Navigant Research Blog

The Next Frontier for Large Consumers of Renewable Thermal Energy: Gaps and Opportunities

— June 18, 2018

Bryn Baker, WWF, coauthored this blog.

Renewable energy for heating and cooling applications has received relatively little attention compared to renewable electricity, despite large and growing demand for renewable thermal solutions. The Renewable Thermal Collaborative (RTC) is putting greater focus on this topic, led by companies like Mars, P&G, and General Motors and cities like the City of Philadelphia.

The Opportunity

Energy used for heating and cooling makes up approximately 50% of total global final energy demand and 39% of energy-related CO2 emissions. In the US, industrial manufacturing, which mostly consumes thermal energy, accounts for one-third of the nation’s total energy use. In the European Union, heating and cooling accounts for half of the total energy consumption, and within the industry accounts for over 70%.

The carbon reduction potential is significant. This, together with thermal users setting goals to cut emissions and shift to renewable energy, makes the call for clean thermal solutions imperative.

The First Barrier

The inconsistencies around the accounting methods used to assess the emissions impact of renewable thermal projects is slowing deployment and impeding decision-making. The lack of consensus around which methodologies to use is leading to confusion by users and incomplete assessments of the emissions and emissions inventories.

A new Navigant report, Renewable Heating and Cooling for Industrial Applications: Guidance for Carbon Accounting, developed with the RTC, reviews the methodologies for six project types (see table below) and recommends a single methodology for each type to simplify guidance for end-users. The report finds that some distilling of the range of methodologies is possible, but that significant gaps remain in accounting for bioenergy projects.


For four bioenergy project types—ranging from burning biomass waste and residues, virgin wood, or biogas—the report recommends one methodology (BioGrace-II) that is the most comprehensive compared to others but it excludes a calculation for three categories of emissions: 1) biogenic emissions, 2) conversion of natural forest to plantations, and 3) indirect land use change, which could result in a significant underestimate of emissions.

These three gaps indicate where work is needed to develop methodologies and build consensus around how users treat these emissions. This is important both to facilitate informed decision-making about the emissions impact of projects and to create a complete emissions inventory.

The report recommends using bioenergy from residual sources instead of virgin materials as the methodological caveats are most relevant for the latter. Navigant and RTC’s report is the first step in clarifying methodologies and identifying ways to provide clarity and guidance going forward.

The RTC is now working to assess approaches for accounting for biogenic emissions from a user perspective and making recommendations that can be adopted into accounting processes. Other stakeholder groups are addressing the gaps around land use change and the RTC will support these efforts.

Beyond bioenergy projects, two project types—ground source heat-pumps and waste heat recovery (from burning fossil fuels)—have either a consensus methodology or an uncontroversial calculation method that can be used. For recovered heat, a straightforward method was proposed, though no widely accepted methodology exists. Therefore, consensus was more clear-cut for these project types.

Recommended Methodologies by Project Type

(Source: Navigant and Renewable Thermal Collaborative)

The Next Frontier

In the not too distant future, candy, paper products, and cars may be made in factories that no longer rely on fossil fuels for process heat. The same shift is coming for cities, hospitals, and universities. Renewable thermal represents another frontier in the low carbon transition where stakeholders are joining forces to pioneer solutions. Getting the emissions accounting right is an important first step on that journey.

To learn more and download the report, visit Renewable Thermal Collaborative.


The Fate of the Smart Home Hub

— June 14, 2018

While the concept of the smart home is expected to explode and completely revolutionize the way people interact with their homes, this space currently faces issues preventing mainstream adoption, the most significant of which is a lack of interoperability. The smart home space is fragmented with a variety of standards and networking protocols, and not all devices work together. Some market participants have developed relatively closed-off networks to ensure the devices operating within their ecosystem work well together and are more secure (and to incentivize consumers to join their club over other manufacturers), which is what Apple has done with HomeKit. Others believe in creating open systems where all types of devices from third-parties can work together, which is ZigBee’s aim with its protocol and Dotdot application layer. However, this is easier said than done.

