Navigant Research Blog

If You Build It, They May Come: Solving for Customer Experience in TE Platforms

— November 16, 2017

The utility customer of the future lives at the center of an ecosystem of networked and largely automated smart devices. Their household is within their preferred temperature range whenever they are at home; their EV charges when electricity prices are cheapest and is always ready for the morning commute; and they store any surplus electricity generated by their rooftop PV or, if the price is right, sell it in a digital market. Every decision made by each of these devices is a data point used by different service providers to refine and optimize customers’ distributed energy resources (DER) and integrate them with wider grid processes.

Transactive energy (TE) platforms will underpin tomorrow’s consumer energy market. The interface between energy producers and consumers, TE platforms allow parties to interact with one another in an open market while ensuring the needs of end users and the grid are met. These platforms will incorporate multiple technologies—including blockchain and machine learning—which have attracted a great deal of interest from the energy industry. But what should the consumer experience with TE platforms look like in practice?

TE Platforms Must Balance Grid Needs, User Preferences, and Ease-of-Use

TE service providers must supply an appealing product that creates value out of the box while providing options for users who are more hands-on. Optimizing household energy consumption to minimize costs requires a multitude of forecasts, calculations, and decisions. Since electricity bills in the US average around $115 per month, or 0.2% of the median household income ($55,000), the typical consumer has little incentive to manage these processes themselves.

Grid+, a technology startup and TE platform provider, solves this problem by supplying users with intelligent agents—hubs that integrate price signals, user preferences, and grid needs to coordinate a household’s smart device (TransActive Grid and Grid Singularity have a similar approach). While some user preferences may be set manually (e.g., preferred temperature range), most will be automated based on analyses of user behavior (e.g., heating the house prior to the customer’s return from work). The user decides their preferred balance of comfort and profits and they need only supply the agent with enough currency to pay bills and execute the necessary transactions on their behalf. All transactions are recorded rapidly and securely on a blockchain.

Thinking with Portals

Aspiring platform providers must devote as much attention to the end-user experience as they do to their platforms’ underlying technology. Customers balance their own comfort levels, convenience, financial costs and profits, and societal or ethical goals when making decisions about electricity consumption. Automation and machine learning solutions have the technological capability to deliver on that balance, but optimizing behind the scenes won’t be enough to inspire consumer trust or purchasing power.

The reality is that the Energy Cloud customer won’t care whether their platform rests on blockchain or a centralized database or a traditional billing system. They’ll care about outcomes and will need on-demand access to a portal that elegantly consolidates and visualizes their Internet of Things (IoT) ecosystem’s performance: What are their profits from selling power to the neighbors? How well is their PV system performing and have they paid off the install costs? How efficient is their home? Positive, confident results will drive further investment into the platforms themselves (so might friendly rivalries between local users).

For TE platform providers, competition for users will be fierce, and consumers will have their pick of platforms vying for their attention. The TE leaders in the Energy Cloud future may not have the most advanced technology, but they will have a blend of technology, functionality, user interface design, and perhaps gamification that creates an attractive and compelling user experience.

 

Utilities Will Rely on Vendor Ecosystems to Support the Energy Transition

— November 10, 2017

Until recently, I often introduced presentations or blog posts with a warning that the utility industry was about to enter the most disruptive decade in its century-long existence. That is no longer true, because I believe the industry has now entered that decade. Okay, the timing for different countries may vary, as will the length of the period of disruption. In fact, some countries—Germany and Denmark in particular—have experienced significant disruption already. But for most markets, the rumblings, threats, omens, and rumors have only recently turned into action.

Navigant Research has a significant volume of commentary on future energy markets, all based around its concept of the Energy Cloud—where energy becomes more distributed, clean, intelligent, and mobile. The old business model of centralized generation will shift to a decentralized, customer-centric value chain, where energy services become far more important than energy supply. Navigant Research also identified an additional $1 trillion of new value created in the Energy Cloud by 2030.

