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The Pew Charitable Trusts, a public policy nonproft, is out with its annual report comparing investment in clean energy among the twenty richest countries in the world. Once again, China is held up as a threat to U.S. competitiveness.
The report concludes that China "solidifies leadership in the global clean energy race" by capturing 29 percent of investment among G-20 countries in 2013.
This type of competitive messaging is common in national policy circles. Democratic lawmakers on Capitol Hill are likely already making the chart below into a giant poster for floor speeches on how China is outpacing America in energy innovation.
“With extensive manufacturing capacity in the solar and wind sectors, growing domestic markets, and unequaled national targets for renewable energy, China is poised to be a leader in the world’s clean energy marketplace for many years to come,” conclude the authors of the Pew report.
Fair enough. China is dominating the solar manufacturing sector. The country installed more solar PV last year than the U.S. has ever installed. And it is the world’s leading market for wind and solar hot water. The country is a strong force in clean energy deployment due to its top-down approach and long-term planning.
Pew’s analysis, which uses data from Bloomberg New Energy Finance, is a very helpful tool for tracking broad regional and country-level figures on clean energy spending. But the framing of the report is somewhat problematic.
What does it mean to “win” the clean energy race, anyway?
In truth, I’ve used this framing more than a few times myself. I also used to work at a progressive think tank that bases much of its policy work on the “race” narrative. And I read Tom Friedman’s 2008 book, Hot, Flat and Crowded, in which he outlines how China is going to “clean our clock” in clean energy investment. So I fully understand why the framing is used: it helps provide a sense of urgency and competitive drive.
“I think it's a big part of how to talk about it. Clearly, people's dander gets up anytime you talk about an economic race with the Chinese. I think it's a very helpful frame for us to be working in,” said Michael Northrop, a director of sustainability at the Rockefeller Brother's Fund, in a 2010 interview when the original Pew report came out.
But with each passing year, this framing seems to lose its edge and meaning. It assumes that capturing the value of clean energy is a zero-sum game. It also takes a very isolated approach to all the other economic, environmental and health factors that surround the development of clean energy.
What if we considered all the other “races” that China is currently winning?
China is certainly kicking our butt in the consumption of coal:
And all that coal use in power plants with ineffective pollution controls is helping China win the race in deaths from air pollution. The World Bank estimates that China pays $300 billion every year in health costs and property damage from pollution -- dwarfing the $54.2 billion in clean energy investment within the country last year.
China has also pulled ahead of the U.S. as the world’s biggest emitter of carbon dioxide. The country is racking up a very serious carbon debt:
Oh, and China also happens to be a world leader at stealing trade secrets from American companies, including ones developing clean energy technologies.
So in the years since folks have been talking about the clean energy race, China has become the world's biggest polluter and the world's deadliest in terms of air pollution, and it now consumes almost as much coal as the rest of the world combined.
Raw investment figures don't tell us much about how renewables are being deployed in China either. Last year, developers installed 12 gigawatts of solar, shattering records for any country. But interconnection issues have plagued the wind and solar industries in the country, and it's unclear how many of those projects are actually feeding the grid.
And then there are the positive impacts that come from other countries with a strong clean energy sector.
For example, if Denmark hadn't become an early leader in developing wind technologies, budding manufacturers in America may not have learned valuable technical lessons as quickly. We can thank Denmark for capturing the value of wind first, and then sending that value over to the U.S.
China's (oft-maligned) support for solar manufacturing may have an equally important impact on downstream solar in the U.S. Although China's heavy subsidies helped put American and European solar manufacturers out of business, Chinese producers have dramatically lowered global module prices -- in turn lowering the installed cost of PV and helping create tens of thousands of downstream installation jobs in America.
Who's the "winner" in that situation?
Finally, comparing yearly numbers doesn't always give us a full picture of the market. In 2007 and 2008, Spain had become a top contender in the early global solar race. But when it dismantled a grossly generous feed-in tariff, the market collapsed and investment ground to a halt. The same story has played out in other solar markets around the world. Being a leader in the long term doesn't necessarily mean attracting the most investment each year. It means providing consistency and a path for clean energy to scale with fewer subsidies.