Enter the Hub

Gateways, or smart home hubs, have emerged in recent years to address this issue. Hubs enable direct communication between devices (and often the cloud) by being embedded with multiple radios, which mitigates issues associated with a lack of interoperability. Some hubs are also capable of processing information locally, and don’t require a connection to the cloud, which addresses issues associated with data privacy and security. While devices like Amazon Echo and Google Home foster communication between devices via cloud-to-cloud integrations, hubs allow devices to rely less on the cloud and to communicate with each other directly.

However, one of the major issues with hubs is that many serve virtually no purpose other than fostering interoperability. They are simply boxes embedded with radios—no screens, no voice activation, no additional use case served. For example, the Wink hub, Samsung SmartThings hub, and the Philips Hue bridge provide no additional value outside of connecting compatible devices to each other and the cloud. Manufacturers recognize this as an issue, and have begun to embed the capabilities of gateways into the existing infrastructure of the home. For example, the Amazon Echo Plus has been equipped with a ZigBee radio, which means ZigBee devices can communicate directly with the Echo Plus and the cloud; Comcast has begun embedding multiple radios in its newest Xfinity Wi-Fi routers to act as home automation hubs.

Do Data Privacy Concerns Represent the Hubs’ Saving Grace?

This trend begs the question of the fate of smart home hubs. Will these devices persist as a means of fostering interoperability in the home? In markets more concerned with data privacy, like Europe, hubs may endure as regulations give incentive for keeping consumer information more local. Hubs can also serve a useful purpose in verticals like new construction, where builders need to choose solutions that are open. However, most industry experts say no, these devices will vanish as there is consolidation among tech vendors and networking protocols, and their functionality is embedded in a home’s infrastructure. Navigant Research expects this scenario to dominate market activity, which is demonstrated in the upcoming Residential IoT Market Overview report.


China Cuts Solar Subsidy: Investors in Crisis

— June 14, 2018

Subsidy cuts in China have caught global solar investors by surprise this June.

The National Development and Reform Commission, the Ministry of Finance, and the National Energy Administration announced a cut in the national feed-in tariff by ¥0.05 ($0.008) per kilowatt-hour and a reduction of the same amount in subsidies for power generated by large-scale distributed PV projects. Subsidy reductions will not affect power prices for smaller-scale, community-based solar power projects. The Chinese government justified the move, explaining that solar PV has long been commoditized because of reduction in equipment prices and that scaling back on subsidies will reduce overheating in the sector. The joint announcement indicated that the measures are aimed at “promoting the solar energy sector’s sustainable development, enhancing its development quality, and speeding up reduction of subsidies.”

Many agree that the move is the result of recent trade wars with the US administration. January 2018, President Trump announced a 30% tariff on imported solar equipment that will last for at least the next 4 years. This is believed to be in response to anti-dumping measures and to prevent undercuts by Chinese solar manufacturers in the US market.

Can Subsidy Cuts Lead to Grid Parity?

Financial incentives and subsidies have long been the cornerstone of solar investments. On one hand, it provides much-needed economies of scale. On the other hand, it encourages investments by ensuring that PV electricity cost achieves grid parity. As the energy sector was settling down into , technology investments and grid flexibility meant that solar energy could reach grid parity even without financial incentives.

The Chinese renewable industry is one of the front-runners of clean energy projects across EVs, wind turbines, solar panels, and energy efficient appliances. During the last decade, the Chinese government introduced the Solar Roofs Plan for promoting the application of solar PV building, and reintroduced the Golden Sun Project to give 50% of the total investment subsidies to the grid-connected PV power generation project. Increasing domestic and industrial demand, the adoption of EVs, and rising pollution have created an ever-increasing need for solar projects in China.

Thus, subsidy scale-backs have created an uproar in the Chinese market. On June 4, there was a sell-off in Chinese solar equipment stocks. Shares dropped the 10% daily limit for several firms, including Shanghai-listed LONGi Green Energy Technology, Jiangsu Linyang Energy, and Tongwei, and Shenzhen-listed Sungrow Power Supply.

