Navigant Research Blog

From Commonplace Materials, Shigeru Ban Creates Uncommon Shelters

— September 8, 2014

Japanese architect Shigeru Ban’s first museum in the United States opened last month in Aspen, Colorado.  An internationally renowned architect and the recipient of the 2014 Pritzker Prize, which is often referred to as architecture’s Nobel Prize, Ban is distinguished from his peers by his commitment to humanitarian work and sustainability.

Since 1994, Ban and a team of volunteers have responded to a number of disasters worldwide with innovative architectural solutions.  They constructed relief housing in response to the 1999 earthquake in Turkey, to Hurricane Katrina in 2005, and to the 2011 earthquake and tsunami in Japan.  Ban uses inexpensive, often recycled materials to construct innovative shelters in an economically and environmentally sustainable way.  These structures dispel preconceived notions of the aesthetics of disaster relief shelters with their simple, clean designs.

In Onagawa, Japan, Ban converted old shipping containers into housing for people who lost their homes in the 2011 disaster.  The earthquake and flooding left little flat land, which Ban addressed by stacking the shipping containers to make three level multi-family units.   One of Ban’s earliest projects was in response to the 1994 civil war in Rwanda that left millions homeless.  Ban worked with the United Nations High Commissioner for Refugees (UNHCR) to develop refugee shelters, using low-cost paper tubes as an alternative to wood in an area that had suffered rapid deforestation.

Minimalism in a Time of Excess

What makes Ban’s work particularly interesting from an energy standpoint is his dedication to using locally and sustainably sourced materials.  The new Aspen Art Museum is constructed from materials ranging from paper tubes to beer crates, and all the wood involved in the project was sustainably sourced.  Fellow architects have called Ban a “socially responsible” or “socially conscious” architect who prizes sustainability above all.  But despite Ban’s focus on reusing materials and minimizing waste, he rejects labels such as green and eco-friendly.

Although Ban is the best-known philanthropic architect, lesser-known builders and organizations are working in a similar capacity, creating a small but growing movement.  For example, the U.K. charity Architecture Sans Frontières, emulating the model pioneered by Doctors without Borders, is spreading sustainable architecture and responsibly built environments to marginalized or impoverished communities around the world.  In the United States, the organization Make it Right, created after Hurricane Katrina, enlists architects who donate their time to create cradle to cradle homes that produce more energy than they consume.  Natural disasters, political turmoil, and war will continue to displace people from their homes, and the innovative architectural designs by Ban and others can help keep them from crowded and unsanitary refugee camps.

 

Winners and Losers under the U.S. EPA’s Clean Power Plan

— September 5, 2014

The most cost-effective and accessible way for states to replace retiring coal plants and comply with the U.S. EPA’s proposed carbon regulation (the Clean Power Plan, or CPP, released in June 2014) is through demand-side measures.  These include the energy efficiency programs that the EPA uses to calculate emissions rate targets in the CPP as well as other measures, such as demand response.  Analysis by Navigant and others shows that measures that cut demand growth will cut compliance costs.  However, most states cannot meet their targets by energy efficiency alone.

It’s in electricity customers’ best interest for states and utilities to implement the CPP with as much emphasis on energy efficiency and demand response as they are physically and financially able to.  For this primary reason, states and utilities will expand programs where they already exist and introduce new programs where there are gaps.

Accelerating Retirements

The costs to comply with the CPP, in addition to costs to comply with other environmental regulations as well as competition with low-cost natural gas, will drive approximately 45 GW of additional coal retirements by 2025, beyond anticipated retirements without the CPP (according to Navigant’s analysis).  The aging U.S. coal fleet already faces troubled times, with low natural gas prices expected to continue and the Mercury and Air Toxics Standards (MATS) requiring hundreds of coal plants to install costly emissions controls or shut down.  As coal plant owners look ahead to a carbon-constrained future, they are weighing complex decisions about whether it makes sense to invest in improvements in the near term when the long-term future of their coal fleets is uncertain.  Much depends on what the EPA’s final regulation will look like and how states will choose to implement it.

While the discussion around coal retirements tends to center on replacement by natural gas, wind and solar will also play a role.  The CPP will drive solar and wind generation above and beyond existing renewable targets, even in states that do not currently have a Renewable Portfolio Standard.  Growth will be particularly strong in areas that have high potential for solar and wind, such as the Desert Southwest and the Texas Panhandle, and where higher power prices make renewables more cost-effective.  Although much of the new solar capacity will be distributed customer-scale generation, wind installations will continue to be larger, utility-scale deployments.

New Questions Raised

The power sector has been expecting federal-level climate change policy or regulations for years.  This has been a major area of uncertainty for future generation planning.  However, the release of the proposed CPP has not led to any concrete assumptions for the future, and it has likely generated more uncertainty than it has quelled.  How will the EPA fashion its final regulation?  Will states choose to band together to implement the regulation, and will the basis for their implementation be rate-based or mass-based targets?  How will energy efficiency be measured and verified?  How will differences between states be reconciled in a system where electricity is constantly moving across state lines?  The answers to these questions will drive broad changes in the power sector and have ripple effects across the national economy.  These ripples will be felt by all industry players that are electricity customers (i.e., everyone) and, indirectly, by the healthcare industry (handling fewer conditions brought on by poor air quality) and the insurance industry (facing lessened impacts of climate change).