In terms of consistency, China certainly beats America. The U.S. hasn't had a real energy policy since 2005, and it continually relies on short-term tax credits to support the industry on the federal level. With absolutely zero political will to price carbon or create more national support schemes for renewables, one could argue that America continues to lag in leadership.
Framing this lack of leadership in the context of a global race creates a compelling narrative that could feasibly influence decision-making on the federal level. However, it fails to take into account many other metrics like environmental health, research and development, quality of college and university programs, entrepreneurship, financial innovation, and the full suite of state and federal support.
In fairness to Pew, the report is an excellent benchmark for what's happening in the global clean energy industry. It's much more nuanced than just being a horse-race tracker. But the framing is part of a broader political narrative about who's behind and who's ahead in the yearly race. Figuring out who's "winning" in clean energy deployment is about more than just yearly investment numbers.
In this special Solar Summit 2014 preview edition of the Greentech Media podcast, Scott Clavenna, CEO of Greentech Media, talks with members of the truSolar Working Group about their ongoing efforts to establish uniform credit-screening standards for commercial and industrial PV projects to help drive down the cost of capital.
The truSolar team will be taking part in our pre-conference seminar at the Solar Summit on "The Future of U.S. Distributed Solar Project Finance" in a special session titled "C&I Project Screening Methodologies: How to Accurately Price Risk to Unlock Financing."
Representing truSolar on the podcast are:
Arthur (Bud) Vos joined Enbala Power Networks as president and CEO. Previously, Mr. Vos served as COO at Simple Energy and as CTO of Comverge. Enbala's previous CEO, Ron Dizy, will remain with the firm as EVP and Chief Revenue Officer. Enbala provides a software platform for for grid optimization. One of its best-known projects is in PJM territory, where it has been providing frequency regulation services by aggregating quick-responding load from about twenty sites. Enbala is on GTM's Grid Edge 20 list.
Power Analytics (formerly EDSA) has hired Dr. Jose Vivas as VP of power engineering services. The firm, another Grid Edge 20 honoree, is able to run "a software simulation of the power grid...quickly and accurately enough to keep up with real-world grid fluctuations -- or even to predict what's going to happen next." Power Analytics is now branching into interconnected regional microgrids and solar-energy-storage systems, with an eye on helping create physics-based models and underlying control systems for managing the most complex two-way, distributed challenges on the grid edge.
Utilidata named Siobhan MacDermott as Chief Information Security Officer. MacDermott most recently served as Chief Policy Officer of AVG Technologies and is a former executive at Intel Security (formerly McAfee Security). Utilidata focuses on automated power conservation and management for utilities and industrial clients. Utilidata made it onto the Grid Edge 20 list with an honorable mention.
Jonathan Trent is now Director at the OMEGA Global Initiative, an organization focusing on spreading the word and disseminating technology related to algae-based products. The OMEGA system uses floating plastic photobioreactors to grow algae for fuel and feed, while also cleaning water and reducing CO2.
Jeroen Van Duren is now Director of the advanced battery team at Intermolecular, a process discovery and contracted R&D firm. Van Duren was Director of Research at Nanosolar before joining Intermolecular in 2011.
John Ogrodny, formerly with Tigo Energy, is now owner and President at Hawaii's Building Energy Group, a provider of daylighting systems and solar hot water technology.
Verengo, the No. 3 U.S. solar installer (behind SolarCity and Vivint), announced the hiring of its 1,000th employee. Founded in 2008, Verengo focuses exclusively on the residential market.
Microinverter maker APS America has hired Michael Ludgate as VP of business development. Ludgate was previously Sr. Director of Sales and Marketing for Sharp's Solar Energy Solutions Group and Kyocera Solar.
David Goldman has been promoted to SVP, Financial Products at Solar Mosaic.
Jeannine Sargent, President of the Energy division at Flextronics, is now president of a newly formed group, Innovations and New Ventures, at the manufacturing and supply chain giant. Sargent was CEO of Oerlikon before joining Flextronics.
According to GTM Research's Latin America PV Playbook, Q2 2014, released today, Chile installed 153 megawatts of utility-scale PV in the first quarter of this year. That's more than three times the amount that any Latin American country has ever before installed in a single quarter.
