Just the other day, I saw my first Tesla Motors all-electric vehicle driving near our offices here in Tulsa, Oklahoma. With more and more electric vehicles taking to the streets — even in this former oil capital — the way people think about electricity could be set for some big changes.
Take this news story from Georgia as an exhibit A on what I mean.
Electric car owner Kaveh Kamooneh was arrested at his home after police filed a report on a complaint of stealing what amounts to 5 cents worth of electric power that he used to recharge his vehicle, according to reports.
While picking up his 11-year-old son from a Saturday tennis game at Chamblee Middle School in Chamblee, Georgia, Kamooneh plugged his car into an exterior power outlet of a school building. The electric car, a Nissan Leaf, had been plugged in about 20 minutes, which was estimated to be enough time to absorb about $.05 worth of power.
Moments later, a Chamblee police officer told Kamooneh that he would be written up on the spot for electricity theft.
About 11 days after the officer wrote him up — and after the department confirmed he hadn't asked anyone's permission — a pair of deputies arrested Kamooneh at his home. According to public records, he spent some 15 hours in the county jail before his release.
Chamblee police, perhaps feeling a little defensive for throwing someone in jail over a nickel's worth of juice, told media outlets that a crime is a crime, and stealing is still against the law.
The first thing I thought after reading this story was you probably wouldn't see something like this happen in a northern state like, say, Minnesota. People there are much more used to having to plug their cars in there, albeit for a different reason.
In interviews, Kamooneh compared his "offense" with sipping water from a public water fountain. Granted, a drinking fountain is only meant for sipping from — but how about people who fill up their mugs or water bottles? Maybe they're taking more than the property owners meant. How many cents could it cost to fill an empty bottle?
If you want to compare apples to apples, just consider other, smaller battery-powered devices. People often top off their laptop or smartphone batteries at electric outlets that they don't pay the bills for. In fact, some venues and businesses provide charging kiosks for customers just as a service. The only difference is size, and an electric car is obviously bigger and more power-hungry than an iPhone.
Drivers are adopting electric vehicles slowly but steadily — and they're doing so despite the fact that in many places the charging infrastructure is not yet there. A situation like the one in Georgia illustrates this problem perfectly, and it makes you wonder. How understanding are people going to be toward those who leave gasoline behind and fuel their commutes and trips with electricity?
Will people figure a few cents is just a few cents, or will people start to get more territorial about their power? I think in a lot of cases, electric vehicle owners will look out for one another while on the go, but what about those who aren't early adopters?
Kamooneh's unfortunate run-in with the Chamblee police is an extreme case, sure. But I'd be willing to be we will see more stories like this. Business owners and property managers could be set for clashes with power-seeking EV drivers — at least until we establish some electric vehicle etiquette for better relations between EV drivers and everybody else.
Wednesday, December 4, 2013
Wednesday, November 6, 2013
Where natural gas and power transmission intersect
By Teresa Hansen
Editor-in-Chief
I recently attended a conference in Washington, D.C. called TransForum East. It was organized by PennWell through one of its latest acquisitions, TransmissionHub, a research, analysis and news portal. As the name implies, the conference deals with electricity transmission, but this year the low price of natural gas and how it is affecting the electric power sector was a hot topic.
Kent Knutson, TransmissionHub's director of data strategy and content, said transmission investment in the U.S. is growing. During the first nine months of 2013, nearly $6.7 billion was invested in transmission projects, up considerably from the $5.6 billion spent in all of last year.
Knutson expects continued growth through 2015. Most activity is in 345 kV projects being driven by Texas competitive renewable energy zone (CREZ) and Western Interconnection projects. A fair amount of activity is also occurring in the Midwest and PJM independent system operators and the Northeast Power Coordinating Council territories.
As in other areas of the electric power industry, uncertainty is prevalent in the transmission sector. Changing technologies, cyber and physical security threats, regulations, siting issues and customer expectations are to blame for much of that uncertainty.
