Navigant Research Blog

As Momentum Slows, Europe Seeks New Smart Grid Boost

— November 8, 2013

Europe continues to be home to some of most innovative and ambitious smart grid pilots in the world, but the dangers of ‘pilot-itis’ are looming large.  Evidence of real-world, large-scale distribution automation upgrades or other smart grid innovations are hard to find, and it’s likely we won’t see any breakthroughs until the economic recovery is assured across much of Europe.  Waiting for an economic upturn is not enough if Europe is to meet its targets for 2020 and to provide a boost to its energy and engineering industries.  The European Union, national governments, and regulators need to take a fresh look at progress on smart grid modernization and be more active to ensure the momentum is restored.  Innovative regulatory regimes like the RIIO model in the United Kingdom are vital – but they’re just a start. Innovative projects need to evolve into concrete strategies for grid modernization.

The need to inject greater urgency into Europe’s smart grid programs was a common theme at the European Utility Week conference in Amsterdam.  The annual gathering of utilities and supplies is always a good opportunity to assess the current state of Europe’s smart meter and smart grid market.  Last year,  in the middle of the eurozone crisis, there was a palpable sense of relief that the crisis seemed to be having a limited impact on smart meter and smart grid programs across Europe, even if there was clearly a slowing down.  This year there was a more evident sense of frustration that progress had continued to slow.

The United Kingdom and Beyond

Suppliers with a foothold in the U.K. market were the most positive.  The announcement of the contracts for the GB Smart Metering program has been a significant boost to the industry – and winning suppliers like CGI and Sensus could rightly celebrate their success.  Meter suppliers like Landis+Gyr, with its strong relationship with British Gas, can also take encouragement from the United Kingdom’s progress, even if the end date has now been pushed back to 2020.

The French program, on the other hand, is still some way off, despite continued reassurance that it will go ahead.  The suppliers I spoke to were also taking a more negative view than I did in my recent blog on the German government’s decision not to mandate a roll out of smart meters.

It would be wrong to paint too gloomy a picture. In addition to the GB program, the Nordic countries are also progressing.  The roll out of smart meters is almost complete across the region, with Norway and Denmark now filling out the map.  This of course makes it of less interest to smart meter vendors, but it does mean the region is becoming an important test bed for the real benefits of smart meters and for next steps in terms of grid optimization.  We are starting to see interesting projects emerge for home energy management, advanced demand response, and distribution optimization.

Vienna Enters the Real World

The intersection of smart grid and smart cities also continues to be a focus for new projects.  A good example is the new smart city/smart grid project launched by Siemens and the Austrian utility Wiener Stadtwerke.  Details of the €40 million ($55 million) project were presented during the Smart City session that I chaired at the conference.  Based in a new development outside Vienna, the Aspern Smart City Research Program will be more expansive than most European smart grid and smart city pilots.  The development will eventually support a community of up to 20,000 people by 2030, including living and working environments.  It will involve a host of smart grid, smart city, and smart building technologies alongside an integrated approach to spatial design, energy strategy, and mobility planning.  The project team is particularly intent on testing these technologies against the real living experience of people at work and home.

Aspern could offer a roadmap for how Europe can move from small-scale pilots to real-world integration of smart grid and smart city technologies.  As I wrote in a blog last year, Europe has the opportunity to be a leader in many areas of the smart grid, but all parties need to ensure there is real substance behind the ambitious visions.


In China, Smart Windows Shine Through

— October 25, 2013

Pursuing the long-held goal of turning transparent windows into energy generators, scientists at the Chinese Academy of Science said this week they have developed a window that not only regulates infrared radiation from the sun, but can also act as a collector of solar energy.

The new smart window incorporates vanadium oxide (VO2), which self-adjusts its properties based on temperature; below a certain temperature, it is transparent to infrared light and acts as an insulator; above that point, it becomes reflective.  VO2 can also scatter photons to solar cells along the window frame, which can generate power from the ambient light.  Published in Nature Scientific Reports, the work has developed a concept smart window device for simultaneous generation and saving of energy,” said co-author Yangeng Gao.

It will likely be years before the smart windows begin appearing in new buildings, but the work highlights the degree to which China is become a center for innovation in smart, energy-efficient buildings.  China’s huge building stock continues to multiply: The total area of buildings in China increased from 27.8 billion square meters (m2) in 2000 to 48.6 billion m2 in 2010, according to the Ministry of Housing and Urban-Rural Development (MOHURD).  It is estimated that China will add a further 10 billion m2 of commercial and public buildings by 2020.  Energy use associated with buildings will increase 70% by then, unless unless energy-efficient building technologies and practices become widespread.

Luminous and Low-Energy

Improving the energy efficiency of new buildings and accelerating the retrofit of existing buildings are two daunting challenges currently facing China.  These challenges will be explored in more detail in Navigant Research’s forthcoming report, Energy Efficient Buildings in Asia Pacific.

