Navigant Research Blog

Natural Gas Flaring: Time to Turn a $30 Billion Waste Stream into Profit, Part 2

— May 22, 2017

Part 1 of this blog series covered the state of natural gas flaring; this post examines specific developments allowing stakeholders to put the gas to use.

Flaring, the intentional burning of excess natural gas, contributes a great to deal to climate change. Therefore, this practice is regulated across the globe in the hopes of meeting climate goals. But is regulation necessary? Ideally, this wasted gas would be put to profitable, efficient use, limiting the need for specific flare gas regulations. In fact, several developments are pointing toward the profitable use of associated gas, including improved gas-to-liquids (GTL) technologies, improved onsite combustion technologies, and access to electricity offtakers through microgrids. Consider the following:

  • GTL technologies are improving rapidly. Notably, small-scale GTL players like Velocys, CompactGTL, and many others have commercially available products that convert natural gas into a variety of liquid products, including diesel and methanol, among others. These products have generally higher local value than natural gas and can be transported easily. This points to more opportunities in the developing world—much of which relies on liquid fuels, but has limited access to pipelines. GTL technologies have been held back by low oil prices, but become quite economical in many cases when oil costs over $50 per barrel—a scenario playing out with more regularity.
  • Improved combustion technologies, including natural gas reciprocating engines and microturbines, are opening new opportunities. Manufacturers like Caterpillar and Cummins offer dual fuel generator sets (gensets) that can mix natural gas into oilfield diesel generators. Meanwhile, microturbine vendors like Capstone Turbine offer units as small as 30 kW that can run on a wide range of fuels. GE’s Jenbacher gensets, well suited to handle the variable composition and impurities in associated gas, account for more than 450 MW of installed associated gas generation worldwide.
  • Access to new electricity offtakers through microgrids has the potential to put flare gas to use. Improvements in solar, storage, and microgrid controls technologies make microgrids a popular phenomenon—though such microgrids often call for a consistent baseload fossil fuel source to optimize generation. This is a good match for wellhead gas, which is produced with a relatively consistent output. Various companies are developing microgrids tied to oil & gas production, from Horizon Power in Australia to Mesa Natural Gas Solutions in the United States.

Global Opportunities

As a measure of global opportunities, consider developments in two key markets: Nigeria and Indonesia. Both major oil-producing nations, these countries rank No. 7 and No. 12, respectively, on The World Bank’s flare gas ranking list, accounting for a collective $2 billion in wasted gas (based on the $5.61 per million Btu measure previously outlined).

Nigeria has an aggressive strategy of 75% electrification by 2020 and recently released minigrid regulations that encourage decentralized generation. This, combined with continued oil & gas growth, points to opportunities for the $1.5 billion of wasted flare gas.

Indonesia, meanwhile, recently released new rules that incentivize wellhead power developments—provided that they are close to gas fields and to existing transmission lines and consumers. With more than $500 million in gas flared there, this regulation will open opportunities for microgrid developers, generator vendors, and other stakeholders in distributed power. With billions of dollars of gas going up in smoke and technologies and regulations pushing for efficient generation, opportunity looms large in flare gas alternatives.

 

Wärtsilä Acquires Greensmith: Genset Manufacturers Expand Their Role in the Energy Cloud

— May 19, 2017

This week, Wärtsilä announced its acquisition of Greensmith, highlighting a significant trend: generator set (genset) manufacturers are acquiring systems integration and controls capabilities. As this trend continues, the companies are embedding themselves ever deeper into the distributed energy paradigm outlined in Navigant’s Energy Cloud.

Hybrid/Storage Plays

Wärtsilä of Finland is a major global producer of larger reciprocating engines for power generation and marine uses. Yet, genset manufacturers in a variety of segments have been building relationships with storage and controls companies. This strategy can be considered both defensive and offensive in the fast changing genset industry, as explained below. Some specific moves since 2015 are shown in the following figure.

Generator Manufacturers with Publicly Announced Hybrid/Storage Plays

(Sources: Navigant Research, Company Press Releases)

In addition to Cummins, Caterpillar, Wärtsilä, and Doosan, other generator manufacturers, including General Electric (GE) and Aggreko, have announced storage offerings developed either internally or by undisclosed vendors. Most of the above companies also offer solar PV solutions in conjunction with their installations, whether through partners, through distributors, or directly.

There is clear appeal in genset/storage/PV hybrid systems. PV provides clean daytime power at cheapening costs, while gensets provide flexible baseload on demand for nighttime hours and fluctuations in demand. Solar production forecasting, as in the cloud monitoring systems developed by CSIRO, can adjust the operation of gensets to improve integration and save fuel costs (often a significant few percentage points). Storage then provides multiple benefits: in addition to smoothing out PV production, batteries can optimize genset operation, allowing for fuel savings, smoother operation, and sometimes even elimination of redundant gensets.

Defense and Offense

With the latter fact in mind, this acquisition/partnering strategy can be thought of as playing defense—acquiring a backfill revenue source for what may be a declining need for number of systems on any given project. Consider the example presented by Wärtsilä here. Of the six gensets in the “spinning reserve by engine vs storage comparison,” two have become redundant with the addition of battery storage, since the storage provides the spinning reserve formerly afforded by the gensets. If vendors see lower genset sales in cases like these, they may jump at the chance to backfill with sales of controls, storage, or PV.