Cheap gas becomes a transmission driver
The changing power generation mix, however, is perhaps the biggest culprit. Electricity generated by wind and solar energy is rapidly being added into the mix. Coal plants are being retired because they can't meet EPA regulations. Cheap natural gas is resulting in a build-out of new gas-fired combined-cycle generation to replace retired coal plants and back up intermittent renewable energy.
New transmission is needed to connect renewable energy with load centers, plus load forecasting and balancing technologies must be added to manage this intermittent supply. New gas-fired generation being built in areas with inadequate transmission capacity is also driving new transmission construction. In addition, in some areas, especially the northeast, gas-fired plants are being built in areas with constrained gas pipeline capacity.
Transmission operators are concerned that these plants, which they count on for supply, could fall off the grid if pipeline capacity is used for other demands such as home heating. Because many new gas-fired plants are owned by independent investors and merchant generators, differing opinions and uncertainty exist about who will pay for needed electric transmission infrastructure as well as gas pipeline infrastructure.
Will FERC address uncertainty?
Many look to the Federal Energy Regulatory Commission (FERC) for clarity on these issues. FERC Commissioner Philip Moeller, who spoke at TransForum, acknowledged that transmission owners and operators face many hurdles. Moeller said FERC knows the lack of a federal policy allowing transmission owners to build across state lines is a problem, but he doesn't foresee a federal law changing siting issues for interstate transmission lines in the near term.
He also said that uncertainty surrounding return on equity (ROE) exists. He said FERC has created much of this uncertainty, but his only words of encouragement came when he said ROE is a "live" issue for FERC.
Low- to moderate-priced natural gas, which Moeller said will stick around for some time, will continue to drive gas-fired generation and transmission growth. Better coordination between gas suppliers and electricity generators must be addressed, he said.
Longer-term issues, he said, such as who pays for the gas infrastructure to secure supply to generators, are more vexing. A big part of the solution involves the two industries learning more about how the other one works, he said.
Even with the uncertainty, Moeller said he is "bullish" on transmission and "it's an exciting time" in the transmission industry. "If the issues were easy, someone else would have already solved them. You need to stay active and involved," he said.
Editor-in-Chief
I recently attended a conference in Washington, D.C. called TransForum East. It was organized by PennWell through one of its latest acquisitions, TransmissionHub, a research, analysis and news portal. As the name implies, the conference deals with electricity transmission, but this year the low price of natural gas and how it is affecting the electric power sector was a hot topic.
Kent Knutson, TransmissionHub's director of data strategy and content, said transmission investment in the U.S. is growing. During the first nine months of 2013, nearly $6.7 billion was invested in transmission projects, up considerably from the $5.6 billion spent in all of last year.
Knutson expects continued growth through 2015. Most activity is in 345 kV projects being driven by Texas competitive renewable energy zone (CREZ) and Western Interconnection projects. A fair amount of activity is also occurring in the Midwest and PJM independent system operators and the Northeast Power Coordinating Council territories.
As in other areas of the electric power industry, uncertainty is prevalent in the transmission sector. Changing technologies, cyber and physical security threats, regulations, siting issues and customer expectations are to blame for much of that uncertainty.
Cheap gas becomes a transmission driver
The changing power generation mix, however, is perhaps the biggest culprit. Electricity generated by wind and solar energy is rapidly being added into the mix. Coal plants are being retired because they can't meet EPA regulations. Cheap natural gas is resulting in a build-out of new gas-fired combined-cycle generation to replace retired coal plants and back up intermittent renewable energy.
New transmission is needed to connect renewable energy with load centers, plus load forecasting and balancing technologies must be added to manage this intermittent supply. New gas-fired generation being built in areas with inadequate transmission capacity is also driving new transmission construction. In addition, in some areas, especially the northeast, gas-fired plants are being built in areas with constrained gas pipeline capacity.
Transmission operators are concerned that these plants, which they count on for supply, could fall off the grid if pipeline capacity is used for other demands such as home heating. Because many new gas-fired plants are owned by independent investors and merchant generators, differing opinions and uncertainty exist about who will pay for needed electric transmission infrastructure as well as gas pipeline infrastructure.
