Navigant Research Blog

Cities Are Making the Energy Cloud a Reality

— October 12, 2014

The possibilities for procuring and distributing clean, low-cost electricity offer challenges to cities and utilities – but also opportunities to forge new relationships and lay the foundations for cities that are clean and efficient in their energy use.

I’ve written previously about the close relationship between smart cities and smart grids.  Early projects have largely been driven by utility programs for the piloting and demonstration of smart grid technologies and to gather intelligence on consumer and business responses to energy management programs.

The challenge is to integrate the lessons learned from these projects into broader smart city programs.  Cities have played a role in these pilots but have largely been supporters of utility-driven technology programs.  This is changing as cities develop more extensive energy management strategies of their own.  Boston, for example, is working closely with its local utilities (National Grid and NSTAR) to reduce its $50 million-plus energy costs and meet the goal set in 2007 to reduce greenhouse gas (GHG) emissions 25% by 2020 and 80% by 2050.   The city is targeting energy consumption across residential and commercial properties.  Other initiatives include the introduction of an energy management system for Boston’s public buildings and the deployment of LED street lighting.

New Collaborations

Minneapolis is going further.  The city is using the renegotiation of its franchise relationship with its utilities (which governs their access and use of city resources such as roadways and buildings) to establish a new form of collaboration that it believes can be a model for the rest of the United States.  The proposed Clean Energy Partnership between Minneapolis and its electricity and gas suppliers, Xcel Energy and CenterPoint Energy, will create a new body focused on helping the city meets its climate action goals of reducing GHG emissions 15% by 2015 and 30% by 2025 based on a 2006 baseline.

The increasing focus of city leaders on energy efficiency, reduced GHG emissions, and the development of a more resilient infrastructure requires close partnership with utilities.   Cities like Boston and Minneapolis are pushing their utilities to help them meet their commitments, but the cities themselves are also taking a more active role.  The Greater London Authority (GLA), for example, has become the first local government authority in the United Kingdom to be licensed as a “junior” energy supplier.  This enables London to buy power from small generators and sell it to other public bodies at an attractive rate.   The city expects to be buying and selling power by early 2015, and it hopes to reduce energy costs for London while also boosting the local renewable energy industry.

A Vision Emerges

The emerging energy vision for smart cities integrates large- and small-scale energy initiatives: from improvements in national infrastructure through citywide increases in efficiency to expanded local energy generation.  Cities will thus become clusters of smart energy communities that can exploit the benefits of the new energy systems, such as distributed generation, dynamic load management, and active market participation.

This synergy presents an excellent example of the opportunities and challenges presented to utilities by the emergence of the energy cloud.  Utilities need to see cities as more than demonstration sites for technology.  Cities are ideal partners for developing the new relationships and the new services core to that energy cloud vision.

These issues are explored further in a new Navigant Research white paper, Smart Cities and the Energy Cloud.  I will also be discussing these developments in my presentation on Smart Cities at Korea Smart Grid Week in October and at European Utility Week in November.

 

Low and Zero Energy Buildings Driven by Policy Measures

— October 7, 2014

New York City Mayor Bill de Blasio has announced an ambitious plan to tackle greenhouse gas (GHG) emissions by retrofitting public and private buildings throughout the state.  De Blasio’s plan strives for 80% reduction of GHGs by 2050, a target that, as The New York Times put it, “would be a truly impressive feat if he were actually able to make good on that promise.”

With this plan, New York is continuing its efforts to become a leader in energy efficiency and GHG emissions reductions efforts across the United States.  Other states with similar GHG reduction targets include Massachusetts and California.  One emerging strategy employed by states with emissions reduction targets is the zero energy building.  Zero energy buildings (ZEBs) produce enough energy to offset their annual consumption, typically through the use of renewable installations.  ZEBs are built using highly efficient building materials and technologies and often rely on methods such as daylighting to reduce energy consumption.

