Below is an excerpt from GTM Research's recent smart grid report, Distribution Automation Communication Networks: Strategies and Market Outlook, 2012-2016. To learn more about GTM Research's take on the distribution automation market, register for a free webinar on the topic by clicking here.
Until very recently, virtually all distribution grid systems were either manually controlled or controlled using modeling or estimation. Utilities operated on the basis of an estimation of the state of their grid: very few utilities had real, empirical evidence as to what was actually occurring in their systems and what information they did have was after the fact.
“Smart grid,” “digital grid,” and “intelligent grid” are among many terms used to describe the transformation of these electricity transmission and delivery systems from a one-way collection of paths for electricity to a delivery system controlled, managed and operated as an intelligent, integrated information network. These networks look very much like their counterparts in the information technology world and less like a collection of pipes, pumps and filters.
The promise of this transformation is to create a network that is self-healing; is controlled based on actual events and circumstances; that maximizes efficiency in the transmission and delivery of electricity; and that extends the operating lifetime of equipment, lowers the overall cost of operations and avoids new capital investment in infrastructure and generating stations. This promise also provides the end-user with a far greater number of options in electricity costs and usage.
There are a number of choices facing utilities with regard to the technologies available that meet their distribution automation (DA) and intelligent grid management equipment requirements. In order for GTM Research to develop a DA communications forecast, cost ranges were used for each communications technology. The figure below displays the market share forecast developed by GTM Research at the average cost of technology per node (any device that must be connected to the system, whether on a point-to-point basis or as part of a mesh, including intelligent electronic devices at the one end and the various routers and gateways at the other end).
FIGURE: Communications Technology Deployment Assumptions
GTM Research believes that DA represents the greatest opportunity to reap the benefits of the smart grid, but at the current juncture it remains largely undeveloped. Automation of distribution system operations and systems, substations and transmission grids offers more rapid and far greater return on investments than smart meter programs by eliminating existing inefficiencies in the system, thereby avoiding traditional capital investments in generation and infrastructure, and by reducing the overall cost of operation by conserving energy and lowering O&M expenses.
What do you call it when one side takes a shot, the other side fires back, and then the process continues onward in an escalating cycle? That’s right, the term is “war” -- and it comes to mind now as the back-and-forth between China and the West on solar power shows increasing signs of morphing from trade dispute to trade war.
The latest round -- a double-barreled action -- was fired by China, which on Monday alleged through the World Trade Organization that the European Union and member states (Italy and Greece in particular) gave added and illegal subsidies to solar PV projects that used EU-produced equipment.
The Chinese officially asked for “consultations” on the issue, the first step in the WTO dispute resolution process.
The WTO move came just a few days after the Chinese commerce ministry announced it would launch antidumping and countervailing investigations on solar-grade polysilicon -- the key component in crystalline silicon PV cells -- that’s sold into the country from the EU.
The U.S. International Trade Commission yesterday locked in duties on Chinese solar PV products coming into the country, ending a 13-month case brought by the U.S. unit of Germany-based SolarWorld.
That was the one that started it all (although, of course, SolarWorld and its allies argue that the Chinese industry brought the complaints on itself by dumping products in the U.S. and taking unfair subsidies from the government).
In the months after the SolarWorld case began, China launched a probe of the U.S. polysilicon industry. Then in the summer of 2012, the EU launched an antidumping investigation into solar panels and their key components originating in China.
According to state-owned (but often surprisingly independent) China Daily, the Chinese WTO issue is twofold: first, with a 2009 EU directive “on the promotion of energy from renewable sources,” and second, with programs in Italy and Greece that flowed from that directive that gave preference and additional support to homegrown goods.
The paper said that according to the commerce ministry, Italian imports of Chinese solar products slid from $4.8 billion in 2010 to $3.9 billion in 2011 and, nine months into 2012, were at just $760 million.
The dip in 2011 could be considered a bit suspicious, given that Italy was the fastest-growing market in the world that year, adding 9,300 megawatts to give it 12,700 megawatts at the end of the year. But forecasts are for this year’s installations to be dramatically lower, perhaps as little as a third of what 2011 brought.
With the mad growth in solar installations ebbing a bit, at least, and wildly excessive capacity, China’s domestic solar manufacturing is in shambles. But an industry rep flatly told China Daily that the WTO action wasn’t going to fix things.
“It won’t help China’s solar industry by starting a trade war,” said Li Junfeng, head of the China Renewable Energy Industry Association.
U.S. smart meter maker Itron had few surprises in its third quarter 2012 earnings call last Thursday. CEO LeRoy Nosbaum affirmed earlier GTM Research predictions of flat to slightly negative sales through the end of 2012 and heading into the first half of 2013. Don’t single Itron out, though -- this trend isn’t unique to the Liberty Lake, Wash.-based company, but rather reflects the state of the industry as a whole.
What’s driving the slowdown? In North America, only a handful of potential multi-million endpoint contracts remain, and regulators have become increasingly stringent in approving business cases for advanced metering infrastructure (AMI). In Europe, macroeconomic and political uncertainties as well as immature standards have delayed tenders at several utilities such as France’s ERDF. Concurrently, large projects won several years ago are now coming to a close.
The impact of project ramp-down has been significant. Itron’s global electric business revenue decreased 24 percent in constant currency from Q3 2011, largely due to the fact that several key OpenWay projects in North America have been completed or are nearing completion. Those include deployments at CenterPoint Energy, Southern California Edison, San Diego Gas & Electric and BCHydro.
Other marquee projects including Detroit Edison have also progressed rapidly, Nosbaum said. As a result, the company’s OpenWay backlog from the five aforementioned projects has decreased to $285 million -- down from the post-stimulus high of $949 million in Q3 2010.
The acquisition of cellular smart meter company SmartSynch (now Itron Cellular Solutions) added $60 million to backlog in Q2 and will be a critical component in acquiring new business going forward, given that Itron’s largest competitor, Silver Spring Networks, also offers RF mesh and cellular networking capabilities. Itron’s management also noted the scope of the project at Michigan utility Consumer’s Energy has expanded, and there may be an opportunity to improve margins by utilizing Itron meter hardware in tandem with Itron Cellular Solutions communication modules.
In other smart grid earnings notes, smart meter and building controls networking technology vendor Echelon’s revenues in the Americas were down 67 percent from Q3 2011, largely due to the company’s marquee project with Duke Energy Ohio nearing completion. While Duke is still awaiting regulatory approval in its Indiana service territory, it appears Itron will be providing additional OpenWay meters in Ohio, as well an unspecified number of meters in the Carolinas, through a $43 million contract announced in the previous quarter.
While the North American investor-owned market has slowed substantially, there has been increased activity among both municipal and cooperative utilities, which collectively account for about 30% of the U.S. market. Despite the flurry of activity, including Itron’s recent win at the Los Angeles Department of Water and Power, the sales volumes won through new municipal and cooperative contracts will be unable to fill the void in sales from the declining IOU market.
Given the slowdown in North America, and tempered growth expectations in Brazil following the Brazilian regulator’s August opt-in decision, vendors’ focus will to shift to Europe and Asia, where several RFPs should breathe life back into the industry in late 2013, most notably through offerings at ERDF in France, Iberdrola in Spain, and Tepco in Japan. However, it is important to note that contracts outside North America are typically awarded to more than one vendor. Such was the case at Spanish utility Iberdrola, which awarded a one-million-meter contract to seven different vendors in the first quarter of 2012. Despite being selected to provide Iberdrola with its meter data management system, Itron did not have a competitive offering in the first bidding process. However, the company expects to have a qualified product ready in time for Iberdrola’s next RFP.
China should not be overlooked either and Echelon has positioned itself nicely to acquire new business through a joint venture with Holley Metering. However, meters and associated communications chips are becoming increasingly commoditized in China and there could be significant downward price pressure from domestic vendors.
Transonic Combustion, a developer of fuel injection technology for internal combustion engines, raised $32 million in Round D venture funding from Venrock, Khosla Ventures, Rustic Canyon and Saints Capital, according to Dan Primack at Fortune.
