Navigant Research Blog

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.
 

How the Developed World Can Learn about Energy Solutions from the Developing World

— March 27, 2014

With utility resistance to policies that support distributed renewable energy emerging as a global phenomenon, it might be wise for vendors in the space not to push the panic button, but instead look to emerging markets in the developing world for a reality check.

As utilities and states modify their past support vehicles (i.e., net metering and feed-in tariffs) for technologies such as solar photovoltaic (PV) systems, purveyors of hardware and software that help integrate distributed renewables into power grids see increasing opportunity.  The decline in generous feed-in tariffs for solar PV, for example, creates new opportunities for energy storage.

Among those sensing opportunity is ABB.  When the company purchased Powercorp of Australia in 2011, few realized that ABB would integrate Powercorp’s distributed controls approach to remote hybrid wind/diesel microgrids (and its PowerStore flywheel technology) into its grid-tied offering.  ABB has recognized that a top-down approach to controlling distributed energy resources may not be the best fit.  Instead, innovation fostered in off-grid systems – which must provide 24/7 power under the most harsh environmental conditions – proves to be a better approach.  Peter Lilienthal of HOMER Energy agrees, arguing in Navigant Research’s Remote Microgrid Business Models webinar late last year that the smart grid is being pioneered in places like the Caribbean, Africa, and India, not in developed world markets like Europe or the United States.

Look to the Islands

While many observers are focused on the so-called utility death spiral, growing numbers of forward-looking utilities – along with diversified energy companies such as NRG Energy – see the proliferation of distributed generation as an opportunity.   In fact, NRG Energy is now developing remote microgrids, starting with the private island owned by Richard Branson.

The world of the future will not feature a one-size-fits-all business model – especially not the utility monopoly that has slowly eroded over the past century.  While long-term planning and dense regulatory proceedings won’t go away, the future of energy requires flexibility and learning from areas where the provision of electricity requires the utmost in creativity: the developing world.  Other large technology companies such as Toshiba are also moving into the remote island microgrid market.

Navigant Research’s new Nanogrids report shows that even the lowly sounding nanogrid is a huge market in the developing world, with global revenue forecast to exceed $20 billion by 2023 in three regions that have historically lagged behind the developed world in new technologies.

Residential Remote Nanogrid Vendor Revenue by Region, World Markets: 2014-2023 

 (Source: Navigant Research)

 

The Climate Change Gap Narrows on Policy

— March 3, 2014

That Americans are polarized on issues around energy, the environment, and climate change is not news.  What’s interesting is the degree to which the gap between those views narrows when it comes to actual policy and funding decisions – in other words, to what should be done.

Former The Wall Street Journal Washington, D.C. bureau chief Alan Murray, now president of the Pew Research Center, kicked off the Vail Global Energy Forum with a discussion of the center’s recent polling data on energy and the environment.  The decline over the last 2 decades in the percentage of Americans who support stricter environmental laws and regulation, who view the environment as a top priority for the nation, and who see global warming as a major threat to the country’s security and prosperity has been striking.  In 1992, 90% of Americans favored stricter environmental regulations; by 2012, that number had fallen to 74%.  Much of this change has happened in the last decade.  In 2006, 79% believed global warming is a serious problem.  That percentage fell to 65% in 2013.  Today, the economy and jobs are the highest priority for most Americans; climate change ranks at or near the bottom of the list of problems demanding attention and resources.  Most of these declines have occurred among Republicans, Murray said; Democratic responses on these questions have stayed remarkably consistent.

Untapped Opportunity

In general, these findings correlate with those of Navigant Research’s Energy & Environment Consumer Survey, which has tracked a small but noticeable drop in favorable attitudes toward clean and renewable energy concepts in the 3 years the survey has been conducted.  (That decline, however, reversed in 2013,  as favorability ratings for a number of these concepts, particularly solar energy, wind energy, hybrid vehicles, and electric cars, rebounded significantly from their 2012 levels.)

Also not surprising is the Pew data comparing attitudes in other countries to those in the United States.  In Western Europe, 54% of those surveyed ranked global warming highest on their list of major threats in the 21st century.  It’s at the bottom of Americans’ lists.

