Navigant’s Predictions for Storage, Transportation, Distributed Systems

The demand for clean generation and transportation, as well as the IT systems and storage to back it up, could reach new highs this year, as utilities, automakers and municipalities all brace for a greener, more connected future.

A recent Navigant Consulting webcast highlighted the firm’s bullish outlook on several clean energy trends. Where 2013 was the year that popularized distributed solar and electric vehicles, 2014 could be the year that takes cleantech a step closer to the mainstream.

To wit, by the end of this year Navigant forecasts some 700,000 plug-in electric vehicles (PEVs) will be on the road, that growth distributed wind and solar will force utilities to rethink their business model, and the electric vehicles and storage management will begin their journey to becoming multibillion dollar industries.

Here are some of the highlights from Navigant’s “The Year Ahead in Cleantech” webcast.

Transportation

Urbanization is reshaping the auto industry. More consumers are moving into cities, driving fewer miles and getting rid of personal vehicles altogether, giving way to smaller, more efficient vehicles, car share programs and new municipal programs aimed to help drivers spend less time on the road. This ongoing shift will make 2014 a year of significant change in the transportation industry, said John Gartner, a research director in Navigant’s energy practice.

Gas and hybrid vehicles still dominate the roads. While battery electric vehicles (BEVs) sold a record number in 2013 – about 215,000 – they will only represent up about 1% of the total market by the end of this year. That trend is set to reverse over the next decade. “BEV sales are going to continue to grow by about 20.3% annually through 2022 while light duty vehicle sales are going to grow by just 1.2%,” Gartner said.

As sales shift, so too will the industry. More battery electric vehicles on the road mean fewer repairs and less need for replacement parts, Gartner says. That could eventually have an impact on automakers, which in turn could see a decline in customers coming back for repairs. Globally, other forms of transportation will edge in on the automobile’s realm. Although auto sales are slowing down, Gartner doesn’t expect “peak cars” to happen until 2018.

Cars increasingly are fighting for room in the developing world,” Gartner said. “Ebikes, scooters and motorcycle sales continue to rise. In total we’re looking at nearly 47 million two-wheeled vehicles – bikes, scooters and motorcycles – to be sold worldwide in 2014. Cars are not the only option for mobilization and we’re seeing more contention in that market.”

Japanese startup Terra Motors is one example of high end Ebike development. Its vehicles include the kiwami bike, which was introduced to India in January, as well as a three-wheeled bike modeled after the traditional tuk-tuk, or auto rickshaw. Another company, BRD Motorcycles raised $1 million last October to commercialize its electric racing bikes. The San Francisco-based company also added Tesla cofounder Martin Eberhard as an advisor. Last year, BRD announced plans to raise a total of $12 million from venture capital investors.

Terra Motors Kiwami

Car Sharing, Smart Cities and Data Driving Innovation

While automakers will be forced to look for other products to offset the loss in revenue, the overall shift in transit needs could be a boon for software makers, car share programs and others looking to edge in on transit. Gartner says governments are actively looking to turn their cities into smart cities, using data and software to reshape transportation as urban dwellers grow less reliant on cars.

“Infrastructure and vehicles will increasingly talk to each other to relay information about where they are, where they’re going and to get information back about traffic, parking availability,” he said, to “make it beneficial to trip planning and figuring out what is the best form of transportation.”

As cars and infrastructure become more connected, it could also be an opportunity for companies to leverage the data for marketing, research and simply getting more products closer to more consumers. “Media companies, energy companies, data analytics companies – they all see these vehicles as ripe area for innovation,” Gartner says. To see more of Navigant’s transportation predictions, click here.

Utilities – The Key is Data

Utilities are another traditional powerhouse industry starting to feel a squeeze in revenue because of clean technology. The move toward efficiency and distributed generation has utilities rethinking their role, says Navigant research director Bob Lockhart.

“Utilities want more revenue sources, especially when they’re dealing with more payouts for residential generation or distributed generation,” he said.

Consumers’ smarter use of energy has utilities thinking smarter, too, said Lockhart, who says some of the biggest trends have to do with granularity of control. It’s giving way to utilities seeking more software solutions from vendors, as the importance of hardware gives way to the priority of control. It’s playing out in the deployment of smart grids, as well.

“Smart grid applications are really coming into focus now,” Lockhart says. “The reason is with so much IT and communications capability on the grid, we need the ability to understand what’s going on there, to manage it more granularly, to collect this data.”

What are utilities looking for? The key is in data. Lockhart breaks it down into four categories: customer information systems, geospatial information systems, grid optimization and data analytics.

