Navigant Research Blog

Google Has Reached 100% Renewable Energy, so I’m Issuing a New Challenge

— April 19, 2018

As consumers press companies to be more conscious of their environmental impact and sustainability, corporate procurement of renewable energy has gained momentum around the world. Some 130 companies have signed the RE100 pledge to make their operations run on 100% renewable energy. One of the companies that started this trend was Google.

Google’s First Renewable Steps

In 2010, Google started a journey to replace the electricity it uses with renewable sources by signing its first power purchase agreement (PPA) with a 114 MW wind farm in Iowa.

To ensure that its purchases have a meaningful impact on the environment, Google has followed the concept of additionality, which means that all the electricity it buys is funding new renewable energy projects.

In 2017—2.6 GW over 20 projects and 7 years later—Google announced that it reached its 100% renewables target. This is a massive achievement, especially considering that Google began these plans when grid parity was little more than a dream for wind, and solar energy was a technology that only rich Californians and Germans put on their roofs.

My Challenge to Google

While Google’s achievement should be applauded, I believe it is possible to move that target further afield. It is true that Google is buying all its electricity from renewable sources, but it is unlikely that all the electricity it is using comes from renewable sources. This is because solar and wind, Google’s choices for renewable sources, are both variable, while Google’s electricity demand is not. In other words, there are times and locations when Google must use electricity that comes from traditional sources, while simultaneously the electricity generated from the renewable projects funded via Google’s PPAs is curtailed and lost.

So, here is my challenge to Google (or any company willing to accept it—looking at Apple, Amazon, Microsoft) to move its energy program forward:

  • Work with the 20 projects it has funded to ensure they have onsite storage, which reduces the chance of curtailments and increases impact on the grid. This also means the balancing cost is not passed to other ratepayers.
  • Ensure all energy assets (distributed generation and loads) are part of demand response programs or virtual power plants, which makes the flexibility of these resources open to grid operators.
  • Make sure any new electricity procured is locally generated, and has no impact on the grid (or that the sites at least fulfill bullets 1 and 2 above).
  • Encourage employees to take their own energy consumption choices along the same journey!

Major Companies Should Continue to Set a High Bar

This is not an easy challenge, but it’s also not impossible. It’s probably as difficult as the goal to achieve 100% procurement of renewables seemed in 2010, when Google embarked on this mission. Google addressed these concepts in a white paper released in 2016, but mostly in a future tense. In my opinion, the technologies and regulations to make this possible are already here and are starting to reach scale. Now it is up to Google and other visionary organizations and individuals to make this happen.

 

Tracking Blackouts: Validation That C&I Microgrids Are the Next Big Thing?

— April 10, 2018

A number of reports tracking power outages in the US have been released this year. These reports underscore why this country continues to be the global leader on grid-tied microgrid capacity, according to Navigant Research’s Microgrid Deployment Tracker. These statistics also show why commercial and industrial (C&I) customers have emerged as the fastest growing microgrid market segment globally.

Eaton Blackout Tracker Results

Eaton, a leading microgrid solutions provider, releases its annual Blackout Tracker every year. The data for 2017 revealed a few surprises. The US sustained 3,526 blackouts in 2017 that interrupted grid delivery of power services to an aggregate population of 36.7 million. The average power outage averaged 81 minutes of down time. While the total number of overall outages in 2017 was 9% less than in 2016, the number of people affected by these blackouts more than doubled. This seeming dichotomy can be explained by the longer term and wider geography of major blackouts occurring last year due to extreme weather hitting Florida, Texas, and Puerto Rico (along with wildfires hitting California).

As noted in a previous blog, the state that features the most power outages is California. No doubt, part of this is due to sheer size. Nonetheless, the state has had the dubious distinction of taking top honors for blackouts for the ninth year in a row. Top identifiable causes were weather and falling trees followed by failing equipment and human error. All 50 states were affected by power outages, with the average cost at $100,000 per hour. One of the most expensive costs incurred by a single C&I customer was Delta Airlines, which lost $50 million due to an outage at the Atlanta, Georgia airport.

Ranking All 50 US States by Number of Blackouts: 2017

(Source: Eaton Blackout Tracker)

S&C Electric Results

S&C Electric, a leading company active in utility distribution microgrids, released its own analysis focusing explicitly on C&I customer blackouts in the US. Some 251 companies representing operations including manufacturing, data centers, and healthcare, among others, responded to this survey conducted in 4Q 2017. Here are some of the highlights rendered from this research:

  • 41% of respondents claimed the average power outage was up to one hour of time, while 26% said one hour or more.
  • In terms of frequency, just under half (49%) said they experienced one or more power outages every year; 21% said once a month or more (see the figure below).
  • In the past 12 months, 84% of respondents recalled some form of power outage.
  • Longest duration power outages were reported in the manufacturing sector with 58% reporting outages of an hour or greater.
  • Productivity loss was the main impact upon C&I customers experiencing power outages (76%).
  • On a regional basis, the longest power outages occur in the South, with 62% of respondents being affected by a power outage lasting more than 1 hour.

US C&I Outage Frequency by Region: 2017

(Source: S&C Electric)

What Does This Mean?

What basic insights can one glean from this analysis? While initially laggards, C&I microgrids are now picking up momentum and will continue to grow at a fast pace not only in the US, but globally. The S&C Electric report supports this view as 71% of respondents say they own or plan to develop alternative energy sources to supplementing their utility power supplies. From a microgrid market perspective, even more important is that 70% see power reliability as an existing cause for concern, and 40% would pay a premium to improve it.

 

Flow Batteries Under Fire: What’s Happening?