“The last quarter has been a testament to the real pipeline now emerging in Chile,” said GTM Research global solar analyst Adam James. “The market has strong fundamentals, and we are seeing that companies like SunEdison can leverage a variety of business models to execute deals on those fundamentals. Both the PPA and merchant markets in Chile have exciting near-term potential, and several companies have secured financing and have projects moving forward."
Source: GTM Research Latin America PV Playbook, Q2 2014
One completed project of note is the San Andres solar power plant. Its 50.7 megawatts make it the largest merchant project in the world with spot prices competing on the open market.
Chile is also adopting large-scale PV systems to support the nation's mining industry, which makes up a significant percentage of its GDP. Copper mining alone represents 20 percent of the economic activity in the country.
SunEdison connected two of last quarter's four projects, including San Andres, totaling 148 megawatts. An additional 380 megawatts are now under construction by a handful of other developers including Solarpack, Selray, Enel Green Power, Mainstream Renewable Power, and SunPower.
Source: GTM Research's Latin America PV Playbook, Q2 2014
This quarter should see two project completions, totaling 23.5 megawatts. GTM Research is forecasting that Chile will install 244 megawatts in 2014.
"With energy reform legislation chilling the large-scale project pipeline in Mexico, Chile may emerge as the regional leader by the end of 2014 in both annual and cumulative PV installations,” said James.
Covering 450 projects totaling 13 gigawatts of capacity, the Latin America PV Playbook is the industry's most comprehensive data and analysis on the Latin American PV market. Learn more at http://www.greentechmedia.com/research/report/latin-america-pv-playbook.
This year’s Solar Summit has an entire morning dedicated to the burgeoning Latin American market. See the conference agenda and register here.
Smart grid data analytics can involve massive utility IT integration and warehousing projects, or cloud computing infrastructures meant to churn through data records of millions of smart meters at a time.
They can also come in a more a la carte flavor, for the thousands of smaller utilities that can’t afford the biggest “big data” offerings out there.
That’s the approach startup Verdeeco has taken to grid analytics -- and the results it is getting for its growing roster of small utility clients has attracted some attention from the smart-grid big leagues. On Monday, big smart meter and grid networking vendor Sensus announced its acquisition of the Atlanta-based startup, with plans to incorporate its GridDNA analytics engine into its operations in short order.
Sensus president Randy Bays declined to disclose the purchase price in a Friday interview. He also denied the accuracy of the $5 million price reported by the Atlanta Business Chronicle, but wouldn’t say whether that publication's estimate was too low or too high.
That makes it hard to determine how Verdeeco’s venture capital investors made out on the deal. The startup has operated on a lean budget, with only $800,000 in disclosed funding from investors including the Atlanta Technology Angels, Auburn Angel Network and Upstate Carolina Angel Network.
“We’re going to make a significant investment in this company, so we can supercharge Verdeeco and our own internal efforts as well,” Bays said. When it comes to data analytics, “every single customer I’ve visited is talking about this, and they have strong needs,” he added.
This observation underscores the need for Sensus and its competitors to bring more flexibility to their data analytics offerings. We’ve seen significant announcements on this front from smart-meter makers like Itron, Landis+Gyr and General Electric, smart meter networking vendors such as Silver Spring Networks and Cisco, and meter data management vendors including Oracle and eMeter.
Sensus, which has more than 16 million electric, gas and water meters deployed worldwide, had been comparatively quiet on what it’s bringing to the big-data table. Like many of its competitors, it has established analytics partnerships, both on the large scale with IBM, and for the smaller municipal and co-op market with Harris Utilities. It’s also working with Navetas, a U.K. startup with energy disaggregation technology that can tease out individual customer loads from whole-premise energy data, through Sensus’ investment in the company and an exclusive North American partnership.
With Verdeeco, Sensus gains a cloud-based platform that now counts ten utilities as customers, but is built to scale to far larger numbers of users, according to Verdeeco CEO Brian Crow. The startup was one of the first to launch an “apps store” for customers that want access to the data analytics tools -- Hadoop, Cassandra, NoSQL database architectures and other distributed computing technologies -- but don’t have the deep pockets to build the technologies for themselves.
