Navigant Research Blog

Can Energy Management Software be the Link for Customer Engagement and Compliance?

— November 24, 2015

Electric utilities and energy providers are preparing for a new energy reality—a transformation driven by climate change risks, rapid growth in distributed energy resources, and the proliferation of data across the energy value chain. Navigant Research has outlined this energy industry transformation as the development of the energy cloud. The evolution of how, when, and where we consume energy is not just a threat to utilities, but also an opportunity. Recent market developments suggest utilities are recognizing the value of energy management software for customer engagement that can direct consumption changes to meet their peak demand and efficiency goals. Navigant Research suggests the coming year will hold substantial growth in electric utility and energy provider investment of energy management software to drive greater customer engagement for energy efficiency savings and satisfaction.

Recent Developments

On November 3, Comverge announced a partnership with Apogee Interactive, Inc. Comverge stated that “When this solution is implemented in conjunction with Comverge’s number-one ranked demand response offerings, utilities can achieve unmatched cost-effectiveness by utilizing a single thermostat and engagement portal to drive both energy savings and peak reduction and can better engage customers by offering them increased control and visibility into their energy consumption.”

On November 13, GridPoint announced it has been acquired by TFC Utilities, a Washington, D.C.-based startup aiming to support regulated utilities in the process of modernizing strategy and procedures in light of industry transformation. The Company’s press release explained that “TFC Utilities’ business model is to transform regulated utilities with a commercial and regulatory construct that drives mass adoption of clean, low cost energy producing and energy saving technologies. The GridPoint acquisition represents TFC Utilities’ commitment to behind the meter technologies that directly benefit customers while also modernizing and enhancing the efficiency of the electric power system.”

A Tool for Compliance

The U.S. Environmental Protection Agency (EPA) released a fact sheet on energy efficiency alongside the publication of the final ruling on 111(d), or the Clean Power Plan. The EPA explains that states leverage energy efficiency to meet their clean power goals across the different outlined compliance approaches. Even as politics surround the EPA’s authority to regulate on climate change, utilities and energy providers are demonstrating their commitments to energy efficiency not only as a tool for hedging the potential regulatory risk, but also as a means of supporting grid reliability and resiliency.

Navigant Research suggests that energy management software is becoming an increasingly vital tool for promoting energy efficiency programs, tracking reductions in consumption, and improving customer satisfaction. On November 12, Direct Energy announced the acquisition of Panoramic Power, a device-level energy management solution. Direct Energy explained its perspective in a news release, stating “The commercial industry trend is moving toward more centralized energy management solutions with a focus on automated energy data collection and reporting, which is why Direct Energy aims to seamlessly incorporate Panoramic Power’s technology and analytical expertise into what we offer our growing customer base.”

The cost-effective deployment of energy management software has been proving its business value to customers directly (check out the Navigant Research’s Building Energy Management Systems report for more information), and market activity shows strong indications that utilities want in the game. Looking ahead, there will be winners in the marketplace, and intelligent, easy-to-deploy devices may help accelerate interest from utilities. These recent developments are driving the Navigant Research expectation that even more momentum is developing from the acquisitions and partnerships between utilities and technology providers.

 

Renewed Interest in Older Forms of Energy Storage

— November 17, 2015

After recently receiving support from Governor Steve Bullock, a planned pumped hydro storage (PHS) project in Montana has moved one step closer to reality. While the Gordon Butte project still faces many hurdles on the road to development, it is being embraced by many in Montana as a way to help take advantage of the state’s abundant renewable energy resources. Located in remote Meagher County, the facility would add a 400 MW resource capable of storing excess wind energy to be released at times of high demand. Montana-based Absaroka Energy is developing the project, working to secure financing and permits, as well as an interconnection and partnership agreement with a regional utility.

This project is part of a trend of renewed interest in PHS and other forms of electro-mechanical energy storage. According to Navigant Research’s Energy Storage Tracker 1Q15 report, there are 42 PHS projects in various stages of development around the world, including 13 located in the United States. As the penetration of renewable energy increases globally, energy storage solutions of all types are emerging as efficient ways to manage fluctuating supply and demand. While advanced batteries are an ideal choice for managing the grid’s stability over short time periods, the economics of very long duration (6+ hour) energy storage often do not line up given the high upfront cost and limited lifetime of battery technologies. Thus, many grid operators are looking at alternative storage technologies to help align the output of renewable energy with times of peak demand.

Generation and Demand

A common issue with renewable energy is the mismatch between when energy is generated and when demand is highest; this is a particularly acute problem in remote areas or physical islands that are unable to import or export energy whenever it is needed. In Montana and other areas, wind power is generally most productive at night (when there is minimal demand for energy) and is generally unavailable during peak demand hours when energy is needed most. The aim of Gordon Butte and other planned PHS projects is to allow this abundant wind energy to be shifted from when it is produced to times of peak demand, often in the evening, helping to ease utility concerns around balancing wind’s variable output. An economical means of storing large amounts of wind energy could allow Montana to fully capitalize on its immense natural resources, potentially allowing the state to export power to surrounding areas and greatly reducing the amount it spends on importing fossil fuels.

Despite the attractive economics and potential positive impacts PHS facilities can have, development of such large and complex infrastructure projects can be challenging, costly, and time-consuming. In addition to concerns regarding impacts on water resources and local wildlife, issues surround land-use and permitting have derailed past projects. These projects will face increasing competition from rapidly advancing battery technologies that are improving the economics of long-duration storage with more flexibility and less complex development processes.

