Navigant Research Blog

Thinking Outside the Box about Microgrid Technology

— November 28, 2017

When one hears the word technology, most think of a hardware gadget, something tangible that can be touched and is a literal tool. However, some prominent thought leaders take a much broader view.

Jayant Kumar, global digital grids director for GE Grid Solutions, points to better microgrid master planning tools as a technology vital to bringing the microgrid platform into full commercial viability. In a recent interview, he asked “What we are trying to do is to create a utility in a box. But how do you do that at the right economic scale? What is the right business case?” He explained that with sophisticated planning tools, the assets can be matched up with the right market landscape to reach necessary internal rate of returns to make projects pencil out.

Investments in Microgrid Tech to Rise

Navigant Research will soon be publishing a report on the topic of microgrid enabling technologies (MET). The focus will be on the distributed energy resources—hardware assets—that get wrapped into microgrids. Preliminary findings show combined heat and power (CHP) capturing the largest market share today, but by 2026, the leader is solar PV (with energy storage coming in second place). All told, the hardware assets (biomass, CHP, diesel, energy storage, fuel cells, hydro, solar PV, and wind) will represent approximately $90 billion in cumulative investment over the next decade.

While these numbers are staggering and may make certain investors drool, the key to unlocking the value sometimes hidden in these hardware assets is more nebulous since they delve into the realms of telecommunications, finance, and software technologies—the value of which is more difficult to count and quantify.

Mobile Phones as a Microgrid Enabling Technology

In the developing world, there is an acute need for financial products to pave the way for microgrids linked to energy access initiatives. In these markets, it is the proliferation of mobile phones—and the infrastructure required to enable communications (i.e., cell phone towers)—that could also be considered MET. Mobile phones create the infrastructure to enable payment for energy services on an as used incremental basis that is driving growth in smaller scale microgrid systems.

For example, Simpa Networks is one of many innovators bringing energy access through microgrids to developing world markets via the pay-as-you-go model. It installs solar PV systems in households or small businesses and customers pay for the electricity consumed, like prepaid mobile phone plans. The payments count toward the purchase price of the solar PV system so customers will eventually own the system.

Controllers: The Magic Sauce

The other MET to be sized in my forthcoming report is microgrid controls spending. This is the linchpin software enabling technology that remains the bottleneck to full-scale commercial viability (just ask Duke Energy). The US Department of Energy (DOE) and the Institute of Electrical Energy Engineers (IEEE) are playing critical roles in taking a bit of the mystery out of what is now the magic sauce that makes a microgrid work (or not.)

Perhaps the most interesting initiative was launched by the National Renewable Energy Laboratory (NREL) in what is being described as a shootout under a controller-in-the-loop test pitting controller against controller. Stage 1 involved five vendors in a Microgrid Innovation Challenge where all five vendors competed in managing a simulated highly complex microgrid. The companies competed for 100 minutes on seven performance parameters. Next, NREL will pit two finalists in a real-world hardware environment in December 2017. The winner will be selected as the controller to be used at NREL’s microgrid testing facility.

 

Beyond Energy and Pizza

— November 7, 2017

As November rolls through and autumn settles in the Northern Hemisphere, attention quite naturally turns to energy. Not only was October Energy Action month, but the changing of seasons marks a time to reflect on how the built environment consumes energy. As we put our air conditioners away and turn our heaters on, autumn gives us time to reflect: Can we be doing this better?

Indeed, there is near universal consensus that action should be taken to reduce energy intensity and carbon emissions. But taking steps to increase energy efficiency affects far more than just energy costs and greenhouse gases. To explore this concept, let’s look at a theoretical pizza parlor (October was also national pizza month, after all). What energy action should this restaurant take?

Popular Energy Conservation Measures

The first answer is likely an evaluation of HVAC systems. According to the most recent Johnson Controls Energy Efficiency Indicator Survey, investments in HVAC improvements were the most popular energy conservation measure last year. For restaurants, kitchen exhaust can create a substantial cost. Cooking causes grease to splatter and can create odors, steam, and smoke, all of which need to be exhausted out of the kitchen. The wood-burning oven in the pizza parlor, for instance, will need to exhaust all of its smoke out of the restaurant. But replacing this air with conditioned outside air can be expensive, particularly in hot and cold climates.

Air Challenges

Some restaurant owners take a shortcut by shutting off their make-up air unit. This puts the entire restaurant under negative pressure, which forces air to infiltrate in through cracks in doors and windows. Though it may save some on utility bills, it is ultimately a Pyrrhic victory: it creates an unpleasant, drafty environment in the dining room and it could even pull in odors from outside. A far better energy action would be to ensure that ventilation and all HVAC are properly balanced, all equipment is properly maintained, and any old, inefficient equipment is replaced with ENERGY STAR equipment.

Lighting Challenges

After HVAC, lighting should be the next concern. LED retrofits typically provide quick payback in energy savings based on the initial investment. But in addition to energy, lighting (like HVAC) creates the atmosphere of the pizza restaurant. That atmosphere affects patron behavior and will ultimately drive business performance. According to a study published in the Journal of Marketing Research, consumers are more likely to select less healthy food options in restaurants that are dimly lit and healthier options when restaurants are bright. That’s great news for the pizza parlor: by installing dimming controls on lighting, it’s possible to not only cut back on energy, but also drive pizza sales.

The Broad View of Energy

Taking action on energy stretches far beyond utility bills and carbon emissions. Those are noble objectives, but building owners and operators are increasingly looking beyond these effects to justify investment in the built environment. Though simplistic, the pizza parlor example highlights how to improve the customer experience and drive sales with investments in energy action. In reality, a broader set of controls, analytics, and efficient equipment can help many businesses reduce costs and increase revenue.