Will FERC address uncertainty?
Many look to the Federal Energy Regulatory Commission (FERC) for clarity on these issues. FERC Commissioner Philip Moeller, who spoke at TransForum, acknowledged that transmission owners and operators face many hurdles. Moeller said FERC knows the lack of a federal policy allowing transmission owners to build across state lines is a problem, but he doesn't foresee a federal law changing siting issues for interstate transmission lines in the near term.
He also said that uncertainty surrounding return on equity (ROE) exists. He said FERC has created much of this uncertainty, but his only words of encouragement came when he said ROE is a "live" issue for FERC.
Low- to moderate-priced natural gas, which Moeller said will stick around for some time, will continue to drive gas-fired generation and transmission growth. Better coordination between gas suppliers and electricity generators must be addressed, he said.
Longer-term issues, he said, such as who pays for the gas infrastructure to secure supply to generators, are more vexing. A big part of the solution involves the two industries learning more about how the other one works, he said.
Even with the uncertainty, Moeller said he is "bullish" on transmission and "it's an exciting time" in the transmission industry. "If the issues were easy, someone else would have already solved them. You need to stay active and involved," he said.
Friday, October 4, 2013
A harder, better, faster, stronger smart grid
By Andy Bennett,
Senior vice president of infrastructure at Schneider Electric
The Obama administration recently published a report that calls for increased spending on the nation's electric power system to increase power grid resilience. The report highlights the enormous economic risks that come with not addressing grid resilience, as power outages cost the economy billions of dollars per year and disrupt the lives of millions of Americans.
Severe weather is the No. 1 cause of power outages in the U.S. and also costs the economy billions of dollars per year in lost output and wages, spoiled inventory, delayed production, inconvenience and damage to grid infrastructure. The report estimates the average annual cost of power outages caused by severe weather to be between $18 billion and $33 billion per year. In a year of record-breaking storms, the costs can run much higher.
Creating a resilient electric grid is critical to reducing our nation's vulnerability to severe weather. Furthermore, as highlighted in the report, smart grid technology designed to increase resilience can improve the overall effectiveness of grid operations leading to great efficiencies in energy use and reduction in carbon emissions. As utilities look to modernize the grid, they not only have the opportunity to improve storm resiliency, drive greater energy efficiency and reduce carbon emissions, but also to support the integration of renewable energy.
In my experience as senior vice president of infrastructure at Schneider Electric, investing in resiliency doesn't have to be at the expense of efficiency or vice versa. Instead, savings from efficiency can actually help fund investments in resiliency. Furthermore, some activities actually increase resiliency and efficiency at the same time.
Examples include leveraging microgrids to smooth out the intermittency of renewable generation, allowing less efficient generators to shut down; or real-time analysis of power grids to determine optimal configuration to minimize electrical losses.
To move towards a more modernized grid and in turn reduce distribution network performance, investment should be made to replace aging infrastructure. As the demand for higher quality power increases, the evolving grid of the future will likely be upgraded to include self-healing capabilities designed to minimize outages from disasters and other natural events. In the near future, we foresee a movement toward multi-user, multi-site microgrids that will create an environment for a stronger and more self-sufficient power system.
In our view, modernizing the electric grid is the foundation for creating smarter, more resilient data centers, homes, buildings, cities and communities. Collaboration across all levels of government and the private sector will be key to enabling the development of the smart grid and ultimately to creating a more sustainable, resilient, energy efficient country.
Senior vice president of infrastructure at Schneider Electric
The Obama administration recently published a report that calls for increased spending on the nation's electric power system to increase power grid resilience. The report highlights the enormous economic risks that come with not addressing grid resilience, as power outages cost the economy billions of dollars per year and disrupt the lives of millions of Americans.
