Navigant Research Blog

Why Does Diesel Win in Places like Puerto Rico? It’s 9,000 Times Better Than Solar PV by This Metric

— December 12, 2017

In the aftermath of natural disasters like Hurricane Irma, there is much talk about how renewables are the ideal backfill to replace and modernize electric grids. Indeed, renewables like solar PV and wind, along with energy storage, grab headlines due to their falling costs, low lifetime carbon emissions, and general excitement about their deployment and future potential. Why, then, was the largest immediate post-storm addition a pair of 25 MW diesel-fired turbines installed by APR Energy?

Compactness Is Key

In addition to dispatchability and fast install (the plant was operational in 15 days), a key factor is energy density, defined here as daily energy output per acre of plant area. By Navigant Research numbers, combustion turbines like the ones installed by APR can produce as much as 6,200 MWh in a day using 1 acre of land. Compare that to solar PV, which is smaller by a factor of 9,200; based on National Renewable Energy Lab data, solar PV can be expected to produce about 0.67 MWh in an acre. The figure below indicates energy density by corresponding bubble size. The numbers vary by project, but the contrast is stark. Reciprocating generator sets (gensets) are compact, more distributed than the turbines, and a key part of the recovery (with the installation of 375 generators noted by this article). There are also headlines citing fast installation of renewables in microgrids, a clear trend of the future. Still, many of the high output, dense systems tend to be based around fossil fuels.

Energy density has two components. Power density (along the vertical axis) indicates the footprint needed for energy production in any instant of time. Combine that with the second component—capacity factor, along the horizonal axis—and fossil-fueled generation can look exceptionally appealing thanks to its availability nearly 24/7. A crucial advantage is the system’s dispatchability, the ability to provide power on demand.

Energy and Power Density by Technology: Daily Delivered Energy (MWh) in 1-Acre Footprint,
North America: 2017

*Assumes 6-hour (150 MWh) battery discharges 80% of capacity, once daily.

**Equivalent hours/day at max output, assuming consistent demand for power.

Sources: Bloom Energy, Caterpillar, General Electric, National Renewable Energy Laboratory, NGK

Island nations are often constrained on space and need to fit generation among existing infrastructure—especially after a disaster. Many are among the most cramped on Earth, with Japan, Taiwan, the Philippines, Puerto Rico, and many Caribbean nations falling in the top one-sixth of all countries by population density. Though rooftops are available for solar PV, they can be small and may need retrofits. Offshore wind is quickly becoming more appealing, too (though if the grid goes down, it can’t provide onsite, distributed power).

Hybrid Systems Hold Promise

While diesel has the advantage of compactness and dispatchability, it is also expensive, challenging to transport long distances, and emits lots of greenhouse gases and other criteria pollutants like NOX and particulate matter. Natural gas holds many of the same advantages while avoiding many of the cons of diesel; where it is available, it often outperforms diesel. Dual-fuel turbines and gensets can be even more attractive—the Puerto Rico turbines produce power at 18.15 cents/kWh on diesel and less on natural gas when it’s available.

Still, natural gas faces similar hurdles to those noted for diesel (albeit lower ones). In many cases, the optimal system is hybridized—relying on a mix of fossil fuel and renewables. Despite all the buzz around solar, storage, and other renewables, reliance on only those technologies is often cost prohibitive. Hybrid microgrids based around diesel or heavy fuel oil generation can often see fuel savings of 10%-30% or more with the addition of new technologies like solar PV, wind, and storage.

 

IoT: Building Awareness – Part 1

— December 12, 2017

Marcus Aurelius once said, “That which is not good for the beehive is not good for the bees.” Conversely, what is good for the bee is good for the hive—a metaphor not lost on Internet of Things (IoT) and smart building integration. A paradigm surrounding the building automation space is developing as businesses begin to focus more on occupant experience. Smart building technologies are widening the building investment landscape to include tenant engagement and satisfaction. Value-generating technologies, like IoT-enabled devices, make it easier to manage energy and businesses. Building owners are able to leverage existing communication platforms, capitalize on energy efficiency, and promote healthier lives with healthier buildings.

