Navigant Research Blog

The Future of Smart Parking Is Integration with Automated Technology

— January 26, 2017

Electric Vehicle 2The smart parking industry continues to evolve as an increasing number of cities struggle with traffic congestion and inadequate parking availability. While the deployment of sensor technologies continues to be core to the development of smart parking, a wide variety of other technology innovations are also enabling more adaptable systems—including cameras, wireless communications, data analytics, induction loops, smart parking meters, and advanced algorithms.

Moving Toward Automation

The future of the smart parking market is expected to be significantly influenced by the arrival of automated vehicles (AVs). Several cities around the world are already beginning to trial self-parking vehicles, specialized AV parking lots, and robotic parking valets.

For example, in Boulder, Colorado, ParkPlus is working on deploying the first fully automated parking garage in the Western United States through Boulder’s PearlWest mixed-use development. The company’s automated parking system uses lasers to scan cars and a robotic valet to park the vehicles. Vehicles are transported by a robotic dolly that lifts and transfers them to storage racks. Using this system, up to 4 times as many cars can be parked in the same amount of space as a traditional garage (since there is no need for extra space in between cars). The automated system is expected to deliver vehicles within 3 to 5 minutes of a retrieval request.

Development and Deployment

Somerville, Massachusetts has partnered with global automaker Audi to develop self-driving and self-parking cars. In 2018, a small fleet of cars with piloted parking technology will be deployed to test self-parking capabilities with a specialized nearby parking garage. The idea is that having cars that self-park will help improve traffic congestion considerably as riders could be dropped off in front of their destination and the car would park itself and minimize the time spent taking up space on the road (as opposed to drivers circling several blocks continuously looking for a space). In 2020, phase two of the project is expected to commence with the deployment of a full fleet of self-parking Audi cars. By 2030, the self-parking garage is targeting availability to the broader AV market. It is estimated that parking garages specifically designed for self-parking cars can take up 60% less space than traditional lots (as cars can park much closer together and elevators and stairs are no longer required).

Leading smart cities are recognizing that smart parking infrastructure (i.e., sensors and communications networks) can be leveraged to help enable cars of the future to park themselves. AV fleets are also expected to fundamentally change the way cars are used, affecting how often and where future vehicles will be parked. For more information on the smart parking industry, check out Navigant Research’s recently released report, Smart Parking Systems.

 

Wind Turbine Blade Strategy: Building In-House or Out?

— January 26, 2017

Wind and SolarThe continuing cascade of merger and acquisition (M&A) activity in the wind sector has primarily centered on a few high profile wind turbine OEMs, but it has also been accompanied by a few blade manufacturer acquisitions. Wind turbine OEMs are continually revaluating whether to build blades in-house, outsource them, or juggle a careful blend of the two sourcing strategies. There has been a trend over the past few years toward more outsourcing arrangements. However, two recent acquisitions of independent blade manufacturers are raising the question of whether the trend toward more outsourcing is slowing.

The largest of the deals was in October, when US industrial conglomerate GE inked a $1.65 billion contract to acquire LM Wind Power, the world’s largest independent wind blade manufacturer. LM’s annual blade manufacturing capacity is estimated by Navigant at around 6,300 MW. A much smaller deal announced in November saw German turbine OEM Senvion acquiring European blade design and manufacturing company Euros for an undisclosed cash sum.

Reversing Course?

So is the era of blade outsourcing reversing? In short, no. Instead, it is a continued validation of the “make and buy” sourcing that balances both in-house manufacturing with outsourcing. Over the past few years, wind turbine companies have increasingly gone down this path because it brings the advantages of both sourcing options instead of being wedded to the limitations of one. Having in-house capacity guarantees supply and ensures that increasingly sophisticated blades are designed and manufactured strictly to the wind turbine OEM’s needs. Outsourcing can give turbine vendors more flexibility in using globally located independent manufacturers while avoiding the need to build new factories to serve all global markets.

GE bringing blade production in-house does not refute or reverse the trend toward outsourcing. Rather, it rebalances GE’s previous 100% outsourcing to an OEM that can make and buy. It still plans to source from the independent vendors—although inevitably at lower rates now that it can satisfy in-house needs from LM under its ownership. Senvion already chose a route of make & buy, and the Euros acquisition just brings more expertise in-house at a time when sophisticated large blade rotors are so important to turbine design.

Furthermore, there has been well-reasoned speculation that GE’s LM acquisition may have been a preemptive defensive move to prevent Siemens—which has been on its own M&A spree —from acquiring LM. Siemens has and still produces all blades 100% in-house, but the company’s acquisition of Gamesa, which makes and buys, may have ignited a new interest in acquiring more blade production capabilities and options. Having more options and controlling interests in more companies would provide more solutions to the complicated blade sourcing strategy of the larger merged company as Siemens/Gamesa turbine designs and technologies are increasingly harmonized.

A Significant Market

Blades are costly and increasingly strategically important parts of the wind turbine supply chain. Blade costs are typically around 22%-24% of the overall cost of the wind turbine, or between $90,000 to $140,000 per blade, depending on size, materials, and other particulars, according Navigant’s recent Wind Turbine Blade Technology & Supply Chain Assessment report. The global wind blade market is significant, with between $6.6 billion and $7.7 billion in revenue expected annually from 2016 to 2025.