More noteworthy was the data Murray presented on policy questions.  By wide majorities, Americans support more federal funding for wind, solar, and other forms of clean energy; better fuel efficiency for all classes of vehicles; and more funding for public transit.  Somewhat surprisingly, that’s true on the Republican side of the aisle.  While the majorities are smaller, most respondents identifying themselves as Republicans support each of those policies – a result seldom reflected in media coverage of news related to these policies.

Theories about the causes of this split between relatively low and falling concern over climate change on the one hand and support for clean energy, fuel efficiency, and public transit on the other amount to speculation.  As Colorado Governor John Hickenlooper said in his opening remarks at the forum, “In the modern world, we don’t all have the same facts.”  But the degree of agreement that government should do more to bolster the development of clean energy and energy efficiency technologies suggests a political opportunity that, for the moment, remains largely unexploited.

 

Up in the Sky, Drones Display Cleantech Potential

— February 12, 2014

Unmanned aerial vehicles (UAVs) – a.k.a. “drones” – are beginning to make the jump from the war front to a domestic application near you.  Amazon’s use of drones in its proposed Prime Air service is perhaps the most high-profile example.  This service aims to disrupt inefficiencies associated with delivering products to customers’ doors via truck with drone quadcopters that make the same delivery in a fraction of the time.  Drones have begun to gain traction globally as delivery vehicles for everything from dry cleaning to beer and sushi.

Recent announcements point to the use of drones for everything from data collection to expediting renewable energy project development to the physical generation of renewable power.

Bird’s Eye View

The U.S. Geological Survey (USGS), in partnership with NASA and two academic institutions, has begun using drones to explore the vast expanse of the western United States for geothermal anomalies.  Using an experimental system called payload-directed flight (PDF) – essentially autonomous flight – researchers have been able to study and map the underground fracture and fault systems of a geothermal field in California.  The technique is being deployed in other remote geothermal landscapes as well.

Geothermal power holds tremendous promise as a source of renewable baseload electricity.  Currently accounting for more than 11 GW of installed capacity globally, or just 0.2% of the global installed base of renewable generation, geothermal power remains a vastly underdeveloped resource.

Two of the key barriers to more extensive development are long development timelines and substantial upfront capital requirements.  Initial scouting of potential sites for geothermal power development typically requires geophysicists to lug heavy backpacks full of equipment to survey vast swaths of remote landscape.  More promising sites are often surveyed by aircraft as well.  According to researchers utilizing drones for surveys, “Unmanned aircraft are ideal for scientific surveys because they can fly much lower than would be safe for piloted craft and are much cheaper to operate.”

Already used overseas in agriculture, drones also have the potential to improve economics across the bioenergy supply chain.

In Louisiana, drones are being used to monitor the health of sugarcane fields, collecting data at the individual plant level.  Close monitoring of individual crops is typically achieved by farmers physically inspecting their fields, a costly and labor-intensive undertaking.  Traditional airplanes are unable to capture data at the same level of detail.

Workhorse of Smart Energy

Borrowing from Amazon’s vision, drones may also have the potential to collect, move, and aggregate biomass materials, slashing one of the more significant (and often prohibitive) cost drivers for bioenergy.  With agricultural feedstocks used to make biofuels (e.g., cellulosic biomass to ethanol) typically representing 75% to 85% of the finished fuel cost – due in part to the manpower required to aggregate and collect the material – the use of drones could help overcome a challenging hurdle to more widespread commercialization of alternative fuels.

Google is among those companies taking notice of the cleantech drone phenomenon, having bought a slew of robotics companies in recent years.  Included in its portfolio of acquisitions is Makani Power, a renewable energy technology innovator aiming to disrupt the traditional wind turbine market by deploying high-flying autonomous wind turbines.  Makani has designed its drone kites to automatically take off and adjust themselves to the windstream to maximize energy production.

So-called “RoboBees” – developed at Harvard’s School of Engineering and Applied Science –demonstrate the confluence of drones and clean technology.  Designed to behave like a swarm of bees to carry out search and rescue operations or artificial pollination, the RoboBees’ need for high energy density power sources to sustain extended flight remains a key limitation to their use.  Advances in battery technologies could one day provide a compact enough power load that could extend flight times for both RoboBees and other drone hardware.

While 2014 is unlikely to be the year drones disrupt cleantech, the profusion of applications across the smart energy landscape suggests we’re just beginning to scratch the surface of their potential.

 

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