Severe weather is the No. 1 cause of power outages in the U.S. and also costs the economy billions of dollars per year in lost output and wages, spoiled inventory, delayed production, inconvenience and damage to grid infrastructure. The report estimates the average annual cost of power outages caused by severe weather to be between $18 billion and $33 billion per year. In a year of record-breaking storms, the costs can run much higher.
Creating a resilient electric grid is critical to reducing our nation's vulnerability to severe weather. Furthermore, as highlighted in the report, smart grid technology designed to increase resilience can improve the overall effectiveness of grid operations leading to great efficiencies in energy use and reduction in carbon emissions. As utilities look to modernize the grid, they not only have the opportunity to improve storm resiliency, drive greater energy efficiency and reduce carbon emissions, but also to support the integration of renewable energy.
In my experience as senior vice president of infrastructure at Schneider Electric, investing in resiliency doesn't have to be at the expense of efficiency or vice versa. Instead, savings from efficiency can actually help fund investments in resiliency. Furthermore, some activities actually increase resiliency and efficiency at the same time.
Examples include leveraging microgrids to smooth out the intermittency of renewable generation, allowing less efficient generators to shut down; or real-time analysis of power grids to determine optimal configuration to minimize electrical losses.
To move towards a more modernized grid and in turn reduce distribution network performance, investment should be made to replace aging infrastructure. As the demand for higher quality power increases, the evolving grid of the future will likely be upgraded to include self-healing capabilities designed to minimize outages from disasters and other natural events. In the near future, we foresee a movement toward multi-user, multi-site microgrids that will create an environment for a stronger and more self-sufficient power system.
In our view, modernizing the electric grid is the foundation for creating smarter, more resilient data centers, homes, buildings, cities and communities. Collaboration across all levels of government and the private sector will be key to enabling the development of the smart grid and ultimately to creating a more sustainable, resilient, energy efficient country.
Monday, September 9, 2013
Moody's puts Energy Future Holdings on bankruptcy watch
Moody's Investors Service, one of the Big Three credit rating agencies, has given Energy Futures Holdings Corp. until the end of the year before the energy company declares for bankruptcy protection and restructures itself.
In an analysis of its own call, Moody's says this would be one of the top 10 largest non-financial corporate bankruptcies in the U.S. since the 1980s. In terms of debt, it could be one of the biggest of all time, ranking with Enron, WorldCom, General Motors and Chrysler. The holding company reportedly has more than $41 billion in debt.
The electric utility company's assets include a power generation portfolio that consists mostly of nuclear energy and coal-fired power (through Luminant), a power transmission business (through Oncor Electric Delivery) and a retail power provider (through TXU Energy).
The company was bought out in 2007 in what was at the time one of the largest leveraged buy-outs in history when a group of Wall Streeters (including Goldman Sachs, KKR and TPG Capital) paid $45 billion for what was then known as TXU Energy.
The idea was that even though the private equity firms that bought up TXU would be taking on a significant amount of debt, the notoriously unstable price of natural gas would surely soon peak, helping the financiers turn a profit. As we now know, this hoped-for spike did not occur, and instead we saw sustained record-low prices for natural gas. The gamble also anticipated that coal-fired electricity would remain inexpensive and high-profit. Hindsight, as they say, is 20/20.
Energy Future Holdings has been carrying a large amount of debt for some time now, leading analysts to speculate about its future. Moody's downgraded the company's credit rating from Caa1 to B3 in August 2013.
From the end-user's perspective, should the worst happen for EFH, the power will continue to flow because of a survival blueprint already plotted out back in April 2013. One potential bankruptcy restructuring plan would forgive billions in debt owned by Luminant in exchange for a large share of the company. The investors, in this scenario, would get the short end of the stick — an estimated return of 50 percent or less. However, subsidiaries like Oncor and Luminant could be preserved.
You can read more about that debt restructuring plan in this story.
In an analysis of its own call, Moody's says this would be one of the top 10 largest non-financial corporate bankruptcies in the U.S. since the 1980s. In terms of debt, it could be one of the biggest of all time, ranking with Enron, WorldCom, General Motors and Chrysler. The holding company reportedly has more than $41 billion in debt.
