Navigant Research Blog

As Summer Winds Down, a Look at Residential Demand Response Leaders

— September 19, 2017

Summer 2017 was relatively light from a demand response (DR) perspective in North America—aside from California, which saw extreme heat waves. There were not a lot of opportunities to test the capabilities of DR resources that utilities, regional transmission organizations, and retail electric providers had stockpiled to prepare for high load levels or energy prices. However, there was still plenty of merger and acquisition (M&A), technology development and new program design activity taking place.

Navigant Research took this opportunity to compile a Leaderboard that examines the current vendor landscape for residential DR (RDR). The report analyzes the strengths and weaknesses of the key players in this global industry and displays those rankings visually in the Navigant Research Leaderboard Grid. This Leaderboard utilized broad guidelines to determine which market participants should be included to allow for companies that offer hardware and/or software and focus on technology or include program implementation services.

The Navigant Research Leaderboard Grid

(Source: Navigant Research)

This Leaderboard evaluated 15 companies based on 10 criteria to determine which competitors are Leaders, Contenders, Challengers, or Followers in the market. As the global RDR market has heated up in recent years, leading companies have invested heavily to develop their capabilities and strategy. There are a number of companies focused on other aspects of the smart grid arena now beginning to tackle the DR space, as well as many startup companies with new hardware and software offerings that take advantage of the plethora of available energy data and communication options for devices and customer messaging. Some of the incumbent RDR vendors are finding that they need to partner with these new players to keep pace with the changing marketplace.

The RDR industry is still maturing relative to the energy industry in general, but great strides have been made in turning DR into an operational resource for grid operators. In addition, this report combines both software and hardware offerings, as well as technology providers and program implementation services, which are all different segments that require diverse skill sets. Few companies attempt to serve all sides, thereby offering a complete solution.

As Navigant Research has published a series of DR-related Leaderboards over the past few years, it has been interesting to see the high level of new players and new technologies that enter the market on a regular basis. By the time the next is published, I expect to see more companies come on to the radar screen and disrupt the market, along with more M&As as successful startups are swallowed up by large energy players looking to expand their reach in the space.

 

Taking the EV Mainstream

— September 19, 2017

The plug-in EV (PEV) is rapidly evolving to become a viable mainstream option for almost every car buyer. As ever with automobiles, there is no silver bullet solution. This year there are several unique variations on how best to serve the needs of drivers seeking to minimize energy use as the PEV landscape matures. Navigant Research’s EV Geographic Forecasts report projects 50% growth in North American PEV sales this year and market share of between 7% and 11% by 2026.

Design is always a matter of balancing priorities. Priorities can depend on the target market, how the vehicle will be used, and budgets.

Tesla’s Approach

Tesla is trying to build on the premium brand image it has cultivated while creating the impression of going mainstream. The Model 3 has been promoted as an affordable long-range EV with a price starting at $35,000. That will yield a spartan car. Most customers will actually be paying far more to include current options, bringing the price to at least $59,000, with additional performance options to be added later.

GM

General Motors (GM) took a different approach with the Chevrolet Bolt, opting for maximum possible electric range and utility while keeping the base price under $30,000 (after federal incentives). Even including all options, the Bolt is still less than $44,000 before incentives. While some reviewers have criticized the hard plastic interior, the vehicle’s real-world range, handling, and utility have garnered very positive feedback.

Hyundai and Nissan

Hyundai and Nissan, by contrast, have veered even harder toward trying to maximize the value proposition of their respective EVs. The Hyundai Ioniq Electric and Nissan LEAF both have starting prices before incentives below $30,000 and even highly equipped models will still only hit about $36,000.

The Ioniq, built on a dedicated electrified platform with hybrid, plug-in hybrid, and battery-only flavors, went for maximum efficiency with a slick five-door hatchback body strongly reminiscent of prior-generation Toyota Priuses and a moderately sized battery. Hyundai aimed to keep both cost and weight down with a 28 kWh battery, less than half the capacity of the unit in the Bolt. With its modest weight and low drag, that’s enough for 124 miles of driving range and a leading efficiency of 136 MPGe combined.