— April 5, 2018

There has been an uptick in news surrounding flow batteries over the past year. On the positive front, ESS, Inc. recently raised $13 million in funding from investors and announced that it will deliver two of its systems to chemical manufacturer BASF. On the negative front, Vizn Energy scaled back its business, citing the loss of one its leading investors.

Navigant Research expects flow batteries to be a major competitor to lithium ion (Li-ion) for both front-of-the-meter and behind-the-meter applications in the next several years. In fact, Navigant Research expects them to be the fastest growing electrochemical energy storage device over the next 10 years. However, short-term hurdles still exist. In this blog, I’m discussing some of the major issues.

Cost and Use Case

CAPEX of flow battery systems compared to Li-ion batteries is higher. The cost over the lifetime of the storage asset is heavily dependent on the type of applications the device will serve. We see flow batteries being utilized for long duration energy applications (over 4 hours) as opposed to short duration power applications (less than 4 hours). As their discharge duration is directly correlated with the amount of electrolytes stored in the tank, the levelized cost of energy decreases as the discharge duration increases. At present, we generally see advanced energy storage being deployed for use cases less than 4 hours. Consequently, Li-ion batteries can provide the same services that flow can at a lower CAPEX.

Component and material costs are also an issue. Current commercial flow battery chemistries are limited to vanadium-based and zinc-based chemistries. Their redox pairs yield competitive but lower power densities compared to Li-ion. Exploring different chemistries that yield higher power density and are safer, engineering better separator and electrode materials and architectures to improve chemical conversion, and decreasing other balance-of-system costs are key to improving the competitiveness of flow batteries in the current energy storage market.

Project Timelines

From signing letters of intent to the ribbon cutting of the system, Li-ion batteries are deployed on increasingly shorter timelines relative to other advanced battery technologies. This is because they have been studied more by both the public and private sectors and are well understood. Flow battery systems can be a bit bulkier and require special permitting by players across the value chain. Most customers are not as educated on flow systems compared to Li-ion or lead-acid batteries. Consequently, it is difficult to convince flow battery customers (utilities and C&I customers, mostly) to invest when they can purchase a Li-ion system at a lower CAPEX and have the system up and running faster.

Economies of Scale

Most commercial flow battery vendors outsource component manufacturing to other companies and assemble the final product in house. The demand for flow batteries has not yet boomed, and companies have not found a need to scale up production. As medium- to long-duration markets begin to open for flow batteries as they did for other types, manufacturing synergies will be developed and consequently drive the price down.

How Do Companies Plan for Success?

Going forward, it is increasingly important that flow battery companies continue to educate customers on the benefits of deploying these systems while continuing to improve on the issues outlined above. Being able to back up the 20-year warranty that most commercial flow battery vendors offer will be contingent on these improvements. Because of this, we see the players best positioned to deploy these systems in the short term as large companies that have other business units and resources to support their flow battery business. This way, if business slows or fails, the company will not be set back significantly.

 

Integrated Ecosystem Partnerships Are Critical to Innovative Residential Customer Solutions

— March 29, 2018

My recent blog regarding Southern Company’s Smart Neighborhoods initiatives with Alabama Power and Georgia Power demonstrated that innovative customer solutions can have customer benefits as well as utility value. These types of customer-focused solutions in both the residential and commercial and industrial sectors are the focus of our new Utility Customer Solutions Research Service. Further, these Smart Neighborhoods initiatives are featured in my recently released Strategy Insight report titled Maximizing the Residential Energy Customer Experience with Emerging Solutions.

Smart Neighborhoods Initiative Taking Shape in Atlanta

Since that first blog release, Georgia Power has released details on the roles that individual technology providers are playing in the Atlanta initiative. These partner roles include:

  • Alarm.com focuses on smart home security solutions and can connect smart home devices to make them accessible through a smartphone app for homeowners.
  • GreenMarbles is a connected home systems integrator that is a channel provider for Alarm.com that specializing in home automation and energy management solutions that can manage homeowner’s thermostats, door locks, lights, garage doors, and water sensors.
  • Hannah Solar is a Georgia-based solar PV plus energy storage installer for residential, commercial, and agricultural sectors.
  • Mercedes-Benz Energy provides home energy solutions related to EV charging, solar PV and battery energy storage that can help provide resilient backup power.
  • Sunverge Energy has developed a distributed energy resources (DER) software and hardware controls platform that allows for the integration of solar PV, battery energy storage, and home energy management systems (HEMS) across multiple residences across a virtual power plant.

Sunverge Energy Helping to Find Savings for Customers

As part of the Atlanta Smart Neighborhoods program, Sunverge Energy’s platform will help customers by forecasting and scheduling residential activities to provide energy bill savings based on Georgia Power’s Smart Usage or Nights & Weekends energy rates. Further, Sunverge Energy’s platform will help Georgia Power and Southern Company understand how aggregated DER such as solar PV, battery energy storage, and HEMSs can interact across multiple residences to optimize the local grid.

Innovative Partnerships Will Transform the Role of the Home

Both regulated utilities and deregulated utility services companies are now exploring new energy-related solutions such as the DER optimization demonstrated by Georgia Power. Further, technology disruptors with smart home/home energy solutions are also looking to deploy their new solutions—either directly with customers or in partnerships with utilities—to make homes more safe, convenient, and comfortable. Navigant Research anticipates that an innovative ecosystem of partnerships between customers, utilities, and vendors will come together to expand the role a home can play in safety, convenience, comfort, and the transition of the grid from traditional, centralized generation to part of an Energy Cloud platform.

 

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