Navigant Research Blog

Funding Smart Buildings to Limit Climate Change

— March 3, 2015

The inefficiencies in commercial building operations have direct implications for the country’s carbon footprint. With climate change still a political stalemate, the Obama Administration has instead taken aim at energy waste in buildings, with voluntary programs led by the U.S. Department of Energy (DOE) that are making waves in the private sector. Energy efficiency challenges, showcases of business best practices, and now a call for private sector financial commitments to fund technology development are all targeting business transformation.

At this year’s ARPA-E Summit, the Obama Administration announced a $2 billion Clean Energy Investment Initiative as a challenge to the private sector to fuel investment in the kind of innovation needed to tackle the threat of climate change. Brian Deese, deputy director of the Office of Management and Budget explained, “Further clean energy innovation to improve the cost, performance, and scalability of low-carbon energy technologies will be critical to taking action against climate change. Foundations and institutional investors have the potential to play an important role in accelerating our transition to a low-carbon economy and cutting carbon pollution.”

Anteing Up

Wells Fargo stepped up to the plate with a $10 million Innovation Incubator (IN2) program to support early-stage energy efficiency technologies for commercial buildings. A collaboration with the National Renewable Energy Laboratory (NREL), the program offers startups grants, mentorship, research and testing support at NREL, and field testing in Wells Fargo buildings.  The effort will not only help startups develop commercial-ready business models, but also generate proof-of-concept demonstration for innovative technologies. In conjunction with the launch of the Clean Energy Investment Initiative, Wells Fargo also announced it will expand investment partnerships with other financial institutions to bring more money to the table in support of the $2 billion target.

New building technologies remain a bright spot for clean tech investment. In fact, according to statistics from Crunch Base, venture funding for building technology innovations characterized as Internet of Things (IoT) solutions has steadily risen, even as more general clean tech investing took a dive. A recent article on TechCrunch suggests that almost 40% of all clean energy rounds in 2014 went to IoT smart building startups.

Direct Impact

Recent research from Navigant Research echoes the optimism around growth in the market for building innovations. Building energy management systems (BEMSs), for example, leverage the IoT to deliver unprecedented visibility and insight into building and significant improvements in energy consumption and resource utilization. Our recent report, Building Energy Management Systems, shows that the business impacts facilitated by BEMSs have direct and quantifiable climate change impacts. A growing pool of funding sources for companies helping to evolve this maturing marketplace is just one example of the benefits that may come from the Clean Energy Investment Initiative.

 

Japanese Automakers Harness PEV Power

— February 2, 2015

Plug-in electric vehicles (PEVs) may provide far more value to their owners than just reducing gasoline costs and greenhouse gas emissions.  The significant energy and power capacities of the PEV system can be utilized to provide power during a blackout, curb commercial electricity ratepayer demand charges, power offboard equipment at work sites, and help grid operators balance supply with demand.  Each of the above uses requires, or is strengthened by, PEVs equipped with bidirectional capability – meaning the vehicle can both absorb electricity from the grid and return it.  Most PEVs available today, however, lack this capability.

This is because automakers don’t yet see a market for vehicle-to-grid integration, and they’re concerned that the use of vehicle batteries for purposes outside of motive power may shorten the batteries’ lives.  Test pilots in major PEV markets are answering some of these concerns, as well as developing the processes by which a PEV’s bidirectional potential may be harnessed.  The center of action is in Japan.

New Models

In Japan, the Nissan LEAF, Mitsubishi i-MiEV, and Mitsubishi Outlander PHEV are all sold with bidirectional capability as an option.  Each model can connect to an offboard inverter through the vehicle’s direct current (DC) charging port to enable a reverse power flow.  The offboard equipment only enables the PEV to supply power back to an owner’s home in the case of an outage, not back to the grid under normal circumstances.  Its purchase is subsidized by the Japanese government.

Though the system’s use is limited to emergency outage situations, this relatively early adoption of the technology in comparison to other large PEV markets is providing a launch point for testing other PEV power possibilities.  Nissan has already begun testing a fleet of LEAFs in curtailing commercial demand charges at one of the company’s facilities through the LEAF to Home system.  Similarly, the LEAF to Home system is also undergoing tests in grid balancing services.   A number of similar tests are underway in the United States and Europe as well; however, no vehicles have yet been made available to the mass market with bidirectional capability as they have been in Japan.

Two Ways Are Best

To date, using PEVs in grid balancing services represents the most interesting case from a revenue-generating perspective.  Though a PEV does not necessarily need to be bidirectional to service the grid, the revenue potential of a bidirectional PEV in grid services is significantly higher in comparison to that of a unidirectional PEV.  Tests and simulations in the United States indicate that the revenue potential of one bidirectional PEV can average around $5 per day of grid service.

This revenue potential provides a significant new incentive for PEV adoption.  However, it’s unlikely such a scenario will emerge unless energy companies and utilities pave the way for PEVs in grid services and automakers outside Japan offer bidirectional PEVs.  Please join Navigant Research’s webinar, Electric Vehicles and the Grid, at 2 p.m. EST on February 10 as we examine in detail the market drivers and challenges of using PEVs in grid services.  Click here to register.

 

Building Innovations Form Pivotal Spokes in the Circular Economy

— February 2, 2015

The annual World Economic Forum in Davos, Switzerland, has come and gone again, and the usual irony of 1,700 private jets delivering the global elite to discuss climate change and inequality was perfectly ridiculed by Jon Stewart last week. But, beyond the spectacle of outsized wealth, there are some valuable economic and policy projects that hold promise outside the weeklong schmooze-fest.