“It looks like there will be clouds in your future if you are a utility,” Lockhart says. “Software as a service is here to stay. It’s just too hard and too expensive to do a lot of the things in-house that are going to be done in the future of data analytics.”

Baltimore Gas and Electric is a recent example, with its announced partnership with C3 Energy that will see the utility deploy smart grid analytics across the utility’s 2 million gas and electric meters in an effort to drive new operational efficiencies.

To see more of Navigant’s prediction’s for the utilities industry, click here.

Smart Energy and Storage

Natural gas has been a success story for about a decade now, says Sam Jaffe, a senior research analyst in Navigant’s energy practice. However distributed generation – including solar, wind and microgrid technology – will continue to grow, with wind in particular rebounding after a slow 2013.

“We had an almost complete cessation of wind in 2013, and because of the [production tax credit] extension we’re expecting a big boom in wind this year, as well as the emergence of what we’re calling the ‘energy cloud,’ meaning distributed generation, distributed management and load control management becoming major factors in how the electricity system works in the united states, and that’s led by distributed [photovoltaic].”

Navigant expects 28 gigawatts of solar in 2014. North America will produce three gigawatts of that, with most of it being distributed.

Fuel cells are one area in particular that’s expected to have a global coming-out party over the next year. Navigant expects some 353 megawatts of stationery fuel cells to be sold in 2014 – a 74% jump from last year’s total. “For the first time we can talk about a stable and high growth fuel cell market, so we’re going from the pilot projects and demonstrations to an actual industry that’s cranking out hundreds of megawatts of fuel cells,” Jaffe adds.

Fuel cell maker Bloom Energy, which raised $103 million in a Series G venture capital funding last year, is one of the top cleantech contenders to have an initial public offering this year, according to several industry pontificators.

Navigant anticipates lithium-ion battery prices will continue to drop, with prices falling below $400 per kilowatt hour. Manufacturing capability and expertise have contributed to the drop in price for lithium-ion. Jaffe says it’s long been considered a superior battery, but adoption has been hindered by cost.

“In terms of what lithium ion can do, it tends to have relatively low degradation rates so it can last for a long time period,” Jaffe says. “Depending on the chemistry it often has good power specifications. It can push out a lot of power over a short time or a little bit of power over a long time, so it tends to be flexible in that regard. It’s also a very efficient battery, so you can easily get a 90% efficiency on a lithium ion system, whereas other batteries systems and other energy storage systems often are another 10 percentage points lower than that.”

Regulation is also contributing to the uptick in interest for energy storage. Jaffe points to California, where the first mandates for energy storage were imposed on electric utilities. “We’re in the beginning of that process, but we will see a lot of significant movement in that space, especially in regard to the compressed air energy storage as well as batteries.”

For example, on February 19, it was announced that the U.S. DOE’s National Renewable Energy Laboratory (NREL) will evaluate and demonstrate the CellCube vanadium redox flow energy storage system at their testing facility. This demonstration project is being driven by strong interest in its new storage technology by utilities and solar developers, according to the company.

And in Europe, Highview Power Storage announced that it has been awarded a $13 million grant from the U.K. Department of Energy and Climate Change to build a commercial-scale facility that uses liquified air to store energy for the grid, according to an article in IEEE Spectrum.

FERC Order No. 755, passed in 2011, has also led to large battery projects across the United States. Jaffe predicts multiple 10s of megawatts of battery projects in the PJM Interconnection region, which covers all or part of 13 states and the District of Columbia.

Distributed Generation and Microgrids

Other energy storage developments will take place in businesses and homes. Navigant expects commercial energy storage systems to start appearing in commercial buildings in America, particularly for demand charge reduction, which is seeing massive growth. Federal subsidies for PV linked energy storage systems will also have a big impact on growth, he said.

Meanwhile, Japan has emerged as a major market for residential energy storage systems, Jaffe says, with more than $100 million in sales in 2013 alone. Korea will emerge as the next country to widely adopt in-home energy storage solutions.

Finally, microgrid adoption could push growth in energy storage over the next decade from about 817 megawatt hours this year to 15,182 in 2024, according to a recent Navigant release. The rise of microgrids could be spurred in part at the municipal level, Jaffe says, as cities will take a leading role in localizing energy production and storage.

“Some of the things we’re looking at this year will be new power purchase agreements as a business model for microgrids, which hasn’t happened before,” he says. “So we’re expecting the first of those to begin happening this year. We also see municipal utilities as taking the lead in the microgrid space. They tend to be more progressive and ready to embrace new technologies, and that’s certainly the case in the case of microgrids.”

 

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