According to the company's website, injecting supercritical fuel directly into the combustion chamber enables improvements in efficiency. The company states that "supercritical injection enables cost-effective compression ignition of gasoline in engines with a conventional architecture. This is described as “Injection Ignition,” and it results in efficiencies that are equal to or better than today’s Diesel engines."
Despite the attention paid to electric cars like Tesla and the Volt or hybrids like the Prius or Fisker, startups and some of the major carmakers are focused on better gas mileage. Surely one way to ratchet back petroleum usage is to double miles per gallon performance.
Firms like Achates Power and EcoMotors have developed dual compression/dual piston engines. These companies claim they can achieve 100 miles per gallon. Ford has an Escort in Europe which gets 65 miles a gallon on diesel. Scuderi has a new engine technology, as does Zajac Motors. Other startups are working on batteries or capacitors for emerging "microhybrids."
With a CAFE standard for vehicle fleets of 54.5 mpg by 2025, many automotive and battery startups -- Scuderi, EcoMotors, Achates Power, WrightSpeed, Nanostellar, PowerGenix, etc. -- hope to license their technologies for energy-efficient engines and other components to major car makers. Carmakers are reluctant to license, and selling to the automotive sector is always a challenge -- even more so for a cash- and time-strapped VC funded startup. But it's either build your own vehicle, or work with the majors.
Here are some technologies looking to get to better gas mileage:
1. Diesel: Diesel engines generally get better mileage than their gas counterparts and auto manufacturers have managed to cut down the particulate matter, SOx and NOx, that gave diesel a bad name in the '70s, '80s and '90s. Nearly half of all U.S. gas stations have diesel now too, Audi execs tell us.
2. Electrics and Plug-In Hybrids: Toyota, Ford, Volkswagen, Honda and most other manufacturers all have electrics coming. Renault-Nissan CEO Carlos Ghosn has said electrics will constitute 10 percent of industry shipments by 2020 -- 85 million cars will be sold and 8.5 million will be electric, he claims. Tesla Motors CEO Elon Musk has said electrics could account for 12 percent or so of vehicle sales by 2020. Cynics put the figure in single digits, warning of evaporating incentives.
3. Regular Hybrids: Ford execs predict that 10 percent to 25 percent of their cars will be electrics, plug-ins or hybrids by 2020. But the vast majority will be regular hybrids.
4. Stop-Start: Also called microhybrids, these cars are like regular hybrids but they have very small electric motors that engage mostly to allow a car to get started quickly. With a micro, a gas engine can go to sleep at an intersection. A microhybrid system can improve gas mileage by 6 percent to 10 percent, according to Dan Squiller, former CEO of battery maker PowerGenix.
5. Waste Heat: Approximately 50 percent of all energy purchased gets lost as waste heat, according to UC Berkeley. Engines are particularly attractive sources for waste heat: some estimate that 85 percent of the energy injected into engines gets wasted. That heat can be captured, compressed and then exploited to run the air conditioning system. Panasonic has developed a waste heat AC system for cars: it is derived from a household AC unit. (See video here.) Tempronics, Phononic Devices and Alphabet Energy are also working on devices for converting waste heat into electricity.
6. New Engines: Pinnacle Engines is working on an opposed-piston gas engine, while EcoMotors and Achates Power have opposed-piston diesels. Pinnacle says it can improve fuel consumption by 25 percent to 50 percent. Opposed piston engines were used in aircraft in WW II, but have been refined and retrofitted now for cars. These engines also require fewer raw materials like steel.
Expect to see new, improved engines from the established players. Ford is expanding the number of models of cars it makes that will come with its EcoBoost engines. GM and Toyota have worked on HCCI engines for years. (Include Transonic Combustion in the startups-with-mileage-tech-to-license category.)
7. Plastics and Carbon: Weight. It's the third fuel. If you drop weight, mileage goes up. Bright Automotive, a startup that spun out of the Rocky Mountain Institute, is working on light delivery trucks. GM is an investor. Non-metallic bodies can also be curved for great aerodynamics. Aluminum will come first along with other lightweight alloys.
8. Hemp: Nearly every automaker is tinkering with ways to replace traditional car materials -- aluminum, rubber, etc. -- with sustainable ones like old plastic and hemp. Ford and others already exploit soy and other renewables.
9. Innovative Transmissions: Fallbrook Technologies pulled its IPO early last year, but its invention, the NuVinci, is still intriguing: a highly variable transmission that relies on balls instead of gears. The company claims it can improve mileage by 12 percent to 15 percent.
10. Hydrogen and Fuels Cells. Honda and other automakers keep pushing out the deadline for hydrogen cars, and for good reason. Hydrogen is dirty to make, you can't transport it easily and the cars cost a ton of money. Honda, Mercedes, and others continue to research the concept. Maybe by 2025?
Everyone’s heard the old saying: you can’t manage what you can’t measure. But what if you can’t even measure what you’re measuring in the first place?
That’s actually a key problem with the sensors used to monitor and control today’s factories, data centers, offices and other buildings. The fact is, they go out of whack, both predictably over the course of years and unpredictably as the result of manufacturer errors, field exposure, or other factors.
In fact, most building system sensors can be expected to go out of calibration often enough to need replacement every few years, according to John Pitcher, a building controls expert and founder of Scientific Conservation, the building energy efficiency startup now called SCIenergy.
Earlier this year, Pitcher became CEO of Weber Sensors, a main-line German industrial sensor company, with the goal of bringing a new line of self-calibrating sensors to market to help solve this problem. Weber has filed patents on technology to recalibrate so-called calimetric flow and temperature sensors, and is working on patents for humidity sensors as well, he told me in an interview last month.
The goal is to build cell phone chipset-based microprocessors into sensors that can test themselves to see where their readings don’t jibe with reality, Pitcher said. That should be able to keep Weber’s new temperature sensors accurate to within less than half a degree Centigrade, in a provable fashion, for up to ten years, he said.
All the added IT will make Weber’s sensors about one-third more expensive than regular sensors, he noted. But he also expects that the multi-billion-dollar industrial and building controls sensor market will find the return on investment well worth the extra cost.
“People have to appreciate the cost of having inaccurate sensors,” Pitcher said. He first discovered the problem while working with customers of Scientific Conservation’s continuous commissioning and fault detection software, which relies on sensors for its data.
But sensors are built with technology that’s almost guaranteed to go out of true over time, he said. Temperature sensors, for example, use devices called thermistors (or electrical resistors) that change their resistance depending on the temperature, which are molecularly altered in the course of carrying that current, he noted. Humidity sensors, a critical component of outside-air cooling and other HVAC control systems, are notoriously unstable and aren’t expected to last more than two years or so, he said.
Weber’s new sensors solve that problem by testing themselves, using known variables, to compare the expected results against whatever the sensor is telling them, he said. For a temperature sensor, that might involve heating and then cooling over a specific time period -- something today’s dumb, analog sensors can’t do.
Pitcher said he knows of a few other companies working on self-calibrating sensors, including Accutech, AccuTru Sensor Technologies and Invensys. Of course, it’s quite possible that others in the building controls ecosystem are working on the problem. IT companies like IBM, Cisco and Echelon, startups like SkyFoundry, Viridity Energy and BuildingIQ, and big energy services companies (ESCOs) like Honeywell, Johnson Controls, Siemens, Schneider Electric, Emerson and the like, are all digitizing building control networks in ways that could allow them to analyze incoming data for calibration purposes.
But having a smart sensor at each end point could sure help. Pitcher said that he sees ESCOs as competitors, as well as potential partners, on the self-calibrating sensor front. Most of today’s building sensors are proprietary, analog devices with little or no ability to actually communicate digital signals, he added. Weber’s new sensors will do their own testing using their on-board microprocessors, but many will have to communicate their findings using today’s analog systems.
Pitcher didn’t name any specific customers that have signed up for the self-calibrating sensors the company is now working on, nor did he disclose how much internal investment he and the company have put into the R&D for the new products. But Weber is a well-established company in the sensors space, with plenty of existing customers that could provide good test beds.
