The building equipment and services industries have always been highly fragmented. While leaders such as Honeywell and Johnson Controls have large, multinational presences, most of the market is divvied up among thousands of smaller companies with a relatively narrow regional or technological focus. Even CB Richard Ellis, the real estate firm with the largest footprint of space under management (2.9 billion square feet), has only captured less than 1 percent of the world’s 400 billion sf of commercial space.

The result is an industry that has historically consisted of an overwhelming array of service providers, each with different capabilities. This has posed a challenge to tying building systems together into single solutions, as I explained in my last blog. In the past, vendors designed products such as building automation systems, controls, and certain types of equipment specifically so that they would not work with other vendors’ products, ensuring the vendor a long-term market for replacements and upgrades.

These vendor-specific fiefdoms are starting to break down as demand for building energy management systems (BEMS) as well as comprehensive, end-to-end solutions for energy efficiency including new capabilities such as demand response and energy procurement continue to grow. The word of the decade in the building sector is convergence: the integration of building control technologies with ICT. No single player on either the HVAC or IT side can do it all, so the drive toward convergence has resulted in “co-opetition” – i.e., partnerships between competitors that would have been pitted squarely against each other in the past, and in some cases still are.

This week Schneider Electric and Cisco announced that they were expanding their partnership efforts to deliver better enterprise energy management solutions. The partnership will pair the strengths of Cisco’s EnergyWise platform, which is ideally suited for data center and IT energy management, with Schneider Electric’s building management system (BMS). The union is mutually-reinforcing, as the BMS can be used to monitor and control parts of the information and communication technology (ICT) network, and vice versa.

This is not the only example of this we’ve seen over the last few years. IBM made one of the earliest moves toward co-opetition in smart building technology when it launched the Green Sigma Coalition in 2009, an industry alliance that has helped tie smart building technology into enterprise energy management and includes Honeywell, Siemens, Johnson Controls, and others. There are also countless sub-rosa partnerships between rivals to enable a wider range of offerings in RFP responses and major contracts.

The co-opetition trend, however, isn’t all about vendors deciding to play nice. It’s about vendors finding that the combined capability of two systems – whether ICT systems linked with BMSs, demand response services tied with energy procurement services, or one of the dozens of other possible permutations – is often greater than the sum of the parts. Combining two powerful solutions from separate vendors can open up new opportunities that are impossible to achieve individually.

Make no mistake; competition is still alive and well in the building sector, and that’s a good thing for the industry as a whole. But these co-opetion arrangements demonstrate that the highly fragmented building industry is finding opportunities to pair technologies in novel ways to deliver smarter buildings in mutually beneficial ways.

Article by Eric Bloom, appearing courtesy the Matter Network.

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Are we entering a new era of energy efficiency?

That’s what economists Ahmad Faruqui and Doug Mitarotonda of The Brattle Group have told Smart Grid News as a preview of their new white paper. They predict that electricity demand in the United States will fall between 5 to 15 per cent by 2020.

The authors say we are entering a new wave of energy efficiency which they have termed “integrated demand-side management (iDSM).” This type of energy use management incorporates demand response coupled with programs that can tell consumers about their energy spending.

The researchers back up their claims with expert opinions from a range of professionals in several sectors: universities, utilities, research labs, governments and consulting firms, among others.

But not everyone seems convinced. A poll that Smart News created to go with the article indicates at the time of writing this blog post that most respondents (49%) believe electricity demand in the U.S. will increase by 2020 while only 28% believe it will be lower than it is today. 23% believe it will remain the same.

Energy efficiency seems to be getting an increasing amount of attention of late. The Wall Street Journal also has published an in-depth article about new ways to save energy at home. The article reports that new green homes have increased to 16% from 2% in 2006. 93% of builders mention energy efficiency as a major green measure. People can understand energy efficiency because it can be measured easily, said director of green green content at McGraw-Hill, a unit of McGraw-Hill Cos., Michele Russo.

