Navigant Research Blog

Stop and Smell the Market Indicators

— May 17, 2018

Last month, Philips Lighting revealed its new Philips GreenPower LED toplighting with a light spectrum optimized for cut rose cultivation. The toplighting technology allows growers to increase light levels year-round without increasing heat, which allows for increased yield production. However, the rose market has advanced in recent years to the point that growers are now more concerned with quality of production. Addressing those concerns along with energy efficiency needs, Philips collaborated with research institutes to provide growers with a toplighting spectrum that improves the quality of the roses and is 40% more energy efficient compared to high pressure sodium lighting. While the technology is important for horticulturalists and agriculture research globally, why would a lighting manufacturing giant like Philips focus on grow solutions for roses? The answer is twofold.

The Wall Street of Flowers

The Netherlands is the trade capital of the global rose market and home to the world’s largest flower market, Royal FloraHolland. Every day, 30 million plants and flowers from all over the world are auctioned at Royal FloraHolland, with operations covering over 14 million square feet—equivalent to 243 football fields. Almost half the world’s flowers and plants pass through one of the 11 cooperatively-run regional flower auctions, with buyers and sellers bidding on trading floors just like a typical stock exchange in financial markets. The sheer scale of this market alone gives reason to why manufacturers would want to specialize in lighting solutions for rose cultivation. Yet bidding wars at Royal FloraHolland are just the beginning.

More Competition, More Opportunities

Developing countries in Africa are starting to take up a larger share of the European market for cut flowers and foliage. The CBI Ministry of Foreign Affairs reports that major suppliers Kenya, Ecuador, Ethiopia, and Colombia have seen a 20%-60% growth in exports of flowers and foliage to Europe. Producers in these regions are strengthening their position in global production and trade, mainly due to favorable growing circumstances, rising demand for competitively priced flowers in Europe, and improved transportation. To remain competitive, European growers are looking to advanced lighting solutions for delivering quality, reliability, and consistency in supply. This is why major lighting manufacturers like Philips and OSRAM have noticed and are taking stock in this burgeoning market. Companies may want to tap into this blossoming market as investment opportunities and demand for unique lighting solutions continue to grow out of this competitive space.

For more details, a recent report from Navigant Research, LED Lighting for Horticultural Applications, examines the global market potential for horticultural lighting.


Takeaways from Reversapalooza: One Analyst’s Perspective on Blockchain

— May 15, 2018

I recently returned from Reversapalooza, a 2-day event hosted by Nori and designed to explore the role of blockchain technology in reversing climate change. There were farmers, economists, policymakers, academics, and representatives from many other professions in attendance. In the conversations that ensued, blockchain took a backseat to Nori’s larger mission.

Blockchain is a hot topic at conferences globally and in many sectors, but this event was one of the few large-scale conversations I have participated in where the “hash everything and put it on the blockchain” crowd were a minority. The event gave me the opportunity to reflect on how blockchain is perceived by stakeholders with a wide range of familiarity with the technology. The majority of customers who will be the end users of blockchain-based solutions probably won’t understand the underlying systems, but they still need to be able to engage with the system.

Blockchain Attracts People, but It Can Also Alienate Them

Blockchain generates a huge amount of interest even outside of tech-savvy circles. I have yet to speak with someone who has heard about blockchain and doesn’t care to learn more about it. It is very tempting for early innovators to put blockchain front and center to capitalize on that interest.

However, once you get people in the door, you need to be prepared to explain in simple terms what blockchain brings to the table and why you’re talking about it in the first place. The technology is complex and difficult to visualize. Without proper care, it can begin to sound suspiciously like wizardry.

Demonstrations Help Clarify Blockchain

Nori worked hard at Reversapalooza to create interactive exercises that demystified some aspects of the customer experience with blockchain-based systems. One gave folks in the room hands-on experience with trading mock carbon removal credits (CRCs), and a second used 10 copies of the Seattle Times, some simple addition, and a 5-dollar bill to illustrate the fundamental steps involved in building a blockchain.

Results were mixed, but any explanation of blockchain must strike a difficult balance between oversimplification and a black hole of technical details. Overall, attendees left the conference knowing more about blockchain than they did when they came into the room.

Blockchain Should Never Be in the Driver’s Seat

I dream of the day when blockchain becomes a means to an end for companies like Nori, and panels devoted to its specifics are no longer necessary. When was the last time you attended a conference with a panel on database mechanics?

Today, companies that use blockchain but neglect to explain it risk appearing like they don’t know what they’re doing. They can’t afford to push it completely into the background. But startups and established players alike must recognize that blockchain, by itself, is not a value proposition. Succeeding in this space requires a clear mission and purpose—a goal where blockchain makes sense as the means to an end.

What Did Reversapalooza Do Right?

Reversapalooza succeeded because Nori kept blockchain in the backseat (or at least in the passenger seat). The event was about reversing climate change and the many processes—behavioral, economic, geological, and scientific—that are necessary to achieve that goal. Within that context, attendees could see the value of a trusted, decentralized ledger that could track CRCs and compare it against the carbon offset markets and other mechanisms that currently exist.


New Community Business Models and Flywheel Concept Launched for Microgrids in California

— May 10, 2018

Much of the innovative development of microgrids in the US has been on the East Coast. It is spurred on by extreme weather events and corresponding state government initiatives designed to boost resiliency. However, California—a longtime pioneer of microgrids featuring high penetrations of renewable energy—is plowing fresh ground in both new business models and enabling technologies for microgrids.