After trying out a slightly futuristic design with the original LEAF, Nissan decided it needed a more conventional look in order to get an audience beyond early adopters. While the five-door hatchback configuration and basic dimensions are carried over, the LEAF now incorporates contemporary Nissan design cues both outside and in the cabin. Aside from the propulsion system, it’s now just an ordinary compact hatchback. With a more efficient drivetrain and battery that has grown from 30 kWh to 40 kWh, the LEAF is now expected to go at least 150 miles on a charge, double what it did when it debuted in 2010.

Chrysler

Fiat Chrysler, which has long derided EVs, has now opted to build on one of its core strengths with the Pacifica Hybrid. Like Nissan, FCA is focusing on the ordinariness of the driving experience with its plug-in hybrid minivan. The key distinguishing feature is that it has 35 miles of real-world electric driving range, enough to meet most daily commuting needs without burning any gas. But as a family hauler that might be used for road trips, no additional planning of where to stop and charge is required.

Buyers of vehicles that burn fossil fuels have long had choices ranging from tiny sports cars to full-size trucks. We’re now reaching the stage where those that want to avoid gas stations have choices at increasingly affordable price points as well.

 

Sunrun: The Large Solar Provider Dilemma

— September 19, 2017

On August 24, Sunrun—the last of the large independent US solar providers—announced an agreement with Comcast, a leading cable provider in the country. The two companies plan to launch a strategic partnership to offer Sunrun’s services to Comcast’s clients.

Sunrun was founded in 2007 and found success innovating new ways to finance residential solar installations such as solar leases and power purchase agreements (PPAs). It created the solar as a service (SOaaS) business model, which became the foundation for the growth of the sector between 2010 and 2015. Until 2014, it seemed that solar leases and PPAs—grouped as third-party ownership in California’s Interconnection Applications Data Set—were going to be the winning business model in the SOaaS industry. These leases allowed large players to both increase the market size and displace local installers.

Changing Solar Market

In 2015, the market share of solar leases and PPAs in California—which itself represents around 60% of the US market—plunged to under 50% from 75% in 2013. Data for 1H 2017 shows third-party ownership at close to 30%.

Third-Party Ownership Market Share, California: 2005-1H 2017

(Sources: Navigant Research; California Distributed Generation Statistics)

The collapse of third-party ownership has weakened large solar providers compared to local installers. Large solar providers relied on their access to cheaper capital backed by significant margins in their leases to run large business development teams and finance the installations. As residential solar customers moved into cash or loan buys, local installers became competitive again, reducing the profit margin per installation in the industry. This left large solar providers like Sunrun with high customer acquisition costs relative to profit per installation.

Under these circumstances, it is not surprising that Sunrun is looking for new and cheaper ways to attract customers. Even if this partnership with Comcast costs Sunrun its independent status, it may be worthwhile if the strategy is successful.

What Is in It for Comcast?

Comcast has shown interest in the energy sector in the past, and its Xfinity Home service includes a smart thermostat as one of the offerings. However, scaling it into a full-fledged energy solution would be costly, as Comcast would need to build a new team from the ground.

For Comcast, this partnership offers a relatively cheap entry into the solar and energy markets in which it can rely on its core skills (customer acquisition and management) without having to invest significantly in a new product. If successful, Comcast can push a more aggressive strategy into the energy sector either through Sunrun or with its own product.

Benefits and Potential

Customers of Comcast and Sunrun could also benefit from this partnership. The companies can put together a convincing solution for home automation by tapping on their offerings on the two main services around home automation—security and energy.

