Navigant Research Blog

How the Developed World Can Learn about Energy Solutions from the Developing World

— March 27, 2014

With utility resistance to policies that support distributed renewable energy emerging as a global phenomenon, it might be wise for vendors in the space not to push the panic button, but instead look to emerging markets in the developing world for a reality check.

As utilities and states modify their past support vehicles (i.e., net metering and feed-in tariffs) for technologies such as solar photovoltaic (PV) systems, purveyors of hardware and software that help integrate distributed renewables into power grids see increasing opportunity.  The decline in generous feed-in tariffs for solar PV, for example, creates new opportunities for energy storage.

Among those sensing opportunity is ABB.  When the company purchased Powercorp of Australia in 2011, few realized that ABB would integrate Powercorp’s distributed controls approach to remote hybrid wind/diesel microgrids (and its PowerStore flywheel technology) into its grid-tied offering.  ABB has recognized that a top-down approach to controlling distributed energy resources may not be the best fit.  Instead, innovation fostered in off-grid systems – which must provide 24/7 power under the most harsh environmental conditions – proves to be a better approach.  Peter Lilienthal of HOMER Energy agrees, arguing in Navigant Research’s Remote Microgrid Business Models webinar late last year that the smart grid is being pioneered in places like the Caribbean, Africa, and India, not in developed world markets like Europe or the United States.

Look to the Islands

While many observers are focused on the so-called utility death spiral, growing numbers of forward-looking utilities – along with diversified energy companies such as NRG Energy – see the proliferation of distributed generation as an opportunity.   In fact, NRG Energy is now developing remote microgrids, starting with the private island owned by Richard Branson.

The world of the future will not feature a one-size-fits-all business model – especially not the utility monopoly that has slowly eroded over the past century.  While long-term planning and dense regulatory proceedings won’t go away, the future of energy requires flexibility and learning from areas where the provision of electricity requires the utmost in creativity: the developing world.  Other large technology companies such as Toshiba are also moving into the remote island microgrid market.

Navigant Research’s new Nanogrids report shows that even the lowly sounding nanogrid is a huge market in the developing world, with global revenue forecast to exceed $20 billion by 2023 in three regions that have historically lagged behind the developed world in new technologies.

Residential Remote Nanogrid Vendor Revenue by Region, World Markets: 2014-2023 

 (Source: Navigant Research)

 

As Solar Prices Fall, Wind Still Finds a Role in Microgrids

— March 25, 2014

With the steep declines in solar photovoltaic (PV) system prices over the past 5 years, many developers of remote microgrids – systems not interconnected with a traditional utility grid – have begun to shy away from their previous reliance on wind power to lower the systems’ consumption of polluting and increasingly expensive diesel fuel.

As one long-time observer summed up the situation: “The history of the small wind turbine industry is one littered with failures.”  The story of Southwest Windpower is particularly galling.  Backed by investments from General Electric, the company’s tiny turbines were pumped out into the market with little regard for long-term performance.  As a result, many of these extremely lightweight machines, producing less than 2 kW of power each, have stopped working only after a few years.  In some remote island installations, the machines have literally been blown away by hurricanes and other extreme weather events. While some other small wind turbines, such as those of Bergey Wind Power, have had lasting power, many of these typically small, small wind companies have struggled over the past few decades.

Wind in Lonely Turbines

A survey conducted by the Commonwealth Scientific and Industrial Research Organization (CSIRO) of Australia in 2009 claimed that 71% of microgrids included some form of wind capacity.  Given that Australia is one of the global leaders in off-grid wind/diesel systems, it is likely these results were skewed by data weighted too heavily toward off-grid applications.  A more recent analysis performed by Navigant Research found that of those microgrids that included wind power, 67% were installed in remote microgrids.  Interestingly enough, North America is the global leader, due to two states: Alaska and Hawaii.

Remote Microgrid Capacity with Wind Capacity, World Markets: 2Q 2014

(Source: Navigant Research)

Wind has fallen out of favor for at least three reasons:

  • Unlike solar PV, small wind turbines historically have required greater operations and maintenance (O&M) investments.  In many remote locations, local expertise is hard to find.
  • Many remote locations do not benefit from an adequate wind resource assessment.  If you’re constructing a 100 MW wind farm, you can justify the expense of a detailed wind resource assessment.  This is not the case for just one or two wind turbines in a remote microgrid.
  • The variability of wind is immense, requiring a more nimble and sophisticated control system for a microgrid.

Both, Not Either

Despite these negatives, many remote microgrid developers still see value in wind.  In many cases, wind power is still half the cost of solar PV.  In fact, the ideal scenario is not just solar or just wind as renewable options, but both.  The sun shines during the day; the wind often blows at night.  Incorporating both of these renewable resources enables the use of a smaller energy storage device – a technology that is currently often viewed as the weak link among hardware choices for a microgrid due to high cost.

Furthermore, there are many wind turbines that now offer direct drives, eliminating the gearbox that is the most common point of failure, which contributes to high O&M costs.  If such wind turbines can be installed without a crane, as is the case with Eocycle’s, some of the installation headaches also go away.