Policy-Driven Change

According to the recent Navigant Research report Zero Energy Buildings, growth in the market for energy efficiency in buildings is expected to be driven by regional and local policies.  This is true both in the United States and internationally, where the European Union leads the way with the Energy Performance of Buildings Directive (EPBD).  The EPBD requires new public construction to be zero energy after 2018 and all new construction to be zero energy by 2020.  In addition, the EPBD requires individual member states to develop national plans for increasing the number of ZEBs.

California’s Title 24 building code aims to achieve all new residential construction as zero net energy (ZNE) by 2020, with all new commercial buildings achieving ZNE by 2030.  In Massachusetts, utility- and state-funded pilots have helped to drive building energy efficiency.  The Massachusetts Department of Energy Resources launched the Pathways to Zero Net Energy Program in 2014, designed to support ZNE building construction and facilitate market development.

Federal Legislation

With technology improvements and the growing availability of energy efficient building materials, policy has become the most important driver in prompting energy efficient retrofits and new construction.  Although several states have adopted targets for building energy efficiency, the most relevant federal legislation is Executive Order 13541.  The Order mandated that by 2015, 15% of existing federal buildings conform to energy efficiency standards and by 2030, 100% of all new federal buildings achieve zero net energy.  Although sweeping national legislation requiring ZEBs for commercial or residential construction seems unlikely in the immediate future, federal incentives could prompt builders to pursue more efficient building and strive to make zero energy more common in the United States.

 

Wireless Power Could Transform Smart Building Nanogrids

— October 6, 2014

From mobile phones to Wi-Fi, wireless communications have fundamentally changed human behavior.  As the much hyped era of the Internet of Things looms, the dense, rich communication networks needed seem to only be possible using wireless networks.  Moreover, big data requires ever more data to be collected and shared.  In buildings, this means more sensors and more communications to enable better efficiency.  Though wireless communications are poised to facilitate this transformation, the shift remains tangled in the wired status quo.

In addition to communications, building networks need power to create what Navigant Research has defined as nanogrids, which are, in essence, single-building microgrids capable of aggregating and optimizing distributed energy resources (DER) while increasing resilience thanks to their ability to island during utility power grid outages.  Running power wires to sensors is costly in new construction and prohibitive in most existing buildings.  As a result, it’s not done unless absolutely necessary.  Wireless makes the communication side of the equation easily scalable.  The incremental cost for connecting more sensors is small.  But, if a sensor needs wired power, why would anyone invest in wireless communications?  Power remains the key to unlocking greater data density in smart buildings, and thereby, expanding near-term opportunities for nanogrid applications.

Get Low

One approach to reducing the cost of sensors is lowering the cost of power wiring rather than eliminating the wire all together.  This is accomplished by using low-voltage direct current (DC) power for sensors, controllers, actuators, and even LED lighting.  Low-power DC wiring doesn’t need to be installed by an electrician, reducing the installation cost.  Also, many electronic devices are natively DC-powered.  So alternating current (AC) power must first be converted, resulting in an efficiency loss.  Moreover, onsite generation of power through solar PV panels or wind turbines is typically DC (as are battery storage devices).  So, DC distribution within buildings helps match energy supply with loads (since according to some estimates, 80% of building loads such as LED lighting, laptops, and cellphone chargers are all natively DC).  Low-power DC in buildings can serve as building blocks to nanogrids that tailor energy services to the precise needs of end users.

The push for DC power is being led by the Emerge Alliance, an industry association developing DC power distribution standards for commercial buildings.  A competing solution can be found in Power over Ethernet.  Both solutions can be cheaper to install than a traditional system.  But, though low power is less intrusive than the status quo, wires remain a limiting factor.

Power from High Frequencies

Eliminating all wires is the most elegant solution to enable the transition to more data-rich buildings.  Currently, this is being done either by installing batteries or by harvesting ambient energy to power devices.  Batteries require replacement and, when examined on a cost per kilowatt-hour basis, are very expensive.  They just don’t provide enough benefit to eliminate power wires.  Energy harvesting, on the other hand, eliminates the maintenance requirement but is restricted by the ambient light available.

