Navigant Research Blog

Better Late Than Never for Smart Cities in Australia

— December 29, 2016

SmartCityAs noted by my colleague Eric Woods in a previous blog, despite being one of the most urbanized countries in the world (with around 90% of the population living in urban areas), Australian cities have played a relatively small and subdued role in the development of smart city concepts and project demonstrations. While Sydney and Melbourne have been promoting building energy reporting and energy efficiency and a number of cities have sustainability goals (e.g., the Sydney 2030 program), there has been little in the way of significant focus and innovation around the key issues of urban development and sustainability.

Federal Government Taking a Larger Role

However, the focus on smart cities in Australia is now beginning to intensify, as the federal government is taking the challenge of updating city infrastructure more seriously. 2017 appears poised to be a significant year for smart city development. The Australian government’s recently announced AUS $50 million ($35.8 million) Smart Cities and Suburbs Program will provide funding to support projects that use innovative technology-based approaches to improve livability and sustainability of cities, building on and supporting the country’s national Smart Cities Plan, which was launched in April 2016. Draft guidelines for the 4-year Smart Cities and Suburbs Program were recently released, and the first round of grant funding is expected to be opened in the first half of 2017.

The draft guidelines include four program priority areas and their key goals:

  • Smart Infrastructure to improve safety, efficiency, reliability, and the delivery of essential services
  • Smart Precincts to make community precincts more livable, productive, sustainable, and safe
  • Smart Services to deliver citizen-centric local government services and improve community engagement
  • Smart Planning to build adaptable and resilient cities through improved land use and strategic planning

These priority areas are indicative of where many global smart city projects and challenges are present today. If successful outcomes and innovative solutions can be achieved from the new plethora of smart city projects to come in Australia, the country could transform from its current follower position into a leadership role as part of the global pursuit of smart cities.

 

Drones for Utility Asset Management, Part 1: The Year in Review

— December 29, 2016

Drone - WindThis post is the first in a two-part series. This post reviews major developments in drone use for utility asset management over the course of 2016. The second will assess opportunities for enhanced utility applications in 2017 and beyond. 

2016 marked a major milestone in the march toward the commercialization of drones for utility asset management in the United States. Most notably, the Federal Aviation Administration (FAA) in late August implemented new rules governing the use of drones for commercial applications.

Known as Part 107, the rule grants utilities and other commercial entities broad authority to operate small unmanned aircraft systems (sUASs) weighing 55 lbs or less without applying for permission from the FAA. Within 12 months of implementing Part 107, the FAA forecasts as many as 600,000 sUASs will be in commercial operation.

Limitations of Part 107

While Part 107 marks a major victory for stakeholders eager to harness the promise of drone technology, the new rules come with a variety of restrictions, including:

  • sUASs cannot be operated at altitudes above 400 feet or within 400 feet of a structure.
  • Operators must maintain uninterrupted visual line of sight with a sUAS.
  • sUASs may not be operated above individuals not directly involved in the operation.

These and other requirements limit the ability of utilities to deploy drones for tasks such as monitoring remote transmission lines beyond the visual line of sight (BVLOS). But utilities and drone companies are already taking active steps to advance the path to commercialization of BVLOS flights in preparation for a more expansive regulatory framework.

Pushing the Boundaries

In February, Xcel Energy became the first US utility to conduct an FAA-approved BVLOS demonstration flight, using a UAS to survey transmission lines in the Texas panhandle. The utility is also undertaking a year-long research project in North Dakota testing the effectiveness of UASs for surveying and assessing infrastructure damage in disaster settings.

Following passage of Part 107, Edison Electric Institute and Sharper Shape, a California-based drone company that already flies BVLOS missions for utility asset inspections in Europe, applied for an FAA waiver to conduct BVLOS drone flights in the US utility sector. As 2017 gets underway and more waiver requests are granted, the number of utility BVLOS flights is set to rise.

Regulatory Developments to Watch

While Part 107 marks a significant step toward the commercialization of drones, development of a robust regulatory framework is still very much a work in progress. Other FAA developments to watch that will affect utilities include those governing commercial use of drones to survey and monitor critical infrastructure as well as related rules restricting drone flights near critical infrastructure in order to contain security threats. The FAA is also establishing committees to address safety issues posed by UASs and to develop rules governing drone operations BVLOS, both of which will affect utility drone applications well into the future.

 

2016 Marks a Year of Disruption for the Energy Industry

— December 29, 2016

Energy CloudAs 2016 draws to a close, it’s difficult to identify which events of a tumultuous year will affect the energy industry the most. The UK’s vote to leave the European Union and Donald Trump’s victory in the US presidential election will certainly top most lists for significant events in 2016. However, no one yet knows the extent to which either will affect the industry. I would like to remember 2016 for other events that gained less airplay than Brexit and Trump but still demonstrate the significant disruption that is occurring to traditional energy business models.

For many years, I have discussed the hypothetical risk of competitive disintermediation caused by the future convergence of electricity and telecommunications markets. Until this year, I relied on a handful of small-scale projects and strategies that amounted to little substance to make this point. However, events in 2016 show that the risk is no longer hypothetical, nor will convergence happen in the future: major utilities are planning large-scale telecommunications projects now, while telcoms are entering the mass market for electricity.

