Navigant Research Blog

DERMS Is the Word at DistribuTECH

— January 30, 2018

After attending DistribuTECH in years 2014 through 2016, I took 2017 off because it seemed like there was less emphasis on demand-side management (DSM) and behind-the-meter distributed energy resources (DER) like demand response, energy efficiency, and energy storage. The biggest standalone public companies in the space at the time, Opower and EnerNOC, had seriously pulled back or ended their presence at the show. Acquisitions added additional doubt of direction in the industry; in 2016, Opower was bought by Oracle—putting into question its future focus on the space—and in 2017, EnerNOC was acquired by Enel.

DSM and DER Back in Focus

With that backdrop, I did decide to make the return trip to San Antonio in 2018 to see if anything had changed. I can’t speak to whether last year’s conference was any kind of transition, but I was floored with the level of attention given to DSM and DER topics by both DistribuTECH stalwart companies and startups alike.

From the big boys, like GE, Siemens, and Schneider, a common theme emerged of connecting advanced distribution management systems with DER management systems (DERMS). I alluded to this trend in Navigant Research’s 2016 report, Demand Response Management Systems, and my experience at DistribuTECH solidified the notion. Those vendors had intricate displays showing how the systems integrate, but there is still little real-world experience with such cases. The Smart Electric Power Alliance (SEPA) held a concurrent session aimed at standardizing DERMS requirements and terminology since it means something different to every vendor and utility.

On the startup side, a plethora of newbies were hawking their technologies for energy efficiency, and in particular, customer engagement. The majority of these applications are based purely on software, analyzing meters and other forms of data, as opposed to any new hardware that the utility or its customers would need to install. Companies like Grid4C, Powerley, Mach Energy, and Bidgely—along with more-established players like Oracle, Itron, Landis+Gyr, Honeywell, Lockheed Martin, and AutoGrid—touted their algorithms, segmentation tools, and disaggregation capabilities designed to help utilities and end-use customers save energy, detect anomalies, and engage in more meaningful ways. The Smart Energy Consumer Collaborative held its annual Consumer Symposium onsite to highlight these technologies and strategies.

DistribuTECH or ConsumerTECH?

Of course, the majority of the show floor was dominated by the usual suspects with transmission and distribution equipment and operational systems, but I was more interested in what was bubbling up around the edges. If things keep progressing in these directions, the show might have to change its name to CustomerTECH!

 

Increasing SMB Customer Engagement through Integrated Demand-Side Management Programs

— October 5, 2017

For decades, utilities have had success reaching large commercial and industrial (C&I) as well as residential customers with demand-side management programs like energy efficiency and demand response. Large C&I customers typically have utility account managers catering to their service needs, while mass marketing techniques like bill stuffers, direct mail, door-to-door canvassing, advertising, social media, and retail channel partnerships effectively reach residential consumers.

However, the small to midsize business (SMB) customer segment is typically underrepresented when it comes to demand-side management (DSM) program participation, so it is considered hard to reach. Obstacles include the facts that there are too many SMBs for utilities to have a dedicated account managers, SMBs typically do not have staff resources focused on energy issues, and mass marketing does not easily penetrate the segment. In addition, no clear definition of SMBs exists. Some utilities and vendors use square footage, others use annual kilowatt-hours, and still others use kilowatt peak demand.

Examining the Issues

A 2016 study in California found that SMB customers accounted for 78% of customers, but only 33% of energy efficiency program incentives and 32% of energy savings from programs. The program participation rate for SMB customers is about one-third of the average for all business types. In Massachusetts, 1.4% of eligible customers participated in the small business direct install program, and the smallest customers did not receive attention comparable to customers closer to the 300 kW program cutoff. In PSEG Long Island’s energy efficiency program, the participation rate among SMBs was 3 times lower than among non-small business customers (5% vs. 15%).

Reaching SMBs

However, this segment makes up a large percentage of a utility’s customer base and has specific characteristics that make these customers great candidates for these programs. They are cost-conscious and will be more likely to participate if energy projects can be put in terms that resonate with them. They also care about community relations, so they will see value if they can show that they are doing something to help the local economy or environment. Recently, utilities have started aggressively pursuing SMBs with new integrated DSM (IDSM), demand response (DR), and energy efficiency product offerings to better leverage this untapped load resource and engage them to help improve J.D. Power customer satisfaction scores.

Join the Conversation

Navigant Research will host a free webinar on the topic of increasing SMB customer engagement through IDSM programs on October 10 at 2 p.m. EDT. I will be joined by Robert Duval, director of operations at Itron, and Jeremy Morrison, program manager at Duke Energy, and we will share best practices related to designing and deploying DR and energy efficiency programs for SMBs.

Key topics covered will include tips for DR and energy efficiency program design, recruitment strategies to maximize customer participation, approaches to maximize energy efficiency savings, and insights from a utility that has successfully deployed an integrated DR and energy efficiency program for SMBs.