Some parts of Australia already have deregulated electricity markets, but that could go even further. Smart meters, which are already mandated in the state of Victoria, could be expanded into a federal mandate.
Meter support comes not only from energy minister Martin Ferguson, but also from opposition energy spokesman Ian Macfarlane, according to the Brisbane Times.
Meters will allow customers to be charged peak-time pricing. One study found that some customers subsidized the heaviest peak energy users by up to $330 a year.
"This is clearly an unfair cost, particularly on those less able to afford it," Ferguson said, according to The West Australian.
The paper notes that electricity prices have risen 40 percent in the last three years and that investment is sorely needed to replace the aging grid, meet reliability standards and cut peak demand.
Beyond smart metering, the paper also covered generation issues. Australia is rich in many fuels, from sunlight to natural gas. The government sees a move toward gas-fired generation, as carbon trading is expanding, and also because gas-fired generation is a better complement to wind and other renewables.
The scale of the needed investment is huge -- an estimated $240 billion by 2030 -- to meet the goals outlined in the paper, including $100 billion for renewables. “The need for new investment and rising costs of production mean that the era of cheap energy is over,” the draft paper stated.
One way to mitigate the costs will be deregulation. While Victoria is fully deregulated, other states -- including New South Wales, where Sydney sits -- are not.
The energy white paper, which hadn’t been updated since 2004, calls for various critical reforms, including:
- Privatizing government-owned energy assets
- Fully deregulating retail energy prices where effective competition exists
- Implementing an improved demand-side energy framework to reduce peak-demand growth
- Transitioning to truly national energy markets
Australia is hardly starting from zero when it comes to integrating more renewables and deregulating energy. Victoria’s active electricity market has a customer churn of close to 30 percent. There is a robust residential solar market and a growing utility-scale solar market.
When it comes to efficiency, Australians, like Europeans, are naturally more inclined toward energy savings and environmental issues than their American counterparts. In the past few years, energy consumption has actually been dropping in Australia. Some say it is because of a few mild winters and summers, but other think that rooftop solar efficiency schemes paid for by carbon trading are starting to pay off. Even with the reduction, critical peaks are still rising during summer, which is just starting Down Under.
The government has already set a 20 percent renewable energy target for 2020; Australia could quickly become one of the most interesting markets for energy services from deregulated utilities.
While Australia’s government wants to create a robust energy future by 2030 that will serve its own nation, it is also well aware that it sits in the Asia-Pacific region, and by being on the forefront of energy investment, the government also hopes to continue its increasing energy exports to Asia, which now stand at about $69 billion annually.
The white paper is not the final word, however. It will be the basis for negotiations between the states and the federal government, which start next month.
Update 11:30AM November 8: Despite record highs in quarterly revenue and margin -- the price of Enphase shares have dropped to historic lows. The stock is currently down 20 percent and trading at $2.65 per share.
Enphase (Nasdaq: ENPH), the Petaluma-based solar microinverter firm, announced solid third-quarter financial results with a record revenue of $60.8 million, up 36 percent year-over-year -- at a record gross margin of 26.8 percent.
The firm sold 431,000 of its innovative microinverters in the third quarter, but lost $8.9 million. Losses in the second quarter were $11.4 million.
Enphase looks for Q4 to be between $52 million and $57 million and for gross margin to be 26.5 percent to 28.0 percent. Enphase also announced that it was accessing new and larger credit facilities.
MJ Shiao, GTM Research's inverter analyst, notes that Enphase continues to push costs down incrementally while keeping its ASP from falling as much as central inverter prices.
Enphase is growing its market and market share at a respectable clip. It's one of the few VC-funded cleantech companies to make it through the public window. But the stock market has not been kind to Enphase in 2012: its stock has been weighed down by uncertainty in the general solar market.
Enphase traded at $3.28 per share at market close November 7.
from Google Finance
U.S. smart meter maker Itron had few surprises in its third quarter 2012 earnings call last Thursday. CEO LeRoy Nusbaum affirmed earlier GTM Research predictions of flat to slightly negative sales through the end of 2012 and heading into the first half of 2013. Don’t single Itron out, though -- this trend isn’t unique to the Liberty Lake, Wash.-based company, but rather the industry as a whole.
What’s driving the slowdown? In North America, only a handful of potential multi-million endpoint contracts remain, and regulators have become increasingly stringent in approving business cases for advanced metering infrastructure (AMI). In Europe, macroeconomic and political uncertainties as well as immature standards have delayed tenders at several utilities such as France’s ERDF Concurrently, large projects won several years ago are now coming to a close.
The impact of project ramp down has been significant. Itron’s global electric business revenue decreased 24 percent in constant currency from Q3 2011, largely due to the fact that several key OpenWay projects in North America have been completed or are nearing completion. Those include deployments at CenterPoint Energy, Southern California Edison, San Diego Gas & Electric and BCHydro.
Other marque projects including Detroit Edison have also progressed rapidly, Nusbaum said. As a result, the company’s OpenWay backlog from the five aforementioned projects has decreased to $285 million – down from the post-stimulus high of $949 million in Q3 2010.
The acquisition of cellular smart meter company SmartSynch (now Itron Cellular Solutions), added $60 million to backlog in Q2 and will be a critical component in acquiring new business going forward, given that Itron’s largest competitor, Silver Spring Networks also offers RF mesh and cellular networking capabilities. Itron’s management also noted the scope of the project at Michigan utility, Consumer’s Energy has expanded, and there may be an opportunity to improve margins by utilizing Itron meter hardware in tandem with Itron Cellular Solutions communication modules.
In other smart grid earnings notes, smart meter and building controls networking technology vendor Echelon’s revenues in the Americas were down 67 percent from Q3 2011, largely due to the company’s marquee project with Duke Energy Ohio nearing completion. While Duke is still awaiting regulatory approval in its Indiana service territory, it appears Itron will be providing additional OpenWay meters in Ohio as well an unspecified number of meters in the Carolinas through a $43 million contract announced in the previous quarter.
While the North American investor-owned market has slowed substantially, there has been increased activity among both municipal and cooperative utilities, which collectively account for about 30 percent of the U.S. market. Despite the flurry of activity, including Itron’s recent win at the Los Angeles Department of Water and Power, the sales volumes won through new municipal and cooperative contracts will be unable to fill the void in sales from the declining IOU market.
Given the slowdown in North America, and tempered growth expectations in Brazil following the Brazilian regulator’s August opt-in decision, vendors’ focus will to shift to Europe and Asia, where several RFPs should breathe life back into the industry in late 2013, most notably through offerings at ERDF in France, Iberdrola in Spain, and Tepco in Japan. However, it is important to note that contracts outside North America are typically awarded to more than one vendor. Such was the case at Spanish utility Iberdrola, which awarded a one million meter contract to seven different vendors in the first quarter of 2012. Despite being selected to provide Iberdrola with its meter data management system, Itron did not have a competitive offering in the first bidding process. However, the company expects to have a qualified product ready in time for Ibderola’s next RFP.
China should not be overlooked either and Echelon has positioned itself nicely to acquire new business through a joint venture with Holley Metering. However, meters and associated communications chips are becoming increasingly commoditized in China and there could be significant downward price pressure from domestic vendors.
Even without increasingly frequent 100-year storms, the U.S. is hardly at the front of the pack when it comes to system reliability.
“There is a lot of opportunity to reduce technical loss,” Ben Kellison, smart grid analyst with GTM Research, said during a recent webinar entitled “Optimizing the Efficiency and Reliability of Electric Distribution Networks.”
In the U.S., two-thirds of the outages are from weather issues or tree-related. The System Average Interruption Duration Index (SAIDI) figures are far lower in the U.S. than in other developed countries, such as Japan and South Korea.
And while all the technology in the world cannot guard against an entire substation being flooded or stop trees from taking down lines, there are a lot of technology systems that can help reduce the damage and outage time when weather events -- even severe ones -- hit.
“What we’re seeing is a convergence of information technologies and operation technologies,” said Clinton Davis, director of product strategy for smart grid at Ventyx, a software company owned by ABB.