Apart from its defensive aspects, this strategy also has significant offensive upside. As power production becomes ever more decentralized, genset manufacturers with solid distributed energy resources (DER) strategies will be well positioned to capture market share. There exist major opportunities in microgrids and virtual power plants—indeed, all across the Energy Cloud. As the core technology providers of thousands of legacy microgrids, genset vendors are both driven and well suited to serve a major role in the future of electricity.

 

Transforming the Way We Live, Work, and Move with Wireless Power: Part 2

— May 17, 2017

This post originally appeared on the MIT Enterprise Forum of Cambridge website.

Development of any new technology, particularly one that goes to market in a technology licensing business model, cannot be performed in a bubble. It requires the feedback of users to refine future advances. There simply is no market for a technology that doesn’t provide a compelling value proposition. The development of wireless power is no exception.

As mentioned in part 1 of this blog series, the MIT Enterprise Forum of Cambridge CleanTech Committee brought together a panel of experts to recount this journey from lab technology to commercial product and reflect upon future applications for wireless power. The panel, Transforming the Way We Live, Work & Move, was moderated by Benjamin Freas, principal research analyst at Navigant Research. It included Marin Soljačić, PhD, professor of Physics at MIT and founder of WiTricity; Alex Gruzen from WiTricity; Ajay Kwatra from Dell; and Patrizia Milazzo from STMicroelectronics.

The Partner Landscape

Indeed, much of the panel was composed of WiTricity partners that are helping to deliver on the vision of making a broad range of products truly wireless. Kwatra relayed Dell’s journey through wireless power implementation. Wireless power is not a new concept to Dell; it shipped its first laptop with wireless charging capabilities in 2009. Dell’s vision is to enable true all encompassing mobility by providing a cable-less desk. Wi-Fi introduced freedom from the Ethernet cable, and now the last cord is power.

The first early foray used inductive coupling rather than WiTricity’s magnetic resonance technology. As a result, the laptop required precise placement in order to charge and provided a poor experience. Though magnetic resonance solved this problem, it was not ready for implementation in a laptop. WiTricity relied on input from Dell as it established the efficiency and wattage needed. Dell knows how its products are used and what challenges users face, so it was able to bring this expertise to WiTricity in a partnership to create a viable product.

The Road Ahead

Wireless charging of mobile phones has already reached mass-market adoption and is beginning to appear in laptops and EVs. However, the actual use of wireless power—even in devices that are equipped with it—has been persistently low. Consumer awareness remains a challenge. Current wireless power technology does not provide users with a truly wireless experience.

Nonetheless, the future of wireless power is promising. The increased reliance on electronics and the constant need to power them are driving wireless adoption. Increased awareness and use of wireless power functionality have been generated as a result of the creation of more devices that have wireless charging capabilities and the expansion in public wireless charging infrastructure.

In the future, the expansion of wearable electronic devices and Internet of Things (IoT) devices will further magnify the need for new power solutions. The establishment of public wireless charging infrastructure in locations such as coffee shops and airports is expected to reinforce adoption through the network effects they create. But user experience will be the ultimate driver of wireless power.

 

100% Renewable Energy by 2050

— May 15, 2017

In April 2017, the City of Portland and Multnomah County in Oregon committed to 100% renewable energy by the year 2050. Ted Wheeler, the mayor of Portland, said, “While it is absolutely ambitious, it is a goal that we share with Nike, Hewlett-Packard, Microsoft, Google, GM, Coca Cola, Johnson & Johnson, and Walmart. We have a responsibility to lead this effort in Oregon.” Other cities in the United States have also committed to renewable goals. Chicago, for example, has committed to 100% renewables for its municipal buildings and operations by 2025. Renewable goals are often tied with increased efficiency in buildings, as this assists in reducing the overall needed energy production, making it easier to rely more heavily on renewables.

At a National Level

Following in footsteps of Portland’s ambitious goal, Oregon Senator Jeff Merkley (D), Vermont Senator Bernie Sanders (I), and Massachusetts Senator Edward J. Markey (D) introduced legislation for the United States to reach 100% renewables by 2050. This 100 by 50 Act creates a plan for 50% of US electricity to be generated by renewables by 2030 and 100% by 2050. Additionally, it would require zero carbon emissions vehicle standards and ban government approval of oil & gas pipelines.

Both Merkley and Sanders understand the importance of local initiatives to propel these aggressive renewable energy goals into reality for the country as a whole. “Starting at a local, grassroots level and working toward the bold and comprehensive national vision laid out in this legislation, now is the time to commit to 100% by 2050,” said Merkley. Sanders already sees these changes occurring, and he believes in the importance of not being limited: “In Vermont and all over this country, we are seeing communities moving toward energy efficiency and we are seeing the price of renewable energy plummet. Our job is to think big, not small.”

The 100 by 50 Act is the first legislation introduced to Congress aimed to completely eliminate fossil fuels for the United States. While it is unlikely such a progressive proposal like this will initially pass, it opens the doors to additional discussions and ideas. The declining costs of renewables provide further incentive to assist in a shift toward greater reliance on renewable energy, such as solar and wind power. Local community initiatives and the individual sustainability goals of leading US companies are helping create a future that does rely 100% on renewable energy. Coupled with these siloed goals, members of Congress will continue to push toward more encompassing legislation, though it will inevitably be a long and trying endeavor.

 

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