The success of this partnership will depend of Comcast’s ability to cross-sell energy services to its current customer base. Comcast operates in a market with limited competition and high barriers to entry, which is different from the solar market. The sales process of solar is also different from that of cable. Solar is a long-term investment (even leases and PPAs require long-term contracts). Therefore, customers take long before making a final decision and, in some cases, it will require home visits before the deal is closed. This means that Comcast cannot simply add solar to its bundles. It will have to invest in training its sales force if it wants to sell solar services effectively. It won’t be easy, but if Comcast succeeds, it may signal a new era for energy.

 

Market Solutions for Transit Deserts

— September 14, 2017

When discussing new disruptive mobility solutions, comments on their effects on public transportation are often not far behind. Many believe that public transportation cannot compete with the convenient, on-demand, door-to-door service offered by transportation network companies (TNCs) such as Lyft and Uber. Some see TNCs and other mobility services as poaching transit riders. Others view these solutions as complementary to public transportation as they provide services to unaddressed transit deserts or other underserved communities.

Two areas that provide opportunity for growth for TNCs—and an opportunity to support public transit operations—are transit desert services and first and last mile (a term used to describe the portion of a commuter’s trip between their place of origin and where they connect with a mode of public transportation). A few pilot programs demonstrate their potential and provide insight into how best to execute these services.

Centennial/Lyft Pilot Program

The Regional Transportation District (RTD) of Denver has had great success in providing public transit services throughout the region. RTD has launched three rail lines and one bus rapid transit line in the past 2 years and is expecting to open a fourth rail line before the end of 2017.

To provide a solution to a lack of connectivity and decrease single occupancy vehicle trips, the City of Centennial partnered with Lyft for a 6-month pilot program that provided Lyft Line rides free of charge to and from the Dry Creek light rail station within the existing RTD Call-n-Ride service area. Centennial subsidized these rides and service was exclusively offered through Lyft. While the program duration was short and had underwhelming ridership, results suggest that mobility solutions provided by companies may work as a supplement to existing transit services.

Lyft Shuttle and Ford Chariot

Recognizing that many of the rides given between 6:00 a.m. and 9:00 a.m. and 4:00 p.m. and 6:00 p.m. are for work commutes, Lyft now offers a new pilot service in Chicago called Lyft Shuttle. Looking at trip data, Lyft identified common travel routes that exist in transit deserts, then created fixed routes where riders could reserve a seat via the app and walk to designated pick-up locations to catch a shared ride at a reduced cost compared to a Lyft or Lyft Line.

In 2016, Ford acquired the San Francisco-based startup Chariot. Chariot offers a service similar to Lyft Shuttle. Riders can reserve a seat on a Chariot shuttle via the Chariot app and travel along fixed routes in transit deserts in select cities. Chariot’s business model is unique in that any community can crowdsource interest in a Chariot route by having 50 individuals express interest in using a route if it was offered by the app.

Automated Transit Networks

Automated transit network (ATN) is a catchall term for self-driving shuttles, and there are several existing electric ATN pilot programs around the world. These automated services run on predetermined routes and carry anywhere from 4 to 24 passengers at a time. Notable ATN systems include 2getthere, Vectus, Modutram, and Ultra.

ATNs can provide users with an automated, high frequency mobility solution along fixed routes. Existing ATNs provide services for universities, hospitals, business parks, and airports, but other services have been speculated, such as replacing costly public transit infrastructure or filling in gaps in transit services.

Several factors are creating opportunities for a shift in the classic paradigm of private automobile ownership. As increasing urban density and traffic congestion drive consumers to look for new alternatives, companies are racing to provide them with new mobility services. The services mentioned above are just some of the market disruptors responding to this shift.

 

Blog Articles

Most Recent

By Date

Tags

Clean Transportation, Digital Utility Strategies, Electric Vehicles, Energy Technologies, Policy & Regulation, Renewable Energy, Smart Energy Practice, Smart Energy Program, Transportation Efficiencies, Utility Transformations

By Author


{"userID":"","pageName":"2017 September","path":"\/2017\/09","date":"9\/19\/2017"}