Navigant Research Blog

Preparations Continue for Tesla Model 3 Launch

— November 21, 2016

Electric Vehicle 2For the hundreds of thousands who put down a deposit on the upcoming Tesla Model 3, the future can’t come soon enough. The much anticipated EV, which is scheduled to start shipping sometime between the end of 2017 and the beginning of 2018, is one of several vehicles due out in the next 18 months that are expected to push plug-in EVs (PEVs) into the mainstream.

A new book, Getting Ready for Model 3: A Guide for Future Tesla Model 3 Owners by Roger Pressman, details many of the expected technical details about the car’s performance as well as considerations for keeping it charged. For those who like the minutiae of how cars function, the chapters on performance and autonomous vehicles give digestible overviews of how EV and assisted driving technologies work in general, as well as Tesla’s likely implementation.

One aspect of PEVs that is often overlooked or misunderstood is the efficiency of electric motors in providing more torque at low to medium RPMs than conventional vehicles. Pressman does well in explaining the details about this feature, which alone should have prospective Model 3 owners excited. Tesla’s prior vehicles are admired for their speedy and nimble driving, and bringing that capability to the Model 3 helps explain the long reservation list.

Autonomous Driving

Tesla’s Autopilot feature has gained praise for its role in pushing the edges of driver assistance (as well as a fair amount of notoriety), and Pressman provides an overview of the levels of autonomy and underlying technologies. The Model 3 will include the hardware and software for Tesla’s self-driving technology, though customers of Tesla’s least expensive vehicle to date will have to pay to unlock the feature. A recent survey of Tesla owners indicates that while the vast majority understand the limits of the technology, the minority who believe Tesla cars can fully drive themselves can have serious consequences. With the Model 3 likely to outsell all previous Tesla cars combined, barring an expanded education push, the number of misinformed drivers putting too much faith in Autopilot could skyrocket.

For those who haven’t owned a PEV before, how to keep the 215-mile-range, all-electric car sufficiently charged is worth reading up on. As my colleague Sam Abuelsamid correctly anticipated, Model 3 owners (and all Tesla buyers who purchase a vehicle after January 1, 2017) won’t have unlimited use of the Supercharger network, but will be capped at around 400 kWh worth of free charging, with a pay-as-you-go model kicking in after that.

To supplement the Supercharger network, Tesla has been busy working with partners to build out its Destination Charging network. As pictured below, this network provides slightly above Level 2 (up to 16 kW) charging at hotels, parking garages, restaurants, and other locations across the United States.

Tesla’s Destination Charging Network

DestinationCharging

Source: Tesla Motors

Tesla will also be introducing a new type of glass in the Model 3 as the company continues to expand its research and development efforts to leverage the synergies with recently acquired SolarCity. There is justified enthusiasm surrounding the Model 3 and other more affordable PEVs coming out in the next 18 months. It will be interesting to see to what degree that excitement turns into growing sales.

 

The iDER Playbook for Utilities: A Firsthand Report from the EEI Strategic Issues Roundtable

— November 14, 2016

SmartCityMichael Rutkowski and Jay Paidipati coauthored this post.

Navigant’s new integrated distributed energy resources (iDER) maturity model provides a valuable tool for immediate application to address today’s emerging industry needs. Using the tool, utility planners can evaluate their current state of readiness for DER integration and value capture, as well as provide guidance for future investments. We recently had the opportunity to apply the iDER maturity model during a highly interactive session with a senior utility audience at the Edison Electric Institute (EEI) Strategic Issues Roundtable, and the findings tell a compelling story.

After sharing some of Navigant’s latest insights on DER and our industry tipping points, we opened the dialogue to focus on the five dimensions of the iDER maturity model—Customers & Programs, Regulation & Policy, Business Models, Technology, and Operations. After outlining the context of each dimension, we described the characteristics of a utility at the highest maturity rating—Level 5—and described what such a utility would look like in terms of strategic focus, operational capability, and market structure.

Scoring DER Readiness and Importance

We prepared the audience, a group of about 80 utility executives, for deeper discussion by asking an initial strategic question for each dimension: How important is it for your utility to be mature today and 5 years from now? Respondents gave low and high scores for each dimension, and after a brief discussion, we recorded an average score across the group. The scores varied for good reasons and were dependent on the role of each utility executive, the current adoption rate for DER in their jurisdictions, and whether or not their companies were already offering DER programs and solutions in regulated or non-regulated business units.

We then asked a second question, again for each dimension: How mature is your utility today, and how mature should it be in 5 years? This resulted in a rich dialogue for each score, and afterwards we tallied average results accordingly. For example, some utilities have an active DER business unit already focused on customer product and service offerings. Naturally, their scores suggested greater importance regarding readiness and importance for Customers & Programs.

The results often reflected wide variations across different utilities, as well as divergence from different stakeholders within the same utility. Summary results are outlined in the two tables that follow.

Readiness

Readiness

 Importance

Importance

 Source: Navigant analysis

Operations (e.g., organization and processes) scored the highest in terms of importance to utilities today and 5 years from now for a fully mature iDER company. However, this dimension had one of the lowest readiness scores from the group, setting it up as an area with considerable gaps to fill over the next 5 years. Some of the reasons cited for this lag include the lack of a robust telecommunications network for high-speed connectivity to DER devices on the far edges of the grid, as well as limited ability to handle high volumes of data and provide sufficient analytics in the middle and back office. There was also mention of softer elements, such as the right cultural mindset and ability to hire talent that fully understands and embraces new digital applications and advanced customer analytics.

