Navigant Research Blog

AMI Data Brings New Possibilities for Energy Efficiency Measurement and Verification: Part 1

— June 29, 2017

Coauthored by Emily Cross and Peter Steele-Mosey

Utility industry stakeholders have been debating whether the proliferation of advanced metering infrastructure (AMI), also known as smart meters, will change the way energy efficiency program evaluation, measurement, and verification (EM&V) are conducted. Many utilities remain unsure about what is realistically possible. This uncertainty is compounded by the fact that new firms seem to emerge each year, claiming to provide increasingly deep insights into customers’ energy reduction potential (such as appliance-level load disaggregation and building-specific identification and targeting) using little more than consumption data from the utility.

How Can AMI Data Be Used?

In the field of EM&V, what is AMI data good for? How can it be used by utilities, regulators, and stakeholders to reduce evaluation costs, deliver more accurate and precise estimated program results, and improve the effectiveness of program delivery?

To answer these questions, it is helpful to define the two key evaluation-driven use cases for AMI data:

  1. Operational improvements: Early indications of program achievement provide the opportunity for course correction. Due to the continual collection of AMI data, it should be possible to quantify the impacts of changes in marketing approach and customer targeting on energy efficiency achievement more quickly than is traditionally required for program evaluation.
  2. Program impact evaluation: What is the best estimate of the energy and demand savings that a program delivered? This type of information is required to track utilities’ progress against mandated energy efficiency targets, to enable energy efficiency programs to be bid into energy and capacity markets as resources, and to quantify overall program cost-effectiveness.

Part 1 of this blog covers operational improvements, while part 2 will cover program impact evaluation. This topic is covered in detail in Navigant Research’s new report, Utility Strategies for Smart Meter Innovation: Energy Efficiency Measurement and Verification.

Operational Improvements

Utilities are all too familiar with the frustration of waiting for results from evaluators. Typically, a full year of data is required and the evaluation itself may take several months. This lag between implementation and assessment limits the ability of program administrators to course correct underperforming programs or understand how to tailor messaging to maximize the recruitment of high potential customers.

AMI data is collected continually, and several firms have recently come to market with prebuilt software solutions designed to quickly plug and play with this data. In theory and depending on the type of program, it should be possible to obtain ongoing updates of program performance long before the actual evaluation even begins.

These software packages have their limitations and are no substitute for a custom econometric evaluation, as they tend to be one size fits most. Additionally, the innovative approaches they employ sometimes lack the support of academic and professional literature from which econometric approaches benefit.

There is no denying, however, that these prebuilt software solutions can deliver results much more quickly than the traditional approaches. The results may not be sufficiently robust for a regulatory environment, but they may (depending on the program and the vendor) be sufficient to allow program administrators to take greater control of their programs and monitor their progress in near real-time. Program administrators would have the opportunity to make more effective use of program budgets and increase the value of their programs for their shareholders and ratepayers. They could use these software solutions for programs where simply multiplying the implementer‑reported savings by the prior year’s realization rates is not expected to be accurate.

 

The Battle for the End Consumer: Residential PV and Battery Business Model Innovations in Germany

— June 29, 2017

While solar capacity additions in Germany have collapsed in recent years, the range of innovative residential energy solutions based on solar PV and batteries has blossomed. In recent months, battery OEM SonnenBatterie has introduced a free refills battery solution, while E.ON has introduced a batteryless electricity storage service.

The VPP Approach with SonnenBatterie

Sonnen’s solution, called sonnenFlat, allows the buyer of a Sonnen battery to opt in to sonnenCommunity. This is an independent virtual power plant (VPP) consisting of Sonnen battery owners and Enerix solar systems. The solar and battery assets are optimized to reduce the need to buy electricity from Germany’s wholesale market and to enable participation in Germany’s ancillary services markets.

