Navigant Research Blog

Climate Risks Provide More Validation for the Energy Cloud

— October 19, 2015

The U.S. Department of Energy (DOE) just released a new interactive map and report highlighting the risks to resilience and reliability of energy supply at a regional scale across the United States. The report highlights projected climate change impacts across seven regions to direct climate change resiliency and mitigation efforts on the most vulnerable components of our energy infrastructure.

The climate projections and potential impacts span across nine segments of the energy sector, including oil and gas exploration and production, fuel transportation, thermoelectric power generation, hydropower, bioenergy and biofuel production, wind energy, solar energy, electric grid, and energy demand. This comprehensive view of climate change impacts across the energy. The threats are prioritized for each region based on the DOE’s analysis, as illustrated in the map below.

Projected Climate Impacts on the U.S. Energy Sector by Region

Casey Oct. Blog

(Source: U.S. Department of Energy)

The climate change-related threats to fuel transport, the grid, and energy demand underscore the importance of investment and commitment to transforming how we think about and use energy. Navigant Research characterizes this necessary revolution of the energy sector as the energy cloud. Profound changes in the technologies that support our use of energy will also transform the nature of the grid, energy assets, and even buildings.

The rapid increase in investment of distributed energy resources (DER), the technology enablement for demand response, and the growing volumes of data associated with the Internet of Things (IoT) is changing the character of buildings. The intelligent building is the framework that helps building owners leverage technology and services to use the expansive data on facility equipment, operations, occupancy behaviors, and other business systems to optimize energy consumption.

Intelligent building solutions are enabling greater integration of control and automation across systems, from HVAC to plug loads, to deliver more strategic and coordinated energy management. The insights from these building energy management systems and industrial energy management systems direct changes in when and how much energy our buildings use.

As climate change impacts continue to threaten our traditional energy industry, intelligent building solutions can usher in a new era in building management. The opportunity is two-fold; first, the technology can restructure building system operations, and second, the software and services can support the change management of people investing in and operating building systems. The technology is available and capable of delivering sophisticated energy management strategies, and the future will be shaped by how software and services help change the mindset and procedures on the human side of the equation.


From Grid to Cloud: A Network of Networks in Search of an Orchestrator

— October 8, 2015

Magnifiers_webIn my blog, “The Impacts of the Evolving Energy Cloud,” I discussed how the power sector is undergoing a fundamental transformation. It is transitioning from a centralized hub-and-spoke grid architecture based on large centralized generation assets toward a more decentralized grid with a bigger role for renewables and distributed energy resources (DER). Navigant calls this new grid the Energy Cloud.

Where networks of networks exist, the business model that Wharton School dubbed the network orchestrator has been found to achieve faster growth, larger profit margins, and higher valuations relative to revenue, compared to three other types of business models (asset builder, service provider, and technology creator). The network orchestrator role will capture value by tailoring electricity supply and demand services for a customer, utility, or grid operator. In Navigant’s latest article in Public Utility Fortnightly, we explore how network orchestrators will emerge from the developing Energy Cloud and who might be candidates for such a role.

The New Uber

This week, in an interview with Energy Post, RWE’s Head of Innovation Inken Braunschmidt talked about the different business models that RWE is pursuing to capture an important position in the future energy system in Europe. She states, “In that energy system, it’s much more about sharing … you go onto a platform and say: I have electricity left over from wind or today I want to order some electricity from wind. It will be like ordering Uber.” This is a good example of how a large utility wants to transform its business and build a network orchestrator business model on top of its traditional business models. Many utilities have recently started new businesses, evaluating and making the initial investment in network orchestrator roles in areas like virtual power plants, building energy management systems, microgrids, storage, and others.

Another example this week was General Electric’s (GE’s) announcement of Current, powered by GE, an energy company that integrates GE’s LED, Solar, Energy Storage, and Electric Vehicle businesses to identify and deliver cost-effective, efficient energy solutions to its customers. This is clearly a move to become more of an orchestrator. The new company combines GE’s products and services in energy efficiency, solar, storage, and onsite power with its digital and analytical capabilities to provide customers—hospitals, universities, retail stores, and cities—with more profitable energy solutions.

Since companies employing the network orchestrator business model outperform other types of companies on several significant dimensions, it may only be a matter of time before pure network orchestrators emerge and establish themselves as key orchestrators within the Energy Cloud. As in other industries, Navigant strongly believes that new players will enter this field to become the network orchestrators of the utility industry.

So with that said: Who will be the Uber of the utilities industry? More to come on this soon.


5G: What It Is and What It Isn’t

— May 15, 2015

Anyone who follows the communications industry with any regularity has been hearing a lot lately about 5G technology—the amazing next generation of mobile (and fixed) technology that promises ubiquitous, low-latency, high-bandwidth connectivity. 5G will power the Internet of Things and provide always-on coverage for a hyper-connected society. Conceptually, energy cloud connectivity will be a piece of cake for 5G networks. Practically, however, it’s a long ways off.

What Exactly Is 5G?

