Navigant Research Blog

Why France Is the Next Big Smart Meter Market

— July 8, 2013

France will be the next focal point for the smart meter industry.  All that needs to happen is for the government to announce final details of a tender plan, and the country will enter a rollout phase that will involve 35 million smart electric meters, covering essentially every home in the country and lasting through 2021.  A decision is expected soon, perhaps as early as mid-summer.

The new meters will be deployed in two phases.  Phase one calls for 7 million smart meters – dubbed Linky – to be installed in homes starting in 2014, with the remaining 28 million smart meters to follow in the second phase.  The estimated value of the long-term deployment is between $6.7 billion and $9.3 billion.

The big question among smart meter vendors is who will win orders from ERDF, the French utility that oversees the power distribution network in France that covers nearly all of the country’s electricity customers.  ERDF is expected to choose multiple meter vendors, and Itron, Landis+Gyr, and Elster appear to be the most likely winners, according to industry insiders.

Mais Oui

I got a preview of this big deployment when I attended the SG Paris 2013 conference in early June.  Hardware vendors are optimistic, as the French deployment represents one of the largest smart metering opportunities anywhere in the world, outside of China.

There is some concern about how France’s famously prickly consumers will react to the new smart meters.  During the conference, I took part in a panel discussion on the subject of business-to-consumer relations between utilities and their customers, and the general view is that French consumers will have little choice but to accept the meters, with government regulators monitoring any pushback.  So, the next major smart meter rollout looks like a fait accompli, at least for now.


Honeywell, Opower Marry Demand Response & Energy Efficiency

— March 1, 2013

Surprisingly, only a handful of utilities have combined demand response and energy efficiency into a unified program.  Some examples of combined programs include: Georgia Power, Sacramento Municipal Utility District (SMUD), Austin Energy, Kansas City Power & Light, and Long Island Power Authority.   

However, efforts to merge DR with energy efficiency are rising as utilities realize the benefits of achieving synergy between them.  Better coordination and tighter integration of DR and energy efficiency would lead to greater cost effectiveness, mainly because of more efficient allocation of resources among program providers.  Consumers would likely welcome a packaged approach to manage their energy use, so they don’t have to deal with two different programs.  An integrated program with a coordinated marketing and education effort could also increase DR market penetration.  In fact, when DR is coupled with behavioral-based energy efficiency programs to raise customers’ awareness of energy use, participation in DR programs tends to improve.  Similarly, by blending DR with efficiency utilities can deepen their energy efficiency initiatives.

That’s why the recent announcement by Honeywell and Opower that they will team up to provide an integrated Energy Management platform is worth noting.   This platform combines Honeywell’s two-way communicating, Wi-Fi-enabled thermostat (built on the VisionPRO platform) with Akuacom’s demand response automation server (DRAS), embedded with a demand response management system (DRMS), and Opower’s interactive, cloud-based software tool to help consumers manage their energy use via the Web or a smartphone.   Jeremy Eaton, vice president and general manager of Honeywell Smart Grid Solutions, explained in a statement:  “We’re bridging the gap by providing mobility, relatable energy information, precise control, and other features customers want so utilities can reach deeper levels of connectivity and participation.”

The platform is designed to enable automated DR (ADR), using the OpenADR 2.0a specification, for almost all residential heating and cooling systems through Honeywell’s Wi-Fi-enabled thermostat.  All thermostats are fully programmed upon installation according to the consumer’s preferred temperature set points and schedules, driving energy conservation and reduced air conditioning or heating use.  In addition, the platform uses measurement techniques to demonstrate ongoing energy savings that utilities can use in meeting their required annual efficiency goals.   Five utilities are piloting the platform, including Pacific Gas & Electric (PG&E), which is currently testing it with about 500 residential consumers.  Its success could help blur the sharp lines between DR and energy efficiency.


In Energy Savings, Utilities Must Meet Consumer Expectations

— January 16, 2013

Pike Research’s just published Smart Grid Consumer Survey indicates that U.S. consumers have fairly realistic – or perhaps optimistic – expectations when it comes to saving money on their electric bills.  Nearly 6 out of 10 (59%) say they expect to save $15 or more on their electric bills based on recommendations from their utility.  That translates to about 15% or greater savings, given that the average U.S. electric bill is $103.67, according to the latest government data.

