Navigant Research Blog

Energy Efficiency Becoming a Resource Force

— March 9, 2017

Energy efficiency used to be a fun little side show in the energy industry, a feel good story about shutting off lights and wearing more sweaters. This is no longer the case, as the size of utility and government-run energy efficiency programs have grown and program energy savings rival the production of large power plants. Electricity usage growth historically mirrored GDP trends, but these are no longer connected because usage has stagnated in many parts of the world while GDP expands.

A couple of recent industry events and reports highlight the magnitude of energy efficiency’s value. In early February, the Independent System Operator of New England (ISO-NE) held its Forward Capacity Auction for the 2020-2021 power year. 640 MW of new energy efficiency and demand response cleared in the auction, an amount ISO-NE describes in its news release as “the equivalent of a large power plant.” In total, about 3,000 MW of existing and new energy efficiency cleared, approximately 9% of the total capacity market.

Additionally, a new report issued February 16 by the Appliance Standards Awareness Project and the American Council for an Energy-Efficient Economy (ACEEE) claimed that the average American household saved nearly $500 on utility bills in 2015 due to state and federal energy efficiency standards for appliances, lighting, and plumbing products. Average household savings by state ranged from 11% to 27% of total consumer utility bills, with a national average of 16%. Total business utility bill savings from standards reached nearly $23 billion in 2015. Business savings equaled 8% of total spending on electricity and natural gas.

A Navigant Research report, Market Data: Global Energy Efficiency Spending, highlights these trends and others on a global basis. Such funding is expected to grow from $25.6 billion in 2017 to $56.1 billion in 2026. Europe and North America have fostered these types of programs for decades, while other regions and countries, particularly China, are expected to significantly increase energy efficiency investments in the future due to economic, technical, and environmental drivers.

As energy efficiency spending and savings expand, utilities and solutions providers will have to adjust their business models to find new ways to profit and create value for consumers or they will risk being left in the cold.


Tracking Blackouts and Microgrids: Surprises in Both Categories

— May 3, 2016

Power Line Test EquipmentThe East Coast’s power outages have made headlines in recent years. Hurricanes and other bouts of severe weather have spurred on a series of state programs to promote greater resilience of the power grid, steering public dollars to new microgrids that serve communities and critical public purpose assets.

The list of states along the Eastern Seaboard now promoting microgrids keeps growing, with Rhode Island and Washington, D.C. being among the latest to join states such as New York, which just announced that it is now offering $8 million for 8 of the 83 projects originally proposed under its much-ballyhooed New York Prize program. No doubt, New Yorkers feel that they are the center of the universe when it comes to microgrids, but folks living on the West Coast may have a different perspective.

Tracking Blackouts

For example, I was surprised to learn that one of the leading vendors in the microgrid space—Eaton—actually tracks U.S. blackouts nationally, regionally, and by state. Eaton’s Blackout Tracker admits that it might be not complete, but it is the best data available on the duration of blackouts and numbers of customers affected. Similar to Navigant Research’s Microgrid Deployment Tracker, the data is global in scale.

Perhaps the biggest surprise in Eaton’s 2015 summary report is that California had led the nation in terms of power outages since the report was first published in 2008. Between that year and 2014, California experienced 525 power outages; New York was in second place with 399. For 2015, the tracker shows that overall power outages nationwide declined compared to 2014, but the number was still significant at 3,571. The number of customers affected by power outages in the United States also dipped slightly between 2014 and 2015, from 14.2 million to 13.2 million.

As noted in the Eaton report, extreme weather is lengthening the duration of power outages. According to estimates by the Lawrence Berkeley National Laboratory, outages are generally lasting 5%-10% longer over time. A study by the National Renewable Energy Laboratory estimated that power outages cost the U.S. economy as much as $188 billion annually. One could argue these dollars would be better spent investing in microgrids rather than being lost as a drag on the economy.

North America in the Lead

Navigant Research has estimated that the cumulative value of assets deployed within microgrids in North America could exceed $50 billion between 2015 and 2024. The next update of the Microgrid Deployment Tracker to be published in 2Q 2016 shows North America leading the world in terms of total identifiable microgrid capacity (42%) and in operational identifiable microgrid capacity (56%).

The biggest surprise in this biennial tally of global microgrid projects? The leading part of the world for energy storage deployed within microgrids is Antarctica of all places, where 100% of all systems feature energy storage. (Of course, this is an extremely small market in an extremely rugged environment.) The largest growth in terms of project entries among grid-tied microgrid segments is expected to come from utility distribution microgrids, which now represent 15% of all microgrid development activity globally. This is a clear sign that utilities are seeking to reinvent themselves in an era of climate change adaptation, increased reliance upon distributed renewables, and the emergence of new utility business models.


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