Navigant Research Blog

How the IoT and Big Data Make Cities More Efficient

— September 8, 2017

The delivery of city services is being transformed by smart technologies that are providing city managers with new insights into operational performance and providing platforms for new forms of personalized and responsive services. Central to this transformation is the availability of real-time data from a growing range of intelligent devices that can monitor city operations. Sensors, communications networks, and the real-time data cities collect can enable more intelligent, efficient, sustainable, and interactive public services. The new technologies are helping cities make the most of limited budgets while adding additional value to the services provided to their communities. These innovations have the potential to drive a revolutionary change in the way city services are delivered in term of the quality, efficiency, and responsiveness of services.

Digital Technologies and City Services

Examples of how digital technologies are changing the way city services are provided can be found across a variety of key sectors:

  • Transportation: Real-time data collected from sensors and other devices can optimize connections between modes of transport for faster travel times, reduce the costs of operation, and increase convenience through improved information services for users on parking and transit availability in cities. Real-time data on traffic and transit services is providing new tools to city managers for both operation optimization and the delivery of new services to users. In Helsinki, for example, the bus service operator Helsingin Bussiliikenne Oy (HelB) worked with CGI to use improve its competitiveness through the use of sensors and data analytics on service performance.
  • Waste: Waste collection in cities is being transformed through the use of sensor technologies to improve collection. Companies like Enevo are providing real-time data and predictive analytics on the fullness of waste bins, enabling optimization of the collection process. These technological advances address the inefficiency of traditional waste collection, which is carried out by emptying containers according to predefined schedules and routes that are repeated at a set frequency.
  • Water: Droughts and population growth around the world have made water an increasingly important issue for cities. Intelligent devices, communications networks, and advanced IT systems are helping the water industry transform the way they deliver water services for cities. Veolia, for example, is working with the City of Lille, France to transform its water infrastructure. Working in partnership with the city, it deployed 1,000 sensors across the water network to identify leaks, as well as water meters and probes to test water quality.

Innovative Smart City Projects

The smart city market continues to expand, as city leaders across the globe are heralding innovative projects and laying out a vision for how cities can use technology to meet sustainability goals, boost local economies, and improve services. The importance of smart cities is being recognized at national level, as well. Canada is the most recent country to launch a national program, joining a list that includes Australia, the United States, China, India, Japan, Singapore, South Korea, and the United Kingdom. The Canadian federal government announced in early 2017 the launch of a Smart Cities Challenge Fund, proposing $300 million over 11 years for Infrastructure Canada to implement the program.

Intelligent Cities Summit

The myriad of ways in which this funding can utilize the power of big data and the Internet of Things (IoT) to deliver improved services in Canadian cities will be discussed at the upcoming Intelligent Cities Summit in Toronto (October 24-25). The conference speaker lineup features C-level municipal executives from cities such as Toronto, Vancouver, and Calgary, among others. See the conference website to download the brochure and register for the summit.

 

Navigant’s 2017 Mid-Year Energy Market Outlook: Ongoing Drivers and Cutting-Edge Trends in North American Energy Market

— August 31, 2017

Industry trends and uncertainties continue to transform the North American energy market. Examples include increased renewables in the power sector, technological innovation in energy storage, shifting supply and demand patterns in the natural gas market, and environmental policy uncertainty due to the administration change. Navigant’s 2017 Mid-Year Energy Outlook (NEMO) analyzes how these trends and others are expected to affect the energy and capacity mix as well as market prices over the next 24 years.

Energy Demand

The rate of growth in energy consumption and peak demand has decreased in recent years despite an increase in economic growth. The United States and Canada appear to be transitioning from the long-term trend where growth in energy consumption closely tracked economic growth. While NEMO forecasts overall growth in both consumption and peak demand, the levels of growth (as well as energy efficiency and other demand-side resources) vary between regions. For example, Electric Reliability Council of Texas (ERCOT) and parts of Western Electricity Coordinating Council (WECC) are among the faster growing regions in the forecast. However, New York, New England, and PJM are expected to see lower levels of growth, leading to a slowdown in generation additions. This marks a shift in PJM, where coal retirements, the capacity market, and low natural gas prices have driven the construction of many new merchant natural gas combined cycle power plants in recent years.