A residential battery owner joining sonnenCommunity receives a €1,875 ($2,100) discount off the battery price. If purchased together with a PV system, they also get up to 6,750 kWh of free grid electricity on top of the electricity generated by the PV system. This is the approximate number for customers that bought a residential system with 9.5 kWp of PV and a 10 kWh battery, which cost around €27,200 ($ 30,500).

E.ON Envisions a Battery-Free Home

E.ON’s solution seeks to eliminate the battery altogether—at least in the customer’s home. The SolarCloud service offers to store the electricity generated by the customer’s PV system virtually in the grid and return it when needed by the customer (at night or on cloudy days, for example). E.ON charges a €21.99 ($24.60) monthly fee for this service (for a 4 kWp installation). If this service sounds familiar to US readers, that’s because it is net metering—but at a cost.

In essence, Sonnen is offering free electricity with its hardware and E.ON is offering free (virtual) hardware for a flat fee. Both aim to help their customers to reach 100% solar self-consumption (on a net basis).

The Battle for the End Consumer

Although E.ON and Sonnen are very different types of companies, nowadays they are battling each other for the long-term ownership of the customer relationship. From its background as a traditional power utility, E.ON knows that any customer who installs a PV plus battery system at home is a lost customer for at least 10 years (the lifetime of residential batteries). E.ON is therefore willing to use its energy trading capabilities to create a product that replicates what a battery offers.

Sonnen approaches the issue from a different direction. It knows that battery technology is being commoditized and therefore it cannot compete in the long term against utility players without monetizing the services its batteries can provide to other energy users and the grid. Hence, Sonnen has had to become a virtual utility to sell its hardware.

Regulation Matters

This sort of competition between traditional utilities and newcomers is something we expect to witness more and more as the Energy Cloud evolves. It is also important to highlight the key role of Germany’s energy market regulation in allowing this type of innovation. The German market was unbundled years ago with short intraday call auction times (15 minutes). It allows aggregators to participate in the market—and importantly, there is no capacity market. This allows companies like Sonnen to offer free electricity to their customers, which is paid for by trading the customer assets in the wholesale and ancillary services markets.

 

Postcard from Hawaii to Nation’s Capital

— June 29, 2017

The mood at the second annual VERGE conference in Honolulu, Hawaii last week was upbeat about the future of clean energy, despite pushback on the US mainland. Apparently, those committed to a clean energy agenda, including the private sector, are more motivated than ever to push forward with aggressive programs to bring renewables resources online. They aim to not only combat climate change, but also create jobs.

Conference attendees clearly supported the supposition that clean energy is here to stay, no matter what might be unfolding in Washington, DC. The proposed dismantling of the federal Environmental Protection Agency’s Clean Power Plan and recent withdrawal of the United States from the Paris Agreement on climate change only seemed to serve as motivation to push forward even harder.

Hawaii’s Renewable Energy Vision

Hawaii is the first (and so far) only state in the United States to commit to a 100% renewable energy future. Governor David Ige of Hawaii didn’t seem to blink in the face of counter currents flowing from the Trump administration. A confessed energy geek, he seemed to take particular delight in the fact that Hawaii has emerged as a key testing ground for bolstering commitments to infrastructure needed to integrate variable renewables for both power and transportation services. Since each island of Hawaii is its own separate electric grid control area and retail costs are high due to such a reliance upon imported sources of fossil fuel, Hawaii is in a unique spot. The economics in the state clearly favor renewable energy.

Industry Momentum Is for Renewables

Even Connie Lau, CEO of Hawaiian Electric Industries, reported that her investor-owned utilities brethren have all bought into the clean energy agenda. If the administrative about-face on clean energy had occurred 8 years ago, then the momentum for renewables and other clean energy may have been halted, but that time has passed. Past government and industry investments have driven down the price of solar PV, wind, and batteries while software innovation to manage such resources has scaled up.

Nevertheless, there are challenges in implementing aggressive clean energy goals. Just look at California, where the state is paying neighboring states to take excess solar production. Many models show that once one reaches 80%-90% renewables penetration, the cost of integration can jump dramatically.

