Navigant Research Blog

Diesel Hybrids Arrive at Last

— December 11, 2012

More expensive than their gasoline counterparts,  diesel engines deliver significantly better fuel economy and are vouched for by taxi drivers the world over.   Some 15 years ago, Toyota and Honda introduced the world to the hybrid drive car, adding an electric motor and a large battery, making stop-start driving more efficient by storing and reusing kinetic energy.

With both technologies established, it was then logical to think about combining the two to make an even more efficient drivetrain, but the double premium (both diesel and hybrid drives are more expensive than conventional gasoline models) made OEMs think that the incremental cost was too much for the market even though the long-term benefits would be very attractive.   Finally, PSA in France decided at the end of 2011 that the time was right and launched its Hybrid4 system, first in the Peugeot 3008, followed by the new Citroën DS5, and then in the Peugeot 508.  In this system, the diesel engine drives the front wheels while the electric motor drives the rear wheels.  A choice of four different modes allows the driver to choose when to use the technology: to be clean, frugal, 4WD, or sporty.  More importantly, the official emissions figure of 91 g/km of CO2 and 80 mpg (Peugeot 3008 Hybrid4 Active model) makes the vehicle attractive to both individual and company car buyers in many European countries, thanks to taxation policies that emphasize fuel efficiency.

PSA’s Hybrid4 technology uses a 1.1 kWh NiMH battery pack that gives an electric-only range of about 2.5 miles.  The premium for hybrid drive on the 3008 is £4,200 ($6,700), or about 18% extra.   The Peugeot 508 with Hybrid4 drive retails at £31,450 ($50,100), which represents a premium of about £7,000 ($11,150) over the non-hybrid version.

The only other production announcement has come from Volvo, which takes things up a notch by including a much bigger battery and the ability to recharge it without the engine.  With a Li-ion battery pack rated at 11.2 kWh, the upcoming V60 diesel hybrid will be capable of about 30 electric-only miles.  On average, the V60 Hybrid official fuel economy is 148.6 mpg and it emits 49 g/km of CO2.

The Price Premium

It’s interesting to note that Volvo chose to use a similar architecture to the PSA design, with the diesel engine driving the front wheels and the electric motor driving the rear.  Again, the driver gets to choose driving mode, in this case from Pure, Hybrid, and Power.  There’s also a ‘Save’ button that prevents the electric drive from being used and saves battery power in advance of entering a low emission zone where all-electric mode is best.

Volvo made its announcement just as PSA was bringing its diesel hybrid to the market, and there has been some fanfare about the first-year production run of 1,000 units being sold out, so it must be worth the £47,000 ($74,900) price tag to the European early adopters.  That is £12,780 ($20,400) more than the R-Lux version of the V60 with the same diesel engine, an increment of about 37%.  These numbers are softened in some markets where rebates and government incentives apply; for example in the United Kingdom, PHEV and EV buyers get a £5,000 ($8,000) rebate from the government.

So the diesel hybrid is finally with us and showing solid, if not spectacular, sales performance in its first year of production.  Both companies have chosen a design that appeals to buyers thinking about an electric vehicle but concerned that it will not meet all their needs and would only be practical as a second vehicle.

The popularity of the diesel engine in Europe will work in favor of this new flavor of hybrid, especially with its tax advantages and significant economy improvements.  Accounting for the total cost of ownership, eliminating congestion charges, and low or zero annual registration costs, it probably will be a cost-effective alternative to a similarly-priced conventional vehicle.  Also, OEMs know that most people decide to buy a new car based on their financial calculations, and then justify the purchase to other people in terms of saving the planet.  The diesel hybrid can do both without sacrificing performance or functionality.


The DIY Green Home

— December 11, 2012

Although there are many clearinghouses for consumers to learn more about energy efficiency measures and how to incorporate cleantech in the building space, consumers still face a great deal of uncertainty when it comes to executing on a decision to introduce cleantech into their homes.  Free tools on the Internet involve a great deal of assumptions regarding energy and the money savings resulting from home energy efficiency measures, such as changing appliances, introducing better insulation, or installing distributed wind or solar.

In the absence of using a LEED qualified architect to reduce the energy footprint of a home, services like Climafy appeal to “do-it-yourself” types who prefer to go at it alone (or on a budget).  Normally, these homeowners would be able to rely on the expertise of a local hardware store, but since the return on investment for many building efficiency measures depends on the quality of the building (age, construction type), without knowing exactly the quality of the building, it’s difficult to make meaningful recommendations.

Three things make the Climafy service unique. First, it takes into account the quality of the building stock in an area by using data from public records to determine the age of properties.  Second, it helps a user determine with a much higher degree of precision how long it will take for clean technologies and building efficiency measures to pay for themselves.  Users can easily select more or fewer upgrades based on personal preference and the service includes information on available incentives.  Finally, Climafy matches users with vendors and installers by letting homeowners submit RFPs to qualified contractors.  Climafy’s revenue will come from the businesses who participate in the service.

Climafy and other services (such as One Block Off the Grid) give consumers more information on clean technologies and connect consumers with reputable and skilled installers.  By reducing the amount of imperfect information in the marketplace, these types of services will accelerate the transition from supply-driven cleantech to demand-driven cleantech.  Climafy is still refining its prototype product, but the premise is sound and users can experiment with the site and service options as the startup develops its service.