The electric utility company's assets include a power generation portfolio that consists mostly of nuclear energy and coal-fired power (through Luminant), a power transmission business (through Oncor Electric Delivery) and a retail power provider (through TXU Energy).
The company was bought out in 2007 in what was at the time one of the largest leveraged buy-outs in history when a group of Wall Streeters (including Goldman Sachs, KKR and TPG Capital) paid $45 billion for what was then known as TXU Energy.
The idea was that even though the private equity firms that bought up TXU would be taking on a significant amount of debt, the notoriously unstable price of natural gas would surely soon peak, helping the financiers turn a profit. As we now know, this hoped-for spike did not occur, and instead we saw sustained record-low prices for natural gas. The gamble also anticipated that coal-fired electricity would remain inexpensive and high-profit. Hindsight, as they say, is 20/20.
Energy Future Holdings has been carrying a large amount of debt for some time now, leading analysts to speculate about its future. Moody's downgraded the company's credit rating from Caa1 to B3 in August 2013.
From the end-user's perspective, should the worst happen for EFH, the power will continue to flow because of a survival blueprint already plotted out back in April 2013. One potential bankruptcy restructuring plan would forgive billions in debt owned by Luminant in exchange for a large share of the company. The investors, in this scenario, would get the short end of the stick — an estimated return of 50 percent or less. However, subsidiaries like Oncor and Luminant could be preserved.
You can read more about that debt restructuring plan in this story.
Friday, August 30, 2013
China thinks big on power generation, delivery
The world's second-biggest economy, China, is setting its sights on a massive expansion of its electric power sector. The country is growing increasingly energy hungry as its already massive manufacturing sector expands — and the smog haze around populated areas grow indisputably denser.
Some power sector expansion scenarios laid out by Bloomberg New Energy Finance could address both power reliability and environmental concerns, however at least one scenario would require 88 GW in new power generation capacity every year from now until 2030.
That would mean a build-out equal to the entire generation capacity of the United Kingdom every single year. Still, if any country can accomplish this, it's probably China.
China, which by the way is already the world's largest single source of carbon dioxide emissions and the most powerful generator of electric power in the world, could add more than 1,500 GW of new power generation in the next two decades, according to Bloomberg's surveys.
In a scenario called "The New Normal," a reasonably progressive yet still conservative estimate of what China might do with its energy sector, this would require an investment just shy of $4 trillion.
At the same time, though, cuts in overall emissions could still be achieved as soon as 2027 through the adoption and integration of more renewable energy capacity and the phase-out of coal-fired power. Large hydropower would constitute more than half of new capacity. China is already home to the world's biggest and most powerful hydropower projects, and even more are being planned.
The New Normal plan also calls for an expansion of China's natural gas-fired fleet that would push down coal-fired generation from 67 percent of China's energy mix to 44 percent by 2030. Coal-fired power would still expand in this scenario by nearly 40 GW per year, it should be noted.
Separate from this planned massive power generation build-out, another way China is thinking big is its anticipated $100 billion investment in ultra high-voltage transmission lines (Read more about that here). The State Grid Corp. of China, which according to some estimates is the world's biggest utility, has either approved or is already building 20 such transmission projects.
These 20 high-voltage lines will form a massive network that will link up the densely populated and heavily industrialized southern and eastern parts of China with the west, where the country's hydropower potential is already better realized than just about anywhere else in the Eastern Hemisphere. China has already built the world's most massive and powerful dams in its eastern provinces, including Three Gorges, which at 22,500 MW generates as much electricity as 15 nuclear power plants.
Linking up the country's east and west with high-voltage power transmission is a smart way for China to make effective use of low- or no-carbon generation. Over the long term, this will help China's overall power portfolio become less polluting. Focusing on a well-built power grid with plenty of storm-hardening countermeasures and redundancies will prevent a scenario like we see in Brazil, which also uses massive dams to power far-flung population centers, but which suffers from regular outages when transmission lines are damaged or cut off.