 

Despite Volkswagen Scandal, GM Remains Committed to Diesel

— November 17, 2015

In the wake of the ongoing revelations about Volkswagen (VW) deliberately manipulating powertrain control software in order to pass emissions tests in Europe and the United States, it would have been unsurprising if General Motors (GM) and other automakers immediately cancelled all future diesel engine plans. Instead, GM remains fully committed to a broad portfolio of fuel efficiency technologies that include diesel engines in a variety of vehicles.

In June 2015, Dan Nicholson, GM vice president of global powertrain development, announced that “GM wants to be considered the leader in North American passenger car diesels.” The same month, Nicholson also spoke to the media and to analysts at a Chevrolet technology forum where the second-generation Cruze was revealed. In North America, the new Cruze will be offered with two four-cylinder powertrain options, a 1.4-liter turbocharged gasoline engine, and a 1.6-liter diesel.

Diesel on Schedule

Barely 2 months later, the automobile leader that Nicholson wanted to dethrone began imploding from self-inflicted wounds and proceeded to take an entire class of fuel-savings technology down with it. Despite the acknowledged illegal actions of VW and unconfirmed reports that other manufacturers may have cheated in a similar fashion, Mark Reuss, GM executive vice president for global product development, is staying the course.

Reuss told a group of North American Car and Truck of the Year jurors in early November that the next-generation Cruze diesel remains on schedule for production in 2016. That announcement came as GM revealed that the diesel-powered 2016 Chevrolet Colorado and GMC Canyon had officially been certified by the U.S. Environmental Protection Agency (EPA) as the most fuel efficient pickups in the United States with an estimated 22 mpg city, 25 mpg combined, and 31 mpg on the highway.

The certification of the new trucks was due right around the time that the VW scandal went public and was held up for several weeks as the EPA decided that these should be among the first vehicles to undergo additional road testing in order to validate the results of the usual lab tests.

Unlike VW’s four-cylinder diesel engines, the GM trucks and the Cruze utilize a urea-injection system to control emissions of nitrogen oxides (NOx). During development prior to the launch of the Cruze diesel in 2013, Chevrolet did test the same lean NOx trap technology used by VW, but found it inadequate to meet EPA and California Air Resources Board standards.

During a weeklong evaluation earlier this year, a 2015 Cruze diesel returned 39 mpg in combined driving with the older 2.0-liter engine that was then in use. The 2017 Cruze diesel will be powered by a new 1.6-liter engine that debuted earlier this year in several Opel models in Europe. In the Cruze, the new engine is expected to easily beat the 33 mpg combined rating of the old model.

Navigant Research’s Automotive Fuel Efficiency Technologies report projects that diesels will only account for about 3% of North American light duty vehicles sales in 2025, but GM wants a big piece of that market as the company takes advantage of every technology in its portfolio. GM is already aggressively slimming the mass of its new vehicles and adding automatic stop-start as a standard feature on many models. In the next year, the company is set to launch new conventional and plug-in hybrid electric systems, the 200-mile Bolt electric vehicle, and by 2020 plans to launch fuel cell electric vehicles. No stone—including diesel—will be left unturned by GM.

 

Hawaii Axes Net Metering as PV Surges

— November 11, 2015

While most utilities are just beginning to adapt to the challenges presented by large-scale solar integration, the state of Hawaii has been at the forefront of this issue for some time. Hawaii is in the midst of a residential solar revolution, and with PV now sitting atop 12% of rooftops in the state, it has the highest PV penetration rate in the nation. While this presents an array of benefits, utilities are also being confronted with increased costs and decreased revenue streams. As these challenges and opportunities continue to grow, Hawaii may present itself as a case study in adaptive solar policy.

Earlier this month, the Hawaii Public Utilities Commission (HPUC) issued a ruling that closed Hawaii Electric Companies’ (HECO) net metering program to new applicants. Current customers and those awaiting approval are still eligible for the program, while new customers will be offered alternatives in the form of a grid-supply or self-supply system. A grid-supply system operates essentially as a discounted net metering rate, while the self-supply system is intended for residences that will consume all of their solar electricity and thus will receive an expedited interconnection review. The HPUC also ruled that HECO companies must pursue a time-of-use (TOU) tariff that would allow for variable electricity pricing. TOU pricing offers advantages to both utilities and consumers alike as it provides a financial incentive for customers to shift their energy consumption patterns, and in turn alleviates pressure on the grid.

Hawaii as a Template

This ruling has received mixed reviews across the industry. While some solar proponents have criticized the decision—including the Hawaii Solar Energy Association—others, such as the Solar Energy Industry Association, have highlighted the uniquely high penetration rate in Hawaii as warranting rate changes. As more homes install PV, utilities are left with a dwindling customer base to support their operations costs. According to HECO, $53 million in operations and maintenance costs were shifted to non-solar consumers in 2014. More of these policy changes should be expected as solar and other renewables move from small-scale toward large-scale integration. Policy incentives that were aimed at kick-starting these industries will likely receive pushback as renewables become more competitive in the marketplace. In the future, Hawaii may become the template for other states as they adapt to a more renewable energy based infrastructure.

 

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