Navigant Research Blog

Emerging Broadband Technology Offers New Connectivity for Utilities

— July 15, 2014

In the battle for smart grid communications standards, yet another contender is now on the horizon, promising ultra fast data speeds over existing copper wires.  And while telephone companies (telcos) are the primary target market for the G.Fast standard, chipset developer Sckipio believes that the standard will be attractive to utilities for smart grid applications, in addition to broadband connectivity and over-the-top applications like video.

Designed to help telcos cost-effectively compete with cable broadband and very expensive fiber-to-the-home (FTTH) connectivity, G.Fast employs vectoring technology to eliminate interference (cross-talk) between multiple wire pairs in a single copper cable.  The International Telecommunication Union (ITU) instituted the standard in 2010, and recent field trials have shown promising results.

Belgacom has trialed the standard with 3,000 customers and reported a nearly four-fold increase in access speeds over copper.  This makes the technology a reasonable alternative to FTTH, particularly in urban areas with extensive copper infrastructure already in place.  In multi-dwelling units with extensive in-wall phone lines, the use of existing copper lines represents enormous cost-saving, as well as a speed-to-market advantage over running new fiber.

Coming Soon

G.fast is designed for use in the last-mile – in practice, over distances of less than 250 meters.  This allows fiber to reach as far as the basement of an apartment block, for example, eliminating the need to rewire the whole building and still allowing a notable acceleration in access speeds.  G.fast requires a short loop (less than 250 meters) and operates at higher frequencies than digital subscriber line transmissions, which also run over existing copper wires, increasing the risk of cross-talk unless the new vectoring technology is employed.

Sckipio says it has seen interest in Europe, North America, and Asia Pacific, and expects to see telco deployment begin in earnest in 2015.

Tel Aviv, Israel-based Sckipio was founded in 2012, and in December 2013 announced a $10 million venture capital round with Gemini Israel Ventures, Genesis Partners, Amiti Capital, and Aviv Ventures.  The company  is building ultra high-speed G.fast broadband modem semiconductors.

The G.fast standard is still working its way through ITU approval, and a few technical hurdles remain:  Powering the equipment and the unbundling of sub-loops is something that different countries are treating differently.

G.fast represents a great leap forward for telcos struggling with legacy copper networks.  As a viable alternative for utilities seeking connectivity for smart grid applications, it is likely still a couple of years out.  Given its very high data transfer speeds, however, it may well present a new alternative for utilities needing visibility and control at the grid edge — while also providing telephone companies with an opportunity to ramp up their business in the utility/smart grid vertical.

 

To Win, Utilities Must Play Offense as well as Defense

— July 10, 2014

Since I’m originally from the Netherlands and spent several years living in Brazil, the semifinal results of this week’s World Cup soccer (or football, as we Europeans call it) matches have been disappointing, to say the least.  One thing that’s clear from the tournament ‑ one of the most exciting World Cups in my memory, by the way ‑ is that to succeed at this level, teams must play well on both ends of the field: offense and defense.  The Netherlands squad, the Orange, played superb defense on Argentinean superstar Lionel Messi, but failed to muster a goal in 120 minutes of regular and extra time and lost on penalty kicks.  As for Brazil, it played neither offense nor defense.

The same is true for utilities in today’s rapidly transforming power sector.  Playing defense – by sticking with established ways of operating and traditional forms of customer service – is no longer enough to succeed.  Utilities must also play offense; they must proactively develop new capabilities and innovative business models to thrive in a world of proliferating distributed energy resources (DER), greater customer choice, and rising competition from new players.

A Shifting Landscape

Widespread coal plant retirements, stiff renewable portfolio standards in many U.S. states, and the spread of renewable generation are all irrevocably changing the mix of generation assets while increasing the need for load balancing and frequency regulation on the grid.  Navigant forecasts that cumulative solar capacity in the United States will reach nearly 70,000 MW – 60% of it distributed – by the end of 2020.

At the same time, the U.S. Environmental Protection Agency’s (EPA’s) proposed limits on CO2 emissions from existing power plants will drive further changes in the generation landscape.  These limits will bring new natural gas capacity online, put upward pressure on wholesale electricity prices, and make demand response and energy efficiency programs key parts of the answer.

(Source: Navigant Consulting)

Today’s centralized, one-way power system is quickly evolving into an energy cloud in which DER support multiple inputs and users, energy and information flows two ways across the system, and market structures and transactions grow more complex.  The energy cloud is more flexible, dynamic, and resilient than the traditional power grid, but it also brings new challenges to a power sector that until recently has changed little in its fundamental structure for almost a century.

Lead or Lose

Facing declining revenue as customers consume less and produce more of their own power, utilities are faced with large investments to build new transmission capacity, upgrade distribution systems, and invest in new DER businesses.  Given these challenges, utilities must be adept at playing offense and defense.  An updated defensive strategy will entail:

  • Engaging with customers and regulators to understand customer choices vis-à-vis price and reliability
  • Improving customer service and grid reliability at the lowest prices possible
  • Finding equitable ways to charge net metering customers for transmission and distribution services
  • Developing utility-owned renewable assets to appeal to environmentally conscious customers

Playing offense is even more important.  Utilities must:

  • Create new revenue streams through the development of new business models, products, and services
  • Transform their organizations and culture in order to fully integrate sales, customer service, and operations
  • Upgrade the grid and operations to facilitate the integration of DER

These objectives can only be accomplished by implementing new business models that include developing, owning, and operating DER such as rooftop solar, customer-sited storage, and home energy management systems; providing third-party financing for DER; and offering new products and services focused on energy efficiency and demand response.