As I write this, Brazilian authorities are working to restore power to eight states and tens of millions of people because a fire in northeast Brazil damaged transmission lines that link huge hydro assets from cities (See that story here). As China grows, it would do well to keep an eye on Brazil and remember what happens when you build out your cities and power plants, but neglect your transmission infrastructure.
Some power sector expansion scenarios laid out by Bloomberg New Energy Finance could address both power reliability and environmental concerns, however at least one scenario would require 88 GW in new power generation capacity every year from now until 2030.
That would mean a build-out equal to the entire generation capacity of the United Kingdom every single year. Still, if any country can accomplish this, it's probably China.
China, which by the way is already the world's largest single source of carbon dioxide emissions and the most powerful generator of electric power in the world, could add more than 1,500 GW of new power generation in the next two decades, according to Bloomberg's surveys.
In a scenario called "The New Normal," a reasonably progressive yet still conservative estimate of what China might do with its energy sector, this would require an investment just shy of $4 trillion.
At the same time, though, cuts in overall emissions could still be achieved as soon as 2027 through the adoption and integration of more renewable energy capacity and the phase-out of coal-fired power. Large hydropower would constitute more than half of new capacity. China is already home to the world's biggest and most powerful hydropower projects, and even more are being planned.
The New Normal plan also calls for an expansion of China's natural gas-fired fleet that would push down coal-fired generation from 67 percent of China's energy mix to 44 percent by 2030. Coal-fired power would still expand in this scenario by nearly 40 GW per year, it should be noted.
Separate from this planned massive power generation build-out, another way China is thinking big is its anticipated $100 billion investment in ultra high-voltage transmission lines (Read more about that here). The State Grid Corp. of China, which according to some estimates is the world's biggest utility, has either approved or is already building 20 such transmission projects.
These 20 high-voltage lines will form a massive network that will link up the densely populated and heavily industrialized southern and eastern parts of China with the west, where the country's hydropower potential is already better realized than just about anywhere else in the Eastern Hemisphere. China has already built the world's most massive and powerful dams in its eastern provinces, including Three Gorges, which at 22,500 MW generates as much electricity as 15 nuclear power plants.
Linking up the country's east and west with high-voltage power transmission is a smart way for China to make effective use of low- or no-carbon generation. Over the long term, this will help China's overall power portfolio become less polluting. Focusing on a well-built power grid with plenty of storm-hardening countermeasures and redundancies will prevent a scenario like we see in Brazil, which also uses massive dams to power far-flung population centers, but which suffers from regular outages when transmission lines are damaged or cut off.
As I write this, Brazilian authorities are working to restore power to eight states and tens of millions of people because a fire in northeast Brazil damaged transmission lines that link huge hydro assets from cities (See that story here). As China grows, it would do well to keep an eye on Brazil and remember what happens when you build out your cities and power plants, but neglect your transmission infrastructure.
Thursday, August 15, 2013
Connecting BEMS in smart buildings to smart grid
By Allan McHale, Memoori Business Intelligence
Just look down a listing of enterprise energy management suppliers and you will find a mixture of some of the world's leading IT organizations and start-up software companies fighting hard to get established in this burgeoning market.
The two major prongs of this business lie in making smart buildings much smarter and the smart grid fully ADR right across the transmission and distribution network by providing a real-time analysis of supply and demand. These two markets alone have the potential to spend upwards of $225 billion by 2030 with smart buildings looking the more attractive and robust business. Installing smart grid is highly dependent upon changes to the regulatory control procedures and the utility companies finding the $2 trillion investment needed to deliver a fully operational smart grid around the world.
In the meantime, the utilities are coming under increasing pressure to reduce carbon dioxide emissions and are being forced to phase out their fossil fueled generating plants. In the U.S. particularly, they are encouraging their major consumers, coincidentally smart building owners, to join demand response programs and are entering arrangements to take their distributed power.
