Navigant Research Blog

French Smart Meter Rollout Gains Momentum

— October 7, 2014

There is finally clarity on which companies will supply the devices for France’s rollout of smart meters.  France’s electricity distribution company, Electricité Réseau Distribution France (ERDF), has chosen six firms to supply the state-controlled utility with the first 3 million of the meters known as Linky: Landis+Gyr, Itron, Elster, SAGEMCOM, Ziv, and Maec.

By the year 2020, ERDF intends to install 35 million new smart meters at an estimated total cost of $6.5 billion.  ERDF has been piloting smart meters since 2010, when approximately 300,000 meters were installed in the Tours and Lyon regions.  The Linky meters use a power line communications (PLC) technology called G3-PLC.  Among the meter vendors that took part in the pilot project was Slovenia-based Iskraemeco, though it was not selected to provide meters for the initial 3 million meter deployment.

Europe Ascendant

The program is expected to begin in the third quarter of 2015 and conclude at the end of 2016.  ERDF has not said when the next phase of meters will begin, but presumably vendor selection will take place within the next year.   The move by ERDF to choose multiple meter suppliers was not unexpected and is similar to what Spanish utility Iberdrola did 2 years ago when it selected seven different suppliers for the initial rollout following its 2010 pilot project.

The timing of the next big phase of France’s smart meter rollout coincides with the expected start of a wide-scale deployment of smart meters in Great Britain in the fall of 2015.  Utilities in Great Britain are to begin installing the meters in earnest in the fall of 2015, with a total of 53 million smart electric and natural gas meters to be in place by the end of 2020.

As noted in Navigant Research’s latest Smart Meters report, the expected large rollouts in France and Great Britain will make Europe the new focal point for the smart metering industry, as shipments have tapered off in North America since nearly all of the federal stimulus money that fueled deployments has been spent.

 

Sharing Center Shines Light on Security Threats

— October 6, 2014

Like most forms of evil, cyber security threats do best under a cloak of silence.  The fewer people who know about a threat, the more it can spread unhindered.  By contrast, widespread information sharing about threats can help defenders prepare for a threat and minimize impact.  But how to gather all that information in one place and get it to the people who need it?

That’s where the Industrial Control Systems Information Sharing and Analysis Center (ICS-ISAC) comes in.  ISACs already exist for a number of specific industries such as information technology, financial services, and yes, even the electricity sector.  But ICSs cut across many industries, such as energy, transportation, manufacturing, and utilities.  These industries are served by a common set of vendors with a common set of products.  So a vulnerability in one vendor’s product line could spell danger for many industries.  The mission of ICS-ISAC is to spread those messages across industries.

Experts Needed

ICS-ISAC held its first conference in September in Atlanta.  As cyber security conferences go, it was a breath of fresh air.  Although many of the usual suspects (like me) attended, the topics were anything but the usual fare.  Rather than a parade of vendor presentations, this conference was nonstop panel discussion on cyber security topics that utilities actually think about: situational awareness, workforce development, cyber insurance, establishing facility inventory, and organizational identity.

The session on building a cyber security workforce was fascinating.  Schools and industry want to make cyber security a cool career choice to attract more students to the profession.  Could we even entice professionals to make a mid-career change to cyber security?  There is a desperate shortage of qualified cyber security experts – those who can tell a utility in practical terms what security it needs.  One penetration testing firm has expanded its services from remote software testing to putting on hard hats and walking around substation yards to understand the threats facing its clients.  That requires substantially more staff than running penetration tests from a remote office.

Into the Light

There were speakers from Qatar and the Czech Republic at the September conference, describing their national computer emergency response teams (CERTs).  Both countries had been subjected to full-scale attacks upon their national infrastructure: Qatar in 2012 and the Czech Republic in 2013.  Both have passed laws to identify their critical national infrastructure, and each now has a single response center in place to defend their infrastructures.  While a large nation like the United States might require more than a single response center, the concept of having the entire national infrastructure covered by incident response is a desirable state.

The key role of ISCs centers around communication.  For any organization to share the attacks it has endured, especially successful attacks, is an act of immense will.  But without that sharing, the infrastructure as a whole remains in the dark.  Members of ICS-ISAC are committed to break out of this protectionist mindset and share the information that will help the entire infrastructure defend itself.

The right security solutions exist and must be deployed.  On top of that, let us all communicate openly so that the serious threats are exposed to the light of day before they can wreak havoc.

 

EPA’s Clean Power Rule a Setback for Emerging Algae Industry

— October 2, 2014

From ethanol refineries to steel mills, major industrial processors are partnering with emerging advanced biofuels producers to monetize their emissions in a process loosely referred to as carbon capture and utilization (CCU).  With carbon regulations once again gaining traction, this could prove to be the paradigm of industrial synergy.  Industrial players generate revenue from a liability, otherwise regarded as waste; biofuels producers gain access to carbon-rich flue gases, which their proprietary industrial microbes or algae consume, resulting in the production of bio-based fuels and chemicals.

Companies targeting waste streams as a strategic feedstock for advanced chemical and biofuels production avoid one of the primary hurdles to commercial scale for conversion processes: the lack of access to inexpensive feedstock.  In the case of flue gas, advanced biofuels producers avoid a costly frontend feedstock conversion that can derail project feasibility.

