Navigant Research Blog

Hunting Fertile Fields, Advanced Biofuels Providers Look Abroad

— October 18, 2013

With nearly 70% of global biofuels production centered on the United States’ corn and Brazil’s sugarcane harvests, concentrated commodity feedstocks have been the common denominator in biofuels industry growth over the past decade.  Advanced biofuels companies seeking to produce next-generation fuels derived from non-food feedstocks are attempting to replicate this model – without the associated social and environmental externalities of using food-based crops.  Access to land for mass feedstock production is a difficult challenge for which many innovative strategies have been proposed.

Companies like SG Biofuels, Ceres, and others are squarely focused on biotechnology innovation, involving complex biological modifications at the crop’s cellular and genetic level.  The central focus of these efforts is the optimization of dedicated energy crops for growth in a variety of locations where food crops are not currently grown, including poor soils and areas lacking irrigation.  Among these, jatropha, camelina, energy grasses like miscanthus, and dedicated trees like eucalyptus have received the most attention.

But optimizing crop strains to thrive in a variety of climates and soils is only half the battle.  Recent experience has shown that the success of even miracle next-generation feedstocks like jatropha, which can produce oil-rich seeds in poor soils and without irrigation, is exaggerated.  As with food crops, bountiful energy crop harvests (i.e., lots of biomass material for biofuels production) require irrigation and nutrients.

Land Ho!

Meanwhile, finding suitable tracts of land with nutrient-rich soil and irrigation for which a large quantity of crops can be grown – but without diverting land otherwise dedicated to food production (see The New York Times blog on food vs. fuel) – remains an elusive goal.  Increasingly, governments and corporations are looking abroad.

Since the food crisis of 2007-2008, foreign direct investment into countries with undeveloped agricultural potential has accelerated.  According to data compiled by the Oakland Institute, an estimated 56 million hectares of land (nearly the size of France) has been acquired in the developing world by international governments and investors since 2008.

Last month, China announced that it will invest billions of yuan into 3 million hectares (7.5 million acres) of farmland in Ukraine, its biggest overseas agricultural project.  This will more than double China’s current portfolio of 2 million hectares (5 million acres), mostly concentrated in Latin America and Southeast Asia.

China is not alone in this quest.  According to a policy paper published by the Woodrow Wilson International Center, “One of the largest and most notorious deals is one that ultimately collapsed: an arrangement that would have given the South Korean firm Daewoo a 99-year lease to grow corn and other crops on 1.3 million hectares of farmland in Madagascar – half of that country’s total arable land.”  Government and institutional investors across other developed economies, including Japan, the United States, the European Union, and wealthy Gulf states, are all actively involved in this rush.

Complicated by the checkered history of international land grabs, this trend is not without its critics.

Balancing Objectives

While intentions may be in the right place in most instances, the past has shown that consolidation of cultivatable land for foreign or multinational interests can often lead to the displacement of local subsistence farmers, as well as other negative environmental impacts.  In recent years, governments have, at least publicly, imposed more restrictions on biofuels investments abroad to prevent a scramble toward destructive plantation-style feedstock cultivation.

The EU’s Renewable Energy Directive (RED) mandates that member states derive 10% of energy consumption within the transportation sector from renewable sources by 2020.  Recently signed legislation caps the contribution of conventional food-based biofuels, calling for a rapid switch to advanced biofuels.  A slew of sustainability standards, meanwhile, aim to mitigate the negative impacts of large-scale dedicated energy crop production for advanced biofuels.

In Navigant Research’s recently published report, Advanced Biofuels Country Rankings, issues such as available arable land and potential for sustainable feedstock hubs figure heavily into assessments of the potential of individual countries to support advanced biofuels commercialization.  At one time regarded as an issue exclusively focused on conventional biofuels, access to land for advanced biofuels production is proving equally sensitive.


E-Trucks and Chargers Headline 2013 Plug-In Show

— October 17, 2013

The Plug-In 2013 show in San Diego highlighted some key trends in the plug-in vehicle (PEV) and PEV charging markets.  In addition to the issues of interoperability and payment systems, below is a round-up of some themes that emerged this year.

Hybrid and Electric Trucks Make a Push

Electrified trucks had a big presence, literally, in the exhibit hall.  Boulder Electric Vehicle, Odyne, and VIA Motors all displayed their latest electric truck technology.  The positive impression from their presence belied the actual state of the electrified truck market, which is still in its earliest stage.  In the United States, hybrid electric trucks are facing stiff competition from natural gas, thanks to the low cost of gas and the high price premium of hybrids.  Odyne and VIA each announced new government funding awards, with VIA’s including emissions and fuel economy testing.  These awards will help demonstrate whether there is sufficient return on investment for plug-in technology in the truck market.

