Navigant Research Blog

The Link between Home Ownership and Energy Efficiency

— April 16, 2014

The world’s population, and how that population is housed, is undergoing a rapid transformation. Urbanization and its impact on sustainability have been well-studied in recent years. Indeed, 70% of the world’s population may live in cities by the second half of the century, but will they rent or own, and how will that affect energy efficiency?

Home ownership rates, like urbanization, are undergoing broad changes. Unlike urbanization, the direction and magnitude of the changes in home ownership vary regionally. Nonetheless, the rate of home ownership is on a wild ride. In the United States, home ownership is at an 18-year low. Meanwhile, Germany, famed for its renting culture, is facing a property rush.

The ownership of a home should influence investment decisions in energy efficiency. Renters have little incentive to invest in lowering utility bills if the paypack period is longer than the expected occupancy. Why would a renter install an LED light bulb that lasts for 20 years if he or she plans to move out in 2 years?  The value proposition of energy efficient investments is similarly poor for landlords.  For many improvements, such as better insulation and more efficient HVAC, the benefits are largely felt by tenants, but the cost is incurred by landlords.  In fact, data from the Energy Information Administration indicates that renters consume on average 33% more energy per square foot than homeowners do.  Home ownership has a profound impact on energy efficiency.

Household Energy Consumption, United States: 2009

Household Energy Consumption, United States: 2009

(Source: U.S. Department of Energy)

However, what about Germany? It is a country with a historically low ownership rate and a strong culture of renting, but it has been a beacon of innovation for home energy efficiency.  The first Passivhaus and the Passivhaus Institut are located in Germany, as is a house that generates enough electricity to meet its own needs and power a car.  Of course, ownership is only one factor.  Government regulation has played a large role in establishing Germany’s market for energy efficient homes.  In contrast, U.S. innovation in home energy efficiency is often driven by what homeowners want rather than what regulations dictate.  The Nest Learning Thermostat, for instance, was developed by Tony Fadell because he realized there was value in expanding the limited features of conventional thermostats.  Though, as fewer Americans and more Germans buy houses, it will be interesting to see how dynamics in innovation shift. After all, property ownership does change your world view.

 

Innovation Is Booming in the Water Industry

— April 9, 2014

As part of the events to mark World Water Day, the United Nations (UN) has launched a new report highlighting the challenges of ensuring an adequate global water supply over the coming decade.  In particular, the World Water Development Report focuses on the growing interdependency of water and energy.  The report looks at the water industry’s energy requirements for production, distribution, and treatment, as well as at the growing demand for water resources from the energy industry.

We have written about the impact of the growing global demand for water before, but the World Water Development Report yet again highlights the challenges ahead.  According to the report, water demand will increase by 55% by 2050, with the biggest impact coming from the growing demand from manufacturing (400%), thermal electricity generation (140%), and domestic use (130%).  More than 40% of the global population is projected to be living in areas of severe water stress through 2050.

Countries, cities, and communities need to improve their ability to assess and plan for future water needs.  However, developing new water supplies, storage facilities, or treatment plants will remain a hugely expensive endeavor, and so the industry must look to technologies that can mitigate the need for capital investment by improving the efficiency of existing systems and maximizing the benefits of new investments.  For this reason, we are seeing a host of innovative technologies and solutions targeted at the water industry.  Entrepreneurs and developers from the IT, telecom, and smart grid sectors are now looking to water as the next industry where they can make a major impact on the way the business operates.  This opportunity is attracting a wide range of technology and service suppliers, including established water metering vendors, water network engineering companies, water service companies, infrastructure providers, IT software and service companies, and a variety of startups and innovators.

The recent World Water-Tech Investment Summit in London gave me a good opportunity to survey a range of companies.  Among a host of other innovators at the show were companies we looked at in our Smart Water Networks report, including TaKaDu, which has been pioneering the use of cloud-based analytics for leak detection.  Also present was i2O, which is providing water utilities with an intelligent pressure management solution that also uses cloud-based advanced analytics, but integrates them directly into the pressure management system.  Other companies new to me included Acoustic Sensing, a U.K. startup that has developed a new acoustic sensing solution to allow the rapid identification of structural defects and blockages in sewerage systems; Syrinix, another U.K. company that provides intelligent pipe monitoring systems for burst detection and pressure monitoring, among other applications; IOSight, an Israeli-based company providing advanced business intelligence and data management for the water industry; and Optiqua, which provides sensor networks for real-time water quality monitoring.

Keeping Afloat

While there is no shortage of innovation in the industry, it is still a challenge to find ways of investing in new technologies in a heavily regulated industry.  With no stimulus funding or mandated smart meter rollouts to boost the market, the industry needs to find other ways to finance innovation.  One option is the use of a software-as-a-service (SaaS) model to defer capital expenditures and reduce resource needs.  For example, both TaKaDu and i20 provide their software as a cloud-based service.  Innovative approaches to regulatory and investment programs will also be important.  In the United Kingdom, OFWAT is currently working with the country’s water utilities on the next regulatory pricing period, to run from 2015 to 2020.  The aim is to increase the ability of utilities to invest in water metering and other networks’ management technologies.