One of the ways that Ventyx sits at the intersection of IT and OT is by allowing for faster and more effective interaction between mobile crews and a control center. Davis didn’t produce specific figures on how a smoother interaction can cut down on outage times, but he did give some specific examples of interactions.
One is just better predictive analytics that can position field crews in the right places as quickly as possible. Giving linesmen information in their hands, and not just in their trucks, can also cut down on the time it takes for them to communicate back to the control center.
As linesmen and technology like smart meters can give real-time updates to outage status, it can also help to let customers know when power might be back on. Maybe the power is still out for three days, but there could certainly be some good will if customers know a more specific timeline for an outage so that they can also plan accordingly.
For utilities that make reducing outage time a priority, there are plenty of resources. Vermont Electric Cooperative made an effort to take the knowledge of the linesmen -- who often know how long it will take for power to be restored down to the minute -- and get that information back to the control center and out to customers in as close to real time as possible.
After Sandy, Baltimore Gas & Electric found that smart meters that cover just 10 percent of its customers so far allowed crews to confirm that power restoration was successful more quickly, allowing them to move along to the next repair.
Davis did not specifically talk about Hurricane Sandy, but he also noted that it’s important to have the data to separate the significant storms from normal storms -- something that smart grid technologies and software from firms like his can offer.
The trend of more advanced modeling for oncoming storms is increasing. Davis noted that planning also involves having more granular data on critical assets to assess how they will interact with the storm. Increasing software and analytics can also help to mobilize crews from other utilities in large storms, such as happened with Sandy when utilities from as far away as California came east to help with restoration.
Ideally, the data will not just be coming off of self-healing feeders or smart grids, said Kellison. But it is when these systems can be integrated that improved reliability can be achieved. Others, like Schneider Electric's Telvent and OSIsoft, are also working on integrating distribution and smart meter data for greater insight. It is still early days for these examples, but with the increasing frequency of severe storms, it is very possible that governments and regulators will demand these systems. “We usually talk about point solutions that can address particular solutions,” said Kellison. “But what we’re missing is the benefit that can be created by connecting many of these systems.”
The solar PV module trade verdict is in and final, and the solar industry will have to adapt to the decision passed down in a 6-to-0 vote by the International Trade Commission (ITC).
The ITC voted to keep last month's tariff and scope decision as determined by the Department of Commerce. (We covered the preliminary ruling by the Department of Commerce last month as we've followed every twist of this international legal case.)
But this language in today's release from the ITC today would suggest that retroactive duties do not apply. Several Chinese manufacturers are due a large refund.
As a result of the Commission’s negative determinations regarding critical circumstances, the antidumping and countervailing duty orders concerning these imports will not apply retroactively to goods that entered the United States prior to the date of publication in the Federal Register of the Department of Commerce's affirmative preliminary determinations.
So -- tariffs on major Chinese solar manufacturers hold, as does the scope of the dispute. Retroactive duties are not applicable.
Gordon Brinser, president of SolarWorld America, the leader of the Coalition of American Solar Manufacturing (CASM), is attributed as saying:
“Today’s unanimous vote by the International Trade Commission confirms what has been apparent in the marketplace for the past two years -- Chinese manufacturers, with the enthusiastic support of the Chinese government, have attempted to game the international trading system in order to gain a virtual monopoly on solar cells and modules sales in the U.S. market. We have seen the results of this campaign in the marketplace, with more than a dozen companies either shutting down manufacturing facilities or significantly cutting back production and employment in the United States and a Chinese industry, led by LDK Solar and Suntech, having to increasingly turn to its national and provincial governments for help to survive. With this relief, combined with an aggressive domestic enforcement regime, there is hope that the United States can maintain a viable solar manufacturing base, conduct ongoing research and development and continue to make solar an increasingly viable part of the American renewable energy portfolio. On behalf of the membership of CASM, I want to thank the commissioners and the ITC staff for the hard work on this case.”
Yingli, the world's largest solar module maker in 2012, writes in a statement:
Today’s decision resulted in two rulings: the first found that the U.S. market has been “injured” due to the presence of imported Chinese cells and modules in the industry, and the second found that there are no applicable “critical circumstances”. As a result of the negative finding, Yingli Green Energy will not be held liable for the $13.7 million USD provision of duties that it has held on its balance sheet. In addition, solar modules assembled in China containing solar cells originating from a third country continue to be tariff-free.
“The threshold for determining injury to the U.S. market is incredibly low, and takes into account several factors, including policy changes, loss of jobs, sales results, et cetera. If only one of those factors is the presence of Chinese imports, then the ITC will make an affirmative injury determination, as it did today,” said Robert Petrina, Managing Director of Yingli Green Energy Americas. “We are relieved that this ruling marks the end of the U.S. trade investigations, and that we will be able to completely focus on serving our hard-working customers. This industry has grown tremendously over the past year, despite SolarWorld’s accusations, and we are grateful to the overwhelming majority of the market that has united behind us and supported affordable, clean energy.”
“Although today’s decision was partially favorable for Yingli, we are saddened to see the global ramifications of this case. We are in the midst of a global trade war now, and Europe will be defending itself vigorously in the footsteps of the U.S. decision,” said Mr. Liangsheng Miao, Chairman and Chief Executive Officer of Yingli Green Energy. “We will always be appreciative to the U.S. solar industry that stood with us, and the other respondents. We remain hopeful that global free trade will prevail, and that affordable solar energy will soon be accessible to all.”
Suntech, the largest solar module supplier in the world in 2011, writes in a statement:
The continued growth of trade barriers represents a serious challenge to the U.S. solar industry, for American jobs, and for energy consumers globally. SolarWorld’s hypocritical campaign has forced the fast-growing American solar industry to foot the bill for SolarWorld’s competitive failures. Further damage can be prevented if governments engage in constructive dialogue to roll back protectionist barriers that limit our industry’s ability to compete against fossil fuels. As a U.S. manufacturer and global company, Suntech will continue to oppose unnecessary solar taxes and promote affordable solar energy everywhere."
As a global company with global supply chains and manufacturing in China, Japan, and the U.S., we remain committed to our U.S. customers and will continue to supply hundreds of megawatts of high-quality, affordable solar panels that will not be subject to these U.S.-China tariffs.
However, we are pleased with the ITC’s final decision to reject Commerce’s critical circumstances decision and remove the 90-day retroactivity of tariffs. It was apparent to everyone within the solar industry that heightened market demand in Q4 2011 was driven by the expiry of the 1603 cash grant program.
Jigar Shah of CASE, the consortium opposing the trade case, writes:
Today’s expected decision by the ITC marks the end of a distracting and politically-charged trade case between the U.S. and China regarding imports of solar cells. Although this ruling was anticipated given the ITC’s low threshold for injury determinations, we are nevertheless disappointed that they have left in place the Commerce Department’s tariffs on solar cell imports. Fortunately, the scope of the decision is unchanged and is limited to solar cells produced in China, thereby minimizing harm to the U.S. solar industry.
We will continue to encourage dialogue and negotiation between the U.S. and Chinese governments to seek a constructive resolution. Unilateral tariffs and a trade war in today’s interconnected global marketplace are unnecessary and detrimental to effective and efficient business competition. Going forward, we must avoid a repeat of the SolarWorld saga, as the growth of the solar industry here, in Europe, and around the world is too important to be upended by one company’s self-serving crusade.
We are pleased that the ITC has determined that there were no critical circumstances, and thus no reason to apply the tariffs retroactively. This means that tariffs will not apply to modules made with Chinese cells that were imported into the U.S. during the period of the investigation. As several witnesses testified at the ITC’s hearing in October, those adversely affected by retroactivity would have been small- and medium-sized U.S. solar businesses that functioned as direct importers and were caught in the middle of SolarWorld’s protectionist case.
