Navigant Research Blog

Distributed Energy’s Big Data Moment

— April 9, 2014

As my colleague Noah Goldstein explained in a recent blog, the arrival of big data presents a multitude of challenges and opportunities across the cleantech landscape.  Within the context of distributed energy resources (DER), among other things, big data is unlocking huge revenue opportunities around operations and maintenance (O&M) services.

As illustrated by large multinational equipment manufacturers like GE and Caterpillar, big data represents not only a potential key revenue source, but also an important brand differentiator within an increasingly crowded manufacturing marketplace.  Experience shows, however, that capitalizing on this opportunity requires much more than integrating sensors into otherwise dumb machinery on the factory floor.

The recent tragedy of Malaysia Airlines Flight 370 brought international focus to the concept of satellite pings whereby aircraft send maintenance alerts known as ACARS messages.  These types of alerts highlight the degree to which O&M communication systems are already in place in modern machinery.  But Malaysia Airlines reportedly did not subscribe to the level of service that would enable the transmission of key data to Boeing and Rolls Royce in this instance.  Although data may be produced via a complex network of onboard sensors, it is not always collected in the first place.

The collection and utilization of big data is not necessarily as simple as subscribing to a service, however.  Today, the sheer volume of data produced by industrial machinery is among the main challenges facing manufacturers of DER equipment.

A Different Animal

Bill Ruh, vice president and corporate officer of GE Global Software Center, which helped lead GE into the big data age in 2013, describes the Internet of sensors as a very different animal than the Internet used by humans.  While “the Internet is optimized for transactions,” he explains, “in machine-to-machine communications there is a greater need for real time and much larger datasets.”  The amount of data generated by sensor networks on heavy equipment is astounding.  A day’s worth of real-time feeds on Twitter amounts to 80 GB.  According to Ruh, “One sensor on a blade of a gas turbine engine generates 520 GB per day, and you have 20 of them.”

Despite volume-related challenges, this opportunity proved too lucrative for GE to pass up.  Estimating that industrial data will grow at 2 times the rate of any other big data segment within the next 10 years, the company launched a cloud-based data analytics platform in 2013 to benefit major global industries, including energy production and transmission.

Similarly, Caterpillar is one of the latest industrial equipment manufacturers to recognize the value of streaming a torrent of real-time information about the health of products in order to generate new revenue.  Already integrating diagnostic technologies into its nearly 3.5 million pieces of equipment in the field, the company launched an initiative across its extensive dealer network aimed at leveraging big data to drive additional sales and service opportunities.  Currently, the company’s aftermarket business accounts for 25% of its total annual revenue.  As Caterpillar and other companies manufacturing energy technologies have realized, a healthy pipeline of aftermarket sales and service opportunities is of vital importance to market competitiveness in an increasingly competitive manufacturing landscape.

With distributed power capacity expected to increase by 142 GW according to a white paper published by GE in February, the addressable market for aftermarket DER data is rapidly expanding.  Despite these opportunities, data analytics still represents a mostly untapped opportunity for manufacturers of emerging DER technologies.  Allowing manufacturers and installers of everything from solar panels to biogas-fueled generator sets (gensets) to closely monitor hardware performance, better utilization of data has the potential to not only drive aftermarket service offerings, but also accelerate return on investment (ROI) through better optimization and greater efficiency.  And this is a highly valuable differentiator for a class of technologies still scrambling for broad grid parity.

 

Enabling Remote Microgrids in the Developing World

— April 4, 2014

In my last blog, I wrote about the success mobile network operators (MNOs) are having with electrifying rural communities in developing regions, such as Latin America and Africa, by partnering with companies that sell solar home systems.  Much credit must go to the pico systems themselves, which are a cheap and reliable way to provide for the customer’s basic energy needs (cell phone charging and lighting).  However, there are two greater forces at play that reach far beyond the business of rural electrification: MNOs have found an effective business model in pay-as-you-go (PAYG) and they have employed an effective money transfer technology, known as mobile money.

These two forces answer the question: What has enabled the exponential growth of cell phone usage in the developing world?

Phone Bank

PAYG is a prepaid mobile phone plan.  You pay for a phone with a certain amount of airtime on it and you refill the time in your account as needed.  There’s no contract or monthly rate.  If you run out of time, your service is cut off, plain and simple.  This model works well for the off-grid rural poor who live on an inconsistent daily budget and who typically don’t have bank accounts.  It should be noted that some utilities in developed parts of the world are also experimenting with PAYG meters and they are finding that it is the only model that has successfully led to a change in consumer behavior (in the form of energy conservation).  As my colleague Peter Asmus details in his recent blog, this isn’t the only example of how the developed world can learn about energy solutions from the developing world.