EV Charging Industry Slims Down

There were some noteworthy absences from this event, providing evidence of EV charging industry consolidation.  The two absences that loomed largest were Better Place and ECOtality, both of which have declared bankruptcy.  Many conference participants are worried about the effect the failure of these two companies could have on the industry by creating a perception that these investments – both from the government and the private sector – were wasted.  The Better Place and ECOtality experiences are really quite different.  Better Place failed because of a very risky technology concept.  ECOtality promoted a conventional charging solution but suffered from a poor business case.  That said, what they do have in common is they could have a chilling effect on private investors’ enthusiasm for funding startups in this sector.

PEV Choice Expands Dramatically

The strong automaker presence at the show highlights the proliferation of PEV models available or coming to market in North America through 2014.  Both Nissan and Chevrolet had a major presence, with Nissan touting its MY2013 LEAF and its larger onboard battery charger.  The exhibit hall also featured PEVs from Ford, BMW, Honda, Mitsubishi, and Toyota.  Based on my conversations, the BMW i3 generated the most buzz, followed perhaps by the Chevrolet Spark.  Those are also two of the first PEVs to be compatible with the new SAE combo fast charger plug.  Navigant Research’s report Electric Vehicle Charging Equipment projects that DC charger sales will rise rapidly in North America after 2014, as more SAE-compatible cars are  on the road.

Annual DC EVSE Unit Sales by Country, North America: 2013-2022

(Source: Navigant Research)

DC Charging Comes to the Fore

There was a surprising level of comity around the DC charging market, given that the market is still grappling with the dueling standards issue.  In the DC charging panel, Nissan’s Brendan Jones and BMW’s Cliff Fietzek each touted the importance of fast charging as part of the total charging puzzle for their customers.  They agreed that the first priority is putting DC chargers within the community to serve customers who need an emergency charge or simply want to extend their daily range.  They also agreed that using DC charging to create intercity electric highways is not a high priority right now.  Interestingly, although Nissan has backed the CHAdeMO plug, Jones sounded supportive of all standards and did not seek to argue against the SAE standard.  Fietzek argued that the combo plug is easier for the EV driver and lighter for the vehicle.

There is increased interest in lower power DC chargers and whether they may be more commercially viable than 50 kW chargers.  The major advantage of these chargers is the lower price tag.  They also can help charging installation hosts avoid demand charges, a serious cost issue that could hinder the DC charging market.  Interestingly, the DC charging panel did not necessarily see higher power AC charging as a viable alternative to the DC charging market, at least not in the United States.  Fietzek noted that the OEMs would rather remove weight and cost from the vehicle not add to it by putting on ever higher power chargers.  As a result, the United States may not see a push for ever higher power AC charging as parts of Europe have.


Where are the Commercial Customer Microgrids?

— October 15, 2013

One of the most frequent questions I get when making a presentation on Navigant Research’s microgrid market forecasts is: Why don’t we see more microgrids for commercial or industrial operations?

The answer is quite simple.  If the emergence of a new energy cloud that features customer-owned distributed generation isn’t threatening enough to a traditional utility’s business model, imagine utility executives’ heartburn when contemplating their largest (and most lucrative) customers abandoning ship and investing in new technologies that allow them to seal themselves off from the grid.

Luckily for utilities, standard utility protocols embedded in utility codes limit the ability of many commercial customers to band together and create their own distribution networks or microgrids.  In fact, when a commercial enterprise transfers power over a public right-of-way, it becomes, in essence, a utility.  That means it is then required to comply with a long list of regulatory mandates – which scares it off.

PUN Intended

Some commercial and industrial customers, especially large chemical and oil and gas facilities in states such as Texas, have created systems some might call a microgrid.  (In Texas, they are called “Private Use Networks” or PUNs.)  The vast majority of these are completely fossil fuel-based and may be able to island from the larger grid, but typically through manual intervention.  These PUNs are not included in the Navigant Research global database of microgrids, since they do not share much with the vision of “smart” microgrids that integrate renewables and energy storage, and can seamlessly disconnect and connect from a larger grid.