There is no going back to the old ways of doing business.  Utilities must lead – by playing both offense and defense – or they run the risk of being out of the competition.

 

Blackout-Plagued India Moves toward a Smarter Grid

— July 10, 2014

Utilities in India continue to take concrete steps toward upgrading to a smarter power grid that in the last few years has suffered massive blackouts.  Though the steps are not yet widespread, they show progress toward a more modern and stable grid.

Within a 2-week span, two utilities announced contract awards for new meters.  The largest announcement came when Bangalore Electricity Supply Company ordered 1.7 million digital smart meters from Landis+Gyr.  The meters are to be delivered over the next 12 months to Bangalore Electric, which provides power to the city of Bangalore and eight districts in the state of Karnataka, population 64 million.  The second recent announcement came when West Bengal State Electricity Distribution Company Limited ordered more than 1 million digital smart meters from Landis+Gyr.  Headquartered in Kolkata, the utility manages electricity distribution for 96% of the state of West Bengal, population 90.3 million.  West Bengal has been at the forefront of smart metering in India, having begun upgrading devices in 2009.  This deal follows an order for 1.5 million meters from Landis+Gyr, which were deployed last year.

Progress, Perhaps

In a separate deal, Essel Utilities will deploy an unusual retrofit meter solution.  The utility will install a module, made by local metering company Aquameas, that contains a radio unit from Cyan Holdings called the CyLec 865 MHz RF device.  A total of 5,000 of these units will be attached to existing meters.  The retrofit installations are to take place in the city of Muzaffarpur, in the state of Bihar, starting late in the fourth quarter of 2014.

Earlier moves made by Indian utilities and smart grid vendors indicate that the market is progressing.  Tata Power Delhi was the first utility in India to launch an automated demand response project with smart meters.  The project in the nation’s capital is for commercial and industrial customers that can take advantage of the latest technology.  Approximately 250 customers are involved, with the potential of helping shed loads totaling 20 MW.  Project partners include IBM, Honeywell, and Landis+Gyr.  Washington state-based meter provider Itron has made India a priority for its smart metering efforts, opening a lab last year to highlight its solutions for the Indian market, where it has also been active in supplying advanced water meters.

India still has a long way to go to reach its goals of a more modern electric grid that could eventually involve some 130 million meters.  But utilities are moving ahead with projects and pilots that could bring the country’s power grid closer to the 21st century.

 

What Constitutes “Grid-Wide” Storage?

— June 25, 2014

A recent article in The New York Times made the claim that energy storage technology is “decades away from grid-wide use.”  Reporter Jim Malewitz did not define “grid-wide,” so it is difficult to understand how this term is defined for the purposes of the story.  We can examine that prediction, though, based on various measures.

One measure could be grid generation capacity of the capacity of installed energy storage.  Given that on its own the U.S. grid has about 1,058 GW of total generation capacity, energy storage rightfully appears to be a drop in the bucket – to be precise, 0.07% of grid generation capacity excluding pumped storage and 2.2% including pumped storage.  It’s worth noting, however, that the solar PV industry is considered to be successful and growing, and currently represents about 1.1% of total generation capacity in the United States.  Moreover, the pipeline for energy storage is expanding rapidly.  Approximately 13,000 MW of storage capacity is in the pipeline – 3,000 MW of which is advanced batteries, compressed air, flywheels, and power-to-gas.

Energy Storage Capacity, Installed and Announced, World Markets: 2Q 2014

(Source: Navigant Research)

The First Thousand

A second measure could be the number of markets where storage is present and the variety of technologies in the market.  Navigant Research is currently in the process of updating its Energy Storage Tracker, which tracks 30 energy storage technologies in over 600 projects – some of which include more than one storage system.  Overall, 952 systems in 51 countries are tracked in the database.

Worldwide, there are 2,497 MW of deployed advanced energy storage projects – this excludes pumped storage, a mature technology that accounts for 124 GW installed.  Asia Pacific continues to be the world leader in deployed capacity of energy storage, with 1,184 MW of deployed capacity, which represents 43% of global capacity.  New pumped storage makes up nearly 60% of Asia Pacific’s capacity, followed by sodium-sulfur batteries, with 31% market share.  The market share of advanced lithium ion batteries is growing quickly in Asia Pacific, with 74 MW installed currently.

Demand Flattens

Western Europe (762 MW deployed, 28% of global capacity) is primarily composed of power-to-gas, compressed air, new pumped storage, and molten salt technologies.  North America (725 MW deployed, up from 566 MW in 3Q13) is more evenly divided among technologies, with compressed air, flywheel, lithium ion, thermal, and advanced lead-acid batteries composing a majority of the capacity.  Clearly, a number of markets and technologies are being deployed across grids globally.

One other measure could be the growth of storage relative to a traditional industry.  In 2007, 28 MW of advanced energy storage were installed.  In the subsequent 6 years, 1,300 MW have been installed.  More specifically, installed energy storage grew 28% between 3Q13 and 2Q14.   In contrast, electricity sales have decreased over the past several years in the United States, and the U.S. Energy Information Administration predicts that electric demand growth will average less than 1% per year between 2012 and 2040.

Although energy storage is unlikely to revolutionize the global grid system in the near term, it will certainly begin to scale up rapidly in the next 3 to 5 years.  Perhaps then it will be closer to grid-wide.

 

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