculture

Our often highly complex international food supply chains are most vulnerable to shocks from weather and longer term climate change. In 2012, the Russian wheat harvest yield dropped by 33% due to drought, heat waves, and forest fires, sending global wheat prices soaring and resulting in a record high price for feed wheat. March 2015 brought episodes of unseasonably heavy precipitation in India, causing extensive damage to wheat, pulses, mustard, and grain. Farmers reported suffering crop losses of over 50%, prompting the government to release state emergency funds.

Solutions Are Crucial

We need solutions to the complex effects of a changing climate on our global supply chains. Our food supply chains must become low carbon and climate resilient in the context of the energy transformation. This is why Ecofys, a Navigant company, focuses on both the low carbon transition and climate resilience. Navigant works with clients to understand the impacts that more frequent extreme events and results of long term temperature changes like rising sea level and changing rainfall patterns can have on agriculture and forestry sectors and on supply chains globally.

How Climate Change Impacts Agricultural Production

(Source: Ecofys, a Navigant company)

What Can Be Done?

For every problem there is a solution, as new regions open up to new opportunities as their climate becomes suitable for cultivating crops. In Europe, we are starting to see examples of innovative approaches to building resilient food supply chains. Witness the farmer in England who for the last 12 years has been growing unconventional crops at his climate change farm, including olives, chocolate vines from the Far East, Peruvian oca, and Japanese wine berries. It’s not just smallholdings adapting crop choices and varieties: GlaxoSmithKline together with the Scottish Crop Research Institute invested in R&D to develop a climate resilient blackcurrant for the Ribena drink. These blackcurrants are resilient to the UK’s milder, wetter winters. The result is a supply chain that remains local to the market, and therefore is low carbon and climate resilient in the face of seasonal changes. Considering the physical risks and potentially exciting opportunities from a changing climate, Ecofys, a Navigant company, also advises clients which stakeholders across their values chains have the greatest capacity to prepare, adapt, and build resilience to these physical changes.

Innovation Abounds

Inspiring examples of low carbon, climate resilient food chains are popping up throughout Europe. Belgian, British, and most recently Dutch vineyards are developing award winning wines, as traditionally cooler zones such as northern Europe and the Pacific Northwest of North America are gradually warming and becoming a focus for opportunities in viticulture. In Germany, Infarm epitomizes the new low carbon, climate resilient innovative approach. Infarm takes its “farms” straight to consumers, reducing emissions across traditionally long and complex supply chains. Its crops thrive indoors with LED lights mimicking sunlight, plus they don’t require any soil and use 70% less water than traditional farming.

Solving Problems in New Ways

The solutions to today’s unpredictable and evolving weather patterns and longer term climate changes require us to look forward. Past climate is no indicator of the future. Navigant applies the latest climate projections globally to inform clients how current vulnerabilities in different locations will change over time. Navigant advises clients on who to work with, where, and how to realize their own business opportunities. A wide range of inspiring projects can arise from planning ahead. Cheers to that!

 

How Hyperloops and Other Futuristic Innovations Could Affect Urban Mobility

— May 15, 2018

With limited space on urban streets, cities will likely need to use new technology innovations to make their transportation systems more 3D. This would include the increased utilization of elevated tracks, higher usage of tunneling (beyond traditional metro systems), and flying vehicles. Hyperloops, underground automated pods, and air taxis offer both these possibilities and the potential to transform traditional transportation markets.

Hyperloops

Hyperloops hold significant potential to become the first new mode of public transport in over 100 years, promising drastically shortened intercity travel times, lower costs, and decreased negative environmental impacts. The technology uses electromagnetic propulsion to transport passengers in a capsule through a vacuum tube at speeds of up to 1,200 km/h (745 mph).

Hypothetically, hyperloop technology could transform commuting and even affect real estate prices by enabling workers to live hundreds of miles away from their offices. Nevertheless, Navigant Research does not expect the currently experimental technology to approach mainstream adoption over the next 10 years. The fastest speed achieved by hyperloop pilots thus far is 387 km/h (240 mph), far off from the 1,200 km/h (745 mph) speed needed to transport passengers in the short travel times that are claimed as possible. Additionally, a myriad of technological, safety, regulatory, and business model challenges will have to be overcome for hyperloops to become a viable mass-transport technology option.

In an interesting development, Richard Branson’s Virgin Group announced an investment in Hyperloop One in late 2017 and created a new company called Virgin Hyperloop One. The strategic partnership with Virgin adds experience and credibility to the hyperloop industry. Virgin is well-known as a leading innovator in the transportation industry—primarily in the airline, cruise ship, rail, and commercial space travel industries.

Underground Automated Pods

Elon Musk’s Boring Company is attempting to develop a high speed underground public transport system using automated pods. The pods would travel on electric skates, reaching speeds of 125-150 mph and carrying between 8 and 16 passengers. The Boring Company is proposing a Washington, DC-to-Baltimore Loop, which would involve the construction of parallel, twin underground tunnels (which would eventually extend to New York City).

There are several benefits of using underground tunnels and pods in the mobility context, including the lack of weather impacts and the near unlimited number of layers of tunnels that could be built. However, tunnels are expensive to dig and projects have cost as much as $1 billion per mile. The Boring Company aims to reduce this cost by a factor of 10, which is a necessary first step if the company is to be successful.

Air Taxis

Several companies and cities are aiming to launch flying taxi services within the next 10 years (e.g., Volocopter, Kitty Hawk, and Uber).There are a number of concerns with flying taxis, including but not limited to issues related to poor weather conditions, safety, affordability, technological maturity, and the need to attain regulatory approvals from aviation regulators. It is also important to note that most predictions about the near-term deployment of flying cars have been wildly incorrect thus far. Flying taxi services will likely have a place in the future of urban mobility, though Navigant Research expects unmanned flying vehicles be used for hauling commercial goods in the near-term as that is far simpler than transporting commuters.

Too Early to Tell

Due to continued urbanization, a variety of transformative technologies are needed both to improve the current state of mobility in cities and to manage the influx of additional populations. Hyperloops, underground automated pods, and air taxis are three highly experimental, futuristic innovations that have the potential to deliver on these lofty goals. The progression toward commercial deployment over the next 10 years will provide a much clearer picture around the viability (or lack thereof) for these innovative solutions.

 

Blog Articles

Most Recent

By Date

Tags

Clean Transportation, Digital Utility Strategies, Electric Vehicles, Energy Technologies, Finance & Investing, Policy & Regulation, Renewable Energy, Smart Energy Program, Transportation Efficiencies, Utility Transformations

By Author


{"userID":"","pageName":"Blog","path":"\/blog?page=2","date":"5\/24\/2018"}