To get there, Verdeeco has been integrating its IT architecture with the sources of data it’s subjecting to analysis, including Sensus, which just happens to supply smart meters for half of the utilities it is working with today. That includes Verdeeco’s flagship customer, Wake Electric Membership Cooperative, a 36,500-customer, North Carolina-based electric co-op that’s been turning its smart meters into grid voltage optimization sensors and sources of transformer loading analysis, among other advanced features.
Verdeeco’s transformer monitoring will be the first application Sensus will be putting to broader use, Bays said. The idea is to comb through data from smart meters, grid sensors and SCADA systems to determine the ongoing health and status of transformers across the grid, whether it’s to find those about to fail and fix them, optimize replacement plans, or other such asset management tasks.
But Verdeeco now has a total of fourteen analytics “apps” now being used by customers in the field, and “we’ve got a roadmap to launch those as well,” Bays said. “It’s not just metrology -- we want to have the full package, front to back.”
Those analytics packages run the gamut, Crow said, from turning interval meter data into day-by-day revenue forecasts, to providing “what you’d call the traditional business intelligence part of analytics,” he said. Traditional business intelligence tools may be common among big investor-owned utilities, but there are thousands of smaller utilities behind the curve in deploying software of this type that are eager for a subscription-based version to try out.
“'Analytics' is a very nebulous term,” he said. “For some, it’s a dashboard and a spreadsheet. For others, it’s a mathematical algorithm that can take minutes or weeks to solve.” While a few vanguard utilities are investing in platforms like those on offer from C3 Energy to perform analytics across the enterprise, more are testing out parts and pieces of what’s available, to make sure they’re able to deliver their promised value before spending more.
Verdeeco’s approach fits into that model. As with all its data analytics competitors, the question is how it can convince an increasing number of utilities that it can deliver the right combination of revenue-enhancing and cost-reducing insights -- at the right price. Sensus is no doubt eager to incorporate these analytics tools into its business in order to gain market share and build ongoing service revenues into its business models. But so are all of its competitors.
Blended polysilicon pricing grew 8 percent quarter-over-quarter, increasing from $20 per kilogram in the final quarter of 2013 to an estimated $21.60 per kilogram in the first quarter of this year, according to the latest PV Pulse. This surpasses the comparatively incremental price increase of 4 percent seen from the third to the fourth quarter of 2013.
Accelerated polysilicon price growth in Q1 2014 was largely due to inventory restocking and low production levels during the Chinese New Year.
Source: GTM Research PV Pulse, Q2 2014
"As is the case with the solar supply chain at large, supply-demand balance in the polysilicon market has tightened up considerably over the last year, with robust demand growth coming into contact with a significantly more consolidated supplier landscape," said lead upstream solar analyst Shyam Mehta. "Consequently, pricing has rebounded from the historical lows of early 2013, and spot pricing has exceeded the $20 per kilogram level for the first time since 2012. With import restrictions on U.S.-produced polysilicon into China in place and a limited amount of additional supply coming on-line in 2014, we expect pricing to continue trending upward over the course of 2014."
GTM Research's base-case forecast calls for blended polysilicon prices to increase 16 percent year-over-year in 2014. By the end of this year, prices are expected to hit $24 per kilogram.
PV Pulse is GTM Research's newest upstream data subscription. Learn more here.
The first quarter of this year brought the most public offerings in fourteen years. And today, as Opower starts trading on the New York Stock Exchange and becomes "OPWR," cleantech investors will get a piece of that record activity.
As of 9:53 a.m., OPWR stock was up 27 percent at just over $24. In preparation for its public launch, Opower set its share price at $19 last night.
Roderick Morris, the senior vice president of marketing at Opower, tweeted out a picture of the company's smiling co-founders as the market opened this morning:April 4, 2014
Co-founders Alex Laskey and Dan Yates collectively own 40 percent of Opower, putting them in a strong position going into the IPO. They were able to keep a large piece of the company because Opower was performing so well going into later venture rounds.
"This is what you can get out of the cleanweb," said investor Jigar Shah, talking about Opower in a recent Energy Gang podcast. "In general, the founder ends up with 5 percent to 7 percent of the company after all the successive rounds, so I think that for these guys to have so much of the company shows the power of their execution, but also the power of the cleanweb."