In particular, the Circular Economy, an ongoing project at the forum, aims to tackle the current paradigm of consumption in light of a future of constrained resources and exponential growth in demand.  The Ellen McArthur Foundation, which supports an ongoing dialog on the circular economy explains the concept as thus:  “A circular economy seeks to rebuild capital, whether this is financial, manufactured, human, social or natural. This ensures enhanced flows of goods and services.”  An important question is how the theory of the circular economy can become tangible, which was a hot topic for this year’s discussions in Davos.

Rethink, Remodel

In the run-up to this year’s event, a Forbes article explained that the circular economy “requires businesses to rethink more than just their resource footprints and energy efficiency. It demands a more radical remodelling of business models.”  Reflecting on the big ideas of the circular economy, it seems the intelligent building, smart city, and innovations in energy management could be an ideal proving ground for these concepts in action.

The intelligent building is characterized by automated and responsive systems that maximize efficiency in consumption and productivity.  Intelligent buildings offer a new sort of resource that extends beyond the walls of any single facility to support key goals of grid modernization and the development of smart cities.  The technology exists to enable this kind of facility optimization, and investment in intelligent buildings and smart cities can demonstrate the benefits of a circular economy.  The following examples highlight how companies are bringing solutions to the intelligent building and smart city marketplace that align with the opportunity of the circular economy.

  • Philips has committed to the circular economy and the company’s lighting as a service offering aims to engage cost-constrained customers and manage the end-of-life treatment of lighting and system components.
  • Schneider Electric and Autodesk have announced a new partnership to bring innovation to building lifecycle management and “drive a deep and long-term transformation in the construction industry, providing greater value to each user and contributing to solve the energy challenge.”
  • Cisco’s position is presented as an “engineering strategy around the Internet of Everything [supporting] the transition to a circular economy, with new connected devices enabling the tracking of products, components and materials for re-use and recovery; new business models through greater connection with customers; and more effective reverse logistics chains.”

While the circular economy might seem like a lofty ideal that will demand major shifts in our consumption mindset, advances like these demonstrate steps in the right direction.

 

Supercar Launches Reveal Advanced Automaker Thinking

— February 2, 2015

Ford and Honda both announced supercars at this year’s Detroit Auto Show.  It’s worth taking a look at some of the key features in each of these vehicles to gauge where automotive technology is headed.

Ford GT

Originally developed in the mid-1960s, the Ford GT won the 24 Hours of Le Mans race for 4 consecutive years from 1966 through 1969.  At the 2002 Detroit Auto Show, a concept car was shown that captured the look of the original racing car but made it practical to own and drive on regular roads.  Slightly more than 4,000 Ford GTs were produced in model years 2005 and 2006.

Now a new version has been unveiled.  Beginning production in late 2016, the GT will be available in select global markets to celebrate the 50th anniversary of Ford GT race cars placing 1-2-3 at the 1966 24 Hours of Le Mans race.  Although its predecessors all featured V8 engines, the newest version will be fitted with a twin-turbocharged EcoBoost V6, producing more than 600 hp.  Ford is keen to show that its chosen path of downsizing engines for fuel economy still offers plenty of power.

Low weight is an important factor for production vehicles as well as race cars, and the new GT has a carbon fiber passenger cell with integrated seats and aluminum front and rear chassis sub-frames encapsulated in structural carbon fiber body panels.  The exterior shape minimizes drag and optimizes downward forces.  An active rear spoiler is used for control of braking, handling, and stability at speed.  Carbon fiber is a very important material for light vehicle structures, and the new GT will give Ford some practical experience in production.  Ford also announced at the show that it has formed a joint venture with DowAksa (itself a 50:50 joint venture between Dow Chemical and acrylic fiber supplier Aksa) to develop carbon fiber for mass-market vehicle applications.

Acura NSX

The original NSX, developed by Honda (though badged as an Acura in North America) from 1989 through 2005, sold more than 18,000 vehicles over 15 years.  The model has always been a showcase for the latest Honda technology, and the company is now relaunching the NSX as a reminder of its latest technology developments.  Production is slated for summer 2015, with first deliveries before the end of the year.

Like the Ford GT, the NSX features advanced V6 engine technology (Honda has never offered a V8 engine in its consumer vehicles despite developing one for racing use in Indy cars and Formula One).  The new NSX will feature a twin-turbocharged V6 engine with a 9-speed dual clutch transmission and Honda’s Sport Hybrid system, which uses three electric motors to boost power and enhance handling – one at the rear and one at each front wheel.

Managing airflow is again a priority, and Honda engineers have carefully tuned the vents and air intakes for maximum efficiency.  The first-generation vehicle used all-aluminum construction for light weight, but the new model has a space frame design consisting of an internal aluminum frame reinforced by ultra-high strength steel, all anchored by a carbon fiber floor.  Body panels are made of a combination of aluminum and sheet molding composite.  Suspension members are all cast aluminum.

Both of these supercars come from mass-market manufacturers that want to showcase their advanced technology. As my colleague Sam Abuelsamid observes, they manage to demonstrate a combination of high performance and fuel efficiency.  When the time is right, some of the processes, design concepts, components, and materials will make their way into high-volume production.

 

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