This provides a ready an fast-growing market for all those companies that have the software products and skills to interface buinding energy management systems (BEMS) in smart buildings to deliver demand response and distributed energy. This is therefore becoming a niche market, not least because we can't wait for ADR to produce a fully operational smart grid.
This market is currently worth around $350 million but the technical market potential to retrofit these two functionalities to smart buildings has a potential value of $30 billion and we forecast it should reach $2.65 billion by 2017. This is therefore a sizable business, but it is made much more attractive by the fact that by far the biggest component is the unrealized potential in existing smart building stock. It may be a smaller market, but it delivers a solution to a problem that must be solved — it can't wait for smart grid to be in place or smart buildings to incorporate a comprehensive enterprise energy management.
So for all of the budding energy management suppliers, that's the good news. The bad news is that there are some other suppliers out there that are hungry for this business. These are BEMS suppliers and energy service companies (ESCOs). Although not particularly well-known for their energy management prowess, they have been acquiring companies with this expertise for the past half-decade. These companies include Johnson Controls, Honeywell, Schneider Electric, Siemens and ABB. They are the world's leading suppliers and the last four are also leading suppliers of smart grid products and services.
This puts them in a very strong position for two reasons:
It is a different matter for major energy management companies because most of their clients will be owners of large smart building real estates and they will have contact with sources that will influence buying decisions on energy management purchases. These companies will be targeting comprehensive energy management systems in smart buildings. However even here, the interest in forming partnerships with the major BEMS companies.
Schneider Electric has just signed a strategic technology agreement with one of the world's major software companies, OSIsoft. OSIsoft will provide their PI System, a leading infrastructure technology for the management of real-time data and events while Schneider Electric, a global specialist in energy management, will provide innovative energy management solutions.
Connecting BEMS in smart buildings to smart grid to deliver demand response is a niche market that is needed now. It could be provided through smart buildings installing comprehensive energy management or waiting 10 to 20 years before ADR is operational within smart grid in the developed countries of the world.
The cost of installing it is less than 1 percent of the investment needed to deliver smart grid. The return on investment is attractive and it reduces the carbon dioxide emissions and gets the utilities companies out of a hole.
Just look down a listing of enterprise energy management suppliers and you will find a mixture of some of the world's leading IT organizations and start-up software companies fighting hard to get established in this burgeoning market.
The two major prongs of this business lie in making smart buildings much smarter and the smart grid fully ADR right across the transmission and distribution network by providing a real-time analysis of supply and demand. These two markets alone have the potential to spend upwards of $225 billion by 2030 with smart buildings looking the more attractive and robust business. Installing smart grid is highly dependent upon changes to the regulatory control procedures and the utility companies finding the $2 trillion investment needed to deliver a fully operational smart grid around the world.
In the meantime, the utilities are coming under increasing pressure to reduce carbon dioxide emissions and are being forced to phase out their fossil fueled generating plants. In the U.S. particularly, they are encouraging their major consumers, coincidentally smart building owners, to join demand response programs and are entering arrangements to take their distributed power.
This provides a ready an fast-growing market for all those companies that have the software products and skills to interface buinding energy management systems (BEMS) in smart buildings to deliver demand response and distributed energy. This is therefore becoming a niche market, not least because we can't wait for ADR to produce a fully operational smart grid.
This market is currently worth around $350 million but the technical market potential to retrofit these two functionalities to smart buildings has a potential value of $30 billion and we forecast it should reach $2.65 billion by 2017. This is therefore a sizable business, but it is made much more attractive by the fact that by far the biggest component is the unrealized potential in existing smart building stock. It may be a smaller market, but it delivers a solution to a problem that must be solved — it can't wait for smart grid to be in place or smart buildings to incorporate a comprehensive enterprise energy management.
So for all of the budding energy management suppliers, that's the good news. The bad news is that there are some other suppliers out there that are hungry for this business. These are BEMS suppliers and energy service companies (ESCOs). Although not particularly well-known for their energy management prowess, they have been acquiring companies with this expertise for the past half-decade. These companies include Johnson Controls, Honeywell, Schneider Electric, Siemens and ABB. They are the world's leading suppliers and the last four are also leading suppliers of smart grid products and services.
