Navigant Research Blog

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.


Why It’s Still Too Early to Bet on Residential Energy Storage in the United States

— April 1, 2014

SolarCity announced recently that it is discontinuing the residential energy storage product that it rolled out in California 2 years ago.  The company put the blame on the shoulders of utilities, which SolarCity said were stalling permitting of its new units.  But, in fact, SolarCity has only itself to blame for the failure of its product.

That’s because the company never stopped to ask why a residential customer would want a battery storage system.  In some cases, such as with off-grid homeowners and homeowners (such as indoor horticulture enthusiasts) with very expensive equipment that needs reserve power, batteries are a requirement.  But the typical homeowner gets no financial advantage from shifting power from one point in the day to another.  Rates that would allow such an advantage, known as time-of-use rates, are rarely offered by utilities to residential ratepayers.  Because residential photovoltaic (PV) power is usually net-metered, meaning that homeowners can receive credit for putting energy back onto the grid, there’s no reason why a solar homeowner would receive a financial advantage from storing energy.

Diesel over Batteries

Meanwhile, SolarCity was trying to sell its residential storage units at an outrageous markup.  I have SolarCity panels on my house in Boulder, Colorado, and when I inquired about the cost of the battery backup system, I was quoted $25,000 for a 20 kilowatt-hour (kWh) system.  That’s despite the fact that Tesla Motors (which makes the battery packs for SolarCity) has told the world that it is able to build its battery packs for less than $300 per kWh.  It’s hard to understand why I should give SolarCity more than 3 times the money it cost the company to buy the battery pack for a system that doesn’t earn me one penny.  The only benefit that such a system could provide me is reserve power when the grid shuts down.  However, a far more reasonable solution to that problem would be an emergency diesel generator.  Yes, it’s dirty, but the carbon and pollutants produced by running a diesel genset during the few hours of a year that I would need it would be far less than that produced from the manufacture of 20 kWh of batteries.

Mind the Wiring

So, is there any merit to SolarCity’s claim that the California utilities are responsible for freezing out the battery system product?  It’s not very likely.  That’s because a battery pack that is situated behind the meter does not require any utility permitting, just as a diesel generator doesn’t.  What does require approval is the capability of an individual building to island itself from the grid (which means that it continues to operate as a nanogrid by itself and shuts itself off entirely from the distribution grid when it does so).  If that’s the case, then the electric utility has every right to deny permitting if it doesn’t feel comfortable with the system.  Improperly set up, islanding can cause a life-threatening situation for an electricity linesman.  The practice of islanding is governed by the IEEE 1547 protocol, which is an extremely complex, difficult to engineer, and expensive set of rules governing an islanded system.

There are ways to do residential energy storage well.  In our upcoming report on the topic, Navigant Research expects that almost 20,000 residential energy storage systems will be installed in Germany, Japan, and South Korea combined in 2014.  All three countries have made concerted efforts to standardize the specifications and permitting process for PV-integrated residential solar systems.  They have also introduced generous subsidies for such systems.  It’s an expensive and politically difficult process, but it’s getting results in those countries.


As Solar Prices Fall, Wind Still Finds a Role in Microgrids

— March 25, 2014

With the steep declines in solar photovoltaic (PV) system prices over the past 5 years, many developers of remote microgrids – systems not interconnected with a traditional utility grid – have begun to shy away from their previous reliance on wind power to lower the systems’ consumption of polluting and increasingly expensive diesel fuel.

As one long-time observer summed up the situation: “The history of the small wind turbine industry is one littered with failures.”  The story of Southwest Windpower is particularly galling.  Backed by investments from General Electric, the company’s tiny turbines were pumped out into the market with little regard for long-term performance.  As a result, many of these extremely lightweight machines, producing less than 2 kW of power each, have stopped working only after a few years.  In some remote island installations, the machines have literally been blown away by hurricanes and other extreme weather events. While some other small wind turbines, such as those of Bergey Wind Power, have had lasting power, many of these typically small, small wind companies have struggled over the past few decades.