Renewable Energy Growth

Despite the absence of a carbon policy, Navigant expects that solar installations will continue to grow in North America as costs decline—though not as steeply as in recent history—and as the technology continues to be pushed by state policies and consumers. In 2016, the United States installed 14.8 GW of solar PV projects, second only to China for annual installations that year. The wind forecast is more dependent on the federal Production Tax Credit that is already declining and set to expire by 2020. This has led to a boom in construction that is expected to peak in 2020 (the last year projects can go online and still get 100% of the tax credit) before declining steeply.

The convergence of increasing renewables penetration and declining battery costs indicates that battery storage is likely on the precipice of increased deployment across the electric grid for renewables integration and the provision of ancillary services. For the first time, Navigant’s NEMO includes an energy storage addition outlook. Energy storage is being implemented in areas such as California to meet policy targets without adding significant new natural gas generation. The revenue that storage projects would expect to receive from avoiding curtailment of renewables is not yet enough to cover the overnight cost of storage, though this could change in the future as the costs of storage decline and renewables penetration increases.

Natural Gas Market Transformation

While the power market grapples with the evolving energy generation mix and the associated effects on the grid, the natural gas market in North America continues its own evolution characterized by threshold events. Exports of natural gas have overtaken imports into the country for the first time in 60 years. US natural gas pipeline exports to Mexico have more than quadrupled since 2010. Exports by ship occurred for the first time from the lower 48 states, with the Cheniere Sabine Pass liquefied natural gas (LNG) export facility delivering LNG to the world market in February 2016. From this point forward, at least to the end of the NEMO term in 2040, Navigant expects exports by pipeline and by ship to continue increasing. Exports are anticipated to grow to represent over 18% of the US natural gas market by 2040.

Navigant’s NEMO covers the changing supply and demand dynamics in the natural gas market, continued renewables generation buildout, slowing load growth, the introduction of emerging technologies like storage, and the continued absence of a federal carbon policy. David Walls and Rob Patrylak will present further details on Navigant’s forecast via a webinar on September 13.

 

Exploring Potential for Integrating Transactive Energy into Virtual Power Plants

— August 4, 2017

The concepts of virtual power plants (VPPs) and transactive energy (TE) are similar in that they place prosumers—formerly passive consumers that now also produce energy—front and center in an emerging market for grid services delivered by distributed energy resources (DER). Both trends are indicative of an electric grid ecosystem that is decarbonizing, decentralizing, and digitizing.

Navigant Research believes that the future of energy rests on the foundation of cleaner, distributed, and intelligent networks of power, what we call the Energy Cloud. The VPP model presents a compelling vision of this future, as does TE. When combined, new revenue streams for diverse energy market stakeholders are inevitable. What portion of the VPP/TE plethora of possibilities will find its way into prosumer pockets?

In a new Navigant Research report entitled VPP Transactive Revenue Streams, I identify six grid services that could be enhanced by integrating TE within the VPP framework. Much more work needs to be done to put money into stakeholder pockets, so I’ve also briefly identified the regulatory challenges that need to be addressed to make these revenue streams real:

  • Localized clean energy: How can previous policy vehicles such as net metering and feed-in tariffs be accommodated or revised (or eliminated altogether) to shift from subsidy schemes to a more transparent market locally, regionally, nationally, and internationally? TE platforms operating within VPPs may be a good starting point.
  • Virtual capacity: Just as consumer supports need to be revisited for solar PV and other distributed generation, so do assumptions governing determinations of resource adequacy for wholesale system planning. Perhaps exit fees and demand charges are obsolete in a DER-rich future. What are new ways to monetize the actual non-generation-related services a power grid provides?
  • Real-time demand response: More sophisticated load-based demand response will be part of the toolkit to displace ramping fossil fuel generators up and down in response to variations in solar and wind. Harvesting load will be one of the key innovations to benefit from TE-based blockchain ledger systems.
  • Fast frequency regulation: While the VPP seeks to provide creative fast frequency response, the sources of such services are still often spread far apart. In an ideal world, localized generation, energy storage, and load could be marshaled to address frequency challenges to the grid. How can we integrate locational benefits in the pricing of such grid services?
  • Smart voltage control: The proliferation of smart inverters onto the grid represent a rich resource portfolio that can be monetized in multiple ways. TE trades would enable a similar value proposition as fast frequency response. The same challenges to pricing locational benefits apply.
  • Big data from small sources: A VPP supported by TE must rely on accurate and timely data, analytics, and insights. While prosumers may not reap large profits from the data they provide via TE, energy service providers and distribution system operators may view this as the largest revenue stream flowing from the digital grid utility transformation.