Opower is exactly why early-stage investors have become attracted to the cleanweb. The company requires no heavy infrastructure to keep growing its service -- just a strong marketing team, the ability to capture meaningful data, and a big enough vision to outpace other software competitors.
Opower is a much different company than it was when it started seven years ago. And, assuming it can keep sales high and investors happy, it has the ability to attack other markets without burdensome capital requirements.
However, Opower's IPO isn't just about the attraction to cleanweb. It's also about growth in a subsector of the cleanweb: intelligent efficiency.
A year ago, Greentech Media released a report on the state of the intelligent efficiency sector. The report provided some clarity on how the convergence of IT and efficiency is driving company strategies. Of course, we weren't outlining a fundamentally new concept. People have understood for a long time how powerful IT could be in driving efficiency in buildings, homes, transportation fleets and the power sector. But we're now starting to see market validation as startups become more targeted in their approach, attract more venture dollars and raise bigger funds for efficiency projects.
In last year's Global Cleantech 100 report, which is based on a ranking system created by investors that provides a guide of where money is going, IT-based efficiency companies made up a quarter of the list. Five years before, upstream solar companies dominated the list.
"We've seen a huge push up in energy efficiency," said Cleantech Group CEO Sheeraz Haji. "That's really illustrative of the broader shift away from capital-intensive upstream solar and toward cleanweb, capital-efficient, software-type deals."
Opower is also validation for other software startups working on efficiency solutions that investors appear willing to support.
"Opower has excited the market by going where no data analytics company has gone before: not just cracking the utility market, but taking it by storm," said Abhay Gupta, CEO of Bidgely, a company that wants to compete with Opower by deploying pattern recognition software in the home.
"The industry is just getting started translating big data into meaningful energy applications," said Gupta.
The public debut of a major software-based intelligent efficiency company is a good sign for the sector. But there are hundreds of other providers trying to get into homes and businesses with similar products, which could be confusing for customers. Simply chasing Opower won't be enough for competitors. And investors are going to be skimming through a lot of froth.
For today, however, most are ready to celebrate another public exit for a cleantech leader after a tough few years for investors.
"I think everybody who has invested their own sweat and tears in cleantech is rooting for Opower -- collaborators and competitors alike," said Abe Yokell, a partner with RockPort Capital.
A just-completed 4-megawatt project and a just-announced 2.4-megawatt project, both on land owned by the city of Lancaster, Calif., are among the first of SolarCity’s commercial projects to involve a partnership with an outside developer.
Topco did all the initial work, according to Erik Fogelberg, SolarCity's VP of commercial development. It found the vacant land, made the deals with the city, created the initial array designs, and opened negotiations on the PPAs with Southern California Edison via SCE's CREST feed-in tariff program. Still, Fogelberg said, the SolarCity team had to vet every detail.
Fogelberg said that prior to the formation of the partnership, he had already begun to suspect that there had to be “a better process” by which to assess the viability of potential projects. Around the same time, he was approached by Mercatus COO Tim Buchner about that company's digital deal room.
“In my four-plus years at SolarCity, we have avoided working with third-party developers, because you can waste a lot of time on deals that will never happen,” Fogelberg said. “But there are also good ones out there.”
Fogelberg and his SolarCity development team, which has built over 1,000 commercial-scale projects in-house, agree that the Mercatus software “streamlined and optimized” the due diligence process. It also allowed them to find opportunities hidden among the many stranded projects in developers’ pipelines.
When developers’ financing gets rejected, it is often because they don’t understand how investors assess proposals, according to Mercatus CEO Haresh Patel. The software is “like an online application.” It summarizes “what investors need to know to evaluate a project.” Using the tool’s data to evaluate projects, he said, can subtract three to six weeks from the due diligence process.
SolarCity is now evaluating more than 100 megawatts of commercial deals involving outside developers. “We intend to use Mercatus going forward,” Fogelberg said. "Mercatus is a critical enabler for scaling repeatable execution between SolarCity and developers of solar assets,” said Buchner.
