Navigant Research Blog

Solar Market for Base of Pyramid Not So Pico

— April 14, 2014

In an upcoming report on pico solar lighting products (<10W) and solar home systems (<200W) sold primarily to rural communities in Africa and Asia, I cover the unit sales, revenue, and capacity of these small solar photovoltaic systems globally.  One of the most important trends covered in the report is that pico solar has transitioned from a humanitarian aspiration to big business – more than $100 million in 2014.  Corporate involvement in rural electrification has traditionally come in the form of corporate social responsibility initiatives, but real money is now flowing to solar companies serving the base of the pyramid market.  The success of a number of off-grid solar lighting companies and social enterprises has attracted interest from major corporations such as Panasonic, Schneider Electric, and Philips, as well as funding from investors.  Some of the more notable investments include:

  • In early 2014, d.light raised $11 million in Series C funding from DFJ, Omidyar Network, Nexus India Capital, Gray Ghost Ventures, Acumen Fund, and Garage Technology Ventures.  The company is one of the leading pico solar manufacturers, and has now raised $40 million and sold an estimated 6 million pico solar systems reaching 30 million people.
  • In early 2014, Persistent Energy Partners acquired Impact Energies, a pay-as-you-go, off-grid solar service provider working in West Africa that has reached 30,000 customers since 2011.  The renamed company, Persistent Energy Ghana, installs village solar microgrids and solar home systems.
  • In late 2013, Khosla Impact invested $1.8 million in a Series A round with BBOXX, a U.K.-based company that sells portable solar kits ranging from 7W to 185W and plug-and-play solar systems that range between 2 kW and 4 kW.  The company also provides a mobile pay-as-you-go service enabled by remote battery monitoring, which was the primary interest of Khosla.
  • In 2012, Greenlight Planet, one of the leading designers and distributors of solar light-emitting diode home lights, raised $4 million from Bamboo Finance and Dr. P.K. Sinha, co-founder of ZS Associates.  The investment followed previous financing by Dr. Sinha.  Greenlight Planet has sold more than 1.8 million solar lamps since the company was founded in 2008.
  • In 2012, Barefoot Power, one of the largest pico solar manufacturers, raised $5.3 million from three social investment funds (d.o.b. Foundation, ennovent, and Insitor Fund), existing shareholders (The Grace Foundation and Oikocredit Ecumenical Development Cooperative), and a number of private angel investors.

The full report will be released in the next few weeks.  It will discuss industry market drivers and challenges, and includes more than 20 company profiles and country-specific forecasts from 2014 to 2024.

 

Honeypots Teach Us About Attackers

— April 11, 2014

Security researchers will try almost anything to find out who is attacking their clients and how.  One of their best-loved and most effective techniques is a honeypot.  First developed about a decade ago, a honeypot is a decoy system or network – a tempting target for attackers that is not really a target at all, but a trap.  The objective is to lure attackers into the honeypot and then watch how they work.  Attackers’ methods are almost like fingerprints; researchers who are familiar with a number of attackers can often identify the attackers simply by watching their step-by-step process of discovery through the honeypot.  Researchers do have other methods as well, such as tracing IP addresses or even fingerprinting the attackers’ browser – adding source code to the attackers’ browser that reveals more about their identity.

Attackers are, of course, aware that honeypots exist, so preparation of an effective honeypot must be extremely detailed.  To set up a honeypot requires a fair bit of planning to make the target look as realistic as possible.  Eventually, the attackers will realize that they’ve been had, so the objective is to keep them in the honeypot as long as possible to gather as much information as possible about their methods and their identity.

One security researcher described one of his honeypots in a talk at the SANS 9th Annual ICS Security Summit.  Kyle Wilhoit of Trend Micro described a scenario in which he set up juicy but fake targets on five continents and then watched them be attacked.   Each was a model of a control system for a small municipality water pump.  Connected directly to the Internet and with insufficient protection, this water pump looked like easy pickings, and it was attacked nearly 100 times.  Again, the attackers were not attacking an actual water pump but were instead sending commands to a simulation of a water pump – the honeypot.

Disturbing Motives

Perhaps most disturbing to me is that most of the attacks that Wilhoit reported were attempted sabotage, not data exfiltration.  Nearly all of my recent research indicates that large-scale persistent attacks against control networks have been data exfiltration for competitive advantage.  In this case, however, data exfiltration attempts were a minority of all attacks.  Even some well-known attack teams supported by hostile nation-states attempted to disable the water pump, not simply exfiltrate its data.  For me, this requires a rethink:  Is all that data exfiltration really just for competitive advantage or are attack plans being prepared?  As ever, only the attackers know, but this one project suggests that there may be more attack planning than has been assumed.

You might think that attackers seeing a control device connected directly to the Internet would say, “Nah, this is too good to be true.”  And then seeing a control device directly connected to the Internet with little or no security – “It just has to be fake, right?”  Sadly, no.  Attackers are accustomed to discovering real systems like this all day long – directly connected to the world and with no protection.

My conclusion is mixed.  Honeypots are an effective tool for learning about our adversaries.  Yet, honeypots work because the unprotected systems that they mimic are commonplace in our industry.

 

Advanced Energy Is $1.13 Trillion Market

— April 11, 2014

The publication of the Fifth Assessment Report by the Intergovernmental Panel on Climate Change (IPCC), Climate Change 2014: Impacts, Adaptation, and Vulnerability, made headlines recently with a familiar message: The climate is warming, people are causing it, and we are ill prepared to deal with the direct and indirect effects of climate change.