Going forward, there likely will still be some shake-ups among turbine OEMs and blade and other subcomponent suppliers, and some strategic moves may be made to in-source previous outsourcing. In general, however, wind turbine OEMs are expected to continue on a trajectory of blending in-house production with cost-effective flexible outsourcing.

 

CES 2017: The Year of Alexa and the Smart Home

— January 24, 2017

Home Energy ManagementAs my colleague Neil Strother put it, Alexa stole the show at CES 2017. Walking through the smart home exhibition at the Sands, it seemed as though every vendor with a device prominently featured the Amazon Echo and emphasized integration with Alexa. What struck me most about this phenomenon was Amazon’s ability to transition the smart home from an idea into a reality. The ability of device manufacturers to hone in on Alexa as the basis for the smart home, on which a whole ecosystem of connectivity and access can be built, is pushing a market that the average consumer can get on board with, as opposed to a Jetsons-style future that seems so far away. The Amazon Echo is not just the advertised Wi-Fi speaker, but an entire smart home platform.

Alphabet’s Google Home is also acting as a connected home platform and pushing the market closer to the mainstream. Google Home touts integration with many of Google’s beloved products and services, including its search engine, translation service, and mapping software, as well as a series of devices such as the Nest product line and Samsung’s SmartThings. However, Home still has a long way to go before it can catch up to the connected ecosystem that Amazon has created since the Echo’s release in 2014. This was made clear at CES, where Google Home took second place to Amazon Echo in terms integration with third-party devices and presence at vendor booths.

Comprehensive Solutions

Outside of the Wi-Fi speaker play, others in the market are providing comprehensive solutions that are pushing the smart home forward. Vivint Smart Home, which had a booth that looked more like a livable home than a technology demonstration, not only has a whole ecosystem of devices (yes, Amazon Echo among them), but is also partnering with sister business Vivint Solar to grant consumers more control over their energy. This all operates on one platform, which includes artificial intelligence for learning user patterns and making recommendations on how to better automate devices in the ecosystem, thus bringing the market that much closer to truly smart homes.

There are still major hurdles to creating a truly smart home, such as interoperability, security, and the technology required to make a home “smart” rather than simply “connected.” However, CES 2017 showed that the smart home is becoming much more of a reality than a concept, and  devices like the Amazon Echo are providing average users with a glimpse into the future.

 

East Coast Now Home to Record Lease Payment for Offshore Wind

— January 24, 2017

TurbineIf there was any remaining doubt of the commercial viability for large-scale offshore wind development off the East Coast, an auction held just before the end of the year for the rights to develop an offshore wind farm off Long Island, New York should put that question to rest. The bidding war was fierce, with 33 competitive rounds among some 14 developers, forcing the planned one-day auction into a second day. When the dust settled on the auction, the US subsidiary of Norway’s oil giant Statoil won the auction with its offer to pay the US Department of the Interior (DOI) $42,469,725 for the lease rights to develop.

Forty-two and a half million dollars. This is more than twice the total of winning bids in 11 other previous offshore wind power auction sites combined. It’s reportedly more than twice the value of offshore oil & gas permits in auction under the DOI in the Gulf of Mexico. Proximity to the high-priced electricity market of Long Island and New York City is a clear advantage to the site.

Increasing Capacity

The New York Wind Energy Area, located 14-30 miles offshore, spans 79,350 acres and covers water depths of 65 feet-131 feet (20 m-40 m). The area could accommodate more than 1 GW of wind capacity, and likely more as turbine nameplate capacity continues to increase. The largest offshore wind turbine currently commercially available is an 8 MW unit from MHI-Vestas with a 164 meter rotor (538 feet). Siemens is well on track to uprate its 7 MW units with 154 meter rotors (505 feet) up to 8 MW. Four to six years from now, the newest turbines will be exceeding 10 MW per unit.

One gigawatt of offshore capacity served by next-generation 10 MW turbines would be a wind farm with only 100 turbines. It is perhaps not entirely a coincidence that New York’s Governor Andrew Cuomo announced in early January that the state had come to an agreement to decommission the aging 2 GW Indian Point nuclear power plant located up the Hudson River. It would take 200 next-generation offshore wind turbines to match the lost nameplate capacity of Indian Point. Two hundred turbines in one plant is entirely achievable given that the largest existing wind farm currently in operation, the 630 MW London Array, is made up of 175 turbines.

Enormous Opportunity

To be clear, Indian Point is not being replaced by offshore wind directly, but wind will help fill in the gap left over from the plant’s retirement. Statoil, among others, sees a healthy future with onshore and offshore wind, both as an enormous business opportunity and as a hedge against its historical focus on oil & gas. Notably, only a short while before the December offshore wind auction round, Statoil pulled out of its investments in the Canadian tar sands oil extraction at a significant loss, in effect exiting one of the most greenhouse gas-intensive energy extractions in favor of one of the cleanest sources of energy.

There will still be many steps in permitting and development before Statoil builds its offshore wind plant, but the amount of money it was willing to pay shows there’s major potential. The Northeast exhibits the confluence of factors inevitable to supporting major offshore investments: high energy prices, high energy demand, proximity to major electricity demand, a relatively shallow ocean bed, and strong and consistent offshore wind.

 

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