Better Building, Better Business

Building automation systems with IoT-enabled sensors can not only increase energy efficiency, but also improve worker efficiency, leading to more productive businesses. Research finds that comfortable work environments enhance business productivity by improving the health and satisfaction of its workers. Advanced sensors, like those in Amsterdam’s building superstar The Edge, have given building managers better information on how building space is being utilized by monitoring occupant behavior. This is important because the more we know about occupant behavior, the more we are capable of creating environments that will optimize worker performance. Studies on the effect of building systems in schools also found that indoor air quality and thermal comfort have a direct effect on concentration. Classrooms that are thermally comfortable with lower levels of pollutants increase student learning, resulting in higher levels of student performance.

Show Me the Money

The advantage of investing in smart building technology is twofold, as these systems are not only more sustainable and energy efficient, but potentially more lucrative as well. Businesses operating within these smart systems are better positioned to make financial gains, as employees are more productive. Reports like JLL’s 3-30-300 rule suggest that prioritizing tenant satisfaction and well-being creates larger payoffs for building owners and investors—more so than savings on monthly utility bills would alone. The study finds that “a 2% energy efficiency improvement would result in savings of $.06 per square foot, but a 2% improvement in productivity would result in $6 per square foot through increased employee performance.”

Work Smarter, Not Harder

The argument stands that smarter buildings make better workers. Smart buildings are attractive from a business perspective, as these technologies enable employees to be more productive and less distracted by time-consuming administrative tasks, such as booking conference rooms or scheduling in-house meetings. The more comfortable the worker, the better work they will produce. This, in effect, raises the value of the business and contributes to the overall value of the building. In terms of ROI on smart buildings, focusing on occupancy satisfaction takes a bottom-up approach that supports greater integration and interoperability, improving bottom lines across the board.

Connectivity Is Key

The paradigm surrounding building management systems is shifting as more attention is being paid to occupancy experience. We know that effective operations and maintenance through IoT-enabled devices improve building performance. Why not apply that same logic to worker performance? The significant effect data analytics continue to have on the uptime of building systems could equally improve the livelihoods of the people operating within those structures. Facilitating better working environments optimizes worker efficiency, adding value to businesses and buildings. What is good for the worker bee is good for the hive (and hive investors), as smart technologies continue to add value to both residents and buildings alike.

 

Consumer Survey Indicates Core Audience Needs Expansion

— December 12, 2017

Automakers are introducing new EV models that will appeal to a broader audience of car buyers. Yet, understanding the demographics of consumers with the greatest potential to buy plug-in EVs (PEVs) remains a formidable industry challenge. Navigant Research conducted a survey to understand consumer preferences and demographics when considering a vehicle purchase. Overall, survey results indicated that electric powered vehicles were the first choice of vehicle for their next purchase for 14% of respondents, while 74% indicated gasoline powered as their first choice. When combined, diesel, hydrogen, natural gas, and propane autogas powered vehicles accounted for 12% of respondent’s first type fuel choice.

First Choice Fuel Type for Next Vehicle Purchase

Source: Navigant Research

The gap between electric and gasoline powered vehicles is large for consumers considering a vehicle purchase, but the number considering an EV jumps to 58% of respondents when their second and third choice of fuel types are considered. So, what can the EV industry do to convince that 58% to prioritize emissions-free driving?

To best distinguish who may purchase a PEV, results of respondents who were favorable toward PEVs (ranked electric as their first fuel type preference) and who owned a PEV were compared to focus on any key differences between the two groups. According to the survey, an average PEV owner is likely to be under 40, live in a single-family home, have a 4-year college degree, and make above $50,000 in yearly income.

Consumers with access to parking at their residence are more likely to purchase PEVs due to the ease of access to charging—having an electrical outlet near the dedicated parking increases this likelihood. Therefore, consumers with garages, largely found in single-family homes, are the most likely to own a PEV. A lack of home charging requires a consumer to rely on public charging infrastructure, which in many areas is still insufficient, and discourages adoption.