Wind in Lonely Turbines

A survey conducted by the Commonwealth Scientific and Industrial Research Organization (CSIRO) of Australia in 2009 claimed that 71% of microgrids included some form of wind capacity.  Given that Australia is one of the global leaders in off-grid wind/diesel systems, it is likely these results were skewed by data weighted too heavily toward off-grid applications.  A more recent analysis performed by Navigant Research found that of those microgrids that included wind power, 67% were installed in remote microgrids.  Interestingly enough, North America is the global leader, due to two states: Alaska and Hawaii.

Remote Microgrid Capacity with Wind Capacity, World Markets: 2Q 2014

(Source: Navigant Research)

Wind has fallen out of favor for at least three reasons:

  • Unlike solar PV, small wind turbines historically have required greater operations and maintenance (O&M) investments.  In many remote locations, local expertise is hard to find.
  • Many remote locations do not benefit from an adequate wind resource assessment.  If you’re constructing a 100 MW wind farm, you can justify the expense of a detailed wind resource assessment.  This is not the case for just one or two wind turbines in a remote microgrid.
  • The variability of wind is immense, requiring a more nimble and sophisticated control system for a microgrid.

Both, Not Either

Despite these negatives, many remote microgrid developers still see value in wind.  In many cases, wind power is still half the cost of solar PV.  In fact, the ideal scenario is not just solar or just wind as renewable options, but both.  The sun shines during the day; the wind often blows at night.  Incorporating both of these renewable resources enables the use of a smaller energy storage device – a technology that is currently often viewed as the weak link among hardware choices for a microgrid due to high cost.

Furthermore, there are many wind turbines that now offer direct drives, eliminating the gearbox that is the most common point of failure, which contributes to high O&M costs.  If such wind turbines can be installed without a crane, as is the case with Eocycle’s, some of the installation headaches also go away.


Utilities Boost Efficiency with Smart CVR

— March 18, 2014

Dynamically optimizing voltage levels via sophisticated smart grid technologies, smart grid conservation voltage reduction (CVR) continuously reduces energy consumption and demand during peak periods, when electricity prices are inflated and demand may exceed the available energy.  At American Electric Power (AEP) in Ohio, 17 circuits have already been equipped and tested with smart CVR capability, and the initial results were so promising that AEP Ohio is now doubling down on this technology.  Utilidata will deploy its advanced CVR solution on 40 more circuits at AEP Ohio.  Ram Sastry, director of distribution services support at AEP, is confident that smart CVR will give the company’s energy efficiency program a turbo boost.  Also in Ohio, Duke Energy aims to have a systemwide smart CVR deployment (a project called Integrated Volt/VAR Control, or IVVC) in full production by 2015 to reach the state’s energy efficiency and peak reduction targets over the next 10 years.  Duke Energy used a small portion of the $200 million the company received in Department of Energy (DOE) smart grid investment grants to help finance the CVR investments in Ohio, one of many states that now incorporate CVR as an energy efficiency resource.

Untapped Potential

The DOE investment grants, combined with companies’ matching investments, are expected to result in the installation and/or automation of about 18,500 capacitors nationwide between 2009 and 2014, according to a recent presentation from the DOE.  (Automated capacitors play an integral role in most smart CVR projects.)  This is a large sample set of automated capacitors, serving as a nationwide demonstration of smart CVR, spurring osmosis between utilities and capturing interest from the National Association of Regulatory Utility Commissioners.  Not all 18,500 automated capacitors are to be used for smart CVR, but even if they all were, that would represent only enough capacitors to populate a small fraction of all substations and feeder circuits in the United States.  In other words, there’s a large, untapped market for smart CVR.

Government smart grid funding is nearing its end, but manufacturers and vendors of smart grid equipment and CVR software solutions will soon see a nice boost from increased adoption of smart CVR outside of DOE-funded projects.  Navigant Research’s Conservation Voltage Reduction report analyzes the market for smart CVR in North America.  While the market is still forming, revenue from smart grid equipment and software products dedicated to CVR solutions is expected to reach $30 million to $40 million this year.  With an intention to meet efficiency targets, most major utilities are already piloting various CVR control schemes.  As more large-scale deployments are expected to ramp up over the next few years, smart CVR component sales are expected grow into a $100 million market annually by 2017.  Total utility spending associated with smart CVR, including planning, installation and systems integration costs, could easily be 2 to 3 times higher.


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