Furthermore, the utilities generally felt that their Business Models were not ready today but would be the most important area for readiness 5 years from now, suggesting that considerable work needs to be done along this dimension. On another level, the utilities felt that Regulation & Policy was highly important for iDER maturity and that they were further along today in this dimension. Some of the representatives in the room were from states where these regulatory constructs are well underway, including New York (i.e., REV proceedings). Others were in areas of the Midwest, where traditional, vertically integrated market structures are not expected to change in the near future.

Finally, we noticed variations in scores from representatives within the same utility. This implies that maturity model scoring needs to take place across multiple functions within a utility in order to inform an overall strategic approach. Navigant is applying this model with a number of initial utilities and will be publishing a white paper showing where the industry currently is and benchmarking against Navigant’s vision of a fully DER-integrated utility. Through this effort, we will present an industrywide view on the state of utility readiness for DER integration, as well as the top priority areas for utilities in readying their organizations to serve as a useful basis for utility strategy, planning, and resource allocation efforts as this industry transformation takes place.

 

New Cummins and Tangent Joint Venture Enters the Heart of the Energy Cloud

— November 14, 2016

PipelineA joint venture has entered the Energy Cloud, pioneering new value propositions for stakeholders across the energy value chain. Dubbed edgeGEN, this offering allows energy retailers and commercial and industrial (C&I) facilities to capitalize on real-time economic opportunities on the grid.

edgeGEN consists of Cummins’ natural gas generator sets (gensets) equipped with Tangent Energy’s Tangent AMP distributed energy resource management system (DERMS). The system’s key focus is predicting (and reacting to) customer coincident peak demand, a rare occurrence that can nonetheless represent a significant portion of an electric bill. By focusing on these high-value instances, edgeGEN has the potential to provide high economic value to the grid with a small amount of fuel.

The business case for the product includes value propositions on both sides of the meter. Municipal utilities and energy retailers, the exclusive channel partners for the offering, save costs by incentivizing customers toward desired behavior like cutting demand during peak hours. C&I customers can be rewarded monetarily while in some cases also realizing the benefits of resilient power to ride through outages. Bringing it all together is a financing structure that typically requires no money down from the host facility.

Established Technology in a New Skin

Gensets remain the de facto backbone of many onsite generation systems for several reasons. They are dispatchable quickly any time of day, can have the cheapest levelized cost of energy of any distributed generation (DG) source, and can reliably deliver 1,000 times or more annual energy per square meter than solar PV. They account for 40% of the average microgrid generation capacity in Navigant Research’s Microgrid Deployment Trackermore than any other technology.

Though some argue that the dramatic cost declines in developing technologies like solar plus storage will lead to the displacement of gensets, we see this convergence as a key opportunity. As intermittent renewables grow, there will be increasing demand for fast-ramping gas generation, as noted in recent reports about California by the National Renewable Energy Laboratory (NREL) and the Union of Concerned Scientists. Additionally, according to a report funded by the German government, distributed natural gas generation must play a growing role in thermal energy storage. Both on- and off-grid, growing access to cheap natural gas is only accelerating this trend.

Offerings like edgeGEN have room to grow. Other DER and demand response can be integrated on the same platform, one that has flexibility to evolve alongside the coming growth in transactive energy. Municipal utilities and energy retailers, especially in areas with high capacity and transmission tags, should consider the value of incorporating smart gensets and complementary DER. Facility owners should consider the offering while also considering the true value of resilient power as a potential bonus. With growing renewables penetration, persistently cheap natural gas, and regulatory bodies recognizing the value of dispatchable DG, the opportunities in this space are promising.

 

The Growth of Automation and Market Competition

— November 14, 2016

Ethernet CablesHumans have amazing analytical capabilities; it has taken decades and some of the most powerful computers ever produced to finally challenge and beat top-level chess players due to the complexities of the game. Now, however, we are seeing autonomous cars driving themselves on our roads, and more and more automation is creeping into basic the technologies that we use every day.

The same is true for commercial buildings and other related energy equipment and technologies.  Automation is taking over tasks and settings that were either normally left alone or adjusted based on a human’s intervention or intuition. The difference between a human and a machine with built-in intelligence lies in focus and attention span. Computers don’t lose focus, nor do they get bored, tired, or stressed; humans do. That’s why it makes sense to let computers check and recheck a setting or make an adjustment to a piece of equipment a couple of hundred times per second, 24 hours a day. Humans simply cannot do this kind of work.

So why is automation so complex, and why is it taking so long to implement into something that a computer can do? First off, a human has to understand any automated tasks and translate them into a language a computer can understand. But that’s not all; new sensors need to be designed and built, software has to be written, and computers require more power to run these automated processes.

An Evolutionary Step

Automation is an evolutionary step to a market dynamic that started years ago with the advent of big data. While many touted the benefits of how much data they were collecting, as it turns out, data can be meaningless, useless, and even costly. A facilities manager can’t do much with a terabyte of building system data collected every day. A computer, however, is a different story.

After years of collecting data, many industries are now starting to understand how it can be used to make significant differences in the efficiency and optimization of equipment operations. They are also starting to take a more holistic view of how disparate pieces of equipment actually work together as an ecosystem of technology to serve a common purpose.

There is still a long way to go. Companies that have started the process of assessing their capabilities in this area will have a significant market advantage over those that have not, and the ones that have an automated offering are already industry leaders. In the near future, it may be the case that a company that does not have some form of automation or intelligence in its commercial building efficiency product or service will have little chance to compete.

 

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