Navigant Research Blog

ZNE Gets a Boost on Two Fronts

— June 24, 2016

Home Energy ManagementThe zero net energy (ZNE) movement has taken steps forward recently in an effort to drive wider adoption of the related technologies. A ZNE building combines energy efficiency and onsite renewable power generation to produce roughly as much energy as it uses during a year. The focal point for much of the ZNE activity in the United States is California, where state regulations call for all new homes to be built as ZNE by 2020 and the same for all new commercial buildings by 2030. It comes as no surprise, then, that the latest ZNE efforts are in the Golden State.

Public Awareness

One step forward to wider adoption was taken by Pacific Gas and Electric (PG&E). The utility has opened a full-sized ZNE display home at its new regional office in Stockton, California. Visitors can see in detail how such a home can work in an effort to drive greater public awareness. The displays have many interactive components, such as an iPad-based augmented reality virtual tour using iBeacon technology that automatically presents relevant content in each room. Interactive components also include a 7-foot, high-resolution touchscreen that compares ZNE conservation methods with those of a typical home built in 2005 and an integrated content management and hardware system that drives the experience.

Virtual Tour of a ZNE Display Home in Stockton, California

ZNE Gets a Boost on Two Fronts_NS Blog

(Sources: Leviathan, Pacific Gas and Electric) 

Industrial Education

Another step to drive greater adoption was the dedication of the United States’ largest net zero plus commercial building retrofit in the Los Angeles area. The 144,000-square-foot Net Zero Plus Electric Training Institute (NZP-ETI) facility serves as a showcase for how commercial ZNE buildings can be designed, constructed, and operated. One of its unique features is its ability to go beyond net zero, generating about 1.25 times more energy than it consumes in a typical year. The excess energy, which is generated from an onsite solar PV array, can be stored in onsite batteries or discharged back to the electric grid. During a grid outage, the stored excess energy can allow the facility to maintain operations for up to 72 hours. The facility also plays an educational role as the training hub for some 1,500 electrical apprentices, journeymen, and contractors who want to stay at the forefront of the electrical industry’s latest technologies.

These incremental yet important steps by PG&E and NZP-ETI represent the cutting edge of the ZNE trend, which was highlighted for the residential market in the recent Navigant Research report, Market Data: Zero Net Energy Homes. These are baby steps toward a time when ZNE buildings become more commonplace. While these are laudable efforts, it will require many more similar moves in other regions before ZNE goes from oddity to ordinary.

 

Consumer Choice in the U.K. Energy Market, Part 2

— June 24, 2016

TabletIn my previous post, I discussed my experience changing energy providers in the United Kingdom and the surge in market share of new players (known as independent providers). This time, I’ll talk about some of the propositions the new players are offering to attract customers.

When I did my research to choose my new energy provider, I was surprised by the number of companies that are now in the market. Back in 2012, the first time I switched providers, there were 14 companies available according to Ofgem, but I can only remember the Big Six and a couple of premium green providers. As of December 2015, Ofgem reports 32 energy providers.

Differentiation through Pricing

Providers are trying to differentiate themselves by using different selling points. The most obvious area to compete in is pricing, and as expected, there are several undifferentiated providers focusing on price alone. Their effect on the average retail price in the United Kingdom is apparent, but some other companies are bringing new ideas to the table.

From variable prices to 3-year fixed prices to different levels of greenness to buy local options like Bristol Energy (a company owned by the city council), companies are trying to stand out from the crowd. Tempus Energy offers a so-called sunshine tariff, which matches prices with peak solar generation for customers in areas with high solar penetration. Others offer smart energy hubs and management tools as a hook for the service. I couldn’t find any that would manage your house for you to reduce consumption, but Tempus Energy does offer some flexible contracts for commercial customers that include time-of-use rates in their tariff structure as well as demand-side management. Most of the new players don’t have generation assets, but others—like Octopus Energy—started as renewable project developers and then moved into retailing.

Better Options Needed to Fit Consumer Needs

It took some time for Ofgem to simplify the switching process enough to make it hassle-free, and a faux pas from the Big Six’s price strategy helped encourage people to take the plunge and make the switch. But now that the process is in place, I can see energy shopping becoming a yearly ritual. It is up to energy providers to develop options that better fit consumers’ needs and tastes.

During my latest switch, I went for a contract of 100% renewables generated by the provider’s solar and biogas projects, which beat most of the competition in price. I also chose a variable rate without any exit fees. For the time being, I don’t see a price spike coming unless the United Kingdom gets a long, cold winter in 2016. But I’ll be happy to switch if something better comes to the market.

 

California Water Summit: A New Landscape for Water Management

— June 21, 2016

??????????????????Drought is not new to California, but 2012-2015 has been the driest 4 consecutive years in history. With climate change forcing us to face the idea of a new normal, the biggest question is: What if the next drought is even worse? This year’s California Water Summit highlighted how the discussion around California’s water situation is shifting focus from emergency measures to long-term preparation. This will require stakeholders to generate new solutions to address water management, both from the top down and the bottom up.