Returning to the unbanked poor of the developing world, MNOs spotted an opportunity to capitalize on the lack of banking infrastructure in remote communities, and they have leveraged vendor networks and mobile technology to offer basic banking services to their customers.  To purchase airtime in the developing world, customers visit their local mobile airtime vendor and pay cash upfront for a scratch card of a certain value.  They enter the code from the scratch card into their phone to redeem the value of the card as mobile money, which goes directly into the mobile money wallet in their phone.  The mobile money wallet is protected by a PIN and acts essentially like a debit account, which can be used to purchase more airtime, along with other goods and services, to send and receive money, and to pay bills.  The MNO charges the customer for transactions made, so it is a lucrative new revenue stream for them.  More significantly for nanogrids, mobile money has opened the door to provide financing to unbanked customers.

Nanogrid Frontiers

Historically, one of the greatest barriers to off-grid households purchasing solar arrays has been the high upfront cost.  Investors, whether they’re vendors, microlenders, or nongovernmental organizations (NGOs), have had a hard time offering PAYG lending schemes to consumers due to the difficulty of collecting a long stream of small payments from a remote village, as well as the inability to monitor the systems.  Mobile money can provide a platform that enables lenders to conveniently offer PAYG schemes to off-grid consumers for the purchase of nanogrids, among other things.  More importantly, mobile money could turn remote parts of the world into profitable frontiers for the nanogrid market.  Many residential solar vendors (such as Simpa Networks in India) already see them that way, and these vendors are finding investors to finance PAYG systems as well as partners to handle the mobile money transactions.

While there is some variability in what these PAYG schemes look like, the keys to success seems to be the ability to track payments and usage easily and the ability to cut off service if a customer falls behind.  To view a list of nanogrid PAYG case studies, check out Navigant Research’s report, Nanogrids, and to learn about other business models that are being used to electrify remote parts of the world, view the replay of our Remote Microgrid Business Models webinar.

 

High-Voltage DC Unlocks Distant Offshore Wind Sites

— February 24, 2014

Germany is on track to commission close to 1 GW of offshore wind in 2014 and will follow up with another 3 GW between 2015 and 2016.  Goals have been revised downward recently, but the government still aims to bring 6.5 GW by 2020 and 15 GW by 2030.  These ambitious installation levels are driven by strong government-backed renewables goals and supportive incentives, but also by a novel solution to the challenge that most of Germany’s ideal offshore wind sites are very far from shore – most over 75 km.  At these distances, losses are so great over typical high-voltage alternating current (AC) subsea transmission cables that they can negate the construction of a wind plant.

The solution – a first in the offshore wind market – is the construction of a network of oversized high-voltage direct current (HVDC) converter stations and connecting cables that will allow much of Germany’s pipeline of offshore wind plants to efficiently deliver power to the mainland.  Direct current (DC) is neither new nor novel.  Its use fell out of favor many decades ago as AC power was cemented as the market standard.  But growing need for electricity and the increasing distances required for some generation projects has sparked a rebirth.  These factors have also sparked fierce innovation and competition among power giants such as ABB with its HVDC Light, Siemens’ HVDC Plus, and Alstom Grid’s MaxSine, each using advanced voltage source converter (VSC) technology.  Likewise, a relatively small number of companies provide large HVDC cables for subsea use, resulting in shortages and order backlogs.  This is prompting new entrants into the market and advances in cable technology, such as crosslinked polyethylene (XLPE) HVDC cable.

Towering Turbines

Offshore wind is a leading driver of the HVDC renaissance, and the scale of the effort is impressive.  The larger units look like offshore oil rigs, topping 93 meters in height and weighing upwards of 9,300 metric tons (not including foundation).  In the first German stages, the HVDC buildout is composed of four grid clusters in the North Sea known as SylWin, HelWin, BorWin, and DolWin. These initial phases combined provide around 5.9 GW of capacity and utilize around 800 km of undersea HVDC cable.  Multiple wind farms connect to the converter clusters in order to share and reduce the overall cost to build the HVDC network.

Germany is not alone.  The United Kingdom is also making enormous progress deploying offshore wind farms and will rely on HVDC for many new wind plants.  The first wind plants under the United Kingdom’s Round 3 offshore wind development are entering construction in 2014 at distances from shore that range from 30 km to 185 km. Close to 20 GW are located beyond 100 km and will rely on HVDC.  By 2020, as much as 30 GW of offshore wind will likely be connected by HVDC globally.  Corresponding HVDC export cable route lengths are expected to reach roughly 4,000 km.

The downside to HVDC is its high cost, driven by the large converter stations.  The challenge to the offshore wind industry, the hardware providers, and grid integrators is to bring costs down by standardizing hardware and voltages and by finding efficiencies of scale in converter component manufacturing and offshore construction.

More detailed information and analysis of the HVDC technology, deployments, cable providers, transmission integrators, and the pipeline of wind plants and their developers connecting to the systems are available through the following Navigant Research reports:  International Wind Energy Development: Offshore Report 2013, High Voltage Direct Current Transmission Systems, and Submarine Electricity Transmission.

 

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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