Although variable solar and wind may still scare off many commercial customers, where a microgrid may make a certain amount of sense (such as a data center), other new generation technologies can seem less threatening.  Enter the fuel cell, a power generation source that can run on multiple fuels, provide 24/7 power and, in the case of the Bloom “Mission Critical” offering, can island from the larger grid when it goes down.

Bloom Energy just announced a 500 kilowatt (kW) system for a data center located in Irvine, California for CenturyLink, and has deployed a handful of other microgrids that can displace uninterruptible power supply (UPS) systems at other commercial sites, including an eBay facility in Utah and a Macy’s in Connecticut.  (As I have noted in previous blogs , Connecticut views deployments of microgrids as a form of economic development for two fuel cell companies that are competitors of Bloom: FuelCell Energy and ClearEdge Power.)

Hard Sell

Consider this fact: Data centers spend approximately $25 million per megawatt of capacity due to the double redundancy of back-up power systems that burn increasingly expensive diesel fuel.  .  This is one reason why Colorado regulators just gave a green light to the Niobrara Energy Park, a microgrid serving data centers that could grow to 300 MW in size and will tap natural gas, fuel cells, wind and solar technologies.  Given the expense of current existing redundant alternating current (AC) UPS systems, microgrid applications – especially direct current (DC) networks – appear to be a no-brainer from an engineering point of view.  Regardless, since energy remains a small portion of the overall operations budget of data centers, the value proposition for conservative operations managers may still be a hard sell in the near term.

Nevertheless, Navigant Research believes that DC data centers will be one of the leading commercial and industrial segments for microgrids, and fuel cells could be a likely bridge generation source for these customers who still worry about what happens to their power supply when the sun doesn’t shine or the wind doesn’t blow.  Unlike the overall microgrid market, which is dominated by North America, in the data sector segment, Europe and Asia Pacific will lead in vendor revenues.

DC Data Center Microgrid Revenue by Region, Conservative Scenario, World Markets: 2013-2025


 (Source: Navigant Research)


The Internet Highway – Literally

— October 14, 2013

In the United Kingdom, the independent regulator and competition authority for communications industries is known as Ofcom.   It is accountable to Parliament and responsible for regulating the TV and radio sectors, fixed-line telecoms, mobile phones, postal services, and, probably most importantly, the airwaves over which wireless devices operate.  It also issues licenses for operators to transmit over the wireless electromagnetic spectrum.

With the relatively recent dramatic increase in demand for wireless communications, Ofcom has determined that it needs to look at other ways to allow providers to operate.  On October 2, 2013, Ofcom announced a new initiative to test the potential of using “white space” technology for wireless communications.  About 20 organizations will take part in trials to see if a variety of technologies can use gaps in the frequency band used to broadcast digital terrestrial TV for other applications without interfering with existing users.

Driver Control

Only one of these tests involves road traffic, but that one captured the attention of the mainstream press.  The headline in the Daily Telegraph rejoiced at the prospect of the A14 becoming the United Kingdom’s  “first Internet-connected road,” while the Guardian concluded that the technology could help lead to self-driving cars.  Apparently, an Ofcom spokesman also hinted at the potential for managing vehicle speeds on the road, which led to the Guardian journalist noting that this could “even pave the way for government systems to automatically control car speeds,” thus reviving memories of the European Union plan to put restrictions on all vehicle speeds – an idea that was discarded a few years ago, but which reared its ugly head again last month.  Judging by the comments on the article, the fear of Big Brother is still alive and well.

Vehicle-to-infrastructure (V2I) communications have been in development for many years, and a wide range of wireless technologies have been evaluated, including Bluetooth, Wi-Fi, and cellular.  Dedicated short range communications is the favored technology for safety systems where immediate connection is required, but setting up such an infrastructure is proving to be prohibitively expensive.  Cellular networks also require costly towers to be erected.  The idea of using low-cost transmitters that can use spare capacity in the spectrum is to be applauded.

Talk to the Car

The planned test will simply demonstrate if this idea is practical, and it won’t involve taking control of anyone’s car.  It will mirror similar efforts in the United States that have been underway for more than a year.  The challenge right now is to test the potential for V2I to handle large quantities of data and to deliver useful information.  If congestion is detected, the same wireless medium can be used to send information back to the vehicles to advise alternative routes or, perhaps, set advisory speed limits, which are currently used on some motorways in the United Kingdom to smooth out the traffic flow.

In the future, when autonomous driving is widespread, such V2I systems will be able to communicate directly with the car rather than the driver.  At that point, driving will already be smoother and faster, thanks to automated systems that I described last month.


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