Observed Consumer Trends

Overall, the demographics of PEV owners and those interested in purchasing a PEV were similar, but two differences stood out. Younger age groups are more likely to own a PEV and be favorable toward a PEV as their next vehicle purchase. There is also a widening gap in the older 45-64 demographic between those who are favorable toward PEVs and those who own them. The 45- to 64-year-old demographic made up 10% of the PEV ownership population, but 21% of those who were likely to purchase a PEV. This data points to a demographic that has unrealized potential for PEV adoption.

The second trend of significance is the disparity between those living in single-family homes and those in multi-family units, such as apartments, lofts, and townhouses. Lack of access to charging is a major barrier to PEV adoption, and those who do not live in single-family homes are less likely to own or be likely to purchase a PEV, as shown in the chart below. No major differences in housing types stand out between the two groups, suggesting that more charging options are necessary to entice multi-family dwellings to buy electric.

EV Consumer Survey: Housing Type

Source: Navigant Research

The Road Ahead

While the consumer survey shows many with positive attitudes toward PEVs, market challenges need to continue to be addressed to make an all-electric transportation future possible. The announcement of longer-range and lower priced battery EV models, charging infrastructure investments, and purchasing incentives indicate that PEVs are here to stay. Market stakeholders should take advantage of this upward momentum to target a wider audience of individuals purchasing vehicles, and promote PEVs to those outside of the current core target demographic.

For more information, see the recent Navigant Research report, Market Data: Electric Vehicle Charging Equipment.

 

Monetizing Energy Efficiency: Creating Additional Value Streams for Your Customers

— December 8, 2017

Much is transforming the global energy landscape these days. Building technologies are progressing from single point solutions to system and platform-based solutions utilizing the latest in smart digital technologies and the Internet of Things. Utilities are reshaping entire business models and strategies to integrate and enable a swiftly growing and diverse stock of distributed energy resources. These are just two of the more visible market evolutions. But as with most industry transformations, change does not happen all at once.

Large groups of buildings (of all sizes) lie along the continuum of advancement with regard to building technologies. Most organizations realize the potential benefits of energy efficiency; however, there are still hurdles that could prevent these types of projects from moving forward. According to a recent Navigant Research report, Energy Efficient Buildings Global Outlook, these hurdles include confusion about which technologies to adopt, what internal resources would be required to manage an advanced building, and how to best understand and calculate payback and ROI to get a project approved.

On the supply side, utilities are also realizing the benefits of making the buildings in their service territories more efficient. Utilities must be concerned with their conglomeration of generation assets to ensure a reliable future energy supply. Energy efficiency and demand-side management (DSM) are two ways that utilities manage this critical task. In fact, at less than 3 cents/kWh, energy efficiency is the most cost-effective source of energy compared to all other sources of generation.

For decades, utilities have had success reaching large commercial and industrial and even residential customers with incentive-based DSM programs like energy efficiency and demand response. PJM is an example of a regional transmission organization (RTO) that understands and actively pursues energy efficiency initiatives to include in its regional capacity planning. Over time, PJM has encouraged over a gigawatt of annual energy efficiency projects in its current and future capacity markets.

The one hurdle faced by utilities and RTOs is awareness of these programs. Small- to medium-sized businesses, energy service companies (ESCOs), and even larger commercial customers may not be fully aware of the availability of these programs. Incentives can go a long way toward clearing energy efficiency project hurdles. For example, utility and RTO incentives may be the final project piece that enables payback and ROI calculations to meet internal financial requirements. Organizations can benefit from working with outside specialists in this area to help understand what is available and how best to assess and include incentives in efficiency and sustainability initiatives.

Join the Conversation

Navigant Research is hosting a free webinar, Monetizing Energy Efficiency: Creating Additional Value Streams for Your Customers, on December 12 at 2 p.m. EST. I will be joined by Meg Kelly, Senior Director of Energy Efficiency, and Russ Newbold, Director of Sales Operations at CPower. Learn the benefits of utilizing PJM capacity credits as a value to you and your customers.

The webinar will help end-use customers—and ESCOs that serve customers—learn what capacity credits are, how to attain them, and how to make them a part of the value chain to earn more energy efficiency project business. This webinar will outline how to benefit from these credits and, for ESCOs, how to add value to proposals all the way through receiving the payments.

 

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