Navigant Research Blog

U.S. Military Sticks to its Guns with Large Renewable Installations

— October 11, 2012

The U.S. military is taking an all-hands-on-deck approach to deploying cleantech for military applications (including facilities, vehicles, and soldier power).  The application with the most firepower is medium-to-large-scale installations – up to 12 megawatts (MW)  –  at U.S. bases – with biomass, solar PV, wind, and geothermal expected to be the primary sources of renewable energy.

Large-scale solar PV projects currently in operation on Department of Defense (DOD) property include Nellis AFB (14 MW) and Fort Carson Army Base (2 MW).  A year-long ICF International study commissioned by the DOD found potential for 7 GW of solar to be installed at seven sites in desert bases in California and Colorado alone.  Pike Research only expects a fraction of this to actually be developed, but it nonetheless underscores the size of the opportunity and the financial feasibility of deploying solar PV.  The following table illustrates some of the most economically viable military sites for solar development.

(Source: ICF International)

The Army’s Energy Initiatives Task Force (EITF), which is directing the implementation strategy for the Army, has screened 180 Army and National Guard sites and has identified potential for 20 renewable energy installations totaling 683 MW.  Of that total, 183 MW have moved from the EITF planning pipeline to the execution portfolio.  Of the 183 MW in the execution portfolio, biomass currently represents roughly 75 MW, solar represents 55 MW, and other (unnamed) technologies represent 53 MW.  The following map provided by EITF shows the large-scale renewable energy installation opportunities either under consideration or undergoing review.

(Source: EITF)

Despite the massive potential for 100+ MW deployments, the U.S. military appears to (wisely) be sticking to installation sizes that it has experience with.  A $7 billion request for proposal (RFP) released by the Army in August 2012 called for renewable energy projects across several sites to generate 2.5 million megawatt-hours of power over the next 30 years – all via projects up to 12 MW (the military will not own the power plants, but instead pay a fixed rate over the lifetime of the contract).  Twelve MW is large enough to make an impact on the overall renewable energy use at the base, but small enough to avoid the large amount of red tape, environmental and wildlife concerns, water use, and transmission issues associated with much larger renewable energy deployments.


China’s Huge Smart Meter Market Seeks Sustainability

— October 8, 2012

In 2010, Chinese President Hu Jintao pointed out that China should aim to “build a strong, smart, highly efficient and reliable grid system that covers both urban and rural areas.”  Since then, he has frequently asserted the goal of energy independence in relation to smart grid deployments.

According to recent reports from the Chinese media, the deployment of smart meters is swiftly ramping up and will reach around 230 million units by 2015.  While actual progress could fall short of this huge number, it’s undeniable that the actual number will be significant compared to other regions.

Even so, the question remains: how will China achieve its goals in terms of the strength of the market, as measured by the qualitative scope and success of the market players, not just by those stunning quantitative volumes?  Will China’s smart grid program be strong in this sense as well as in sheer numbers?

Several challenges are evident.  For one, the major Chinese utilities (The State Grid Corporation of China (SGCC) and China Southern Power Grid) are not entirely consistent in smart meter standards.  Second, China is quite fragmented, with different versions of local communication protocols, different functional requirements for installation, usage, and management in smart meters, with over 300 types of meters in use by local regions.  While China has already formed a standards body, associated with the China Electric Power Institute (CEPRI), cooperation and broad-based standards are still lacking.

Therefore, the surprising number of smart meters announced and currently being deployed in China might not be the real issue.  The state-owned utilities must tackle the fragmentation that could impede the progress of Chinese domestic metering markets.  For smart meter manufacturers, the lack of uniform standards could lead to inefficient, duplicative, and waste of resources in R&D investment.  Accordingly, the delay of the standards will push back the time frame for mass production.  Eventually, Chinese companies in the smart metering industry are vulnerable to low margins and falling competitiveness.

Utility Partnerships

Already, the ultracompetitive bidding process for Chinese smart meter vendors has started to winnow the weaker players.  Since 2009, China has had successive plans and procurement cases with multiple bidding processes each year.  More than 70 Chinese meter manufacturers have participated in the bidding, but only 30% of these participants eventually sign deals, making for a very competitive market landscape.

Given the keen competition, some big players such as Ningbo Sanxing are actively working with the two major utilities to differentiate themselves from their competitors.  This close cooperation with utilities includes discussions on product design at the earliest stage, along with quality control and joint R&D.

As a result, smaller vendors will face big challenges in making their technologies competitive unless they secure similar relationships with utilities.  Even more important for the small players is the issue of cost competitiveness.  Aggressive bidding has driven vendors’ margins close to zero.

To build a truly strong and competitive industry, China needs a positive market environment with a high degree of cooperation in smart meter standards.  This is a necessary condition for vendors to survive in the Chinese smart meter arena.  Announced numbers of deployments are not the best signal for the development of a strong, sustainable industry.