Westward Expansion 

The California Energy Commission’s most recent foray into helping the state meet its renewable energy and greenhouse gas reduction targets included the recent awarding of over $51 million to 10 microgrid projects. However, another program focused on the broader concept of advanced energy communities is planting seeds that may help address thorny regulatory issues while also introducing a novel energy storage technology.

The novel business model is being deployed in Lancaster, California, which is one of many communities in California taking advantage of a community choice aggregation (CCA) law passed back in 2002. Since California’s initial foray into retail deregulation and customer choice ended in the so-called Enron disaster in 2001, the only way for residential customers to choose new power supplies was either to install rooftop solar or be part of a CCA. I played a small role in helping create the state’s first CCA in Marin County, which has now expanded to adjacent jurisdictions. The following figure shows the status of this movement. Orange areas represent currently operating CCAs, green areas represent regions where program launches are expected in 2018, and blue areas represent programs in exploratory phases.

Map of California CCAs: Operating, Current, and Proposed Development

(Source: Local Energy Aggregation Network)

CCAs are somewhat limited in what they can do in creating community microgrids, since the incumbent investor-owned utility still controls the distribution grid. In Lancaster, the CCA serves as the single point of governance for a microgrid designed to serve 75 new homes known as Avenue I. In this example, 450 kW of rooftop solar PV systems, EVs, and a 1.4 MWh of centralized energy storage system are the key building blocks. The design of the system incorporates a new flywheel technology. While microgrids have deployed flywheels in the past, especially in Australia, where they were historically used to inject short bursts of power to help manage variable wind with diesel generators in remote applications. This flywheel from Amber Kinetics of Fremont, California is instead being deployed within a grid-connected context for long-duration energy applications, thereby storing solar energy for up to 4 hours.

CCAs at Work

“We think this is a scalable model for affordable housing,” said Brett Webster, project manager with the consulting firm Energy Solutions. Only a handful of affordable housing microgrids exist globally: 2500 R Street project in Sacramento and Marcus Garvey Village in New York City are perhaps the most noteworthy. In Lancaster’s case, carbon is reduced by 70% and onsite sources provide 77% of local consumption at a cost of 13 cents/kWh.

The flywheel purports to be cheaper than the Lithium-ion (Li-ion) batteries that appear to be taking over the microgrid market. They are manufactured from steel, which lowers manufacturing costs, and they do not represent fire hazards, which to date have limited Li-ion battery installations in many dense urban environments due to local fire codes.

Whether the CCA structure propels community microgrids forward remains to be seen, as most are focused on low cost wholesale renewable supplies. Once the microgrid is completed, the results from Lancaster could spark a change in that status-quo thinking.


New Technology Announcements Portend a Smarter IoT

— May 10, 2018

The Internet of Things (IoT) ecosystem is about to get smarter. Leading technology vendors have recently announced new products and integrations intended to push greater intelligence to the edge, derive deeper insights through analytics, and heighten security. Utilities should take note.

Qualcomm Offering a New Chip-Based Platform

Qualcomm’s new Vision Intelligence Platform is part of this trend. The Qualcomm platform features the chipmaker’s first family of system-on-chips (SoCs) built specifically for the IoT using an advanced 10 nm FinFET (Fin Field Effect Transistor) process that produces substantially faster performance and efficiencies than previous chips. The platform’s chip models, QCS605 and QCS603, are designed to provide greater computing power for on-device cameras and machine learning. The company envisions these chips being used for a variety of applications, including robots, the smart home, and smart cameras. For utilities, these could become valuable in cameras mounted amid critical infrastructure such as substations, or in drones that monitor the grid.

Microsoft Promoting Its Own System

Similarly, Microsoft has introduced Azure Sphere, a new custom SoC operating system for the IoT. Azure Sphere has its own flavor of a Linux kernel, and includes a new security subsystem called Pluton. The idea is to provide greater IoT device security starting from the microcontroller level and moving up from there to the cloud. For example, Pluton is designed to prevent malicious code from tampering with firmware on a device, which could be quite useful for a utility or energy provider that oversees over-the-air upgradeable smart meters or sensors connected to the grid. The first certified hardware based on Azure Sphere is expected to be available later in 2018.

Other Offerings in This Market

SoftBank Group’s Arm semiconductor subsidiary announced enhanced capabilities for its Mbed IoT platform during Hannover Messe, one of the world’s largest industrial technology events, held annually in Germany. The Mbed platform, designed to help companies connect, secure, manage, and provision IoT devices, will now integrate Mbed’s Cloud solution with IBM’s Watson IoT and artificial intelligence platform. Arm also announced a collaboration with Cybertrust and GlobalSign in a bid to give industrial customers the flexibility to use their own security certificates in IoT deployments, something utilities are likely to appreciate given their penchant for managing and controlling their devices and systems in their own way.

Just a Glimpse of Market Momentum

None of these vendor moves will happen overnight, of course. They are cutting edge and will take months or even years to gain widespread adoption; some might even fizzle or fail. Nonetheless, they indicate vendors’ strong emphasis on the IoT, whether the focus is at the edge, in the cloud, or on security (for a deeper look at IoT security, see Navigant Research’s Managing IoT Cybersecurity Threats in the Energy Cloud Ecosystem). Momentum is building, and utilities need to stay apprised of how advances in IoT technologies could enhance their grid operations.


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