Navigant Research Blog

Off-Grid Markets Foster New Microgrid Business Model Innovation

— April 29, 2016

Power Line Test EquipmentMicrogrids are being developed in mature industrial markets such as the United States to provide premium, high-quality clean power to a broad array of customer segments. Even more dramatic creativity is occurring on the business model front in developing world markets such as India, Africa, and Iraq. Here are three companies moving the needle in terms of technological advances fueling new creative ways to control, finance, and implement microgrids.

SimpliPhi

The first company is SimpliPhi Power, which got its start in 2002 developing off-grid portable power systems for Warner Brothers and Disney film shoots. The company’s portable power units, called LibertyPaks, were used in locations as diverse as the Amazon and New York City. The company then found a home for its technology with the Marine Corps in forward operating bases in Afghanistan and Iraq, relying upon lead-acid batteries and diesel generators optimized to reduce fuel consumption and save lives.

SimpliPhi has significantly upgraded its technology offering over time. The company now focuses on sophisticated power electronics embedded in its smart inverters to integrate distributed solar PV panels with non-toxic lithium ferrous phosphate batteries, which offer a thermal energy profile that does not require cooling and which reportedly outperformed Tesla’s Powerwall in a head-to-head competition. A school in Tanzania shows an example of the company’s typical installations in the developing world. Perhaps SimpliPhi’s most unique business model is its reliance upon an open source, plug-and-play, low-voltage 48-volt direct current (DC) power network, making its microgrids a nice fit with low-voltage grids throughout the developing world. Few other companies focus on such low-voltage microgrids.

SparkMeter

The second company I’d like to reference is SparkMeter, which has a smart meter offering that puts most advanced metering infrastructure (AMI) deployments by U.S. utilities to shame. Lower in cost than the majority of competing metering options and with robust functionality, the combination of hardware and cloud-based interface provides real-time monitoring and adjustments to voltage and frequency issues. SparkMeter offers a platform that that was designed for the off-grid environment, but which can also be deployed in centralized grids. A mobile money or cash-based prepayment system is also integrated into the microgrid platform, allowing vendors to insure cash flows vital to sustainable business ventures in key microgrid markets such as India. The company validates that smart metering is even more important in an off-grid operating environment than in developed economies. Why? In emerging economies, small amounts of electricity are consumed by large numbers of customers with little annual income. It is this kind of technology that is key to making any bottom of the pyramid (BOP) energy access strategy work.

Powerhive

Last, but certainly not least, is Powerhive. With recent investments by the likes of the investment arms of French oil giant Total Energy Ventures and diesel generator manufacturer Caterpillar Ventures, the company has announced plans to develop 100 microgrids serving 90,000 people without electricity. These systems will aggregate up to approximately 1 MW. With plans on the boards for microgrid portfolios that could top 500 MW over the long term, a key to the company’s success has been a pay-as-you-go business model that, like SparkMeter, depends upon mobile phone payment options. Powerhive’s Honeycomb remote monitoring system underpins the pay-as-you go strategy that it first deployed in 2011, which has now emerged as the primary business model for BOP deployments around the world.

All three of these companies highlight the innovation required to create viable sustainable energy projects. How can these lessons be applied to microgrid markets in the developed world?

 

It’s a Small World (for Dynamic Pricing) After All

— April 4, 2016

multimeterDisney recently unveiled surge pricing for its theme parks, meaning that tickets will cost more during holidays and on some weekends—up to 20% more—than during slower periods as the near-capacity parks seek to spread out demand. When Mickey Mouse announces this strategy, it’s hailed as a brilliant business move. So why is it that when utilities try to roll out dynamic pricing options, it is assumed it will lead the elderly and orphans to swelter in the heat and sit in the dark?

Dynamic pricing exists in many aspects of society, such as with airline tickets, theater and sporting event tickets, subway fares, and road tolls. The basic concept is that the value of a product varies based on time, demand, and other factors, so being able to charge prices that better reflect that value is more economically efficient than simply charging an average flat price across all hours and variables. Makes sense, right?

In the electricity industry, the concept of dynamic pricing for mass-market customers is fairly recent (aside from time-of-use rates). With the proliferation of advanced meters that can record usage at small intervals, more types of dynamic pricing can be applied down to the residential level.

The key drivers for advancing dynamic pricing include technical, policy, and economic factors such as:

  • Advanced metering infrastructure (AMI): Without the 15-minute interval data provided by smart meters, or AMI, dynamic pricing programs cannot accurately be implemented. Smart meters are now seeing more widespread deployment, which further enables the market for dynamic pricing.
  • Utility and customer costs: Offering a dynamic pricing program to reduce peak demand may be cheaper for a utility than building a peaker plant to meet increased demand. On the customer side, electric bills can be reduced by modifying consumption behavior. In the long run, all ratepayers should see lower rates than they otherwise would due to the increased capacity factor and avoided infrastructure costs.
  • Enabling technologies: Devices such as smart thermostats, smart appliances, and associated home energy management applications are becoming more commonplace, allowing consumers to more easily manage their energy demand.
  • Distributed energy resources (DER): As DER capacity from resources like energy storage and electric vehicles grows, so does the ability to shift load and enjoy the cost savings from dynamic pricing programs.

However, the slow rate of dynamic pricing program development points to the depths of the barriers to such growth:

  • Reliable service concerns: Utilities understand how important reliability is—especially for at-risk residential customers, including low-income customers, the elderly, families with young children, and the disabled—and seek to provide a resilient grid that operates disruption-free. Without proper education about the program, dynamic pricing rates could potentially send a harmful signal to these at-risk groups.
  • AMI integration: Systems integration plays a huge role in the success of AMI techniques and poses a significant cost to utilities. Ensuring AMI provides flexible and extensible solutions is paramount.
  • Lack of customer education and demand: Customer understanding of dynamic pricing is low. Unlike other energy management strategies that focus on different aspects of energy consumption, dynamic pricing depends on modulating customer habits, which may be hard to change.