The Spread of Smart Grid

Enel is Italy’s largest utility and has led the charge into smart grid technology adoption. Italy was the first country to adopt smart meters, and it also has one of the most advanced distribution automation projects in Europe. However, Enel’s ambitions extend well beyond the utility industry. It is targeting the Italian broadband market, aiming to provide 250 towns and cities with broadband, and the company’s recent Metroweb acquisition sets Enel on this path. Enel has also discussed plans to deliver broadband to its international customers through wholly owned electricity subsidiaries in Spain, Romania, and South America.

SoftBank is Japan’s third largest company and provides fixed and mobile telephony, Internet, and digital TV services. When the Japanese market liberalized in early 2016, SoftBank recognized an opportunity to expand its services into electricity supply. It has partnered with TEPCO—the former Tokyo Electric Power Company—to deliver power products to its telecommunications customer base of 60 million. In a bold statement that highlights SoftBank’s ambitions in Internet of Things (IoT), the company also acquired leading chip manufacturer ARM for $31 billion.

Transactive Energy

Finally, 2016 saw a profusion of announcements of transactive energy proofs of concept. From North America through Europe, across Asia and into Australia, utilities are investigating ways that customers can start trading power between themselves. Again, transactive energy has been something the industry has discussed for several years, but has seen very little activity. The combination of solar PV, storage, and transactive energy platforms threatens to turn the old centralized business model on its head. The three technologies are complementary and each contributes to the accelerated deployment of the others: solar PV provides the opportunity to self-generate; storage enables the use of electricity at other times of the day; and transactive energy allows the owner to sell power to whomever they choose, at an optimal price.

Utilities face innumerable risks. There are threats from new entrants encroaching on the mass supply market, and massive changes in consumer behavior bring their own share of uncertainties. How each utility reacts will depend on market conditions and their appetite for change. Some will do their utmost to force regulators to protect their current businesses, and others will procrastinate their way to extinction. The likely winners will be those that recognize where future value lies and innovate their way to future success.

 

Autonomous Ride-Hailing May Hail the New Era of the Minivan

— December 22, 2016

CarsharingIt’s been more than 3 decades since Hal Sperlich and Lee Iacocca redefined the family hauler with the introduction of the minivan. Over the subsequent 20 years, the minivan segment grew to become one of the largest in the US market before being overtaken by SUVs and beginning a long and steady decline. However, as we move into the era of autonomous mobility services, we may also see a resurgence of what had been derided as the “soccer mom-mobile.”

While the minivan market isn’t as big as it once was in total sales volume, as these vehicles have gained useful amenities, they have become quite profitable. Starting in 2016, the companies that have stuck by this body style have begun introducing redesigned vans, including the 2017 Chrysler Pacifica and the 2018 Honda Odyssey that will debut at January’s North American International Auto Show in Detroit.

Vans On Demand

When Google decided it was time to expand its development fleet of self-driving cars, it struck a deal with Fiat Chrysler Automobiles (FCA) to purchase 100 Pacifica plug-in hybrid EVs (PHEVs) and equip them with its autonomous sensing and control systems. With the self-driving car project now spun out of the X research lab as a separate company called Waymo, it has also announced an agreement with Honda to discuss collaboration on development and possibly commercialization of autonomous technologies. In Navigant Research’s 2015 Autonomous Vehicle OEM Leaderboard Report, Honda was ranked eighth among 18 companies evaluated, so working with Waymo could provide a boost relative to the market leaders.

Since auto industry veteran John Krafcik came on board as CEO of what is now Waymo in October 2015, the program has apparently shifted its focus from developing complete cars to working with existing carmakers to supply its systems as well as potentially building mobility service platforms. As the shape of future mobility services continues to evolve, these platforms are likely to include a broad range of vehicle types to support different needs. One- or two-person pods may be adequate to provide first/last mile transportation in dense urban areas, while something more akin to a minivan can support families or larger groups traveling on a variety of routes that don’t have sufficient density to make mass transit viable.

Ford-owned San Francisco-based startup Chariot is already providing hybrid on-demand services in San Francisco and Austin, Texas with human-driven vans. As autonomous vans become available, they could be deployed in the same way. For these types of transportation services, the easier ingress/egress of a van would be much more practical than climbing up into an SUV.

Growing Trend

Volkswagen will also be joining in on the autonomous van trend at January’s Detroit show. The embattled German automaker will be unveiling a new battery electric micro-bus concept based on the same new modular electric platform that underpins the I.D. concept shown at this year’s Frankfurt Motor Show. FCA will be participating in the 2017 International CES in Las Vegas for the first time and will reportedly show a battery electric version of the Pacifica.

FCA’s program with Waymo only extended as far integrating autonomous hardware into the minivan and does not include system development. However, as one of the companies in the back half of the pack in the Leaderboard rankings, FCA would also be a good candidate to adopt a production autonomous package from Waymo or one of the larger Tier One suppliers such as Delphi or Continental. We’ll probably be seeing a lot more self-driving minivans in the coming decade.

 

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