There Will Be No Energy Transition without a Digital Transformation

It is important to note that the energy transition is as much a digital revolution as it is an energy revolution. The $1 trillion of new value identified by Navigant Research will likely be created through the provision of digital energy services, from automated demand response to transactive energy. None of this value will be delivered without access to vast quantities of data from an enormous and heterogeneous array of devices. None of this value can be delivered without a robust IT infrastructure to support digital energy services.

As part of thought leadership, Navigant Research has identified seven platforms that are critical to the delivery of digital services within the Energy Cloud. Additional white papers are on the roadmap to discuss these platforms in further detail. Next up is a white paper on the neural grid platform, which describes—among other things—the devices, communications, and analytics that will underpin all other digital services in the Energy Cloud.

Vendor Ecosystems Will Help Manage the Complexity of the Energy Cloud

Navigant Research’s upcoming Neural Grid white paper will shine a light on the sheer complexity of the IT infrastructure required. There will not be any plug and play platform for the foreseeable future. The market is new, moving rapidly, and different utilities have different requirements. As a result, over the next decades individual utilities will deploy many platforms that rely on many datasets created by many devices communicated over many networks using many protocols stored in many locations supplied by many, many different vendors.

It is critical for the success of the Energy Cloud that vendors cooperate within official and unofficial partnerships and work toward their customers’ common goals. Join us on November 14 at 2:00 p.m. EST for an Intel-sponsored Navigant Research webinar. We’ll explore in more detail how the energy transition and associated digital transformation requires strong vendor ecosystems and gain some insights from Intel, which sits at the heart of one of the largest smart grid ecosystems.

 

What Is a Smart Home and How Will It Play a Role in the Energy Cloud?

— November 3, 2017

The concept of a smart home has the potential to revolutionize the way people interact with their homes. Homes that act intuitively and intelligently through smart home systems can enrich consumers’ lives by fostering increased comfort, awareness, convenience, and cost and energy savings. This concept also extends to the role that the home can play in transitioning the grid from traditional centralized generation to the Energy Cloud.

How Do We Define a Smart Home?

However, there is no set definition of a smart home. The industry often uses the terms smart, connected, and automated interchangeably when referring to the Internet of Things (IoT) in the home, though these terms refer to different (albeit related) ideas. Navigant Research believes the concept of a smart home goes beyond the individual devices of a connected home and involves integrated platforms where an ecosystem of interoperable devices is supported by software and services. A truly smart home should be able to act intuitively and automatically, anticipating and responding to the needs of consumers based on learned lifestyle patterns and real-time interaction.

Navigant Research’s View

Navigant Research believes the comprehensiveness and integration of such solutions are the keys to the success of the smart home, as homes that are embedded with smart technologies at their core are more suitable for playing a role in the Energy Cloud. Homes are expected to transform into dynamic assets that balance home energy production and consumption with distributed energy resources, shed load demand through the optimization of more energy efficient products, respond to signals that shift demand to times when the grid is less strained, and generally support a more reliable grid infrastructure.

Market Focus

Currently, the market is focused on the proliferation of connected devices, which are supporting more digitally enabled, connected homes. Consumers are increasingly aware of smart home technologies, with platforms like the Amazon Echo, Google Home, and Apple HomeKit spurring excitement about controlling devices in the home through voice activation and slowly but surely turning the smart home into a reality. These devices are demonstrating value, whether it be for entertainment, health, convenience, security, or energy. The figure below demonstrates the connected hardware in the home that establishes the backbone for comprehensive integrated platforms that support the development of smarter homes.

Connected Hardware in the Home

(Source: Navigant Research)

A Promising Future

There are many obstacles for the smart home market to overcome, such as interoperability, data privacy and security, a lack of embedded technologies in the home, advanced functionality, and connection between smart technologies and the grid. Yet, this market is gaining traction, and smart home solutions are becoming the future of the home and its role in the digital grid. To learn more about the smart home market, check out the recent Navigant Research report, The Smart Home.

 

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.

 

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