There are several examples of utilities implementing successful dynamic pricing programs, such as Baltimore Gas and Electric, Oklahoma Gas and Electric, and Sacramento Municipal Utility District. These topics and more are covered in Navigant Research’s new report, Dynamic Pricing. Perhaps learning about dynamic pricing from Disney will lead more people to embrace it in other parts of their lives.

 

Big New York Smart Meter Rollout Plans Take Shape, but Issues Remain

— March 30, 2016

??????????????????Consolidated Edison (Con Ed), the largest utility in New York, recently received approval of its ambitious plans for a smart meter rollout, but the latest details point to some concerns about paying for the requirements and more details about customer engagement.

The plan, approved by the New York Public Service Commission (PSC), calls for the installation of approximately 3.5 million smart electric meters and for some 1.2 million gas meters to be deployed in Con Ed’s service territory starting next year, with an expected completion by 2022.

But in the announcement, the commission said its approval was contingent on the utility providing a detailed plan for providing continued engagement with customers and third parties. In addition, the commission expects 15-minute meter reads for residential customers, whereas the original proposal called for hourly data from meters. With the more frequent reads, the issue of charging fees, if any, for providing the more granular data has yet to be resolved. For non-residential meters, the meter data is to be at 5-minute intervals.

Program Questions

In addition, there are concerns about how Con Ed will implement the Green Button Connect program, which is a federally sanctioned initiative aimed at giving residential customers easy online access to their detailed energy consumption data. Originally, Con Ed indicated hourly data would be available at no charge. But now a group called Mission:data, which represents third-party companies like SolarCity, Stem, Bidgely, PlotWatt, and EnerNOC, has raised the issue of whether Con Ed will be charging a fee for data access. Con Ed has until the end of July to submit new details about data access and who will have to pay.

Undoubtedly, the smart meter rollout envisioned by Con Ed will eventually be deployed and customers should benefit by having a more modern and flexible system. But the devil, as always, is in the details, and when it shakes out, some of the hoped-for capabilities might be less than expected. And third-party energy service providers might be less than satisfied. As we’ve seen with other smart meter implementations—the United Kingdom’s complicated deployment comes to mind—the complexity of an advanced metering infrastructure rollout can sometimes be overwhelming, and the real costs not readily apparent. Bumps in the road have become commonplace, especially with large projects, but a smarter grid is still attainable.

 

Smart Meter Projects Crank Up for 2016 and Beyond

— February 26, 2016

Control panelThe smart meter market is picking up new momentum as 2016 unfolds. Announcements for a number of significant projects and partnerships signify an expanding market, which bodes well after a somewhat sluggish past few years.

In the United States, New York utility Con Edison has chosen Aclara to provide nearly 5 million electric and gas meters as part of its advanced metering infrastructure (AMI) deployment. Con Ed will utilize Silver Spring Networks‘ technology for its communications network, and IBM was selected as the IT system integrator. The Con Ed approach is unique for its view of what a modern utility could look like, and the utility is driving this initiative at a time when New York is rethinking its energy future under a plan known as the Reforming the Energy Vision, or REV. Con Ed’s plan includes the capability for easier integration of renewable energy sources, gaining real-time grid insights, and reducing and repairing outages more quickly, according to Eric Dresselhuys, Silver Spring’s executive vice president of global development. The Con Ed project still awaits final regulatory approval, but it does have the green light to begin backend IT work in anticipation of installing meters starting in early 2017.

Another smart meter project of note is the one announced recently by Memphis Light, Gas and Water (MLGW). The largest U.S. three-service public utility, MLGW selected Honeywell (which acquired Elster in December 2015) as the provider of one million electric, gas, and water meters to be deployed over the next 5 years. The utility will install the meters using Honeywell’s Elster EnergyAxis smart meter technology in a deal valued at $200 million.

Projects Worldwide

Outside the United States, Mexico’s state-owned utility Comision Federal de Electricidad (CFE) has awarded Landis+Gyr a new contract to supply an AMI system in the states of Campeche and Quintana Roo in CFE’s Peninsular Division. The deal calls for Landis+Gyr to supply its Gridstream AMI solution, including a radio frequency (RF) mesh network and nearly 96,000 advanced meters. The main objectives of the system upgrade are to reduce non-technical line losses, improve efficiency, and enhance service delivery to high-use customers. The project is part of CFE’s long-term plan to install a total of 30.2 million smart meters by 2025.

In South Asia, two major Pakistani utilities have finished the rollout of 50,000 smart meters, according to MicroTech Industries (MTI), a Lahore-based technology vendor. In addition to supplying the three-phase meters, MTI also handled installation, implementation, communications, and hosting services for the projects at the Peshawar Electric Supply Company (PESCO) and the Multan Electric Power Company (MEPCO).

In Europe, utility E.ON and technology provider Siemens have announced a partnership to develop and deploy smart metering technology solutions for the German market. The country is in the midst of preparations to install smart metering beginning this year as part of a new overall energy mix plan. The two companies plan to offer their expertise, with Siemens’ EnergyIP application platform serving as the technical component for their joint offering.

There is still plenty of runway left for the deployment of smart metering technology, and projects continue to unfold across the globe. These advanced metering solutions form the backbone of grid modernization, which leads to greater efficiencies and help underpin Navigant’s Energy Cloud vision of a decentralized grid. Expect many more similar smart meter projects to be announced over the remainder of this decade and beyond, as noted in Navigant Research’s Smart Meters report.

 

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