Now that both Commerce and the ITC have ruled, we will continue to encourage dialogue and negotiation between the U.S. and Chinese governments to seek a constructive resolution. Unilateral tariffs and a trade war in today’s interconnected global marketplace are unnecessary and detrimental to effective and efficient business competition. Going forward, we must avoid a repeat of the SolarWorld saga, as the growth of the solar industry here, in Europe, and around the world is too important to be upended by one company’s self-serving crusade.
But the deal is done and settled. Except for the annual reviews.
Here are the tariff schedules:
Chart courtesy of CASE
Amid the rubble of Hurricane Sandy, there is a quiet success story: not a single one of the many data centers supported by Marin County-based battery monitoring firm IntelliBatt lost internal power.
A standout case is recounted on the company’s blog by Executive Chairman Steve Cotton (who was also interviewed for this article). For new customer Cologix, IntelliBatt’s monitor rig covered not only the main battery backup bank, but also the batteries for the generators and a secondary telco DC bus. In each of the latter, a single cell nearing failure was found and replaced, days before the hurricane struck.
The San Rafael, CA firm presents a refreshing contrast to the smoke-and-mirrors world of startups. A second-generation family endeavor, IntelliBatt was founded as Data Power Monitoring Corporation in 1991 by (father) Bart Cotton (now serving in an advisory role), has 55 employees, and never took venture funding. According to (son) Steve Cotton, “Of necessity, we run a profit in an average 60- to 90-day period.” He continued, “We thought about owning our building, but decided that property management was not our core competency.”
IntelliBatt considers itself to be in the business of greentech. “You have to see the fleet of 18-wheelers delivering the batteries for one of these data centers to realize how much lead they consume.” Careful management can extend the life of the batteries by 30 percent, reducing the lead consumption (or recycler smelting). Temperature monitoring can also save energy wasted from over-air-conditioning.
Competitors include smaller dedicated companies such as Btech and Cellwatch, and services provided by large technical firms such as Emerson, Eaton, and Schneider. “Actually, our biggest competitors are apathy and stubborn do-it-yourselfers, but these people eventually learn a hard lesson,” comments Mr. Cotton.
Last July, the company broke with its tradition by taking $22 million of investment, mainly from Columbia Capital and CBC Capital. The latter gives a connection to mainland China growth markets, via mover-and-shaker Edward Tian.The money is stated to be for broad development of products and services, with several release waves in the next twenty-four months.
The churn in utility-scale PV projects was the topic of GTM Research VP Shayle Kann’s conversation at the U.S. Solar Market Insight conference, with people who know where the investment money is and how developers see it.
Canadian Solar (NASDAQ:CSIQ) is “focused on two-megawatt to 30-megawatt projects,” Director Noah Eckert said. After coming in “at mid- to late-stage development” and moving Canadian Solar modules to it, Eckert said, Canadian Solar would sell the finished project to an independent power producer (IPP) “like an Exelon (NYSE:EXC) or an EON (PINK:EONGY) or a NextEra (NYSE:NEE)” and use the capital to begin the process again.
“We have found a robust number of projects in the market in the last year,” Eckert said. “Our approach has been project by project,” he explained, “unlike the MEMCs (NYSE:WFR) and First Solars (NASDAQ:FSLR) who went in and consumed a whole developer.”
One reason for solar merger and acquisition (M&A) activity this year, said Chadbourne & Parke Partner Evelyn Lim, is “uncertainty about what is going to happen with some of the tax incentives.” That has “some smaller IPPs looking to monetize assets, either their portfolio or individual projects.” Another reason is that other Chinese module manufacturers are coming in, Lim said, “to move their product.”
Buyers, she added, are “bidding low, expecting to get a deal, thinking smaller developers are desperate.” But with buyers shopping, developers see interest when market their projects, Lim said, and “think their assets are worth more.” There is not yet, she said, “a meeting of minds” on valuations.
“2011 was a record year for solar M&A activities,” said Marathon Capital Director Ani Rouskova, due to “supply manufacturers investing in building out their pipelines” and “supply manufacturers that had earlier bought pipelines looking to monetize them.”
The top ten operating U.S. solar PV assets, Rouskova said, “are all under 60 megawatts, and four or five have already changed ownership. I can’t see a lot of M&A in that sector.”
But the top ten assets under construction and in development “are all above 100 megawatts,” and though “seven or eight have changed ownership,” she said, developers in pursuit of capital are likely to create “a lot of activity in those at a later stage of development.” Especially, she said, if there is a PPA attached. “The trend today is high quality assets with PPAs.”
Quality, the group agreed, is fundamental to valuation. Projects must have a PPA, an assured interconnection, a quality EPC provider, well-defined owner objectives, schedule and payment structure flexibility, good vendors, a solid resource analysis and capital cost clarity.
Real estate issues must also be clear, Eckert added. It can be “as simple as making sure you get a 30-year or 35-year lease” for a twenty-year PPA. Without the extra years, “you just lost the potential ten-year merchant tail and the residual value that could help you monetize a second project.”
“We get to look at projects that are kind of messed up,” said Solar Land Partners CEO John Barnes. “The object is to fix the project to be bankable and sellable.”
New this year, Barnes added, “was a tremendous dropout of hundreds of megawatts of SREC-dependent New Jersey projects that real people will not invest in” because of the crash of the SREC market. But, he said, California’s reverse auction mechanism for one- to twenty-megawatt proposals produced “a whole bunch of real projects, won by real developers, at extremely low rates, that really push the IRR window.”
Eckert said valuations now range from $0.03, $0.04, or $0.05 per watt to perhaps $0.22 to $0.25, but “anybody looking for $0.30 or $0.40 in my world is crazy.”
“The $0.30 days are gone,” Barnes agreed. It is “pretty risky around $0.10.”
“We see investors bidding at around 8 percent in after tax IRR,” Rouskova said. “Last year, when there was more competition around acquiring a development pipeline, we saw panel manufacturers bid down to 7.5 percent or even less because they could have some panel margin.”
Buyers, Rouskova said, will be utilities, especially those with post-2014 tax capacity. “IPPs make sense,” she added, though they may have to partner with conglomerates and corporates. But, she said, deals like the recent Google (NASDAQ:GOOG) and Sumitomo (NYSE:SMFG) participation in Desert Sunlight “are few and far between.’
Energy players have tax capacity, but have not come in. Passive investors don’t yet understand how to build a tax structure or find a partner but the cost, time frame and yield expectations for their capital make them “a very interesting investor class.” The cost of pension funds’ capital makes them more appealing than infrastructure funds.
Sellers include non-balance sheet players, like smaller developers, Lim said. Many will try to tack a development pipeline onto the deal. “The more you want your money up front, the less value you get for the pipeline.”
The trend, she said, is “toward earn-outs.” If a developer “is willing to wait, there is some value in the pipeline.” Otherwise, such assets “are not being valued at all.”
“Upfront payment is approaching zero,” agreed Barnes. “You get the money at the end if the project is built. Everybody has to suffer along to make it work.”
Democrat Joe Kennedy III won the congressional seat vacated by retiring Massachusetts Democratic Representative Barney Frank after breaking with the Kennedy tradition on offshore wind.
Kennedy, whose grandfather was former U.S. Attorney General and New York Senator Robert F. Kennedy, last month broke with his great uncle, environmental activist and attorney Robert F. Kennedy, Jr., and his great-great Uncle and longtime Democratic Massachusetts Senator Edward Kennedy, by endorsing the controversial Cape Wind offshore wind project.
The 420-megawatt Cape Wind installation, to be composed of 120 3.5-megawatt Siemens (NYSE:SI) turbines, could begin construction by 2014. It is likely to be the first large-scale U.S. offshore wind undertaking despite the fact that it has struggled against intense opposition from the monied residents of Cape Cod since it was proposed in 2001. Led by patriarch Senator Ted Kennedy, the Kennedy family joined the opposition to the Nantucket Sound installation, which will be distantly visible from the beachfront of the clan’s Hyannis Port compound.
“The Cape Wind project would double the amount of alternative energy produced in Massachusetts and create good-paying jobs,” Joe Kennedy told a newspaper in his congressional district. “Offshore wind is one of the resources Massachusetts is blessed with.”
