Navigant Research Blog

Working Together toward a Circular Economy in Europe

— October 19, 2017

The European Commission is taking the lead on circular economy strategies through the circular economy package. Thus, an increasing number of industry associations and companies in Europe are working toward a circular economy. They are devising ways to implement related measures to reap the benefits while also preparing for upcoming regulations and directives.

Earlier this year, Ecofys, a Navigant company, and Fipra organised a roundtable discussion with industry coalitions, private sector, and the European Commission on the circular economy package, with a focus on the upcoming Strategy on Plastics. The aim was to gain more clarity regarding the current direction and expected content of the strategy that the European Commission will publish by the end of 2017. Ecofys and Fipra are working together with complementary specialisations and a common goal of furthering the narrative about the circular economy. Ecofys specialises in strategic insights, research, and analysis while Fipra specialises in public affairs strategies. This combination of skills is critical to proactively developing substantiated, viable alternatives to the challenges presented by the circular economy.

Cooperation between Stakeholders

The key message of the roundtable discussion based on feedback from participants was the importance of cooperation between all stakeholders in the value chain to find creative solutions to making the plastics materials stream circular. According to the roadmap on the plastics strategy released by the European Commission in January 2017, the three challenges the Commission plans to tackle are the following:

  1. High dependence on virgin fossil feedstock
  2. Low rate of recycling and reuse of plastics
  3. Significant leakage of plastics into the environment

The European Commission plans to conduct a variety of actions, including studies and analyses on alternative feedstocks, reuse, recycling, marine litter, and micro-plastics. It also plans to develop standards for secondary raw materials and the biodegradability of plastics, as well as consider policy tools such as extended producer responsibility (EPR) aimed at increasing the recyclability of products.

Not a One-Size-Fits-All Approach

For a business, this transformation to a circular economy is about efficiency gains, both in terms of input and output, and ensuring each part of its value chain is being targeted. Factors such as shifting focus from product design to usage of recycled content, investing in recycling processes and technology, and creating a market for secondary raw materials based on competitive prices, quality, and quantity are all essential drivers in this transition.

Companies should emphasize all levels of the value chain, including all economic operators and the final customer. A more holistic lifecycle approach should be taken to evaluate where along the chain the most efficiency gains can be made. This transition to the circular economy will be a long one, and it can only be sustained if it is profitable for businesses. It’s also important to note that recycling cannot be a goal in and of itself. Rather, it should be seen as a means to an end.

The application of the waste hierarchy in the member states will also be heavily considered in all actions within the strategy by the European Commission. The main concern for the private sector is that the competitiveness of European businesses is ensured to encourage a successful transition to the circular economy.

The key positive takeaway from the discussion on the circular economy with multiple stakeholders is that there is great interest and belief in this important issue, as well as the desire to implement related measures. However, the motivation to act needs to be accompanied by specific implementation steps to accomplish the transition in companies and sectors.

 

Service Providers Capitalizing on Smart Home Opportunity

— October 17, 2017

The smart home is a concept gaining hype and excitement with its futuristic promises. This market is projected to see significant growth, as Navigant Research expects smart home platform revenue to increase from $4.2 billion in 2017 to $39.5 billion in 2026. As discussed in our report, The Smart Home, a range of companies are vying for market share in this hotbed of opportunity, from startups to large tech incumbents.

Recently, I had a chance to attend the Service Delivery Innovation Summit, a conference bringing together a range of service providers to discuss innovations in the service business. Service providers are increasingly looking toward the smart home as a way to create new revenue streams as existing business models are challenged by newer offerings, such as traditional cable TV versus streaming services.

Who Can Take the Chance?

Service providers are arguably the best positioned to seize opportunity in the smart home. These companies are already trusted by consumers and have existing touchpoints and technologies deployed in the home, making it convenient and easy to go to market with smart home technologies. Because service providers are already in the home, they also have the unique position of being the gatekeeper for technologies that enter the home. Thus, service providers can profit from becoming smart home technology aggregators and can assist in solving many of the issues that exist in the smart home, such as technology interoperability, the comprehensiveness of solutions, and data privacy and security.

Additionally, broadband service providers and telcos offer products and services that support the development of smarter homes, such as cellular and broadband connectivity (which allows for the communication of connected devices and smart home data transmission). They can also use existing networks and infrastructure to offer new smart home-related services, such as professional installation and customer support.

Early Smart Home Investors

Some service providers are already making big investments in the smart home space. Comcast has been in partnership with EcoFactor to offer its EcoSaver thermostat-based energy management service to Xfinity Home customers since 2013. In 2016, the company partnered with Earth Networks (which has since spun off its home sensing and software company Whisker Labs) to bring big data and analytics to the EcoSaver service. In 2017, Comcast finished its acquisition of iControl, a home automation company. It will use the acquisition to build a Center of Excellence in Austin, Texas to wholesale its home automation and security services.

Service Providers Are Paying Attention

Comcast is just one example of a service provider ramping up activity in the smart home industry. Others such as energy providers Centrica and Vattenfall, as well as Telefonica, AT&T, Verizon, and Cox, are also offering home solutions. Service providers are increasingly recognizing the opportunity in this market and can help the progression of smarter homes.