This puts them in a very strong position for two reasons:
- They are in daily contact with the owners of smart buildings who are existing clients both through installing their BEMS and also taking their ESCO service. This gives them a massive heritage estate to work with.
- They have the practical ability to bring all the various electrical loads in the building together and not all are being controlled through BEMS. Both are important factors that will influence buying decisions.
It is a different matter for major energy management companies because most of their clients will be owners of large smart building real estates and they will have contact with sources that will influence buying decisions on energy management purchases. These companies will be targeting comprehensive energy management systems in smart buildings. However even here, the interest in forming partnerships with the major BEMS companies.
Schneider Electric has just signed a strategic technology agreement with one of the world's major software companies, OSIsoft. OSIsoft will provide their PI System, a leading infrastructure technology for the management of real-time data and events while Schneider Electric, a global specialist in energy management, will provide innovative energy management solutions.
Connecting BEMS in smart buildings to smart grid to deliver demand response is a niche market that is needed now. It could be provided through smart buildings installing comprehensive energy management or waiting 10 to 20 years before ADR is operational within smart grid in the developed countries of the world.
The cost of installing it is less than 1 percent of the investment needed to deliver smart grid. The return on investment is attractive and it reduces the carbon dioxide emissions and gets the utilities companies out of a hole.
Tuesday, August 6, 2013
U.S. wind takes off
The U.S. wind energy industry is continuing to pay off for those who have invested in it, both in terms of power generated as well as manufacturing and jobs. This is according to a pair of studies the DOE has made public.
More than 13 GW of wind energy capacity was added onto the U.S. grid last year. That's double what was added the year before. To boot, more of these wind turbines and their parts (towers, nacelles, blades, gearboxes, etc.) are being built in the U.S.
The DOE estimated that 72 percent of the wind turbine equipment used in the U.S. was manufactured domestically — up from about 25 percent in 2007.
Crucially, the report also reveals that the American wind energy sector now employs some 80,000 people who work at all levels — from building wind turbine blades to installing nacelles or performing needed wind farm maintenance.
Other factoids from the report that I thought were worth noting:
There was a time to wonder whether wind power could make it as a viable power generation technology. For the U.S., that time has passed. Now the question has become: What is the best way to integrate wind energy onto the power grid without causing too many disturbances due to intermittancy.
If you want to see how wind farms have spread across the U.S. over the years, the DOE has an interactive map at their website. Click here to see it.
More than 13 GW of wind energy capacity was added onto the U.S. grid last year. That's double what was added the year before. To boot, more of these wind turbines and their parts (towers, nacelles, blades, gearboxes, etc.) are being built in the U.S.
The DOE estimated that 72 percent of the wind turbine equipment used in the U.S. was manufactured domestically — up from about 25 percent in 2007.
Crucially, the report also reveals that the American wind energy sector now employs some 80,000 people who work at all levels — from building wind turbine blades to installing nacelles or performing needed wind farm maintenance.
Other factoids from the report that I thought were worth noting:
- Texas added 1,300 MW of new wind capacity last year, beating out California, an early adopter of the technology and home to some of the nation's oldest wind farms
- The country's cumulative installed wind capacity has jumped 22-fold since the turn of the century
- There are three states that get more than 20 percent of their power from the winds: Iowa, South Dakota and Kansas
- The price of a kilowatt hour of wind energy ran about 4 cents from 2011 to 2012
- There are now 69,000 distributed wind turbines operating in all 50 states
There was a time to wonder whether wind power could make it as a viable power generation technology. For the U.S., that time has passed. Now the question has become: What is the best way to integrate wind energy onto the power grid without causing too many disturbances due to intermittancy.
If you want to see how wind farms have spread across the U.S. over the years, the DOE has an interactive map at their website. Click here to see it.
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