Navigant Research Blog

Accelerating Urban Metabolism with Waste 2.0

— May 31, 2012

The world’s biggest cities are sometimes described as having an “urban metabolism,” akin to living entities that consume energy, food, water, and other raw materials and expel waste.  Via a well-planned web of municipal infrastructure, a streamlined urban digestive system enables economic advancement, growth in development, and population expansion by improving public health and the surrounding urban environment.

But even efficient digestive systems have their limits.  Over the last several hundred years, one of the defining measures of how far a city has advanced has been its ability to distance its inhabitants from trash, excrement, and emissions.  With more than half of the world’s population living in cities today, and megacities – defined by the UN as metropolitan areas with populations exceeding 10 million – on the rise, this out-of-sight, out-of-mind “Waste 1.0” paradigm is facing significant limits.  As urban entities gorge themselves on resources, the sheer volume of trash, limited geographies, and sustainability efforts are causing the urban digestive system to back up.

For cities faced with this predicament, treating waste as a strategic resource, a strategy I call Waste 2.0, is quickly becoming an enabler of urban growth.  Last year 3.7 billion urban dwellers produced an estimated 2 billion tons of municipal solid waste (MSW) and 375 billion gallons of wastewater, both lucrative potential sources of energy-rich biomass.  When this unprocessed waste is shipped to far away landfills in developed economies or dumped in open pits throughout much of the developing world, the energy potential contained in waste is vastly underutilized.

MSW, a primary urban biomass resource, satisfies one of the key requirements for bioenergy deployment: aggregation of biomass in sufficient quantities to allow for projects to be deployed at scale.  Accordingly, a slew of companies are advancing projects that convert waste to useable energy in the form of power, heat, and fuels for onsite consumption.  At Heathrow, in the United Kingdom, for example, Solena Group is partnering with British Airways to convert trash generated by London’s residents into biojet for use in commercial flights.  Plasco Energy Group is also targeting MSW, but aims to produce electricity for onsite generation.  Fleets of buses throughout Sweden, meanwhile, run on renewable natural gas produced in anaerobic digesters processing organic waste.

For projects targeting MSW, however, securing a consistent steam of garbage is only half the battle.  In some cases, MSW must be separated from inorganic components in order for conversion to be viable.  Although waste can be source-separated at the point of conversion, this can add significant cost.  Accordingly, Waste 2.0 is also about crowdsourcing separation of waste components at the upstream source in order to decrease the cost of technology deployment.  From dedicated waste bins for separate streams (e.g. recycling, compost, landfill) to pneumatic waste collection systems, Waste 2.0 is as much a cultural challenge and a behavioral shift as it is a technological chore.

The European Union has shown that viable Waste 2.0 projects will require a combination of political will fueled by a strong waste management policy framework, economic will fueled by high electricity or fuel prices, and grassroots will fueled by streamlined waste collection infrastructure to facilitate technology deployment around waste.

The last leg of the stool, requiring a cultural shift from the Waste 1.0 paradigm, is perhaps the greatest challenge to increased waste utilization in urban centers.  In regions like Asia Pacific, for example, where opportunities to capitalize on waste streams show the greatest opportunity, the ability of local governments to win over their public by branding or selling the idea of utilizing MSW will have a significant impact on the rate of technology deployment.  In order for urban dwellers to get a little closer to their trash, Waste 2.0 will require herculean efforts to educate the public, but will maximize sustainable growth throughout fast-growing advanced and developing cities.


Building Automation Systems Get Smart

— May 8, 2012

According to our recent report on building automation systems, the market for building automation controls today totals over $75 billion per year.  There’s still room for growth, however, not just in developing regions but even in North America and Western Europe.  Automation systems and controls relating to HVAC and lighting are not always required by code, but they can play an important role in maintaining high levels of energy efficiency.  As LEED certifications soar (recently passing 2 billion square feet of commercial certified space worldwide) and organizations look to reduce their energy consumption and carbon emissions, such controls are one of the key enabling technologies that achieve high levels of energy performance in buildings.  Although some of this growth is due to the increasing stringency of building energy efficiency regulations, such as the EU Energy Performance of Buildings Directive, which will require all new construction in Europe to achieve nearly zero-energy levels by 2021, much of the investment in building automation controls will be voluntary, as companies aim to improve energy efficiency in their building portfolios.

At the same time, building automation systems are becoming more intelligent.  Increasingly, controls are not designed to be “set and left” but are connected to a building management system (BMS) that continuously monitors data streams from building controls and feeds them into energy displays that help facilities managers and other decision-makers gain visibility into how their buildings are performing.  This is enabled by the convergence of IT with building controls, a process that, despite arriving later to the building industry than to other industries like telecom, is now transforming the way energy is managed in buildings.  Controls were originally imagined as standalone devices that would to some extent take control of building energy out of occupants’ hands to “make sure the lights got turned off.”  The new wave of intelligent controls, ironically, aims to put control over controls back in the occupants’ hands, albeit under the guidance of sophisticated BMS and building energy management systems.