Indeed, it is a grim outlook, but when looking at one indicator not covered in the IPCC report – revenue from deployment of smart energy technologies – there are signs that things are moving in the right direction to reduce emissions.

One group, the Advanced Energy Economy (AEE), is a national association of businesses and business leaders who seek to make the global energy system more secure, clean, and affordable.  The group takes a big tent approach to clean energy.  It is bankrolled by one of the leading advocates and funders for the United States taking a leadership position in deploying clean energy, Tom Steyer.  AEE has identified seven core segments that make up the advanced energy industry: transportation, electricity generation, fuel production, electricity delivery and management, fuel delivery, buildings, and industry.

For the past 2 years, AEE has commissioned Navigant Research to quantify the advanced energy industry market sizes for the United States and globally.  We have identified 41 categories and 80-plus subcategories that meet the AEE definition and put the detailed findings and key trends in the report, Advanced Energy Now 2014 Market Report.  Below are some key findings from the report that illustrate the breadth and depth of technologies that are capable of reducing emissions and U.S. activity in those markets.

Key Findings

  • The global advanced energy market reached an estimated $1.13 trillion in 2013.
  • In the United States, the advanced energy market was an estimated $168.9 billion in 2013 – 15% of the global advanced energy market, up from 11% in 2011.
  • Advanced transportation is booming: Navigant Research forecasts annual plug-in electric vehicle sales will reach approximately 467,000 vehicles in the United States and 80,000 in Canada by 2022 – slightly faster than hybrid electric vehicles sales grew in their first decade.
  • The United States accounted for an estimated 18% of the global solar PV market that approached $100 billion annually in 2013 and far surpassed 100 GW of cumulative installations in 2013.
  • LEDs are expected to be the leading lighting technology over the next decade, with LED lighting products (including lamps and luminaires) in commercial building markets forecast to grow from $2.7 billion in 2013 to more than $25 billion in 2021.
 

Innovation Is Booming in the Water Industry

— April 9, 2014

As part of the events to mark World Water Day, the United Nations (UN) has launched a new report highlighting the challenges of ensuring an adequate global water supply over the coming decade.  In particular, the World Water Development Report focuses on the growing interdependency of water and energy.  The report looks at the water industry’s energy requirements for production, distribution, and treatment, as well as at the growing demand for water resources from the energy industry.

We have written about the impact of the growing global demand for water before, but the World Water Development Report yet again highlights the challenges ahead.  According to the report, water demand will increase by 55% by 2050, with the biggest impact coming from the growing demand from manufacturing (400%), thermal electricity generation (140%), and domestic use (130%).  More than 40% of the global population is projected to be living in areas of severe water stress through 2050.

Countries, cities, and communities need to improve their ability to assess and plan for future water needs.  However, developing new water supplies, storage facilities, or treatment plants will remain a hugely expensive endeavor, and so the industry must look to technologies that can mitigate the need for capital investment by improving the efficiency of existing systems and maximizing the benefits of new investments.  For this reason, we are seeing a host of innovative technologies and solutions targeted at the water industry.  Entrepreneurs and developers from the IT, telecom, and smart grid sectors are now looking to water as the next industry where they can make a major impact on the way the business operates.  This opportunity is attracting a wide range of technology and service suppliers, including established water metering vendors, water network engineering companies, water service companies, infrastructure providers, IT software and service companies, and a variety of startups and innovators.

The recent World Water-Tech Investment Summit in London gave me a good opportunity to survey a range of companies.  Among a host of other innovators at the show were companies we looked at in our Smart Water Networks report, including TaKaDu, which has been pioneering the use of cloud-based analytics for leak detection.  Also present was i2O, which is providing water utilities with an intelligent pressure management solution that also uses cloud-based advanced analytics, but integrates them directly into the pressure management system.  Other companies new to me included Acoustic Sensing, a U.K. startup that has developed a new acoustic sensing solution to allow the rapid identification of structural defects and blockages in sewerage systems; Syrinix, another U.K. company that provides intelligent pipe monitoring systems for burst detection and pressure monitoring, among other applications; IOSight, an Israeli-based company providing advanced business intelligence and data management for the water industry; and Optiqua, which provides sensor networks for real-time water quality monitoring.

Keeping Afloat

While there is no shortage of innovation in the industry, it is still a challenge to find ways of investing in new technologies in a heavily regulated industry.  With no stimulus funding or mandated smart meter rollouts to boost the market, the industry needs to find other ways to finance innovation.  One option is the use of a software-as-a-service (SaaS) model to defer capital expenditures and reduce resource needs.  For example, both TaKaDu and i20 provide their software as a cloud-based service.  Innovative approaches to regulatory and investment programs will also be important.  In the United Kingdom, OFWAT is currently working with the country’s water utilities on the next regulatory pricing period, to run from 2015 to 2020.  The aim is to increase the ability of utilities to invest in water metering and other networks’ management technologies.

The smart water market is attracting a wide range of new players and presenting established players with the opportunity to expand their business into new areas.  Both sets of players face challenges in an industry that is hungry for change but also conservative in its operations and restricted in its financial options.  As stated in our Smart Water Networks report, while there are strong drivers for growth, the challenges of transforming a conservative industry faced with a physically and technically challenging deployment environment mean that the growth in this market will always be steady rather than explosive.  However, the direction of travel is clear.

 

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