Do VPPs create opportunities for TE revenue streams or vice versa? Most likely, these two DER platforms will evolve in parallel. DER management systems that can harmonize VPP and TE platforms must incorporate market pricing mechanisms to reflect the changing value of millions of connected endpoints throughout the day. That’s quite the challenge, which also translates into a major revenue stream opportunity for the Energy Cloud ecosystem.

To learn more from two major players active in the Energy Cloud ecosystem—Enbala Power Networks and ABB—tune into the Navigant Research-hosted webinar on Tuesday, August 15 at 2 p.m. EST.

 

The Future of Analytics in the Utilities Industry Lies in Strong Partnerships

— July 18, 2017

The utilities industry presents some unique issues for analytics specialist SAS, as I witnessed during a recent analyst event. The industry is no stranger to large volumes of data or analytics, and as it undergoes a digital transformation, it should present a huge opportunity. However, the industry’s approach to the procurement of analytics means that there are few low hanging fruit, and SAS must work hard if it is to dominate utility-focused analytics.

In its favor, SAS is unquestionably a market leader and continues to remain one step ahead of its competition. It is investing heavily in four areas, all of which will resonate with utilities’ changing requirements:

  • Platforms: In a similar vein to virtually every other enterprise data vendor, SAS is making a big bet on data platforms. While many will struggle to differentiate, SAS’ strength comes from its experience in data preparation, an area that many fail to discuss in detail. SAS’ strategy for its Viya product is to provide different types of user access to any type of data, from any source, using the most appropriate user interface.
  • Harness artificial intelligence (AI) and machine learning: Over the last couple of years, during which AI hype has hit peak volume, SAS has been relatively conservative. It is focusing more on machine learning and the benefits of massive compute—how analysts can interface with SAS in new ways, on new devices, using the most up-to-date algorithms.
  • Internet of Things (IoT). SAS wants companies to be smarter about their IoT data analytics. It discussed at length its partnership with Cisco—to embed SAS analytics within smart routers—which will take analytics to “the edge” much closer to the devices where the data is stored. It also promoted its event stream processing tool and announced the recent addition of Event Stream Manager.
  • Cloud analytics: Finally, SAS is investing heavily in cloud-based analytics, which will be increasingly important for utilities as their digital journeys mature. It is also important to note that SAS wants to offer a flexible approach to where analytics is performed. Cloud is just one option, among on-premise, in-database, in-stream, or in Hadoop.

SAS has a market-leading set of analytics products, it is investing in all of the areas utilities would want, and is not shy about discussing the issue of data governance. These are all messages that should resonate well with utilities. But should it expect a rich harvest of low hanging fruit in the utility orchard? In short, no. The biggest barrier SAS will face is utilities’ historic approach to analytics procurement, which is heavily siloed and task-specific.

Future Opportunities Lie in Partnerships

Many of the future opportunities for analytics within utilities lie in operations, where SAS has not historically had a strength. Operations typically procure analytics for a specific task, from a vendor with deep knowledge of the technical issues, but lacking the robust analytics engine SAS brings.

The answer for SAS lies in partnerships. SAS will never compete with large engineering companies for industry knowledge; likewise, these companies will never compete with SAS in terms of analytic capability. Unsurprisingly, SAS has begun conversations with all the global engineering companies. However, these conversations are at an early stage. Digitization and analytics will help utilities address their most pressing concerns: to improve operational efficiency, maximize customer experience and develop new products. The market needs a robust analytics platforms and algorithms designed by industry specialists. The market needs these partnerships sooner rather than later.

 

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