Top Down: Putting the Right Systems in Place

The California Department of Water Resources has been managing the variety of funding opportunities available to public utilities and others through Proposition 1. One focus area relates to the implementation of the Sustainable Groundwater Management Act (SGMA), which requires the formation of Groundwater Sustainability Agencies (GSAs) to oversee the management of the groundwater basins that provide over half of California’s water in dry years. The process of forming GSAs requires the input of many stakeholders on how to protect our watersheds from unsustainable use. As this effort evolves, it will be important to help these entities organize effectively and meet their planning requirements.

Another hot topic as resources become scarcer is that of water rights. Nobody wants to lose their access to water, but things have definitely changed since this fragmented system was put in place, resulting in suboptimal use of a precious resource. The summit called upon a number of Australians to share their experiences with the electronic water markets implemented in response to a culmination of factors, including their own drought that lasted over a decade. Though the endeavor was technologically challenging, the Australians said the largest obstacle was political inertia.

The California Water Summit also exhibited a strong focus on recycled water as an important water supply. Case studies showed the criticality of regulation and investment that support this resource as consumers become more comfortable with expanding its uses.

Bottom Up: Aligning the Resources

The Pre-Summit Workshop was dedicated to public-private partnerships, termed P3s, as a way to spur investment in water infrastructure. Various opportunities were discussed throughout conference sessions, including grant funding, which can take up to several years to secure. The summit wrapped up with a number of case studies that highlighted the importance of involving various stakeholders at every step in the process. One set of stakeholders to be particularly aware of is disadvantaged communities, as these sometimes overlap with areas hardest hit by drought.

Infrastructure is composed not only of large civic construction projects, but also of the more subtle IT networks that enable more precise management of water-related systems. These investments are also necessary as utilities seek to eliminate inefficiencies from leaks and other sources of waste. As the saying goes, “You can’t manage what you don’t measure.” We can expect increasing focus on (and hopefully investment in) California water data over the next few years.

 

FordPass Points to a Future beyond Selling Cars

— June 21, 2016

CarsharingAt first glance, the FordPass smartphone app seems like an also ran, a remote control app similar to what other automakers have been making for years. However, after spending a week driving the 2017 Ford Escape and having a conversation with Don Butler, Ford’s executive director of connected vehicles and services, it’s clear that FordPass is the beginning of something potentially much larger. This is the first automaker-produced app that is specifically designed to provide services even to drivers who don’t own a vehicle from that brand.

The 2017 Escape and Fusion are the first Ford-brand models to offer SYNC Connect, the company’s new telematics service. Ever since Ford announced its SYNC mobile device connectivity system in 2007, the company has focused mainly on brought-in solutions. SYNC has used the phone to enable features like automatic emergency calls and vehicle diagnostics. Connect adds a 4G LTE data modem to the redesigned SYNC 3 that debuted in 2015. Until now, Ford had only used embedded cellular telematics on its premium Lincoln models and plug-in electric vehicles.

No Subscription Fees

The addition of a built-in data modem enables Ford to add capabilities such as remote start and lock/unlock similar to what GM’s OnStar and other telematics systems have offered for 20 years. However, unlike most other automakers, Ford has opted not to charge any subscription fees for SYNC. Basic services will be provided for 5 years at no additional charge beyond the option price of Connect. OnStar now provides 5 years of free basic services on new cars and 3 years on vehicles from 2011 on that are reactivated. Premium brands such as BMW include up to 10 years of service in the purchase price of the vehicle.

The FordPass app was developed in collaboration with San Francisco, California-based Pivotal, a cloud platform development company. Following the spring 2016 launch of FordPass, Ford also announced a $182 million investment in the company. “Ford is reorganizing into a hardware, software, and services company,” said Butler at the recent TU-Automotive Detroit conference. “We recognize that software and services cut across multiple boundaries and FordPass is a platform for delivery of some of those services.”

Shifts Are Coming

Navigant Research’s recently published white paper, Transportation Outlook: 2025 to 2050, projects shifts in the current model of vehicle ownership. As this model changes, Ford wants to be ready to manage the new relationship that people have with mobility. FordPass is a component of the automaker’s new Smart Mobility subsidiary that is structured to capitalize on business partnerships, much like Ford Credit. The full business model of FordPass is still being worked out, but one of the first elements that extends beyond vehicle control, roadside assistance, and live chat support is parking. FordPass will enable users to find, reserve, and soon even pre-pay for parking—regardless of the brand of vehicle they drive. It also will likely include some revenue-sharing component with partners in exchange for leads.

 FordPass Find Parking

FP_Find_Parking_Lumina

(Source: Ford Motor Company)

At the 2016 North American International Auto Show in Detroit, Ford used the platform to reserve parking spaces available for media. Drivers only had to show a QR code on their phones to gain access. Other potential future additions to FordPass include localized deals with other merchants, usage based insurance, or ride-hailing systems such as the Dynamic Shuttle service that Ford is currently piloting at its Dearborn, Michigan product development campus. The shuttle service was deployed prior to the release of FordPass, but it could be easily integrated in the future along with carsharing and bike-sharing, or even transit passes.

Ultimately, for Ford and every other automaker, it comes down to expanding the scope of their business from manufacturing and selling vehicles to moving people and goods from place to place efficiently.

 

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