It’s not surprising that the CPP will transform the domestic power generation landscape, reducing coal use, lowering demand growth (due to energy efficiency and conservation programs), and increasing gas-fired and renewable generation.  Thinking globally, the plan could be just what the international community has been calling for: leadership on climate change from the United States that will push other nations (notably China and India) to follow suit.

 

The Race to Control the Smart Home Heats Up

— September 3, 2014

The race to control the smart home is heating up.  Four tech giants have made strategic moves that portend a lengthy fight – one in which consumers should come out ahead, eventually, and more energy efficient homes should result.

The four big players – Microsoft, Samsung, Apple, and Google – are each taking different approaches and are at different stages of development.  Their recent tactical moves include:

  • Microsoft is acting as an incubator.  The software giant (along with partner American Family Insurance) has set up an accelerator program to encourage tech startups to create smarter homes.  In the current round, 10 companies have been chosen, two with a clear focus on energy efficiency.  Chai Energy aims to give consumers real-time energy consumption data for the whole house and for individual appliances.  Heatworks offers what it calls “the first digital tankless water heater” to conserve energy and reduce water consumption.
  • Samsung is making acquisitions.  In August, the gadget and appliance maker announced its purchase of SmartThings, a startup offering a hardware-software solution that connects many in-home devices, such as light switches, outlets, locks, and thermostats.  Also in August, Samsung bought Quietside, a U.S.-based distributor of heating, ventilation, and air conditioning (HVAC) products, and the South Korean conglomerate says it will release an enhanced lineup of HVAC products that better addresses North American customers’ needs.
  • Apple is featuring HomeKit as part of iOS 8.  The mobile operating system will include HomeKit, a new software framework, when it is released this fall; the new software will enable users to connect iOS and third-party devices in the home in order to control lights, door locks, and thermostats, among other devices, from mobile devices.
  • Google’s Nest Labs is opening its platform. The company’s software is now available to outside developers that can write applications that connect devices to Nest thermostats and smoke detectors.  The company also acquired Dropcam, a startup that offers video monitoring equipment for the home.

No Quarter

This competition for smart home supremacy will continue for a number of years.  Why?  Because home energy management remains a fragmented world, with no single standard or platform.  No clear leader has emerged, and interoperability will be an issue.  Furthermore, none of these companies want to concede ground to the other if they don’t have to.  From an energy-savings standpoint, Google’s Nest Labs has momentum.  But don’t count out the others in terms of volume and the ability to drive adoption, particularly Apple and Samsung; both can leverage large installed bases of mobile device users, and Samsung has the advantage of already selling connected appliances.  The race has just gotten started.

 

New York Details Its Energy Vision

— August 27, 2014

The New York State Public Service Commission (PSC) has released its latest straw proposal on its Reforming the Energy Vision (REV) proceeding.  It includes recommendations that incumbent utilities take on the central Distributed System Platform (DSP) role, at least in the short term.  This was one of the most controversial issues in the REV plan, with the potential for the utilities to be stripped of many of their responsibilities by the PSC and replaced by a new independent entity.  PSC staff decided to stick with the utilities – partly for substantive reasons, partly out of expediency.

The paper includes a table comparing the roles of a utility versus a DSP, exhibiting a great deal of overlap.  So the utilities can breathe a major sigh of relief with that recommendation, knowing that they will maintain many pivotal duties.  But the paper does point out that utilities do not currently have all of the capabilities and competencies needed to successfully operate the DSP and will need to hire new staff with different skill sets, as outlined in my earlier blog on utility hiring trends.

Seeking Alignment

Also noteworthy, from the standpoint of demand response (DR) and distributed energy resources (DER), is the recommendation that all utilities be required to develop DR tariffs, including fees for storage and energy efficiency.  PSC staffers are wary about the potential effects of the pending U.S. Circuit Court case on Federal Energy Regulatory Commission Order 745 on DR compensation, which could complicate DR participation in wholesale markets like the New York Independent System Operator (NYISO).  On the other hand, the report is rather light on recommendations for expanding time-of-use rate structures, which may also encourage increased DR participation.

Addressing the concern about a lack of coordination between retail and wholesale markets, the report states that market rules allowing DER participation in both markets must be aligned to ensure that DER interaction is efficient and properly valued.  The PSC argues that this goal can be accomplished with DSPs acting as aggregators in NYISO programs.  That’s a threatening statement to the third-party DR aggregators that would not want the utility/ DSP to compete with them in the wholesale markets.

Are Smart Meters Necessary?

From the consumer perspective, the report references a recent survey of residential electricity customers in New York that found that, although few customers say they are knowledgeable about their electricity usage, many place a high value on easy access to information regarding their energy use, the price of electricity, and methods for controlling their energy costs.  This indicates the potential for substantial increases in residential customer adoption of home energy management and DER products.

Notably absent from the REV plan is a recommendation regarding advanced metering infrastructure (AMI).  Electricity cost and rate increases are sticky political issues in New York currently, and PSC staff did not highlight AMI as a requirement for achieving REV goals.  The only reference to AMI actually speaks to how to avoid it: “To the extent that the cost of advanced metering equipment presents a barrier to customer adoption of DER programs or time variant pricing, utilities and market participants should consider alternatives to AMI technologies to enable program delivery.”  In other words, the report acknowledges that AMI functionality may be useful for REV purposes, but doesn’t say how that functionality can or should be achieved.

Comments on the straw proposal are sure to be plentiful from all sides.  I view this plan as less aggressive than the original REV paper, but ultimately, it is more achievable in the short term – which may help build momentum for the longer-term transformation.

 

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