Cape Wind has obtained all necessary permits and holds power purchase agreements with National Grid and NSTAR that were approved, despite higher than average prices, by the Massachusetts Department of Public Utilities (MDPU). The MDPU decision was validated by the Massachusetts Supreme Court, which found offshore wind offers the state “unique benefits,” such as emissions-free peak demand electricity, that justify the higher power prices.
It is not yet clear whether the November 6 Obama presidential victory will fulfill wind insiders’ repeated predictions that the industry’s vital 2.2 cents per kilowatt-hour production tax credit (PTC) would be extended with the election decided.
Newly re-elected President Obama has said he wants to make the PTC permanent. But that will require the cooperation of a still-divided Congress that will now include Democratic Senator-elect Elizabeth Warren and conservative Republican Senator-elect Ted Cruz..
Even if the PTC is extended, industry watchers agree, 2013 is a lost cause for manufacturing and development. Uncertainty surrounding the incentive has already put companies on hiatus, shuttered facilities and caused an estimated 10,000 announced layoffs. It will take twelve months to twenty-four months to get the industry geared up and producing again.
The December 31 expiration of the PTC has driven what the American Wind Energy Association’s Q3 2012 report described as a potentially record-breaking year. Wind built 1,833 megawatts in the most recent quarter, bringing the year’s total to 4,728 megawatts and the U.S. cumulative capacity to 51,630 megawatts.
With over 8,400 megawatts still in construction, the year’s total could top 13,200 megawatts.
General Electric (NYSE:GE), the biggest U.S. turbine manufacturer, announced it will break its previous record for installed turbines in a single year with 3.99 gigawatts this year. But, as GE General Manager Matt Guyette noted recently, “More than 70 percent of GE’s wind turbine deals so far this year have been overseas.”
GE’s 1.6-100 machine is getting wide play for its improved ability to harvest moderate winds, and its 2.5-megawatt machine reached 1,000 units installed this year.
Spanish wind giant Gamesa's (PINK:GCTAF) latest announcements tell the story. As part of its 2013 to 2015 plan, it is launching two new wind turbines, a 2.5-megawatt onshore machine and a 5.5-megawatt offshore machine, and developing 7-megawatt and 8-megawatt offshore machines.
At the same time, it will lay off 1,800 people in Europe, China and the U.S., just over 20 percent of its workforce, between now and the end of Q1 2013.
The latest press releases from Goldwind USA (PINK:XJNGF), a subsidiary of the Chinese wind giant formed in 2010 to go after the booming U.S. market, foretells the short-term future of U.S. wind. It is partnering with developers in Panama on a new project, bringing to over 200 megawatts its four wind project presence in Latin America.
It also announced Carolina Galleguillos Gonzalez as Director of South American sales in a press release tellingly written in both Spanish and English.
Spanish mega-developer Iberdrola (PINK:IBDRY), which, according to industry insiders, has one of the strongest balance sheets in the renewables industry, announced Q3 2012 earnings up 12 percent and said it will slow growth in its U.S. business “until more favorable conditions arise.”
"Considering Iberdrola is already the second-largest wind producer in this country,” Iberdrola Chair/CEO Ignacio Galan said, “we do not need to push a rapid expansion in case regulatory and economic conditions are not suitable."
The hesitation in U.S. wind growth could stall a renewables advance that saw all new U.S. electricity generation for September 2012 coming from wind and solar and the cumulative installed electricity generating capacity of wind grow to 4.43 percent of the U.S. portfolio, according to Federal Energy Regulatory Commission statistics.
Renewables now constitute almost 15 percent (14.86 percent) of U.S. electricity generating capacity, with solar at 0.29 percent, hydropower at 8.51 percent, biomass at 1.25 percent, geothermal at 0.31 percent and waste heat at 0.07 percent.
It is possible the many utility-scale solar power plants expected to start bringing megawatts on-line next year could take up some of the slack left by wind. The NRG Energy (NYSE:NRG) and MidAmerican Holding (NYSE:BRK.A) Agua Caliente project, the Exelon (NYSE:EXC) Antelope Valley Solar Ranch One project, the BrightSource Energy Ivanpah project, the SolarReserve Crescent Dunes project, and the Abengoa (MCE:ABG) Solana project all may help, along with others, take up the slack created by the wind industry recession.
With the biggest renewables supporter ever to occupy the White House now re-elected, it is possible the future of wind and solar and the smart grid is indeed bright. On the other hand, if compromise in Congress extends the PTC for two years or less, the industry could get geared up just in time to wind up once again where it is now in anticipation of the 2014 midterm election.
Much rests on how a Congress now facing a fiscal cliff chooses to move.
If this keeps up, the wind power industry might not need the embattled production tax credit for very much longer. Which, come to think of it, is the stated point of the subsidy: to provide support for the industry while it evolves to a lower cost structure and ultimately becomes self-sufficient.
The new evidence that this hoped-for storyline is unfolding comes from Bloomberg New Energy Finance, which reports that operation and maintenance costs for the wind energy sector worldwide fell 38 percent from 2008 to 2011, or about 11 percent per year.
Wind power has done much to improve its competitiveness against gas-fired and coal-fired generation in recent years, via lower-cost, more technically advanced turbines, and more sophisticated siting and management of wind farms,” BNEF’s Michael Liebreich said in a statement. “This new O&M Price Index shows that servicing wind farms at the operating stage is also becoming much more cost-efficient.”
These cost figures aren’t based on some kind of theoretical estimate -- BNEF used actual contractual data submitted to it by 38 wind power companies around the world. “The data have covered 104 confidential and undisclosed O&M contracts, totaling 5.3 gigawatts of contracted capacity, in more than 24 markets,” BNEF said. “In all cases, the service providers are the turbine manufacturers, with a main focus in Europe and the Americas.”
Bloomberg listed six main points from its O&M research (quoting here):
- Average prices for full-service O&M contracts fell to EUR 19,200 ($24,700) per megawatt per year in 2012 -- a 38 percent decrease since 2008. The decline in O&M prices was driven by increased competition, as turbine manufacturers vie for service contracts, as well as by improved service performance of the underlying turbines.
- Average contract duration has risen from 4.5 years in 2008 to 6.9 years in 2012, as manufacturers attempt to lock in longer-term agreements.
- Average availability guarantees in the contract sample reached 96.9 percent, with any upside beyond that generally shared between the developer and service provider. Guarantees on actual energy production are also becoming more commonplace.
- Markets in Eastern Europe and the U.K. had the highest pricing for full-service offerings. This may be due to higher labor costs and/or a limited local supply chain. The U.S. displayed the most competitive pricing of all markets.
- Pricing between manufacturers has been fairly similar in 2008-2012, with the exception of one manufacturer, German company Enercon. Its prices for full-service contracts were nearly 20 percent lower than the market average throughout the whole period.
- Index participants expect O&M pricing be fairly stable at least until 2015. They regard Enercon, Siemens and Vestas as the best service providers in the industry in terms of promptness and quality of service for scheduled and unscheduled works.
Mountain View-based startup Verdigris Technologies looks to do a better job of taking the setup and audit hassle out of building efficiency monitoring. And the company inked a deal for a “significant” installation with San Francisco-based utility PG&E.
Verdigris’ major tool, Energy.AI, applies high-rate sampling to the algorithm that undertakes the task of disaggregation, which is monitoring a building’s AC current draw at an upstream power entry point and identifying every electrical device load in the building by its signature waveform. Hypothetically, this requires a method of decomposing a master-breaker current measurement into a sum of constituent parts, a library of known devices (e.g., Kenmore washing machine Model 110), and an ability to learn or add new or unknown devices. Once the devices and appliances in the building are known, the signature can be monitored for anything that is failing, or aberrant, or simply being left on when it shouldn’t be. The software can communicate with remote handheld devices via an app.
Verdigris was founded in 2010, by Archan Padmanabhan, Craig Norris, and Mark Chung. The firm is a tenant in the NASA Sustainability Base incubator at Moffett Field in Mountain View, California. The company is self-funded with five full-time employees and five part-time or contract employees. Professor Jeremy “Zico” Kolter is a technical mentor. Verdigris has been attracting some attention in startup competitions in the Bay Area, including reaching the semifinalist level in the 2011 Cleantech Open and being judged the winner two weeks ago in the 2nd Keiretsu Forum Pitch Me Green event.