Growing on CO2

There are many advanced biofuels ventures targeting carbon-rich gaseous feedstock sources through colocation partnerships with industrial facilities.  In the United States, BioProcess Algae, which designs, builds, and operates commercial-scale bioreactors that convert light and CO2 into high-value microbial feedstock, has deployed a demonstration plant at a first-generation ethanol plant in Iowa.

Algae are the ideal partner for industrial carbon emitters, digesting CO2 as they grow.  The more CO2 the algae consume, the faster they grow.

During this process, the algae return clean oxygen to the environment while also producing high-value oils and proteins.  These oils and proteins can be used in the production of transportation fuels, animal feed, chemicals, and food products.  As an added bonus, once the lipids and other co-products have been extracted from the algae, the residues can be used as a fuel for power generation, either co-fired in combustion facilities or converted to biogas in an anaerobic digester.

Left Behind

Among many advanced biofuels production pathways, algae’s unique advantage is high per-acre productivity.  Microalgae can potentially produce 2 to 20 times more oil per acre than other plants, making algae platforms a compelling solution to offsetting petroleum imports without converting large swaths of farmland to grow dedicated energy crops.

Unfortunately for the emerging U.S. algae industry and other companies targeting flue gas in the United States, though, the Environmental Protection Agency (EPA) excluded CCU as an approved strategy for emissions mitigation in its proposed Clean Power Rule.

Most algae companies today have long-term aspirations to partner with utilities for access to CO2 produced at power plants.  With nearly 5,000 potential industrial sources of CO2 across the United States – most of these power generation facilities – the addressable market for these emerging technologies is significant.  At its demonstration facility in Hawaii, Cellana currently relies on flue gas from diesel generators to feed its algae.  A CO2 source from power plants could potentially make the operation more economically feasible in the future, according to the company.

While algae companies argue that their technologies are ready for prime time after years of researching and building small-scale test projects, challenges remain.  Industrial algae production is effectively an agricultural play that requires advances in cultivation and harvesting to lower production costs to a level that can compete with commodity products.

 

Distributed Biogas Gains Footing in Revised Standard

— September 8, 2014

In July, the U.S. Environmental Protection Agency (EPA) finalized an extension of the beleaguered Renewable Fuel Standard (RFS2) to carve out a pathway for renewable biogas to qualify as a cellulosic fuel.  Expanding the scope of the RFS2 beyond liquid transportation markets could have promising implications for the slow-to-emerge cellulosic biofuels market.

Under the RFS2, the EPA requires domestic refiners and importers of transportation fuel to blend increasing volumes of renewable fuels into conventional gasoline and diesel.  The EPA sets the renewable volume obligations for various renewable fuels every year, and regulated entities must demonstrate their compliance by acquiring and retiring renewable identification numbers (RINs), which are publicly traded credits that fluctuate in value.

RINs provide an important financial incentive for the nascent advanced biofuels industry, helping these fuels compete with conventional fuels in the marketplace.  Cellulosic biofuels, a fuel pathway slated to deliver the greatest volume under the rule, have fallen short of expectations every year due to less capacity being built than otherwise predicted.

Expanding Universe

Under the expanded rules, biogas-derived compressed natural gas (CNG), liquefied natural gas (LNG), and electricity used to power electric vehicles would qualify for cellulosic RINs.  The final rule is likely to lead to a substantial increase in the production of cellulosic biofuels and create new markets for materials previously regarded as waste.  Opportunities for upgrading biogas to so-called bioCNG or bioLNG – also referred to as biomethane or renewable biogas and already used in fleet applications like garbage trucks and municipal buses – currently show high promise for biogas-to-transportation fuel.

As outlined in the U.S. government’s Biogas Opportunities Roadmap report released last month, biogas has broad applications across a range of diverse industries.  Livestock farms, industrial wastewater treatment facilities, industrial food processing facilities, commercial buildings and institutions, and landfills all produce biogas – either directly or in the form of waste feedstocks that can be converted into biogas.  According to Navigant Research’s Renewable Biogas report, the biogas capture market across the United States is expected to reach more than $4 billion in annual revenue by 2020.

All in all, biogas remains a vastly underutilized resource across the United States when compared to countries like Germany that have used a range of incentives to drive investment, particularly in agricultural applications.

The Curse of Versatility

The challenge for biogas in the United States is that to some it’s a fuel source, to others a waste mitigation strategy, and to others a distributed generation resource.  That makes it difficult to tailor policies that address all potential opportunities.  Adding to the confusion, distributed biogas is often treated by utilities as a strategic resource alongside solar PV and small wind, when in fact it can be utilized in the form of a traditional generator set, a fuel cell, or sometimes concurrently, in combined heat and power configurations.

With these issues in mind, the EPA’s final rule relating to biogas introduced a relatively novel and subtle feature for renewable energy markets: incentive flexibility.  Under the rule, the EPA not only expands the scope of RFS2, but allows the same amount of renewable electricity derived from biogas to give rise to RINs for transportation applications and renewable energy credits for electricity generation, while also qualifying for incentives under state renewable portfolio standards.

This potential for multiple revenue streams unlocks the versatility of biogas as a resource and is likely to attract new investment in the U.S. biogas market.

 

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