 

New Demand Response/Energy Storage Partnership Poised to Reduce Customer Deployment Hurdles

— September 12, 2017

In my most recent Navigant Research blog, I highlighted how load management and optimization solutions, which include demand response (DR) and energy storage, fit within the energy as a service (EaaS) framework. The EaaS solutions framework is now positioned to support how corporate commercial and industrial (C&I) energy and sustainability managers apply these new technologies and business model innovations to meet their energy management and sustainability needs.

EaaS Deployment Options

In Navigant Research’s Energy as a Service report on the evolution of EaaS, I highlight how EaaS solutions like load management and optimization will be deployed, which can be summarized as follows:

  • Pure-play EaaS solutions provider: Customers engage with a pure-play EaaS provider such as a solar PV developer or an energy efficiency performance contracting provider that provides just a single financed solution.
  • Bundled EaaS solutions provider: Vendors offer multiple EaaS solutions across a project development/financing platform that meet customer needs while also decreasing their customer acquisition costs.
  • Integrated facilities management plus EaaS solutions: A single vendor manages the customer’s day-to-day building operations and EaaS solutions over longer-term agreements that can enable financing innovation.
  • Managed energy services agreement (MESA): Customers with predictable energy use and spend outsource their entire energy management operations to a comprehensive EaaS provider under long-term agreements to unleash long-term financing innovation.
  • Asset monetization or public-private partnerships: Private and publicly traded C&I companies, universities, or municipalities monetize their energy assets in a sale leaseback arrangement that results in the outsourcing of energy operations.

One significant challenge for the deployment of new load management and optimization EaaS solutions to date from the customer perspective is that the market is populated by pure-play solutions providers. This scenario presents a challenge to C&I customers given the potential interdependence of solutions like DR and energy storage on the overall business case for deploying these technologies.

Potential of DR/Energy Storage Partnership

However, a recent partnership announcement by CPower and Stem will combine Stem’s energy storage capabilities services with CPower’s DR and curtailment services to better manage customer energy load and spend. Given the current contracting and revenue models that each vendor provides, an integrated Stem/CPower offering has the potential for an improved customer savings business case that can exceed the business case of each technology individually, as highlighted below:

  • For existing Stem customers, this partnership can result in an increased bonus payment over their equipment lease payment/demand charge savings scenario given the added DR market participation that CPower can enable. Stem’s existing customers can also benefit from an improved battery use case scenario over time given that additional building controls under CPower DR technology control can be leveraged instead of just the battery energy storage system (BESS).
  • For Stem sales contacts looking to deploy new BESSs, this partnership can result in a better bonus payment scenario given that a potentially smaller BESS could be installed (or one with a lower cost use case scenario over time), thereby potentially lowering the equipment lease subscription price.
  • And for existing CPower customers and sales contacts looking to participate in DR programs, this partnership can result in and improved DR market participation revenue scenario given the added response capabilities that the deployment of a Stem BESS can enable. This can help reduce the over subscription/under commitment challenges that DR aggregators face given the need to keep building occupants comfortable during demand response events.

It will be important to keep an eye on how the CPower/Stem partnership handles the integration of dispatch algorithms and customer dashboards as the partnership matures. But this partnership appears poised to reduce customer barriers for the deployment of integrated DR/energy storage EaaS solutions.

 

Smart Dust Has Yet to Settle, but the Hype Flourishes

— September 7, 2017

Smart dust … it sounds like a magical substance sprinkled on dumber things. Which is kind of true. The concept has been making the hype-cycle rounds late this summer and setting off some industry buzz among megatrend watchers during an otherwise lackluster news and information cycle.

But smart dust is not all that new a concept. Not long ago, it might have been known by the more mundane and geeky term micro-electromechanical systems, or MEMS, which is common in the computer chip world. Lump it together with the much hyped artificial intelligence (AI) notion and presto, smart dust gets new life.

Motes Not Dust Mites

So, what is smart dust? It is a swarm of tiny electronic sensors, some evidently smaller than a red blood cell, designed to float in the air and do various things. These tiny devices, known as motes, are self-powered. The idea is to unleash hundreds or thousands of them, have them interconnect wirelessly, and then perform a task or set of tasks. Think of releasing a batch over a farm for testing soil chemistry or pesticide levels.

Smart Dust for Energy Management

This smart dust could also be used in homes or commercial settings to reduce energy use. That was one of the use cases imagined by Kris Pister, a professor at the University of California Berkeley and smart dust pioneer. He has been tinkering with smart dust since at least 2001, when California was in the midst of an energy crisis. Back then, he worked on the technology with colleagues at Berkeley’s Center for Information Technology Research in the Interest of Society (CITRIS) in an effort to find new ways to conserve energy. The idea never quite took off as imagined.

The idea for dust networks goes back further to when the US Defense Advanced Research Projects Agency (DARPA) and RAND Corporation worked on the idea in the early 1990s. One can imagine the use of smart dust over a battlefield, feeding field commanders with relevant data in real-time to get the upper hand on an enemy. The idea can even be traced to novelist Philip Pullman’s His Dark Materials trilogy; dust in the books is a mysterious cosmic particle that is a central plot device.

A Cloud of Potential

Needless to say, smart dust motes have not made much of an impact outside the labs. Nonetheless, given the potential and the many swirling technologies of AI (e.g., deep learning, machine learning, smart robots, and the rest), smart dust’s future could be quite amazing, though that remains on the horizon. For now, one can keep the idea of smart dust on the radar while focusing on the more practical emerging technology trend affecting the grid and other industries, namely the Internet of Things, a topic extensively covered by Navigant Research.

 

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