Good question. The answer is, they’re still figuring it out. “They” being a multitude of organizations and standards bodies worldwide that are currently working independently; once they’ve each come up with working definitions, they will then all need to agree to standards and spectrum alignment issues, among others, before a final answer emerges. But 5G sounds really good on paper, especially the part about less than 1 millisecond (ms) latencies and 1–10 gigabits per second (Gbps) connections. Here are the generally agreed upon working specs for a 5G network:

  • 1–10 Gbps connections to end points in the field (not theoretical maximum)
  • 1 ms end-to-end roundtrip delay (latency)
  • 1000 times bandwidth per unit area
  • 10x–100x number of connected devices
  • 99.999% availability
  • 100% coverage
  • 90% reduction in network energy usage
  • Up to 10 year battery life for low-power, machine-to-machine devices

Cool, right? The problem is that there is currently no way that all of these conditions can be met simultaneously. Rather, certain characteristics will be needed for certain applications, while other characteristics are needed for others. And creating a ubiquitous, less-than-1 ms latency network may simply not be physically possible across large geographies. This is a pretty tall order. Delivering even a few of these goals will be tough while simultaneously reducing network energy consumption by 90.

When Will 5G Really Happen?

It may sound cynical, but it’s unlikely that 5G will become a meaningful communications platform anytime even close to 2020, which is the target date that most standards bodies have set for initial commercial deployments. For years in the nineties, I wrote articles about the zero billion dollar wireless data industry. Following the hype cycle, it took another 15 years before all the necessary components came together and real billions were generated by wireless data. Particularly given the lack of agreement today on the goals and purposes of 5G networks, it will be a decade or more before real-world installations develop. For an excellent overview of the issues and challenges faced in defining and developing the 5G networks of the future, check out this white paper from GSMA.

What Does 5G Mean for Utilities

Over the longer term, 5G infrastructure may power futuristic applications like autonomous driving and virtual reality as well as smart grid applications. But for utilities today, existing communications technology is more than adequate—in places where it’s available.

The bigger challenge for utilities is getting those networks more widely deployed with a holistic strategy for a multitude of energy cloud applications. Monitor the 5G evolution if you’re curious about how engineers plan to defy the laws of physics, but when it comes to your utility’s network, consider the best existing solutions for the smart grid applications of today and tomorrow as you build and extend connectivity throughout the grid.


The Comms Are the Cloud

— May 14, 2015

The Internet of Things (IoT). Smart grids. The energy cloud. What do all of these have in common? In order to achieve their promise, ubiquitous, high-speed, high-bandwidth communications networks will be needed. The energy cloud, as described in Navigant Research’s white paper, is expected to radically change the electric power industry over the coming decades. The energy cloud will emerge as the old-school, centralized monopoly utility model transforms into a decentralized, intelligent, two-way grid where utilities, markets, and prosumers transact in real-time for a cleaner, more efficient, reliable, and cost-effective energy industry. The potential in the long run is huge.

But today, adequate, ubiquitous communications that meet utilities’ needs for smart grid technology simply haven’t been widely deployed. Even in North America and Europe, where smart grid efforts have been underway for a decade or more, the infrastructure in place to transport all of that valuable data to the systems and devices that need it is, at best, a patchwork quilt of legacy and newer technologies, deployed in an ad hoc manner. The energy cloud won’t become a reality until seamless, high-speed, interoperable communications networks are present gridwide.

Utilities struggle with their communications networking strategies, even as the media waxes enthusiastically about the IoT and the coming nirvana of 5G technology; the recently announced mega-merger between Nokia and Alcatel-Lucent has been attributed to the marriage of the advanced wireless and wired communications that 5G capabilities will demand. But 5G networks are a decade away; a bit of a reality check is in order. Here’s the good news—and the bad news—about communications and the energy cloud.

The Good News

Perhaps the best news for vendors and service providers is the massive demand for utility communications that the energy cloud will engender. Navigant Research estimates that communications gear for basic smart grid communications technology will be a $30 billion opportunity over the next decade.

Communications Node Revenue by Region, World Markets: 2014-2023

Blog chart - RE(Source: Navigant Research)


This is likely conservative, based on expectations for deployment of advanced metering infrastructure (AMI), distribution automation and substation automation technology, and on the leading communications technologies used today—microwave, 900 MHz mesh, cellular, etc. (Detailed forecasts can be found in Navigant Research’s report, Smart Grid Networking and Communications.)

Additive to the infrastructure markets included in this forecast will be service fees collected by comms providers, independent network providers (see PDVwireless), networks for electric vehicle charging networks, connected solar panels, and more.

Remember the cell phones of the nineties? The novelty of being able call someone from outside of the home or office? That’s where we are today in terms of smart grid connectivity and applications. We can measure power consumption thanks to smart meters; we can monitor grid devices thanks to new sensor technology. That visibility provides a wealth of knowledge to grid operators—it’s great!

Now think about the explosion of applications—and revenue—that smart phones combined with 4G networks has allowed. That’s where the energy cloud is heading.

The Bad News

Solving the problem of ubiquitous connectivity—with low latency, high bandwidth, and seamless interoperability—is no small task.  Utilities tend to invest in the lowest cost connectivity solution for the application at hand. Once an AMI network is in place, utilities then begin to think about ways to leverage those networks. Now that we can connect to the meter, we could try (insert the smart grid application du jour here)! But all too often, the network in place wasn’t configured with that application in mind. Existing networks can be a serious limiting factor to cutting-edge smart grid applications. But those sunk investments have to be depreciated and a new rate case may be many years away.

Cautious Optimism

Despite the challenges utilities face in developing holistic, long-term, gridwide communications strategies, it will happen. It will take years—maybe decades—but the energy cloud revolution is already underway. Build the comms, and the energy cloud will come.


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