Already, western firms have begun to realize the enormous opportunity for innovative building design and energy efficiency in China’s buildings sector.  This week the American Institute of Architects awarded the Leatop Plaza, a skyscraper that forms a key part of the the Zhujiang New Town, in Guangzhou, a certificate of merit.  The 66-floor tower is sheathed in glass shingles that control the sun’s radiation, and it has a tubular structure of diagonal support braces that reduce the need for concrete in the core, adding floor space and making the interior more open and efficient.  “The building’s strong presence derives from the simplicity of its form, the clarity of its structural systems and the expressive values of the shingled façade; transparent, translucent, opaque, reflective and luminous.”

Those qualities, not synonymous with China’s buildings sector, will be critical to making China’s buildings smarter and more energy efficient.


Boston Leads the Way on Energy Efficiency

— October 10, 2013

With a few exceptions like San Diego, U.S. cities have been slower than their counterparts in Europe and Asia to adopt the smart city label.  That doesn’t mean they don’t understand the important interplay between economic development, sustainability, and quality of life that define many smart city programs.  A new report from the American Council for an Energy-Efficient Economy (ACEEE), a nonprofit organization that works to advance energy efficiency in the United States, highlights the progress that U.S. cities are making toward a range of energy efficiency measures.  The 2013 City Energy Efficiency Report Card assesses energy efficiency programs across the 34 largest U.S. cities and ranks them across five areas: transportation, local government operations, buildings, energy & water utilities, and general community initiatives.

At the top of the rankings is Boston.  The report draws particular attention to Boston’s community initiatives and above all to its relatively strong showing across all five categories.  The ACEEE report also singles out Portland for its progress on transportation and local government operations, Seattle for its lead in building policies (see also the work Microsoft is doing with the city in this area), San Francisco for its utility programs, and Austin for energy efficiency policy.

Only Connect

Overall the report shows a strong commitment among U.S. cities to improve energy efficiency as part of broader initiatives around the environment, quality of life, and economic renewal.  As cities build on these efforts, one opportunity is to develop more connected thinking across diverse projects, which when brought together can provide a strong basis for a smart city vision.

Boston provides an example of how cities might make progress here.  It has strengthened its commitment to improving its energy performance through its decision to implement an enterprise energy management system (EEMS) for all city operations. Based on Schneider Electric’s StruxureWare solution, the Boston system will help monitor energy use, greenhouse gas emissions, and related conservation projects including those spanning city buildings, traffic systems, and street lighting.

It’s not surprising to find Detroit at the other end of the rankings in 33rd position (only Jacksonville scored lower).  City leaders and citizens in Detroit can make a strong case for having more important concerns at the moment.

Meanwhile, the progress other cities are making suggests that a commitment to energy efficiency and other environment programs is becoming central to the vision of the modern U.S. city.  Hopefully, energy efficiency will be a key part of Detroit’s rebuilding strategy.


With Invensys Deal, Schneider Surfs the Industrial Automation Wave

— August 5, 2013

After a high-profile initial announcement in mid-July (and following a few weeks of speculation about counter-offers and a bidding war that never materialized), Schneider Electric, the French power systems and automation giant, agreed to buy Invensys, the United Kingdom-based engineering company, for £3.4 billion ($5.2 billion).  On August 2, Invensys accepted the offer, making it Schneider Electric’s largest acquisition since its 2006 purchase of American Power Conversion for $6.1 billion.

The agreement will add Invensys’ software and control systems to Schneider Electric’s arsenal, bolstering one of its highest-profit businesses and placing it on more equal footing with other industrial automation giants such as Siemens and Mitsubishi.  Schneider Electric has been expanding its focus from sales of industrial automation products to broader solutions that consist of hardware, software, and recurring services.  Invensys, which provides engineering services to integrate processes for large industrial sites, will complement Schneider Electric’s product offerings. Schneider says the acquisition will also create €140 million in cost reductions and generate an additional €400 million in revenues by 2018.

Smart Automation

This move also marks a notable end to the British tenure of Invensys, one of the largest tech and engineering companies in the United Kingdom, though that may be more a symbolic fact than reality. As Sir Nigel Rudd, chairman of Invensys, pointed out in the Financial Times, “Basically this is an American company – 95% of sales are outside the U.K. … this is not a U.K. company.”

The driving force behind the acquisition, however, is the expectation that demand for smarter industrial automation and energy management systems will grow in the long term, particularly in Asia Pacific. As Navigant Research concluded in our report, Industrial Energy Management Systems, the global market for industrial energy management systems will reach $11.3 billion in 2013 and grow to $22.5 billion by 2020 at a combined annual growth rate (CAGR) of 10.3%.  The market in the Asia Pacific region will grow even faster, at a CAGR of 13.4%.  Adding Invensys’ deep expertise in industrial automation should enable Schneider Electric to take advantage of this growing market.


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