The two new projects, which will earn a CREST tariff rate of $0.0975 per kilowatt-hour for 20 years from SCE, keep Lancaster Mayor R. Rex Parris on track toward his goal of making the city of 156,000 “the solar capital of the universe.” Streamlined permitting and interconnection opportunities have put 110.21 megawatts of solar capacity into operation, development, and planning phases so far. That is over half of the city’s 215-megawatt peak load.
Lancaster's requirement for residential builders to provide an average of 1 kilowatt per new unit was the first such U.S. ordinance. The city currently now has 13.91 megawatts of rooftop capacity.
Installations totaling 1.45 megawatts at five city-owned facilities generated some 100 construction jobs and are cutting an average of $50,000 per year from Lancaster’s electric bill. School installations in Lancaster total 7.5 megawatts, providing 250 jobs, and rechanneling an estimated $325,000 per year in school district electricity costs to other municipal budget items like teacher and law enforcement salaries.
Partnerships with the cities of San Jacinto and Pittsburgh, California; neighboring Kern County; and nearby Edwards Air Force Base also allow Lancaster to export solar. SolarCity is committed to building 200 megawatts of residential and commercial capacity in Lancaster, and companies including Silverado Power, SunEdison, and Canadian Solar are also developing commercial projects in the area. SunPower is partnering with MidAmerican Solar on the world’s biggest solar PV installation, which will be sited nearby.
Nest Labs has stopped selling its Protect smoke and carbon monoxide alarm after discovering one of the device's features could delay an alarm if there is a fire.
In a letter from the CEO posted on its website, Nest said it discovered during testing that the Nest Wave feature (which allows users to make a waving motion in front of the alarm to turn it off) could be unintentionally activated. In turn, that could delay the alarm going off if there was a true emergency. Nest said it did not have any reports of the malfunction from customers.
“We identified this problem ourselves and are not aware of any customers who have experienced this, but the fact that it could even potentially happen is extremely important to me and I want to address it immediately,” CEO Tony Fadell wrote in the statement.
Nest has disabled the wave feature in Protects that are installed in people’s homes and halted the sales of any new devices. The company expects it will take at least two to three months to put the software through testing and get approval from safety agencies in the U.S. and Canada, as well as the U.K., where Nest has just began selling products.
A review earlier this year by Consumer Reports praised the Wave feature, which is one of the conveniences differentiating the $130 device from more basic smoke and carbon monoxide alarms. The review did not find that the Nest was not any better than other brands at detecting fires.
Those who follow the home automation market closely have been waiting to see what the next step from Nest would be after Google bought the startup for $3.2 billion in January. While market experts have weighed whether Nest will open its platform or which companies will eagerly build apps with Nest’s API, news of a glitch that would halt Nest’s second product was an unexpected turn of events.
The bump in the road may not deter tech enthusiasts, who have already scooped up tens of thousands of Nest Protects since the device was released last fall, according to Forbes.
For customers who are second-guessing their purchase, Nest will offer a complete refund for the Protect. “We're enormously sorry for the inconvenience caused by this issue,” wrote Fadell. “The team and I are dedicated to ensuring that we can stand behind each Nest product that comes into your home."
Are building codes the secret to connecting the smart consumer with the smart grid? California will test that proposition this summer, when it starts requiring every new or retrofit thermostat, HVAC system, networked lighting controller and building automation system in the state to come ready for two-way, automated utility-to-customer energy management.
Now the question is whether the state’s utilities and regulators will develop the markets that are needed to tap that new grid resource.
Starting in June, California’s latest version of its sprawling Title 24 building code kicks in, requiring that a whole host of systems come with some sort of demand response capability. Specifically, they are required to be “capable of receiving and automatically responding to at least one standards-based messaging protocol” to receive fast signals from utilities, via broadband or wireless connections.
OpenADR, the technology developed by the California Energy Commission and Berkeley Labs for automating this utility-to-building IT network, is just one such standards-based messaging protocol. Its latest version, OpenADR 2.0b, offers a fairly comprehensive set of tools to allow buildings and utilities to talk about energy: its availability, its price, and, most critically, how individual buildings can execute and confirm they’ve done something about it that’s worth getting paid for.