The smart water market is attracting a wide range of new players and presenting established players with the opportunity to expand their business into new areas.  Both sets of players face challenges in an industry that is hungry for change but also conservative in its operations and restricted in its financial options.  As stated in our Smart Water Networks report, while there are strong drivers for growth, the challenges of transforming a conservative industry faced with a physically and technically challenging deployment environment mean that the growth in this market will always be steady rather than explosive.  However, the direction of travel is clear.

 

Cleantech in the Era of Big Data

— April 1, 2014

The concept of big data – the notion that we are overwhelmed by a flood of digital information like nothing we’ve seen before – holds both promise and peril.  The allure is centered on the benefits that big data will bring, in areas from medicine to traffic to agriculture.  These benefits will translate into profits for companies that manage, transmit, and store all that data.

Then there’s the other side: that big data will lead to privacy intrusions, lack of freedom, and, from a very practical standpoint, yet another headache for executives and IT managers.  We have covered this topic in the past (see a great description of how automated demand response firms are focusing on data analytics or click here to read more about framing the problem for building operators) and our recent webinar, “Innovations in Smart Building Data Analytics,” also presented some excellent examples of how industry leaders are using data analytics for their customers.

The Three Vs

Many definitions of big data are available, but the most compelling framework was created by Doug Laney in a 2001 research report.  This description focuses on three prime elements: volume, velocity, and variety.  Volume refers to the bigness of the data – there are more sensors and signals than ever before, pumping out data on everything from location to temperature to transactions.  Velocity addresses the speed that the data is being created, from subsecond phasor measurement unit (PMU) data describing the power quality on the grid to the rate at which Facebook is gathering our likes.  (It should be noted that one overlooked aspect of velocity is not just speed, but also direction.  Data is streaming not just from our devices, but also to servers, corporate analytics processors, and back to customers, all over the world.)  Lastly, there is variety, which is the real game-changer.  Data has never been unitary, and the diversity of data forms, standards, protocols, and utilities is growing by the day.  While often presented as separate concepts, these three elements are intrinsically linked.  I’d like to present the three Vs as a nested hierarchy (see below).

The 3 Elements of Big Data

 

(Source: Navigant Research)

Data volume gets most of the attention (hence the name big data, not fast data or diverse data) and velocity gets the communication and IT folks excited.  But it’s the variety of the data, and the variety of the velocity and the variety of the volume, that makes the big data interesting.  It’s not just that data is big or fast; it’s the diversity of speeds and directions that data travels to its many users.

Big Data, Big Challenges

For example, utilities used to report monthly electricity usage; now customers can see how much power they use every 15 minutes – that’s three orders of magnitude difference!  In addition, utility data is now being served to customers, local grid operators, energy efficiency firms, and facility managers.  Lastly, it is the complexity of the variety (the variety of the variety) that creates challenges, as well.  For example, in the developing world, buildings are at many different levels of IT sophistication and electrical grids have to integrate old equipment and management processes along with new state-of-the-art high-tech factories that need highly reliable power.

So how is big data actually affecting cleantech markets and technologies?  Going forward, in our research and our blogs, we will touch on how big data is changing cities and how it’s being integrated into regular business practices.  We will explore how traditional firms are coming up to speed, while startups are using it to leapfrog their competition.  We’ll  also examine how big data is providing new opportunities and challenges to the cleantech markets and how those markets are responding.

 

Smart Building Apps Seek Relevance

— March 20, 2014

In a world where software applications are replacing bank tellersconcierges, and even opticians, what’s the impact on the role of building engineers?  As described in Navigant Research’s Commercial Building Automation Systems report, the convergence of information technology and building control networks is yielding vast amounts of data.  Moreover, the wider adoption of open standards and the decentralization of building networks make this data widely available.  Against this backdrop, the appification of building management seems inevitable.

Still, the universe of building management applications appears to be in its infancy.  A quick search of the iTunes App Store revealed several available choices.  Apps are available from developers as large as Siemens and as small as Lorenzo Manera (I don’t know who he is, either).  The low barrier to entry in app development means that new entrants are just as capable of bringing an app to market as veteran industry players.

Most of these apps appear to turn a mobile device into another building-level control panel, providing functionalities such as monitoring and controlling heating, ventilation, and air conditioning (HVAC) and lighting or providing some level of energy management.  With the proliferation of open protocols, these types of apps have become easy to develop.  However, they all seem to be equally unsuccessful; none of the apps identified have received enough overall ratings for an average rating to be displayed.

Worthy or Worthless?

Smartphones and tablets provide a slew of sensors and far greater mobility than laptops.  Successful apps take advantage of these features, whether it’s the ability to play games anywhere or to use the embedded camera to snap a quick Instagram selfie.  Residential building automation provides several compelling ways to leverage the properties of mobile devices: occupancy can be set using geolocation, outside air temperatures can be provided through the Internet, and devices can remotely monitor and control lighting, HVAC, and security.  Moreover, an app can obviate the need for a system console.

Apps for commercial buildings, however, are a different story.  Since they’re built on top of an existing building management system (BMS), they don’t replace any equipment.  They don’t provide any more functionality than the underlying system.  The sensors on the device do not provide any useful input.  Some building management apps may aid in commissioning, but the biggest feature appears to be providing another way to monitor the BMS.  The Facility Prime app from Siemens, for example, is described on iTunes as “an ideal interface for non-facilities employees that may need access to live system data.”  Until building management apps can provide more functionality for commercial buildings, they will remain a cool toy for home automation.

 

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