Some of the new ways to save energy at home include brown fiberglass insulation, heat pump water heaters and concrete countertops.

Article by Antonio Pasolini, a Brazilian writer and video art curator based in London, UK. He holds a BA in journalism and an MA in film and television.

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The U.S. stands at an energy crossroads. With or without new direction from policymakers, huge sums will be invested in the electricity system as aging infrastructure is replaced and new infrastructure is built to meet our country’s growing energy needs. In the 11 states that comprise the Western Interconnect, that amounts to more than $200 billion over the next two decades.

We know that this money will be spent. The remaining question is: how do we spend it? We can maintain a business-as-usual approach or intentionally invest those dollars in a new clean energy economy. Decisions made today will have economic and environmental consequences for decades to come, so we’d better choose wisely. A new report we helped release with Western Grid Group — Western Grid 2050: Contrasting Futures, Contrasting Fortunes — is intended to inform that choice. In addition to our 25 esteemed industry and conservation compadres in the WCEA, the launch got some extra wattage from former Colorado Governor and our own Solar Champion award winner Bill Ritter.

Ritter called Western Grid 2050 “one of the best and most comprehensive things I’ve seen that tells a region of the U.S. this is how we can move and do it in a fashion that will make a meaningful difference in the quality of life in the West.” He’s not kidding when he calls it comprehensive. The report provides a detailed analysis of what the Business As Usual and Clean Energy Vision cases look like for the 11 western states in 2030 and 2050 — and the first comprehensive overview of the job, economic, environmental, energy security and public health implications of two very different futures. It’s a big report. (For those wanting the cliffs notes version – check out the very helpful summary fact sheet).

Needless to say, we think the Clean Energy Vision and its many benefits is the right choice for the West. The report goes further to demonstrate that the CEV cases are absolutely achievable, but they’ll require more than the isolated examples of state leadership we’re already (happily) seeing on clean energy. It requires region-wide changes to system infrastructure, policy, and operations in order to reliably and cost-effectively meet the West’s growing power needs. That means implementing distributed renewables like rooftop solar, efficiency, demand response & smart grid capabilities at scale. It means resource planning that includes large-scale wind and solar as a non-negotiable piece of our energy mix rather than outliers that require more natural gas development. It means regional cooperation and resource sharing across the now-balkanized Balancing Areas. And it means a true transition away from centralized fossil generation.

It’s not technology or cost or resource adequacy that could stand between the West and a clean energy future. It’s inertia. Without intentional policymaking and planning, the Western electricity grid of 2030 and 2050 will instead look very much like the grid of the last century. Leadership from state regulators, lawmakers and grid planners will make all the difference. The good news is that the states already have a proud tradition of driving progress on clean power in this country.

Ritter said it best: “In my time as Governor, Colorado saw tremendous benefit from our commitment to clean energy. I call on Western state policymakers to similarly prioritize clean energy and to reach across state lines to help build a stronger energy future for the West. We can’t afford to wait for Washington, nor should we. The West is the land of frontiers, of pioneers and innovation. Let’s make good on that heritage. Let’s break with business-as-usual and build a more prosperous, safe, and sustainable energy future.”

Bill Ritter Introduces the Clean Energy Vision from Western Grid Group on Vimeo.

Vote Solar is a non-profit grassroots organization working to fight climate change and foster economic opportunity by bringing solar energy into the mainstream.

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Johnson Controls is a sustainability veteran. Back in 1885 it invented the first electric room thermostat. These days it operates in 150 countries and employs 142,000 people whose main job is to create products, services and solutions to optimize energy and operational efficiencies of buildings.

Recently the company purchased EnergyConnect as part of its drive to help customers reduce their energy consumption. EnergyConnect is a provider of smart grid demand response services and technologies. It offers building owners and operators a service in management of how much energy their buildings consume and when the energy is consumed.

