Navigant Research Blog

Trends from Light + Building 2018

— March 29, 2018

When I registered to attend the infamous Light + Building trade show in Frankfurt months ago, I never could have imagined its massive scale. This colossal trade show hosted over 2,700 exhibitors and 220,000 attendees, and featured just about any company you can imagine with stakes in the digitization of lighting design, building management, and energy—from big building and lighting tech incumbents like Siemens, OSRAM, Schneider Electric, Philips Lighting, and Honeywell to smart home and Internet of Things (IoT) startups like ROCKETHOME, frogblue, and Ubie. During the many miles I walked between exhibition halls, I observed several noteworthy trends.

From Products to Solutions

Several of the vendors I spoke with that have traditionally invested in selling products and deploying hardware are transitioning their focus toward broader solutions based on software platforms and services. For example, Philips Lighting announced a new IoT platform called Interact, which allows the company to deliver new data-enabled services to professional customers through lighting. The company also announced the change of its brand name to Signify to highlight its strategic push toward IoT-enabled smart lighting systems (not just because it was required to as part of Philips Lighting’s split from Royal Philips in 2016). OSRAM made a similar announcement at the show with its Lightelligence IoT platform for developers, as did other lighting manufacturers like CREE and Zumtobel Group, each showcasing its own software solutions to support asset tracking, space utilization, and location-based services using data collected from connected lighting sources.

Li-Fi as an Emerging Technology Trend

Other technology trends featured at Light + Building include Light Fidelity (Li-Fi). At the trade show, Philips Lighting also announced that it is now offering Li-Fi-enabled luminaires, which provide broadband internet connection through light waves. Li-Fi is a wireless technology similar to Wi-Fi, though it uses lighting waves instead of radio waves to transmit data. The technology has the potential to bring additional connectivity to IoT devices. The company is piloting the technology with Icade, a French real estate investment company.

Connectivity through Partnerships

Another set of companies working to accelerate connectivity in buildings are Schneider Electric, Danfoss, and Somfy, which announced their partnership at Light + Building. The collaboration creates a connectivity ecosystem for homes, small commercial buildings, and hotels that allows each company’s products to integrate more easily with each other at the controller level or in the cloud through application programming interfaces, making the deployment and interoperability of IoT solutions for buildings less of a barrier. Initially, the ecosystem will manage lighting, heating, and window shutters on a single platform.

Implications

These technology trends, partnerships, and solutions ultimately highlight the importance of IoT and a shift toward platforms and solutions that bring together data and connectivity to increase efficiency and optimization. Whether it be in buildings and lighting or security, health, and energy, this is a trend Navigant Research sees across a variety of industries. This transformation is discussed in relation to the energy industry in Navigant’s latest white paper, Energy Cloud 4.0.

 

A Shifting Lighting Landscape Provides New Opportunities for Vendors

— March 29, 2018

The commercial lighting market is shifting focus from hardware and the production of light sources such as lamps and luminaires to a broader set of solutions that incorporate lighting controls and value-add features beyond illumination. The Internet of Things (IoT) is helping drive this change as the number of connected devices increases and as connectivity is brought to devices that were previously not connected. To address this shift, lighting manufacturers are repositioning themselves in the market to showcase their abilities beyond lighting and traditional lighting controls.

Deepening Capabilities Creates Broader Portfolio Offerings

In the emerging market of IoT lighting solutions, new and expanded technologies are providing a different way to view the capabilities of a lighting system. Vendors can use new use cases to address specific customer challenges beyond increased energy savings such as space utilization, increasing operational efficiencies, improved employee productivity, and enhanced retail customer experience, among others. Companies are leveraging a growing number of technologies to set themselves apart by providing solutions that use these different technologies.

Many companies see value in offering solutions with a breadth of protocols as these can assist a company’s aim to provide tailed solutions for each use case and to future-proof their portfolio. Philips Lighting recently announced the release of luminaires enabled with Light Fidelity (Li-Fi) technology. Li-Fi provides a two-way wireless communication traveling at high speeds, similar to how Wi-Fi uses radio waves to transmit data, but instead relies on light waves. Icade, the French real estate investment company, is piloting this technology in its office in Paris, France.

Navigant Research’s research brief, Visible Light Communication, discusses the origin of Li-Fi technology, which was first demonstrated by Professor Harald Haas during a TED Talk in July of 2011. The technology has not gained much traction in the commercial lighting market since then, but has potential to garner more attention with Philips Lighting’s bold decision to pioneer this technology with its office portfolio. Philips Lighting recently had several other announcements that are chronicled by my colleague Paige Leuschner in her recent blog, “Trends from Light + Building 2018.”

Expanding Capabilities through Acquisition

Acuity Brands, Inc., another leading lighting manufacturer, recently acquired building analytics company Lucid Design Group, Inc. The acquisition will help expand Acuity’s already robust IoT lighting solution portfolio that includes the company’s sensory network of luminaires, components, and edge devices that are enabled with Atrius and feature advanced sensing capabilities. Lucid’s data and analytics software as a service-based platform, BuildingOS, provides building owners, operators, and occupants the ability to gain insights into building operations in order to increase employee productivity and operational efficiency. Lucid’s capabilities will assist Acuity’s strategy of increasing IoT capabilities by connecting the company’s IoT solutions with broader integrated building data.

New Opportunities

These two lighting powerhouses have demonstrated the opportunities available in the market for new solution offerings to expand IoT capabilities with lighting at the center of an intelligent building’s infrastructure. Philips Lighting and Acuity are not alone in pushing the boundaries of lighting system capabilities. The lighting industry is seeing many incumbent lighting companies seize the opportunity to expand their portfolios to align with the shifting market and new startups looking to make a place for themselves in the growing IoT ecosystem.