OpenADR isn’t the only protocol available, but it’s one among a very short list of contenders. SEP 2.0, the ZigBee-based energy protocol and messaging stack now opening to Wi-Fi and HomePlug, is another, but most utilities are still using a ZigBee-only version of the technology (SEP 1.0. 1.1, or “1.x” in ZigBee Alliance parlance).
OpenADR, by contrast, was built with public funds to create a free, open-source standard that’s now been taken up by pretty much every major controls and demand response player in the world. That list includes Honeywell, which holds the lion’s share of the OpenADR market through its purchase of server maker Akuacom as well as most of the embedded market; Alstom, the French grid giant that bought UISOL, the OpenADR source code curator and software provider; French building power and automation systems giant Schneider Electric and partner IPKeys; energy data analytics startup AutoGrid with its tech partners such as Fujitsu; and U.S. demand response leader EnerNOC, to name a few.
In the meantime, there’s no telling who’s cooking up software and business plans around OpenADR’s coming ubiquity in California buildings -- it’s an open standard, after all. But there's little doubt that Google, with its $3.2 billion purchase of Nest under its wing, will be eyeing opportunities for smart thermostats, and whatever it has coming next.A platform for home and business innovation at the grid edge
For companies that have been locked into slow utility pilot project business cycles, Title 24 is a godsend. Take Universal Devices, the Encino, California-based maker of smart home hubs and gateways in use with utilities like Southern Co. and Pacific Gas & Electric.
“All the California utilities know about our product; they use it extensively in their labs,” CEO Michel Kohanim said in an interview last week. “But our business model does not depend on getting those pilots. What I want out of them is name recognition, plus opportunities. Hopefully when Title 24 comes out, we’re already there, and the actual customers will choose us -- not the utility.”
Universal Devices is running one project in a five-building commercial property in San Jose, and it has been able to shave about 20 percent off that complex's utility bills just by responding to the simple version of OpenADR now sent out by the state’s big three utilities, he said. At the same time, Universal Devices’s virtual end nodes (VENs) have built-in smarts, allowing them to run autonomously of any utility or grid operator virtual top node (VTN) sitting in a back-office or cloud-based set of data centers somewhere.
“Our sustenance comes from home automation and building automation,” Kohanim said. But if demand response programs blossom, Universal Devices' ISY hubs could serve as aggregators of all sorts of devices -- smart thermostats, automatic lighting controllers, rooftop chillers, smart appliances and office energy management systems -- capable of getting a price signal for what their internal energy control capabilities are worth.
Honeywell is taking on California’s OpenADR opportunity at both the whole-building and the smart-thermostat levels, Jeremy Eaton, president of the company’s Connected Home business, said in an interview last month. On the home and small commercial side, Honeywell has pledged to make all its Wi-Fi thermostats demand-response-capable this year, in part to prepare for Title 24 compliance this summer.
On the big commercial property side, the company has built a multi-protocol “site controller” that can speak the languages of lots of different building management systems. “Some of our platforms speak OpenADR natively, but you don’t turn over the building stock very often. It’s important to ask how I retrofit an existing BMS to speak ADR,” he said.
Tying multiple buildings together could allow property owners or demand response aggregators to put that demand to use in various grid markets beyond old-fashioned, peak-reduction-centric demand response, he said. “There’s a lot of investment we’re making in our product, for what I’d call state awareness: what’s dropped, what running, what’s available,” he said.
Lighting is another building system singled out for attention in Title 24, with non-residential buildings required to have daylight-matching adjustment, dimming and demand response capabilities built in. Wireless lighting controls startup Daintree Networks has been building OpenADR into its server software for some time, and is ready to start taking utility or grid operator signals into the mix, CEO Danny Yu said. It’s also ready to start connecting smart thermostats, plug loads and other often-overlooked demand reduction opportunities via the wireless networks it’s installed in the ceiling, he noted.Utilities and regulators: The thermostats are in your court
California’s demand response markets will certainly need some adaptation to take advantage of these new opportunities, however. The California Energy Commission identified some key flaws in the state’s overall approach to demand response in its 2013 Integrated Energy Policy Report (IEPR), including its inability to reach relatively modest goals set back in 2007 to reduce peak demand by 5 percent.
