Navigant Research Blog

Software and Services to Deepen the Benefits of Factory Energy Management

— September 1, 2015

The manufacturing sector is realizing the opportunity to generate impressive financial savings with energy efficiency. Recently, the Institute for Market Transformation (IMT) released a series of case studies showcasing the benefits of energy efficiency investments, including an example from a lab at the University of Minnesota and an Ohio factory. From retrocommissioning to equipment retrofits, factory owners are realizing significant improvements to their bottom lines through investment in energy efficiency measures. An upcoming Navigant Research report on industrial energy management systems (IEMSs) finds that a growing market for software and services can help industrial customers expand the opportunity for energy efficiency benefits with solutions for measuring, monitoring, and predicting the impact of operational and equipment changes.

IEMSs are defined by software and services offered to reduce energy use and costs while meeting the operational requirements of the facility’s business. These solutions provide site-level insights on equipment and operational performance and enterprisewide perspectives for continuous business improvement.  Industrial customers can leverage an IEMS as a cost-effective tool for internal transparency on energy consumption and analytics to support strategic changes in energy use for regulatory or corporate policy compliance.

Energy Management as a Differentiator

When oil prices continue to drive downward to historic lows, the question of why manufacturers would care about energy efficiency is a logical one. The fact is that energy efficiency still has a real and significant business value for the industrial sector. Executives in charge of industrial facilities are becoming more aware of the benefits of strategic energy management as a competitive differentiator and source of opportunity for business improvement. These customers are demanding more integrated systems in terms of operations and enterprise IT that utilize granular equipment and operations data for predictive maintenance and optimization of equipment and operations. IEMSs are becoming the go-to solution for leveraging data to deliver economic and business benefits.

The IMT case study from the University of Minnesota illustrated how organizational commitments can drive interest in efficiency. The university’s senior energy auditor explained, “We implement energy conservation projects as a key component of the University’s sustainability goal of becoming carbon neutral by 2050.” In Ohio at the Tusco Display factory case study, the company CEO explains how real benefit of energy efficiency is that economic and sustainability benefits go hand in hand: “Over the last 10 years, we have increased both production and per person productivity while cutting energy usage by 41 percent. We will continue to invest in energy efficiency because it’s good stewardship with a long-term, positive impact on our bottom line, too.”

Watch for our new Industrial Energy Management Systems report, coming soon!


Speed Bumps on the Road to the Smarter Home

— August 20, 2015

While more smart home technology keeps rolling out from manufacturers, some of the targeted customers are finding the systems do not always satisfy their expectations or have shortcomings. This was pointed out recently in a Wall Street Journal piece that noted the downsides of the latest systems that control lighting, door locks, and thermostats, among other things.

Not Worth the Trouble?

One of those people is a professor of mechanical engineering who is also head of the Berkeley Energy and Climate Institute at UC Berkeley. He received a smart thermostat as a gift, but has yet to install it because it wasn’t worth the trouble, according to the story. Another is a tech-savvy contractor who finds his smart home control system is too complicated, particularly when things go wrong. He now tells his own clients to avoid automated systems.

These are anecdotal examples, to be sure, and may not reflect the experiences of satisfied smart home technology customers. But these stories do highlight some of the barriers to smart home technology adoption and the related Internet of Things (IoT) trend, which has gripped many in the high-tech, home automation, and energy sectors. These barriers (as noted in Navigant Research’s IoT for Residential Customers report) include complexity, pricing, and data security.

Moreover, a Bluetooth Special Interest Group survey released earlier this year underscored what consumers consider as key factors in deciding what to purchase. More than half of the survey respondents (54%) said smart home solutions need to be straightforward to use and 41% said they should be easy to set up; 4 in 10 of the respondents (42%) said offering products at competitive prices is important; and an equal number (42%) said keeping their data secure is essential.

Too Complex

While conducting research into IoT trends, many of the vendors and stakeholders I spoke with mentioned complexity as a barrier for smart home tech adoption. It is an age old problem: How to solve thorny problems, like increasing energy efficiency in a home, with improved products that don’t require the consumer to do too much? In other words, bring the benefits but hide the complexity.

Some manufacturers have done this. And despite the professor mentioned above who has yet to bother with his, smart thermostats from Nest, Honeywell, and ecobee (to name just a few) can boost efficiency without sacrificing comfort and without too difficult a setup. They aren’t perfect answers, of course, and tend to be more expensive than common offerings. But other hardware and solutions providers should take note: It is possible to conceal the complexity behind smart home devices. And it should be a top priority in designing solutions, especially when even geeks among us are reluctant to engage.


Solar PV on Leased Buildings: Drivers, Barriers, and Solutions

— June 17, 2015

Andrea Romano co-authored this blog.

Navigant Consulting works with the U.S. Department of Energy’s (DOE’s) Better Buildings Alliance (BBA) to understand barriers and solutions to promoting solar PV adoption. Currently, we are focusing on solar PV on leased buildings. We have teamed with the SunShot Initiative to develop a request for information to better understand the barriers, benefits, and solutions to installing solar on leased buildings. We are encouraging those active in the solar industry to voice their opinions so that we can develop tool to meet the market’s needs.