In-Home Displays Face Adoption Hurdles

— October 8, 2012

In-home displays (IHDs) help customers track their energy usage.  The consumers can see charts and graphs about their consumption, as well as trends, messages from their energy provider, and other energy awareness information.  These devices promise to help customers save money, while deferring the construction of new power plants by reducing overall demand.  Despite these benefits, as Pike Research has reported, the market for IHDs has been slow to develop and only modest growth is expected over the next several years.  Still, stakeholders are hopeful that, as customer indifference is displaced by the desire to be more efficient and save money, widespread adoption of IHDs will accelerate.  (On Wednesday, October 17, Smart Grid News will present a webinar exploring these issues, entitled “Consumer Engagement with In-Home Displays.”)

The prospects for adoption of IHDs by may be caught in the same trap as many new technology innovations.  New inventions can appear quickly, but diffusion can be frustratingly slow.  The real question is not when IHDs will be adopted, but if they will at all.

Two of the key predictors for the mass-market adoption of IHDs are customer beliefs and attitudes; specifically, how changes in these beliefs and attitudes can significantly alter how a customer wants to behave.  Good intentions alone are not enough to actually change behavior.  The customer must perceive a need to manage their energy. Only then will customers will look for tools to help them act on those intentions. If they believe that IHDs will be useful in helping them accomplish their goals, are easy to use, and engaging and interesting, then there will certainly be life in this market.

To achieve this shift in perception, commercial, utility and advocates must learn to engage customers to provide trusted insights and knowledge about the value of energy efficiency and grid modernization.  The rate of penetration of any technology is exceedingly difficult to compute.  However, there may be ways to accelerate this phenomenon:

Encourage global adoption with social media: Technology adoption used to take years, then months, now days, thanks to the instantaneous communication enabled by social media. The acceptance and enthusiasm of peers plays a larger role in customer adoption today than ever before, and is why innovations like IHDs must be engaging and interesting enough to talk about.

Understand how the common cold spreads: The spread of knowledge transfers through contact, much the way, a cold is spread from one to another.  You still have what you started with (a runny nose), even though you have participated in the diffusion of the cold.  Simply increasing the so-called “contact rate” will significantly speed up the adoption lag.  The more users get hands-on time with an IHD that brings them value, the more likely they are to talk about it.

Demonstrate Ease of Use: Remember that toddlers did more to drive the adoption of the iPad than any other group, by demonstrating its ease of use.  A YouTube video showing a 2 1/2 year old using an iPad had over 1,000,000 viewers.  That helped Apple sell about a million iPads in the first month they were available.

At its most fundamental, if the learning effect can be accelerated, by using multiple models of consumer engagement, the chances of wider adoption of IHDs improve.  With IHDs, though, other significant factors are at work, like price, competitiveness, and regulatory factors.  Right now, utilities are largely driving adoption, but there are lessons to be learned from these deployments, including what resonates with these energy consumers and what does not.  With that information, home energy management companies can then turn to these consumers with a solution that directly improves their lives – not just another gadget.

Click here to register for the Smart Grid News webinar, “Consumer Engagement with In-Home Displays.”


Advanced Batteries + Solar PV + Microgrids = Market Growth

— October 8, 2012

Advanced batteries are consistently heralded as a future panacea for cleantech, without which renewables will remain niche applications and a distributed grid architecture will never materialize.  To a large extent, though, advanced batteries remain materials science experiments, more commonly found in labs than on the grid.  Likewise, the pace of innovation seems slow, especially in a world accustomed to advancing at the pace of Moore’s Law.  But if advanced batteries became the focus of consumer demand (from individuals, households, commercial buildings, and utilities), and the process of innovation became a conversation between materials science and real-world needs, we could see a dramatic acceleration of this market.

Consumer electronics brought lithium-ion batteries to the forefront of public awareness, making battery life and replacement a central issue for makers of smartphones and tablet computers.  Users consistently challenge the cycle life and functional limits of their devices, which has begged a targeted response from battery vendors.  The industry’s advances over the last 20 years have been generated through interaction with the physical world and the marketplace.  The challenge with larger format batteries, particularly for grid-scale applications, is how to get early versions of these systems deployed and interacting with the physical world.

Grid-scale demonstrations are costly and can be controversial, depending on the source of the funding.  In the United States, this work has largely been done by the Department of Energy.  Deploying advanced batteries in remote microgrids or in conjunction with distributed solar PV, though, could drive these technologies in the same fashion that consumer electronics drove the evolution of lithium-ion batteries, through smaller deployments visible to consumers.  The industry would benefit from a larger number of deployments, a broader variety of end-use applications displayed, and economies of scale that would begin to bring costs down.

This scenario might not be that far from reality: the competition on cost between diesel fuel and solar PV now makes distributed solar a more attractive investment than diesel generators.  According to McKinsey, the cost of power coming out of diesel generators ranges from $0.30 to $0.65 per kilowatt-hour.  Solar PV can now produce power for about half that cost.  In niche applications such as uninterrupted power supply in emerging economies, rural electrification, and island power, there is a clear economic case for deploying solar PV, which becomes a dispatchable, high-quality resource when paired with battery storage.

These small-scale deployments would provide the industry with another source of product feedback on technical integration with renewables, demonstrate potential revenue models, and ultimately generate larger demand for advanced batteries.  Microgrids are also a popular new technology for U.S. military applications, a historically strong contributor to advanced technology innovation.


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