 

Data – The Foundation of Value in the Energy Market Transformation

— October 17, 2017

I attended GreenBiz’s annual Verge Conference in mid-September and found a unifying theme throughout the diverse discussions on the intersection of technology and sustainability: data is the key to market transformation. The topics of the conference’s sessions spanned from environmental justice to grid modernization, but in every conversation and demonstration, it was clear that access to, and use of, good data is the foundation for innovation and value creation. An unwavering commitment to environmental justice was the undisputable, yet unofficial, secondary theme of this year’s event. I would argue this important societal goal can be tackled alongside the transformation of the energy industry by using data and technology.

Decentralization Is Coming

Panelists on the plenary session roundtable for day 1 represented the major contingencies in the US utility landscape—a municipal, a retailer, and an investor-owned utility. From three points of view, these industry leaders agreed that decentralization is coming and “the traditional utility business model is obsolete, if not dead.” At Navigant, we have been articulating this time of market disruption as the emergence of the Energy Cloud. We are exploring how various platforms are creating value through business models built around a more dynamic relationship between energy supply and demand. The foundation of this new energy reality is digital transformation, in which data fuels business opportunity. Buildings2Grid (B2G) integration is just one of the platforms that illustrates the power of data in creating new business opportunities for utilities, as discussed in Navigant Research’s Building-to-Grid Integration report.

As one panelist put it, “Markets move at the pace of innovation, grid moves at the pace of regulation,” which can place a significant hurdle in front of a large proportion of our energy providers. So, how can utilities take a seat at the table in a new energy reality? It starts with data. Navigant Research took another look at utility opportunities in the Energy Cloud with a complementary report, Intelligent Building Technologies for Value-Added Services. The connectivity and data-driven insight of intelligent building solutions create the roadmap for redefining how commercial buildings operate and opportunities for new services to optimize energy use and generation. Or, as one of the more memorable lines from that Verge utility plenary put it, “great innovation is where megabits meet megawatts.”

Across the board, electricity suppliers are unified by a fundamental goal to keep lights on—to support reliable and resilient power. Intelligent building technologies provide a digital lens into commercial customer operations and a pathway to new engagement models for ensuring that power is reliable and resilient but also supports broader customer goals such as sustainability and operational efficiency.

 

Smart Home Expanding at European Utility Week

— October 12, 2017

European Utility Week (EUW) is Europe’s flagship energy event of the year. It brings together over 10,000 delegates covering the entire smart energy value chain. I had a chance to attend this landmark event last week and was intrigued by the transition occurring in the energy industry. This event’s roots clearly lie in network operations and grid infrastructure, though it also displays cutting-edge technology and innovations transforming the energy ecosystem, as my colleague Stuart Ravens explains. Wandering between booths and networking with energy stakeholders, I noticed the energy industry becoming smarter through data analytics, services, and the smart home.

Data Analytics

Data analytics was a major theme at EUW this year. The energy industry is no different from other industries that are starting to realize the value in big data and the advanced applications it can enable. From Schneider Electric’s display of its EcoStruxture platform to a demo of REstore demand-side management software, it is clear that companies are investing in data analytics to optimize grid operations. A few of the main data-based applications that I noticed at EUW included:

  • Asset performance management, which analyzes data from sensors deployed throughout the grid to monitor assets and help utilities reduce unscheduled downtime, prevent equipment failures, reduce maintenance costs, extend equipment life, and identify underperforming assets.
  • Demand response platforms, which crunch data to determine the available capacity of residential and commercial and industrial assets that can be aggregated to participate in capacity markets.
  • Meter management software, which can be used to power customer billing tools or monitor the health of a meter.

Though many utilities are still easing into data analytics and few are actually using such advanced applications, these types of data-based solutions demonstrate the future of the energy industry.

Services

Services are emerging as a natural progression to hardware and software offerings. As much as I saw industrial-looking, complex grid hardware on display, I also saw vendors peddling software as a service (SaaS) and cloud services. One example of a vendor pursuing the services market is GE, whose booth featured its Predix Cloud service for asset performance management, grid monitoring and diagnostics, and utility field operations. Another company, Aclara, revealed during a briefing that the company is trying to become and end-to-end solution provider by not only supplying utility companies with grid infrastructure, but also offering a SaaS platform that uses data from their infrastructure to power software modules. Vendors in this space recognize the need to expand outside of hardware sales and use the infrastructure they have deployed to offer services that help make utility operations more efficient and provide new and recurring revenue.

The Smart Home

The utility/consumer relationship is becoming more important in the changing energy landscape, which was made obvious by the number of smart home booths at EUW. As traditional utility business models are challenged by distributed energy resources and more efficient energy technologies, utilities must look for other options to maintain revenue. This often involves engaging end users, which requires utilities to differentiate themselves and increase customer satisfaction. Companies like Bidgely and Smappee are helping utilities achieve this vision with device disaggregation and personalized energy consumption software. Other companies like geo recognize the need to create more active homes that can become flexible grid assets, and their booths demonstrated these values. Whether the smart home solutions on display were focused on connected energy devices, customer engagement software, or comprehensive whole home solutions, it was clear that utilities are recognizing the importance end users are playing in the energy transition.

 

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