However, many existing energy-saving programs offer reductions only in single-digit percentages, often as little as 1% to 3%.  The much-touted Opower solution, which dozens of U.S. utilities have adopted, provides an average 1.5% to 3.5% decrease on energy bills through a combination of paper bill reports and online recommendations.  That’s not much to an individual homeowner.  But for a utility, the relatively small percentage – spread across thousands of households – can mean substantial savings in terms of reduced operational costs and help in terms of meeting efficiency targets.

Expected Savings Based on Utility Recommendation, United States: 2012

(Source: Pike Research)

Clearly, consumers have a good sense of what matters to them when it comes to savings.  If the product, service, or program a utility is offering does not deliver meaningful savings, on the order of 15% or more, consumers are unlikely to be interested.  While it’s nice to have a few percentages off monthly bills, they’re looking for double-digit reductions for the programs to be worthwhile.

So, it makes sense for utilities and vendors in home energy management (HEM) to provide something consequential, which is starting to take place.  PG&E in California, for example, is trialing a smart thermostat service, powered by Opower and Honeywell, that’s reportedly cutting heating and cooling costs by 15% to 25%.  Similarly, Reliant Energy in Texas is working with Tendril to deploy in-home displays that connect to smart meters, enabling savings of up to 15%.  More utilities should consider taking the lead to reach wider traction among consumers.  If not, current energy savings solutions will continue to languish.


Why Military Microgrids’ Influence Exceeds Their Market Share

— January 15, 2013

Glaring evidence of the electrical grid’s vulnerability to severe storms on the East Coast has increased interest in microgrids, which can provide continuous power in the event of a utility service blackout.  As documented in Pike Research’s recent report, Military Microgrids, the U.S. military, the largest consumer of energy in the world, is one of the strongest proponents of this technology.

The U.S. Department of Defense (DOD) microgrid that carries the greatest implications for the larger commercial market is located at Twentynine Palms, the large U.S. Marine Corps base, near Joshua Tree National Park in Southern California.  Some 10,000 Marines train here at a site that stretches over 932 square miles, an area larger than the state of Connecticut.  With a capacity of approximately 13 megawatts (MW), and a generation portfolio featuring solar photovoltaics (PV), combined heat and power (CHP), and a new advanced metal halide energy storage system, this stationary base microgrid is clearly the showcase for General Electric’s microgrid solution for DOD.

The most cutting edge microgrid testing program at Twentynine Palms, known as “ExFOB,” (Experimental Forward Operating Bases), is aimed at overseas installations.  While the focus of large companies such as GE to date has been on domestic base military microgrids, the most radical innovations could occur overseas, where DOD operates approximately 600 FOBs, the majority of which are not connected with reliable power grids.

The 3rd Battalion, 5th Marine Regiment was chosen as the unit that would conduct the demonstration and testing of new renewable and efficiency technologies at ExFOB.  The deserts of Southern California feature an environment in the United States that resembles that of Afghanistan, where the battalion would eventually deploy in August of 2011.  The following three technologies were integrated into microgrid tests:

Solar Power Shade: The Military Solar Power Shade Shelter provides up to 1 kW of continuous solar power to low-power draw items.  It also provides shade from the sun, reducing solar heat loads from 80% to 90%.

Ground Renewable Expeditionary Energy System (GREENS): These solar PV-based systems are capable of continuous power, or 1 kW of peak power, designed to be scalable and adaptable for missions that do not require a full base-scale power source or energy storage.

Light-Emitting Diodes (LEDs): Lighting kits provide continuous tent lighting over a 20-day period in temperatures from 85 to 112 degrees Fahrenheit.  This saves a significant amount of energy and works well with renewable energy sources.  The durable lighting system can be set up by two Marines in less than 5 minutes.

A handful of these hybrid solar PV/battery/diesel generator systems were first deployed in July 2011.  They have proven so valuable that two small patrols in Afghanistan have been operating completely on renewable energy.  Another small base has reduced fuel use by 90%.  So far, over 400 portable Solar Portable Alternative Communication Energy Systems (SPACES) have already been deployed in Afghanistan, following testing and validation at ExFOB.

The DOD has played a consistent role in commercializing new technologies that provide tremendous social benefits in the civilian realm.  The microgrid may be another instance where the DOD plays an incubator and market maker role.  The developing world could apply a new model of grid infrastructure, as microgrids deployed initially by DOD are then adopted for non-military village power or industrial mine remote microgrid applications.  The opportunity to help develop these microgrids has attracted a number of powerful technology companies beyond GE, including Lockheed Martin, Honeywell, Boeing, and Eaton.


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