BAS Market Size by Region, World Markets, 2011-2021


These advances in building automation technology are occurring just as demand for higher levels of energy efficiency is rising.  As a result, Pike Research expects the market for building automation systems to grow to $146 billion in 2021 – a near doubling of the market today.  Much of this growth will come from rapid construction activity in China, where 2 billion square meters of new space are added every year, and where much of that new space will integrate sophisticated controls over time.  The fastest growth categories will be those that relate directly to energy efficiency, such as lighting controls.  As these devices are rolled out, they will usher in a new generation of intelligent buildings that are less expensive to operate and easier to manage than ever before.


Greenpeace Criticizes Apple, Amazon, Microsoft Data Centers

— April 20, 2012

Greenpeace has re-ignited the debate over the environmental impact of cloud computing with its latest report on energy consumption and energy sourcing in the data centers of some of the largest tech companies.  Its new report, How Clean is Your Cloud?, looks at the data center deployments of 14 of the leading players in the market.

The report is particularly critical of Apple, Amazon and Microsoft, identifying them as major suppliers who are expanding their data center capacity “without adequate regard to source of electricity,” relying “heavily on dirty energy to power their clouds”.  On the other hand, it praises Google and Yahoo for the investments in renewable energy.  Its rapprochement with Facebook also continues, as it commends the social media giant’s decision to develop its next data center in Sweden, where it will be able draw on renewable energy sources for its power.

Both Apple and Amazon have reasserted the green credentials of their data centers and of cloud computing in general.  However, according to a report in The Guardian, Amazon appears to be simply retreading arguments for the general benefits of cloud computing, while sidestepping the issue of energy sourcing altogether.  This rather misses the point of Greenpeace’s criticism.

More interestingly, Apple has responded by providing more details on what it is actually doing in its flagship data center in Maiden, North Carolina.   Apple argues that its new data center will be highly energy efficient, will use a significant amount of renewable energy, and overall will use only 20% of the 100 megawatts (MW) attributed to it by Greenpeace.   In turn this is putting the spotlight on Greenpeace’s method for ranking data centers.

However, Apple would seem to be suffering in part from inflating its own claims to being green.  It’s hard to see how it can claim to building the greenest data center ever if it is still relying even partially on coal-generated electricity – Verne Global, for example, likely feels it has a much better claim on that score.  Interestingly, Apple now says that its next data center in Oregon will be powered by 100% renewable energy, something Greenpeace hadn’t allowed for in its rankings.

Greenpeace can claim that getting Apple to talk more openly about energy use in its data center is already a step forward.  But until there’s an agreement on data transparency and metrics, such partial disclosures tend to confuse rather than clarify the debate.  The focus should therefore be on getting cloud computing providers to be more open about the actual energy efficiency and environmental impact of their data centers.

As Greenpeace says, data centers are the factories of the digital world. So it’s interesting to see Akamai, the cloud and Internet platform provider, gaining credit from Greenpeace for being the first major players to report on its Carbon Usage Effectiveness (CUE).  CUE, developed by the Green Grid, provides a means of assessing a data centers overall emissions performance, including its primary energy sources.  Only when all cloud providers enable such transparency will customers be able to make informed decision on whether they are procuring cloud services that are truly green.


Newcomers Flock to the Energy Efficiency Services Market

— April 18, 2012

In the 1980s and 1990s, vendors of HVAC equipment, oil and gas, and others entered the energy service company (ESCO) market, using end-to-end energy efficiency solutions as a platform to sell “stuff.”  In the early 2000s, many of these service providers divested their service lines to re-focus on their core businesses, leaving integration up to others.

In recent years, however, a range of new players are entering – or re-entering – the energy efficiency services market.  In our report, Energy Efficient Buildings: Global Outlook, Pike Research forecasts that the market for energy efficiency technology and services will grow to $103 billion by 2017, up from $68 billion in 2011.  As the market for energy efficiency services grows, many players are finding that to compete for energy efficiency business – whether through procurement procedures in the public sector or outsourced energy efficiency services for commercial property owners and managers – they need to move further down the value chain and not only sell products, but also integrate those products into a complete solution.

One way to make the transition from manufacturing to integration is through acquisition.  Eaton Corporation, for example, made its move into the energy efficiency services space with its 2010 acquisition of EMC Engineers.  That paved the way for Eaton to achieve a certification as a Qualified ESCO by the U.S. Department of Energy in 2011, allowing it to access the federal energy efficiency services market as well.

Meanwhile, a number of other firms that don’t necessarily fit the traditional HVAC or property services profile have also been building on their product lines with new energy efficiency service businesses.   In February, Hess, the Woodbridge, NJ-based oil and gas giant that’s better known for selling gallons of gasoline, announced the launch of Hess Energy Solutions.

The motivations for getting into energy efficiency services relate mostly to the opportunity to expand further down the energy efficiency value chain and to bring in higher-margin work.  When sales of stuff plateau, or gaining market share becomes increasingly difficult, some firms see services as the logical extension of existing product lines.  The global economic downturn encouraged the development of service lines as many manufacturing firms have had difficulty maintaining product sales levels at pre-recession levels.  In addition, many services offer higher margins than product sales do, so folding a service business into a business’ broader portfolio can yield a higher average profit margin for the business as a whole.


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