Why Leased Buildings?

As of 2012, there were 5.6 million commercial buildings in the United States, comprising 87 billion SF of floor space and representing a huge sustainability and clean energy opportunity. However, a large portion of these buildings are multi-tenanted leased spaces facing a split incentive in that the building owner does not typically pay the energy bills, but would bear the upgrade costs. A number of green leasing initiatives have developed concepts, tools, and guides to overcome this barrier for energy efficiency, but have not focused on solar PV. As a result, Navigant is focusing on this issue in 2015.

Benefits of Solar PV

In many cases, solar PV benefits both the landlords and tenants; however, the division of the economic and environmental benefits depends on the structure of the building lease. The lists below demonstrate the potential benefits.

Solar Benefits for Landlords

  • Reduces operating costs and exposure to volatility of energy prices (due to reduced utility electricity consumption)
  • Enhances marketability of the building
  • Lowers occupancy costs, which facilitates the ability to charge higher rent
  • Improves tenant retention due to lower operating expenses

Solar Benefits for Tenants

  • Lowers electricity costs
  • Stabilizes electricity costs
  • Supports corporate sustainability goals
  • Demonstrates environmental responsibility to employees and the community

In general, for commercial buildings, reducing operating expenses through the installation of a PV system can provide a hedge against escalating energy prices. Buildings may see lower costs of capital and higher market value because of this reduced risk. Depending on how the lease is structured, some or all of these benefits can lead to increased revenue for the building owner. Additionally, solar helps diversify revenue streams, reducing the overall volatility of the property’s income.

Barriers to Solar PV

A number of factors affect the growth of the commercial solar market, with the greater obstacles being the lack of project standardization and high transaction costs. Within the commercial real estate market, owner-tenant facilities in particular have an added level of complexity:

  • Split incentive: Energy costs often paid by tenants and solar PV system is purchased and owned by building owner
  • Short payback requirement: Building owners want 2- to 3-year payback
  • Timeframe discrepancy between building lease and solar PV system life: Solar PV system has a 20- to 25-year life, which is often longer than building leases
  • Property owner creditworthiness: Many properties owned by LLCs without publicly rated investment quality
  • Property ownership entity: Determines 30% Business Energy Investment Tax Credit eligibility

Overcoming the Barriers

While many barriers to installing solar PV on leased buildings exist, companies are developing innovative solutions to address or overcome these challenges. The figure below summarizes the ideas by system ownership. Navigant Consulting is currently working with the DOE and BBA on a guide summarizing these strategies, and it will be available later this summer.

System Ownership Strategies


(Source: Navigant Consulting)


Smart Grid Deployments Moving Ahead in Latin America

— June 3, 2015

Smart grid deployments in Latin America have struggled to gain traction in recent years compared to North America or Europe. But that is starting to change. Significant projects in two countries—Brazil and Mexico—are moving ahead, with vendors being selected in recent weeks.


Eletrobras, Brazil’s leading electric utility, has chosen several technology vendors for a smart grid project that involves six of the utility’s distribution subsidiaries. The utility selected Itron’s new OpenWay Riva solution that enables a single network to support two communications technologies (radio frequency and power line carrier) in the same device. The result is an adaptive system that can dynamically choose the best path for communicating based on network conditions, type of data, or application requirements. The solution is supported by Cisco’s IPv6 network infrastructure.

Other vendors selected for the Eletrobras project include Siemens, Telefónica, and Telemont. Approximately 115,000 endpoints are expected to be deployed at the six subsidiaries in the states of Alagoas, Piaui, Acre, Rondonia, Roraima, and Amazonas. The goal of the project is to reduce theft of service, a chronic problem in Brazil. Full implementation of the project is expected to be complete in 2017.


In Mexico, Comisión Federal de Electricidad (CFE), the state-owned electric company, has selected a number of vendors for its smart grid project in Mexico City’s Central District. Silver Spring Networks was chosen to provide its IPv6 network, which enables connectivity to cabinets that house a group of centralized meters. In addition, vendors chosen to support the project include Elster and Tecnologias EOS. Elster will provide its EnergyAxis software and field network devices in addition to its REX2, A3 ALPHA, and mREX2 smart meters. A total of 300,000 meters are expected to be deployed, according to Elster. Similar to Eletrobras, the goal of CFE’s project is to reduce theft of service, which can be substantial. Nearly 15% of CFE’s total electricity production was lost due to theft or defaults in 2013, according to the utility, and in some areas of Mexico City, that figure surges to more than 35%.

Theft Reduction and More

Clearly, the main driver for smart grid deployments in these two projects is the same: theft reduction. But beyond that, the technologies being deployed lay a foundation for additional smart grid applications. For instance, Eletrobras has indicated it will add outage detection and analysis along with improved transformer load management. And while these two projects do not necessarily portend a wave of similar deployments, they do represent a next step toward grid modernization by leading utilities and are likely to be imitated by others across Latin America in coming years.


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