However, a shift from energy harvesting to wireless power transmission is on the horizon.  Ossia, a tech startup, has demoed its Cota wireless power technology and expects to have commercially available products by the end of 2015.  Cota works by broadcasting radio waves over the 2.4 to 2.485 GHz ISM band (the same as Wi-Fi, ZigBee, Bluetooth, and others) and is capable of transmitting about 1W of power up to 10 meters – enough for a sensor, but not much else.  Even a decade from now, it’s unlikely that wireless power transfer or energy harvesting will be able to provide enough power for anything more than a sensor.  But leveraging big data in buildings requires more sensors, many more than are currently deployed.  Wireless power could be the building block that brings the Internet of Things to smart buildings and hasten the spread of nanogrids.

For a more detailed look at the nanogrid market, please join our free webinar, The Expanding Business of Nanogrids, on Tuesday, October 14 at 2 p.m. ET.  Click here to register.

 

Utility Customers Respond to Variable Pricing

— September 7, 2014

On July 23, Baltimore Gas and Electric (BGE) customers earned more than $2.5 million by reducing their electricity usage during peak summer heat hours.  Over 640,000 residences voluntarily participated – nearly an 80% participation rate among those who were notified – amounting to an average bill credit of $6.80, enough to buy an ice cream cone while turning down the air conditioning a few degrees.

BGE is the first utility in the country to put all of its customers with smart meters on a default Peak Time Rebate program.

It works like this: BGE customers with a smart meter can participate in the BGE Smart Energy Rewards program by voluntarily reducing their electricity usage to earn a bill credit of $1.25/kWh saved from 1 p.m. to 7 p.m. on designated energy savings days.  Eligible customers will be notified, usually the evening before, by an automated phone call, e-mail, or text message.  BGE anticipates that there will be 5 to 10 energy savings days in a summer season.

Smarter Grids, Smarter Customers

BGE has had a traditional direct load control (DLC) residential DR program for many years, and it has been successful within its own parameters.  However, the company has been installing advanced metering infrastructure (AMI), as covered in Navigant Research’s Smart Meters report, over the last few years, and with that network comes new capabilities (and regulatory requirements to meet cost-benefit thresholds).  AMI provides the utility and potentially customers with near-real-time interval meter data, so the utility can send time-based price signals and get almost immediate feedback on customer performance.  Couple these abilities with new end-user device and thermostat technologies that enable fast response and remote control by the customer, and you have more customer-centric, flexible demand response (DR) programs than were possible before; this can increase customer penetration rates dramatically.

Right on Time

Other innovative companies are trying different variations of programs and pricing offerings.  The Sacramento Municipal Utility District (SMUD) is looking to become the first utility to have a default time-of-use (TOU) rate after running a successful pilot that showed that customers preferred TOU structures to their standard flat rate.  The guiding principles of Oklahoma Gas and Electric (OG&E) for DR include voluntary participation for customers and no DLC by the utility, relying completely on customer empowerment.  OG&E believes that pairing dynamic pricing with technological devices will achieve these goals.  The province of Ontario, Canada has instituted default TOU pricing for customers with smart meters since 2005, the only area in North America to do so.  A traditional DLC program already existed in the province, and now the plan is to combine the control ability of the DLC with TOU pricing to help customers respond to price variations.  Massachusetts is set to become the first U.S. state to mandate default critical peak pricing (CPP) based on a recent order by the Department of Public Utilities.

All of these developments and other innovative programs are covered in Navigant Research’s new report, Residential Demand Response.  The report discusses industry trends around the world and provides 10-year forecasts of sites, capacity, and revenue, including breakouts between DLC and dynamic pricing.  Over time, all these different pilot projects will blossom into full-blown programs and expand into other jurisdictions, creating a truly responsive demand side of the energy equation.

 

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