One of the key tools Hawaii will rely upon to reach its 100% renewable energy goal is to integrate devices like energy storage into self-balancing distribution networks such as microgrids. As of now, over 90 MW of new energy storage devices has been authorized by state regulators to be installed among the Hawaiian islands, with the majority of that capacity—70 MW—to be installed in Oahu.

Continuing Conversation

I had the pleasure of helping to run a 4-hour workshop on how to overcome challenges to developing a microgrid at VERGE with cutting edge microgrid market makers such as ENGIE and Spirae. I also moderated a session on how microgrids boost clean energy on islands, with featured speakers from ABB—which is pushing forward with a 134 MW microgrid designed to reach 50% renewable energy on the island of Aruba by 2020—and representatives from Hawaii and the US Navy.

Ironically, there may still be some room for collaboration between Hawaii and Washington, DC in the clean energy space. As I noted in a previous in a previous blog, one area where the interests in promoting national security in DC and a clean energy agenda in Hawaii align is the microgrid space. Watch for a report on that topic later this year.

 

Mapping Smart City Applications to Smart Street Lighting Platforms

— June 28, 2017

City managers interested in smart street lighting applications today can choose among a multitude of technologies and vendors. Questions such as cost, functionality, useful life, and ability to accommodate other applications over time, however, can make the decision-making process overwhelming.

To provide guidance, Navigant Research performed a heatmap analysis in a study commissioned by smart street lighting vendor Echelon. The heatmap compares the characteristics of various narrowband, mediumband, and broadband network technologies with the performance and cost characteristics required by 10 different smart city applications. Network technology features such as costs, reliability, security, latency, and bandwidth, among others, were evaluated.

Smart City Platforms and Applications: Suitability Heatmap

(Source: Navigant Research)

The analysis indicated that for a balance of cost and functionality, the mediumband options, such as power line carrier (PLC) and radio frequency (RF) mesh technologies, offer several advantages. For basic lighting controls, there are several narrowband connectivity options that will work at a competitive price—but they are limited in terms of capacity for additional applications to be layered on top.

In contrast, broadband options such as point-to-multipoint RF solutions, public 3G or 4G networks, or Wi-Fi may be robust enough to handle even high bandwidth applications like closed circuit TV—but at a higher price. Wi-Fi—public access or private—may also bring higher security concerns to municipalities, as there are publicly available hacking tools for cracking Wi-Fi networks. Also, public access Wi-Fi may see its throughput constrained by citizens streaming video over their phones; this could impair the efficacy of higher speed applications such as smart traffic light controls or gunshot detection.

Advanced Controls Have Advantages

At the most basic level, lighting controls provide elementary features such as remote on-off control, dimming, and scheduling functions. There is also a wide range of advanced functions that can be enabled by intelligent controls, including energy monitoring and billing, performance monitoring, color controls, adaptive lighting, and emergency response.

Beyond the capabilities for advanced lighting controls, street lighting networks also have the potential to support a range of non-lighting applications: environmental/air quality monitoring, traffic monitoring, smart parking, and gunshot detection. An even wider range of applications may benefit from sharing the network infrastructure. These might include traffic light controls, smart waste management, public messaging/ digital signage, or high definition video surveillance.

New applications for smart street lighting platforms are emerging still. New ideas such as controlling sprinkler systems or controlling public restroom locks have been raised—and other new ideas are sure to emerge as connectivity becomes more ubiquitous.

Better Quality of Life

A growing number of cities globally are looking for ways to not only reduce their energy expenses, but also improve the efficiency of city operations and provide a better quality of life to their citizens. As such, the selection of the appropriate smart street lighting platform that meets both long-term goals and near-term constraints should be given careful consideration.

For further detail on smart city applications, street lighting as a platform, and the relevant connectivity platforms discussed herein, see the Smart Street Lighting as a Smart City Platform white paper, available here. Navigant’s Navigating the Energy Transformation white paper, available here, also provides a related discussion of smart city solutions as a platform in the Energy Cloud era.

 

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