Existing revenue customers include the City of San Jose, the Moscone Center in San Francisco, Blue Earth EMS, and Enovity.
The disaggregation field is not without competition. Sunnyvale California-based Bidgely and U.K. startup Navetas have raised venture funding; Intel has development in-house. And Professor Shwetak Patel of the University of Washington sold his startup, Zensi, to Belkin Corp. for an undisclosed sum. Zensi uses a unique voltage-noise sampling method without relying on current sampling. Like Verdigris, Zensi had never taken outside funding.
Verdigris similarly is going its own road with regard to sampling method, using high rate sampling with a custom sensor. “We feel that we are unique in what we are doing,” states founder Padmanabhan. “It is refreshing to be in a startup without half a dozen companies right on top of you doing almost the same thing. We believe we have much better discrimination than Bidgely and Navetas. They are using a stock smart meter with low-rate sampling.”
Verdigris is bucking a broad trend of finding creative applications for a standard smart meter. It remains to be seen whether the cost and installation of a custom power sensor will be a barrier to users.
Farther afield among competitors are conventional building efficiency monitoring players such as SCIenergy, and large corporate entrants such as Siemens and GE.
Setup has been a sticking point for building monitoring software, and has been cited as a rough spot (along with low sales) in a trio of major flameouts last year: Google’s PowerMeter, Microsoft’s Hohm, and Cisco’s Mediator. A disaggregation algorithm will need to overcome messy challenges such as, for example, spotting the twice-yearly load surge from a self-cleaning oven -- and keeping up with the ubiquitous proliferation of novel electronic devices. But if proven robust and reliable, disaggregation could attract users on a new scale.
The built environment consumes 39 percent of North America’s energy. Building efficiency monitoring, if it can translate its potential into reality, may be headed toward being a next layer of “virtual energy supply.”
Duke, EON, Exelon and HelioPower executives talked with GTM CEO Scott Clavenna about solar-utility relations, the impact of low natural gas prices and other contentious issues at GTM Research’s recent U.S. Solar Market Insight conference.
“I am a solar advocate in a utility company. I have a lonely job,” Duke Energy (NYSE:DUK)’s Emily Felt said with a laugh. The first of three points she makes to Duke executives, she said, is that solar is a fuel hedge. “They get that. You substitute what you would expect to spend on fuel with upfront capital investment.”
The second point “is about solar integration.” Half of Duke’s Carolinas generation is nuclear, she explained. “If you have one or two gigawatts of solar, that is a problem. Luckily, we have 2,000 megawatts of pumped storage.”
“Duke is a fully integrated monopoly utility,” Exelon (NYSE:EXC) renewables lead Bryan Miller said. “Our utilities are in deregulated markets and are pure wires companies. Exelon owns the power.” Retail power is a tough, pure commodity business, he said. Solar “lets us relate to our customers in a way that is not a commodity relationship.”
“Energy is a complicated beast,” observed HelioPower President Ty Jagerson. “In the commercial and residential spaces, the margins are really gruesome.”
At utility scale, he said, “if you start developing a large-scale solar project right now, you are not going to finish until around 2016. That could be four, five, six development cycles for a lot of the products in that system.” Pricing for such projects doesn’t reflect that.
“It makes for a more complicated blend for solar in all its different implementations,” Jagerson said. “We think solar is a component, not the component.” Therefore, he added, solar and natural gas, solar and wind, even solar and battery power, are "frenemies" and they have different applications.”
"Frenemies is appropriate,” E.ON (PINK:EONGY) Climate and Renewables VP Peter Moritzburke agreed. “Low price natural gas in the U.S. is a wholesale market dynamic we are keeping a very close eye on. It means low wholesale power prices in general which makes non-gas resources look relatively expensive.”
But, Moritzburke added, “if you have a low wholesale power price environment, ratepayers and regulators should be more willing to accept some of the higher costs of integrating renewables. It is a great time to put in place very aggressive renewable portfolio standards with solar carve-outs.”
Natural gas is no longer a bridge fuel to a renewable energy future, Clavenna suggested, but rather “a default fuel for all-new generation.” Renewables are at the edges and evolving toward a merchant solution. “How do you think things will evolve over the next five years?” he asked.
“Low-price natural gas has changed our renewables strategy,” Miller replied. “Solar and gas are more contentious than frenemies. It is very hard to imagine doing a merchant solar play.” But demand is already starting to drive the price up, he added. “The best cure for low prices is low prices.”
As Duke modernizes its fleet, Felt said, “gas will replace coal.” But until it is clear how volatile prices will be, she said, “I don’t think solar will replace gas.”
“What about wind, especially with the difficulties about the PTC?” Clavenna asked.
“Wind is often a shoulder, off-peak resource, and solar is more peak coincident,” Moritzburke said. They are competing, he added, but the price of solar is on a downward trajectory, while the price of wind may go back up with commodity prices. “For a capacity factor for solar in the 30 percent range and a capacity factor for wind in the 45 percent or higher range,” he said, “the capex for solar will compete head-to-head with wind.”
Solar is already competing in California, Miller said. “In the clearing prices in last year’s large-scale renewables solicitations from the California IOUs, solar beat some wind for the first time.” And, he agreed, they are on totally different technology and cost curves. “Wind versus solar is happening before our eyes.”
“How do utilities, developers, and IPPs get along?” Clavenna asked.
E.ON works with solar companies on grid integration issues, Moritzburke said, but “there are tensions between sellers and buyers. There always will be.”
“It is my job to sit in the middle of all those tensions and conflicts between developer and IPP and utility,” Miller said. “I mediate those disputes and then send my therapy bills to my employer.”
“Utilities have people who are behind solar,” Jagerson said. But “the culture and the business incentives are not there.” Developers, he said, feel like “a very strong, gusty, sandy wind is constantly blowing in their face. It is frustrating. But most utilities are getting better.”
We need to “start speaking each other’s language,” Felt said. “Duke’s tenets are 'clean, reliable, and affordable.' Solar is without question clean. It will be affordable. But reliable will be the last piece. Let’s substitute 'controllable' for reliable. When you talk about clean, affordable and controllable, that’s when our guys perk up.”
“As we get to higher penetration levels, it is a natural sign of maturity,” Miller said, to understand “the broader fabric of everything that goes into keeping the lights on.”
OpenADR -- an emerging technology for connecting utilities and their power users via two-way communications and control systems -- is, as its name denotes, an open standard. The whole point of the Department of Energy and California Energy Commission project that created OpenADR was to spread fast, automated demand response capabilities to the industry at large.
But so far, all the big OpenADR deployments have been carried out by a single vendor. That’s Honeywell, which in 2010 bought OpenADR server maker Akuacom, the company that worked with Lawrence Berkeley National Laboratory to bring the technology from R&D to the real world. Akuacom’s servers now run the roughly 260 megawatts of OpenADR-controlled demand response in California, and Honeywell has launched OpenADR-based projects in other parts of the U.S., as well as in China and the U.K.
That’s going to change, however. We’ve seen a diverse set of companies, from giants like Lockheed Martin and Alstom (via its acquisition of OpenADR software developer UISOL), to smaller contenders like Stonewater Control Systems, Powerit Solutions and IPKeys, developing software and hardware to help complete the loop that OpenADR established between utility grid operations centers and customer building energy management systems.
Now French building power equipment giant Schneider Electric has joined the OpenADR fray. Last week, it announced a partnership with IPKeys, a maker of OpenADR devices for both utilities and buildings, which will see the two co-develop a set of OpenADR 2.0a-compliant solutions for the commercial market.
IPKeys’ role in the Schneider partnership is to provide both the “virtual top node,” or VTN, servers that receive the utility signals at the customer premises, as well as the “virtual end node,” or VEN, client servers that translate those signals into energy-saving actions for building control systems and other end devices.