 

Regulated Utilities Deliver Innovative Home Construction Solutions

— March 15, 2018

In a recent blog, I discussed how a new virtual net metering product is saving residential customers money by going solar with no money down while also retaining customers and reducing sales overhead for the energy service provider. This kind of creative, customer-focused solution is the focus of my new Utility Customer Solutions Research Service.

Utilities Are Rolling out Creative Solutions

The announcement of the Southern Company Smart Neighborhoods initiatives with Alabama Power and Georgia Power is showing that creative customer solutions can have utility benefits within a regulated utility jurisdiction as well. These Smart Neighborhood initiatives are featured, among others, in my recently released Navigant Research Strategy Insight report on these solutions.

In Birmingham, Alabama Power is now providing distributed energy resources (DER) including solar PV and battery energy storage, as well as smart home appliances and technologies as part of a new home construction development. This initiative will also aggregate renewable generation and distributed energy storage at the neighborhood level through community scale storage, solar PV, and emergency distributed generation to optimize the local grid and improve resiliency.

In Atlanta, Georgia Power is also providing DER (rooftop solar PV and battery energy storage), enhanced home insulation, advanced HVAC units, and LED lighting, as well as home automation systems with smart thermostats, smart locks, and voice control technology as part of a new home construction development. The Georgia Power program will collect data from the DER, HVAC systems, heat pump water heaters, and other technologies to inform grid optimization and new services for customers.

What Should We Expect in the Evolving Market?

Navigant Research anticipates that both regulated utilities and deregulated energy service companies will be increasingly more focused on these new solutions and business models to meet new utility customer expectations. For deregulated energy services companies, the reason is quite simple—the sale of electricity in retail choice is being commoditized, which reduces margins. Therefore, the drive to deliver new services without customer expenditures under longer contracts and recurring revenue is obvious. And there are few regulatory barriers to doing so.

But regulated utilities face regulatory constraints on what the utility can do beside operate the grid and sell electricity to customers, making the path to new business models more difficult. However, these two Southern Company Smart Neighborhood initiatives are extending the role a home can play in transitioning the grid from traditional centralized generation to part of an Energy Cloud platform while also creating new residential customer solutions.

 

Ericsson Presents Its Future Vision for the Neural Grid

— February 13, 2018

At its London-based industry analyst event, Ericsson detailed areas for future growth. Its primary customer base (communications service providers [CSPs]) is looking for growth in an age of flat revenue from existing services. Ericsson believes this future growth will be made possible by the rollout of 5G communications—by 2026, Ericsson predicts 5G will contribute to a potential 36% of revenue growth for CSPs.

Ericsson cites the utilities industry as the largest opportunity for digitization. With a $101 billion addressable market likely in 2026, utilities present the second largest Internet of Things (IoT) opportunity (after manufacturing). The energy transformation is central to this growth. As the industry shifts toward a distributed future, connected asset deployments will increase exponentially. In addition, regulatory focus on advanced network flexibility requires significant improvements into a distribution utility’s visibility of loads and supply. All things being equal, the energy industry presents a juicy opportunity for CSPs.

Cellular Carriers to Prosper in Utilities with a Group of Technologies

Ericsson stated that CSPs will only succeed with a combination of technologies, and presented the reasonably compelling proposition of IoT services, supported by network-slicing-enabled 5G communications, and a concept it calls the distributed cloud.

IoT is often cited as the next big thing for CSPs. The term IoT has failed to gain traction in the utility industry primarily because the industry was comfortable with the technology long before the term was used to describe it. But this experience also presents a problem for telcos chasing profits in energy—the industry has to be convinced to switch from the proprietary, self-built, and decades old IoT communications networks to public carrier networks. The critical question is how Ericsson, and its CSP clients, can profit from the utilities industry.

Existing infrastructure may be difficult to convert to a public carrier, particularly for utilities rewarded for CAPEX on new assets. However, the sheer volume of low value assets that will become connected in the future pose many problems to utilities. Passing responsibility onto a third-party provider could well be an attractive proposition, if issues surrounding scalability, security, cost, and network availability are overcome.

5G may be the answer to this, particularly when connecting lower value, less critical assets (such as customer owned distributed energy resources (DER) or network equipment on low voltage networks). 5G offers much greater bandwidth than previous communications, while the ability to create virtual slices of the same physical network communications will help utilities overcome concerns regarding network availability for more valued assets.

Ericsson’s Distributed Cloud Approach Could Help Future Distribution Operation

Ericsson’s distributed cloud concept plays well into utilities’ current and future needs for edge computing. Ericsson has identified an opportunity for CSPs to host cloud servers in their existing real estate. CSPs’ buildings often have underutilized floorspace, yet are in central locations, directly connected to fiber rings and have good power supply. Ericsson believes its distributed cloud could compete as a low cost alternative to utility-owned, grid-edge computing that provides local data filtering and analytics.

Navigant Research has actively defined the technological needs of future transactive markets, in particular real-time visibility into DER, the calculation of hyper-local pricing of network access, the hosting of localized smart contracts for transactive energy participants, and more. The technology proposed by Ericsson has surprisingly close alignment with these requirements. Ericsson’s biggest challenge to convert an opportunity into sales is to overcome the industry’s innate conservatism and the current preference for proprietary IoT infrastructure. Regardless of how attractive the public network is, utilities still have a strong preference to build their own networks. Increasing cybersecurity concerns will only reinforce this attitude.

 

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