China Will Remain a Renewables Leader, despite Scale Back

Resilience of renewables has been a topic of discussion across many energy forums, and the solar industry is a front-runner in this. Chinese solar power will continue to strengthen its position as a mainstream energy source across both utility-scale and distributed energy generation. Navigant Research’s recent report, Preparing for New DER-Driven Opportunities in the Chinese C&I Energy Market, explores the changes in the Chinese commercial and industrial electricity market and the opportunities this creates for distributed energy resources stakeholders.

The Chinese solar industry is likely to witness a larger number of mergers and acquisitions over the next year, especially among the smaller market participants. While long-term prospects continue to remain positive, the short-term impact will cause a contraction in the overall positive growth trajectory.


The Rise of Connected Vehicles Is Changing the Approach to Vehicle Maintenance

— June 14, 2018

In late April, I attended the Advanced Clean Transportation Expo in Long Beach, California. One of the main themes at the Expo was how the penetration of Internet of Things (IoT) technologies enhances commercial vehicles. Currently, commercial vehicle maintenance is preventative; meaning maintenance is scheduled to occur after some interval of mileage or time, and whenever an engine light notifies a driver that maintenance is needed. However, with the increasing application and prevalence of connected sensors throughout vehicles, fleet owners are shifting away from the traditional approach to maintenance.

From Interval Maintenance to Maintenance On-Demand 

As more vehicles become connected and as more sensors are added to track more parts, there is a shift away from preventative maintenance toward new models.

Vehicles equipped with connected sensors are already enabling changes to the maintenance chain. OEMs have begun using telemetry data to offer remote diagnostics services for fleet managers who own vehicles with connected sensors. Remote diagnostics can enhance vehicle maintenance by providing real-time analysis of engine fault codes and other component issues to enable faster, more informed maintenance. However, these remote diagnostics tools are often reactionary in nature, and work alongside preventative maintenance strategies. And for fleet managers, the holy grail of connected vehicles is predictive maintenance.

Using connected vehicle sensors, predictive maintenance would enable fleet managers to stay on top of maintenance requests and fix parts before they fail. By aggregating telemetry data collected from a vehicle fleet and correlating it with component failure history, predictive models can be built that project the service life of components. As the real-time data of components, such as the starter battery or brakes, begins to resemble what happens leading up to a failure, the vehicle can be serviced before it needs unscheduled downtime. This enables fleets to reduce their vehicle downtime and reduce costs by avoiding catastrophic maintenance events. As fleets become more reliant on predictive maintenance and vehicles come equipped with more sensors to track most—if not all of—a vehicle’s components, there will be less need for preventative and scheduled maintenance to take place.

The Future of Predictive Maintenance and IoT

IoT technologies are also expanding into the connected vehicle space. Edge analytics of vehicle components, in particular, will be hugely impactful on fleet management. Currently, most of the telemetry data gathered for remote maintenance is not analyzed at the point of data collection (also known as the edge). Rather, much of the remote diagnostics data analysis happens in the cloud. As vehicle component sensors become more advanced and IoT-enabled, more of the data analysis used for remote diagnostics and predictive maintenance will occur at the edge by embedding the lifecycle models that were developed in the cloud from aggregate data. As the number of sensors on each vehicle grows and becomes more sophisticated in collecting data, so too will the volume of data grow. Moving large amounts of data will become a consideration in the costs of real-time analysis. A shift toward edge maintenance, where the analysis used to make maintenance decisions happens at the sensor, will reduce the amount of data needing to be sent to the cloud.

These changes will require the status quo of vehicle maintenance to change over the next 5-10 years as the technology continues to penetrate the vehicle population and as fleet managers realize the added value in such services. Stakeholders on the maintenance side and those upstream will need to adapt to new business models where predictive and edge maintenance replace current business models that revolve around scheduled and catastrophic maintenance. These new maintenance models may have to become more integrated with other platforms to remain competitive with their service delivery and parts availability.


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