 

As Summer Winds Down, a Look at Residential Demand Response Leaders

— September 19, 2017

Summer 2017 was relatively light from a demand response (DR) perspective in North America—aside from California, which saw extreme heat waves. There were not a lot of opportunities to test the capabilities of DR resources that utilities, regional transmission organizations, and retail electric providers had stockpiled to prepare for high load levels or energy prices. However, there was still plenty of merger and acquisition (M&A), technology development and new program design activity taking place.

Navigant Research took this opportunity to compile a Leaderboard that examines the current vendor landscape for residential DR (RDR). The report analyzes the strengths and weaknesses of the key players in this global industry and displays those rankings visually in the Navigant Research Leaderboard Grid. This Leaderboard utilized broad guidelines to determine which market participants should be included to allow for companies that offer hardware and/or software and focus on technology or include program implementation services.

The Navigant Research Leaderboard Grid

(Source: Navigant Research)

This Leaderboard evaluated 15 companies based on 10 criteria to determine which competitors are Leaders, Contenders, Challengers, or Followers in the market. As the global RDR market has heated up in recent years, leading companies have invested heavily to develop their capabilities and strategy. There are a number of companies focused on other aspects of the smart grid arena now beginning to tackle the DR space, as well as many startup companies with new hardware and software offerings that take advantage of the plethora of available energy data and communication options for devices and customer messaging. Some of the incumbent RDR vendors are finding that they need to partner with these new players to keep pace with the changing marketplace.

The RDR industry is still maturing relative to the energy industry in general, but great strides have been made in turning DR into an operational resource for grid operators. In addition, this report combines both software and hardware offerings, as well as technology providers and program implementation services, which are all different segments that require diverse skill sets. Few companies attempt to serve all sides, thereby offering a complete solution.

As Navigant Research has published a series of DR-related Leaderboards over the past few years, it has been interesting to see the high level of new players and new technologies that enter the market on a regular basis. By the time the next is published, I expect to see more companies come on to the radar screen and disrupt the market, along with more M&As as successful startups are swallowed up by large energy players looking to expand their reach in the space.

 

Non-Wires Alternatives Give NWA a New Meaning

— June 22, 2017

There is a growing trend among utilities and grid operators to forgo traditional transmission and distribution upgrades in favor of alternative methods to meet system needs. In mid-June, it was reported that Massachusetts lawmakers are considering a bill that would require the consideration of non-wires alternatives (NWAs) before utilities make investments in grid upgrades. In May, Bonneville Power Authority (BPA) announced that it had chosen to take “a new approach to managing congestion on our transmission grid,” according to CEO Elliot Mainzer, rather than build a new $1 billion, 80-mile transmission line along highway I-5 in Oregon. Such examples show a move from tradition toward creative innovation.

Past to Present

Traditionally, when a transmission or distribution system operator had a need to upgrade or replace infrastructure due to aging equipment or increased load demand, it would simply conduct poles and wires projects with which it could earn a regulated rate of return. No thought was given to alternatives in addressing the issue; it was simply seen as replacing a part in the electric grid machine. However, more creative solutions are being explored to address infrastructure needs at a lower cost with higher customer and environmental benefits as grid management and distributed energy resource technology has improved. Utilities now look to increase customer engagement and provide more value-added services, and policy concerns related to cost and the environment have grown.

The Massachusetts bill would require utilities to competitively seek non-wires projects for necessary grid upgrades. It would require utilities, when proposing new infrastructure, to provide a “description of the alternatives to the facility,” including other methods of transmitting or storing energy, other site locations, other sources of electrical power or gas, load management, or local energy resource alternatives.

The BPA decision “reflects a shift for BPA—from the traditional approach of primarily relying on new construction to meet changing transmission needs, to embracing a more flexible, scalable, and economically and operationally efficient approach to managing our transmission system,” according to Mainzer. The preferred solution includes resources like battery storage, flow control devices, and demand response.

No One Solution Is Yet in Play

Several utilities in different state jurisdictions have undertaken NWAs with diverse program design and procurement models. At this early stage in development, there is no standard business model and procurement process for utilities to implement NWAs. Currently, there are four models being considered and tried by utilities. The first is request for proposal, a typical utility procurement model. Auctions are another; borrowed from wholesale market models to drive the lowest cost solutions. Also being considered is procurement with current implementation contractors to keep things simple and quick. The last possibility is internal utility resource deployment if the utility has the required capabilities. There is no one right answer for all situations; each case will depend on the utility’s internal structure and capabilities along with the regulatory construct in which it operates.

NWAs are likely to become more common in US utility capital planning processes and regulatory requirements in many US state jurisdictions. It is an exciting yet anxiety inducing opportunity to change the way utilities address system and customer needs simultaneously. The sooner the industry faces this new reality, the better prepared all parties can be to ensure it succeeds. Navigant Research’s recently published report, Non-Wires Alternatives, discusses the drivers, barriers, business models, and future growth of the market.

 

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