One big problem is that the California ISO’s existing Participating Load and Proxy Demand Resource products are heavily centered on utilities playing a middleman role, the report noted. “The path forward should include alternatives to the utility-centric model of program delivery that can create new participation opportunities for customers who have not been interested in the utility offerings.”
Katie Papadimitriu, state and local affairs director at Schneider Electric, said that California regulators could take lessons from mid-Atlantic grid operator PJM, which has created market mechanisms, rather than utility-managed programs, to enlist demand at scale. “Having the secondary markets in PJM has allowed a lot of customer-side participation to occur,” she noted.
Beyond that is the issue of the rebates, payments and tariff structures that will actually pay the millions of potential demand response participants for their efforts. But at least with Title 24 now pushing OpenADR-capable control and automation into the field, “The policy changes to making sure the prices are right,” rather than how to pay for the thermostats, Papadimitriu said.
That’s important for state grid planning needs, she noted. For example, the California Public Utilities Commission (CPUC) has ordered Southern California Edison and San Diego Gas & Electric to find hundreds of megawatts of “preferred” grid resources, including demand response, to replace the shuttered San Onofre Nuclear Generation Station. But it also assumes that “fast-responding” demand response will come with costs and complexities that will limit their availability in years to come.
“Title 24 coming on-line over the summer should provide substantial savings” for models like these, she noted. It should also bring more certainty to the CPUC and CAISO. That’s because the code requires -- and OpenADR 2.0b provides -- the beloved measurement and verification (M&V) data that utilities and regulators use to figure out who’s owed how much money for their role in the day’s grid supply-demand balancing act.
But for water utilities, especially in California, it’s difficult to tackle energy costs in the midst of a water crisis. Water utilities spend about 30 percent of their total operating budget on energy, and yet have little to no available capital to upgrade systems in order to save money. In California, nearly one-fifth of the state’s energy requirements are water-related.
Honeywell has embarked on a first-of-its-kind project with East Valley Water District (EVWD) that uses a ten-year, $4 million energy performance contract for an energy efficiency and OpenADR demand response project that is expected to deliver more than $500,000 in annual savings.
“They just don’t have the money for capital upgrades,” Mike Taylor, VP of sales in municipal markets for Honeywell, said of water utilities. “They’re very interested in anything we can do to guarantee energy savings while upgrading infrastructure.”
EVWD, which serves about 100,000 customers in San Bernardino County, will receive $500,000 from Southern California Edison for joining the utility’s OpenADR program, which uses automated demand response signals sent to participants to shed load.
“As a water district, we are pleased to have the opportunity to dramatically reduce our energy use, help our state reach its energy reduction goals and increase system efficiencies for our customers,” John Mura, CEO and general manager for East Valley Water District, said in a statement.
Honeywell will install a new operating and control system that will allow for flexibility in the pumping algorithm that moves water between EVWD’s storage tanks, distribution system and wastewater facilities. Honeywell will also upgrade some of the less efficient pumps to newer, more efficient models.
The system will allow the utility to participate in Southern California Edison’s automated demand response program. Honeywell’s Akuacom platform already provides ADR to a few other water districts, such as Cucamonga and Coachella, but this is the first time that demand response and efficiency have been offered in a single performance contract for a water utility.
Water utilities aren't the only entities taking a fresh look at performance contracts. The U.S. Army has recently become a leader in third-party clean energy financing, and LEDs are increasingly being offered with performance contracts. Silver Spring Networks is offering entire smart city networks as a service in Europe.
There has already been another benefit from the contract. For years, EVWD had been looking to upgrade its emergency generator, but could not find the capital in the budget. With some of the savings from the efficiency upgrades, the utility will now be able to afford the new emergency generator it needs.
Honeywell is in discussions with a few other unnamed water utilities, and the sales focus is on California. Taylor said that when in talks with water utilities, the company will "cast the net far and wide to find out what [their] aging infrastructure needs are.” That could include adding renewables, assessing demand response capabilities and evaluating energy efficiency retrofits. “This is not just about energy efficiency,” Taylor said of the project. “It’s all about upgrading infrastructure.”