Energy Pool, Europe’s Largest Aggregator, Eyes Rapid Growth

— December 11, 2012

French energy giant Energy Pool, majority owned since 2010 by Schneider Electric, is currently the largest aggregator of demand response (DR) in Europe, with curtailment capacity of around 1,000 megawatts (MW) and a penetration rate of close to 80% in France.  Today, Energy Pool manages curtailment capabilities at 70 sites, representing 50 customers.   By the end of 2013, its DR capacity is expected to be upgraded to 1,500 to 2,000 MW.

So far, Energy Pool’s growth has primarily come from large industrial customers that participate in the company’s emergency or interruptible load DR programs.  However, Energy Pool is increasingly aggregating load from high-energy users within the commercial sector, such as hospitals, shopping malls, and retail stores.  Participation in DR by this customer segment is expected to ramp up in the coming years.

Although Energy Pool’s customer base is primarily located in France, the company’s goal is to expand its presence abroad.  Initially, it plans to focus on the industrial sector in Belgium in 2013, soon to be followed by other countries in Europe.  The company is counting on a push for DR within the EU because of the European Union’s aggressive energy and climate change policy to reduce carbon emissions (20% from 1990 levels) and energy consumption (by 20%), while increasing the use of renewables (by 20%) by 2020, thus creating new supply-demand challenges for the grid.  Another major market driver in Europe is the expectation among business and building owners that the price of electricity, which has so far remained relatively low, will rise.  Moreover, payments by Energy Pool in exchange for load curtailment, along with lower energy consumption, and hence costs, are also strong incentives to take part in the company’s DR initiatives.  According to Energy Pool, their customers’ electricity bill could decrease by 3% to 10% in a year.

Although it can expect serious competition from EnerNOC, which has recently been establishing a foothold in the United Kingdom, and emerging aggregator KiWi Powers, which is headquartered in London with a fast-growing DR business, Energy Pool can leverage the significant resources of Schneider Electric and its long legacy as a building management systems provider.  Schneider’s long-term relationship with building owners and facility managers throughout Europe and other parts of the world gives Energy Pool access to a large number of potential DR customers.  The company has won several significant DR contracts.  (For example, Energy Pool, which declined to release specific customer examples, says it has recently signed a deal to manage the load capacity of 20 large office towers in the business district of a major city.)  Such deals reaffirm the company’s ambition to accelerate its growth in Europe and elsewhere.


Are Cyber Security Researchers Burning Down the Village to Save It?

— December 7, 2012

To research smart grid markets is to immerse oneself in a succession of fads.  Here at Pike Research we watch the fads come and go while utilities quietly go about their distribution automation projects.  Two years ago, smart metering dominated conference agendas.  Last year it was customer engagement.  This year data analytics is the buzzword du jour.

Smart grid cyber security has its fads too.  One topic dominates discussion these days:  Should security researchers publish control system vulnerabilities without notifying the system vendors?  And if that’s okay, is it equally acceptable to publish software to exploit those vulnerabilities without prior notification of the vendors?

Opinion is sharply divided on this topic – as if we are holding our own presidential election.  What’s not divided is vendors’ and utilities’ response to this activity, which has been very little.  One leading researcher, after releasing a boat-load of vulnerabilities, wondered aloud, “Where’s the response?”

The stated objective of these activities is not to generate PR for the researchers but to force vendors to take action.  From one site:  “The goal of Project Basecamp is to make the risk of these fragile and insecure devices so apparent and easy to demonstrate that a decade of inaction will end. SCADA and DCS owner/operators will demand a secure and robust PLC, and this will drive vendors to finally provide a product worthy of being deployed in the critical infrastructure.”

I got news for you guys: so far, it ain’t working, but we sure are exposing a lot of critical infrastructure to attack.  That’s the only provable outcome of these exercises, and it’s a problem.

Cyber security exists to defend critical infrastructures against attack.  A strategy that accepts a successful cyber attack for its success is self-defeating.   Some agree with that position while others that I immensely respect disagree.  So be it.  From my perspective this is like an arsonist wondering why firefighters don’t have better tools to put out the wildfires that he sets.

There’s also a human element: whom have we arbitrarily doomed to suffer the coming cyber attack?  Grandma’s dialysis machine?  Traffic signals in Los Angeles?  Potable water in a developing economy?  Unfortunately, we don’t get to pick who is attacked with those exploits.  Are we willing to throw grandma under the bus to make our point?

I choose not to support any of this.  If someone else can do it with a clear conscience, good for them, I suppose.  Unfortunately, all cyber security practitioners will be painted with the same brush.  If a few set fires, we shall all be presumed arsonists.  Think about it:  how many headlines do you read about security people doing their job?  “In other news today, nothing was successfully attacked” – that makes for super-compelling copy, right?  Ultimately, we shall have thrown ourselves under the bus too, and I don’t think that will entitle us to call ourselves martyrs.

The common rap against security practitioners is that we’re a bunch of techie nerd geeks that don’t have a clue about business issues.  I’m afraid that setting fire to our own industry may earn us that stereotype for good.


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