As for Schneider, its various brands of power equipment now run in about half the buildings in the United States and Europe, and it’s also a big smart grid player with its acquisition of Telvent.
Last week’s announcement didn’t say much about how the two partners would deploy OpenADR into the market. But Mark Feasel, Schneider’s vice president of smart grid, told me in a Monday interview that Schneider already has a number of U.S. utilities using another piece of the company’s software that could provide a bridge into OpenADR services.
That’s Schneider’s Energy Profiler Online platform, which Schneider got when it acquired PowerLogic in 2005. Feasel said the EPO software-as-a-service platform is being used by utilities including Duke, Exelon and National Grid today to connect big commercial and industrial customers to their energy data. About 150,000 metered customers are now getting interval energy use data, up-to-date pricing data, demand charge warnings, and other such energy management insight from EPO, he said.
Think of it as a utility-customer energy dashboard, along the lines of what Constellation Energy (now part of Exelon) has developed with its VirtuWatt platform, or the customer demand response control platform that Johnson Controls got with its acquisition of Energy Connect in 2010. That means that customers can see up-to-date power use and pricing data, and make appropriate decisions about how to manage their energy use in close to real time.
The platform already supports a curtailment module that can send automated systems, as well as settle the accounts at the end of the events, that could be adapted for OpenADR, Feasel noted. He didn’t get into specifics about how Schneider, IPKeys and its various utility EPO platform customers might be working on that kind of project, however.
Schneider is also working on integrating OpenADR functionality more fully into its new line of building energy management software, known as StruxureWare, he said. Other big building management and control technology makers, like Siemens, Johnson Controls, General Electric and Echelon, are incorporating OpenADR into their building management systems as well.
As for target markets, beyond Schneider’s EPO users, Feasel said that municipal utilities could be good customers for the kind of utility-to-building connectivity that Schneider and IPKeys plan to provide. After all, municipalities that run their own utilities are providing power to their own city buildings and facilities, giving them a big set of demand-side resources they can tap to serve grid purposes, as well as directly impact their overall budgets.
Feasel made it clear that Schneider and IPKeys are providing technology to empower utilities and power customers, rather than getting into the business of transacting that relationship, as demand response aggregators like EnerNOC and Comverge do.
On the other hand, any OpenADR deployment will likely come with quite a bit of service support from Schneider, particularly if it happens to come via a hosted platform like its EPO system, which Schneider runs for utilities that brand it under their own name.
This won’t be the last partnership to emerge in the OpenADR realm. Schneider is working with a number of startups on demand-side energy management projects that could incorporate OpenADR at some point, Feasel noted. Partners like BuildingIQ, which optimizes building HVAC systems to manage power use, or Enbala Networks, which hooks up wastewater plants and other industrial facilities for fast, automated demand response, are two to watch for developments on that front.
We’ve all been there. You take a load of clothes out of the dryer only to find that the pair of jeans you want to throw on aren’t completely dry.
Although occasionally frustrating, it’s hardly a mystery. Heavy denim just takes longer to dry than those polyester blend workout clothes that might be tumbling around with the jeans.
The variety of real-life laundry is a problem not only for people looking for their favorite pair of pants on short notice, but also for the government.
Clothes dryers can account for up to 6 percent of residential electricity consumption in the U.S. While dryers have gotten more efficient overall, they bear no Energy Star label, as their clothes-washer cousins do. The outdated testing standards mean that dryers are falling behind as other energy hogs, such as hot water heaters and air conditioners, become increasingly efficient and start to be vetted by Energy Star.
The missed opportunity can be rectified, according to a study from Ecova about better testing in residential clothes dryers. “The problem is that in real life, some dryers use a lot less energy than other dryers,” said Gregg Hardy, VP of research and policy at Ecova, an energy and sustainability management company that often works with utilities and government agencies. “Most people use the moisture-sensing [feature] to turn off the dryer.”
Before we get to the issue of moisture-sensing, one of the most glaring problems is the current test procedure. The DOE uses napkin-size polyester-cotton blend cloths, said Hardy. Those are weighed completely dry, then water is added and they are occasionally taken out and weighed as they dry. Of course, nobody has an entire dryer full of homogenous polyester napkins. The result, according to Ecova, is that dryers likely use 35 percent more energy when drying cotton-heavy loads.
The second major problem is that the DOE test procedure ends a drying cycle when the cloths have 2.5 percent to 5 percent of remaining moisture content. The complaint is that this essentially sidelines the energy savings potential of automatic shutoff. Because the DOE doesn’t test for this feature, there is no evaluation of which brands have more effective automatic shutoff mechanisms.
The study by Ecova also looked at the energy source and found that gas dryers used far less energy than electric dryers. Also, there is not the loss of energy with gas as there is with electricity. About one-quarter of Americans had a gas dryer as of 2001, according to the EIA. But there are even more options. In Europe, heat-pump dryers, which Hardy described as a dehumidifier in a box with a fan, are widely used.
Saving maybe 2 percent of residential energy use might not seem like much, but increasing efficiency through more robust testing procedures is likely to save more energy than smart appliances that could respond to price signals from a utility. (Smart appliances would likely be the most energy-efficient of them, anyway.) Increased standards don’t require people to change their behavior.
Another appliance that could also benefit from updated testing procedures to better reflect the real world is the refrigerator, says Hardy. He noted that testing could be done with the front-facing icemaker off, even though the icemaker makers in the front “are like a wide-open door where the air can come out.”
Ecova also found that both groups are interested in writing better standards, and now that this is on the radar, there could be changes in coming years. “This is an a-ha moment in the past few years,” said Hardy. Now comes the work to turn a-ha into action.
The writing has been on the wall for a while, and China seems to be getting the message that the only way its solar sector can avoid a complete meltdown is if the country radically increases domestic deployment: Photovoltaic solar hooked in with China State Grid, the country’s largest grid operator, jumped from 530 megawatts to 2.71 gigawatts in the twelve months ending Sept. 30, according to the State Electricity Regulatory Commission.
That capacity increase of more than 400 percent was impressive enough, but actual PV power flowing to the grid grew at an even faster rate, rocketing up 537 percent in the same period to 2,480 gigawatt-hours.
China’s solar manufacturing sector rose from nothing to dominate the globe in the past five years, flooding fast-growing markets like Europe and the U.S. with cheap solar panels. But many of those markets have begun to tighten as government incentives dry up, and also as the U.S. moves toward duties on Chinese imports and Europe probes price-dumping allegations.
The result, for the Chinese industry, is extraordinary overcapacity. GTM Research reports that China’s c-Si PV module ramped manufacturing capacity hit 48.02 gigawatts in 2012, outstripping the forecast of 31.3 gigawatts for 2012 global installations. A recent article in the Communist Party-connected China Daily put China’s manufacturing capacity even higher, at 50 gigawatts. The article reported that 90 percent of China’s PV products are made for export, with about 60 percent aimed at Europe and 30 percent at the U.S.
So dire has the situation become that even China’s biggest panel maker (also the biggest panel maker in the world), Suntech Power Holdings, has needed emergency funding from the government in the city of Wuxi, where Suntech is headquartered, to stay afloat. The giant wafer-maker LDK Solar has also gotten state help, selling a 20 percent stake to state-run Hen Rui Xin Energy for $23 million, BusinessWeek reported.
But the biggest priority now, from Beijing’s perspective, seems to be to spur increases in solar deployment. Xinhua reported in September that Beijing had asked provincial leaders to “make plans for establishing distributed photovoltaic generation demonstration centers as part of efforts to boost the domestic solar industry amid mounting trade frictions with the United States and the European Union.” Last week, the State Grid Corporation of China announced a plan to allow small-scale distributed solar power generators to connect to power lines. All told, China Daily said, the country is planning to spend some $11 billion to boost domestic deployment.
Integrating vast amounts of solar can be challenging, but in July, China said it would boost its target for solar energy installation to 21 gigawatts in the current five-year plan, which runs through 2015. Some analysts think 50 gigawatts might be possible -- and maybe even 100 gigawatts.