 

Filling Small Niches, Nanogrids Become Pervasive

— March 21, 2014

If you think the term microgrid is still a bit fuzzy, you’ll be even more puzzled when it comes to the term nanogrids.  While it’s safe to say that nanogrids are smaller than microgrids, there is a major disagreement as to whether nanogrids will scare the hell out of utilities or if they are actually already well-established and can flourish within the current regulatory environment.

The Navigant Research definition of a nanogrid is: A small electrical domain connected to the grid of no greater than 100 kilowatts and limited to a single building structure or primary load, or a network of off-grid loads not exceeding 5 kW, both categories representing devices capable of islanding and/or energy self-sufficiency through some level of intelligent distributed energy resource management or controls.” 

The basic concept behind the nanogrid is simple: small is beautiful.  Nanogrids are modular building blocks for energy services for current applications that range from emergency power for commercial building to the provision of basic electricity services for people living in extreme poverty.  Nanogrids typically serve a single building or a single load.  Because of their simplicity, the technology requirements for nanogrids are less complex (in most cases) than either microgrids or the utility-dominated smart grid.

Tiny Grids, Big Business

Ironically, nanogrids are big business.  While microgrids (as described in Navigant Research’s report, Microgridsexhibit exponential growth and share synergistic properties with many nanogrid segments, substantial deployments of nanogrids are already in place, as they actually face less technical and regulatory barriers than their microgrid counterparts.  For example, Navigant Research’s Nanogrids report finds that the market is already worth $37.7 billion today and it represents capacity almost 10 times larger than the projected size of the current microgrid market.

Lawrence Berkeley National Laboratory (LBNL) asserts that nanogrids never encompass any forms of distributed generation and never interact with the larger utility grid ‑ two criteria that Navigant Research takes issue with.  By that definition, every laptop, every car (even if powered by an internal combustion engine), and every universal serial bus (USB) drive is a nanogrid.

The business case for nanogrids echoes many of the same arguments used on behalf of microgrids.  These small, modular, and flexible distribution networks are the antithesis of the economies of scale that have guided energy resource planning over much of the past century.

Here to Stay

Nanogrids take the notion of a bottom-up energy paradigm to extreme heights.  Yet, one could argue they are less disruptive than microgrids in one very important way.  Since nanogrids are confined to single buildings or single loads, they avoid many of the regulatory challenges that stand in the way of power-sharing microgrids, such as prohibitions regarding non-utilities sending power over public rights-of-way.  In the developing world, nanogrids are often the only pathway to universal energy access, as dispersed residences often preclude networking.  One could also take a contrarian view.  For example, nanogrids foster a more radical shift to direct current (DC) power than microgrids, since their small scale can accommodate low-voltage networking.

Either way, nanogrids are already here to stay.  New forms of distribution networking are clearly on the rise, whether one wants to call such platforms a nanogrid, a microgrid, or something else.

 

Questions on “Dirty Energy” Highlight DC-Based Nanogrids

— February 7, 2014

The United States set a record in 2013 for billion-dollar disasters, according to the Annual Global Climate and Catastrophe Report.  Yet, the $41 billion in economic losses paled in comparison to those of 2012, the year of Tropical Cyclone Sandy ($65 billion in damage) and widespread drought ($30 billion in damage).

These disasters, and the power outages and demand for emergency energy services they entail, are fueling interest in microgrids not only in the United States, but also in the developing world.  But, what if these microgrids, so dependent upon smart inverters, were to accelerate the creation of a new form of dirty electricity – pulsing electromagnetic fields that could grow even more intense as power sources and control technologies increase radio frequencies (RFs)?

Such concerns led to a recent gathering at the prestigious Commonwealth Club of San Francisco, California, at which speakers attempted to articulate the different between a wise grid and a smart grid.  Among the panelists was Dr. Timothy Schoechle, the author of a recent paper entitled Getting Smarter about the Smart Grid and a guest on a radio show I was a part of on KWMR.

The RF Question

The discussion focused on utility deployments of smart meters, as Schoechle observed that these meters often rely on wireless communications that, according to some scientists, jeopardize the health of growing numbers of citizens who have no choice in the matter.  RF waves are ubiquitous, and smart meters are increasing the density of this RF blanket that envelops us – and that has not been subjected to sufficient scientific scrutiny, these critics argue.  At the same time, some assert that smart meters have failed to deliver the purported economic benefits to most consumers.

Ironically enough, during the same week, The World Bank hosted a webinar on the topic of rural electrification that extolled the virtue of wireless telecommunications as a driver of economic livelihood for those living at the bottom of the pyramid.  As pointed out in a previous blog of mine, among the chief drivers for providing more affordable electricity to the poor in the developing world is wireless cell phone technology.  In many places in Africa, Latin America, and Asia, millions of people are more likely to have a cell phone than access to reliable electricity.  Since banks will lend money to large multinationals installing cell phone towers in the middle of nowhere, small local entrepreneurs can then piggy-back on these investments to expand electricity service.

In a sense, this approach is working and is more often than not delivering direct current (DC), which, as Schoechle claimed in San Francisco, is the cleanest form of electricity from an electromagnetic point of view.  In fact, he argues, the best way to deliver what many consider to be the lifeblood of modern civilization is through DC nanogrids – a technology platform that is the subject of my next report.

 

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