Johnson Controls says this type of service is a critical feature of connecting smart buildings to the smart grid.

Energy Refuge caught up with Johnson Controls’ utility market director, Terri Laughton, to find out more about the deal and what the company’s plans are.

ER:Why did Johnson Controls choose to acquire EnergyConnect?

TL: The demand response technology offered by Energy Connect allows Johnson Controls to deliver on our vision of smart buildings. The acquisition provides a platform for new growth in a fast-growing segment and leverages the scale of Johnson Control’s installed base of customers.

ER: How do you define ”demand response?” What value does it provide?

TL: Demand response is the ability of energy users to drop electricity load when the electrical grid is at or near its peak capacity. This improves the reliability of the grid and decreases the chance of blackouts or power shortages from occurring. Demand response has been growing significantly in many part of the U.S.

ER: How does demand response work?

TL: Demand response relies on building operators reducing their electricity consumption in response to a price, capacity, or reliability signal from the electric grid or utility, communicated through a curtailment service provider (CSP).

In return for the drop in electricity consumption, the grid or utility makes payments to the CSP, a part of which is passed on to the building operator. That provides an incentive for the building operator to participate in demand response events.

ER: Is demand response available or applicable throughout the world?

TL: Demand response opportunities do exist around the world, but each market has rules and processes that are unique to its needs. Global expansion of EnergyConnect’s offering will be evaluated and an implementation plan established. Within the United States, some regions have strong demand response programs while in other areas programs are weak or nonexistent. Primarily, demand response is strong in the Northeast, Mid-Atlantic, California and Texas. Within each of these regions, the market rules are different and so the business approach varies. Currently, EnergyConnect operates in the Mid-Atlantic, Chicago area, and California.

ER: How does this demand response capability benefit Johnson Controls?

TL: EnergyConnect’s solution benefits Johnson Controls by creating another opportunity to add value to our customers. Demand response is another element that helps customers manage their energy spend. Today, if our customers want to participate in demand response programs they would have to work with another company. Now they can work directly with Johnson Controls and we can create the optimal solution for their facility that balances energy efficiency and demand response. This capability gives Johnson Controls the ability provide a larger and optimal bundle of products and services to our customers.

ER: How does this help differentiate Johnson Controls from our competitors?

TL: Many of our competitors are looking to expand into demand response, but each is approaching it differently. Johnson Controls is taking a very customer-centric approach. We believe that having an offering that is focused on the customer, giving the customer control over how and when their energy is used, fits best with our philosophy and approach to comprehensive energy solutions. Additionally, the demand response program offered by Johnson Controls will provide more than cash back to customers, it will provide a vehicle to secure and implement greater energy efficiency and facility improvements for our customers.

ER: How will the combination of Johnson Controls and EnergyConnect technologies impact utilities?

TL: Johnson Controls and Energy Connect combine demand response with automation, enabling more participation from the demand side in the operation of the grid. Automated response, implemented from a customer perspective to retain control over their operations at all times, will change the game in several ways. First, DR will become a regular part of managing energy. Instead of a handful of emergency events requiring 6-10 hour curtailment, the building systems will be able to monitor and respond to high prices whenever they occur.

A typical building in the mid-Atlantic region might provide 500 kW of peak relief during the 1,000 hours in the year when the grid is most burdened. The building technology provided by Johnson Controls and the market interface technology of Energy Connect make this scenario possible without adding any workload to the building staff. In addition, automation increases the reliability of the reduction from the grid operator perspective. Finally, automation unlocks the possibility of “fast DR,” where continuous signals between utilities and building systems interface with loads to provide additional services to the grid, such as standby reserves and frequency regulation.

These two new combinations – demand response with efficiency and demand response with automation – are important to utilities. In the first place, they support a more comprehensive approach to energy management, leading to a more intelligent demand side. From a business standpoint, this acquisition creates a new opportunity for utilities to break down conventional silos in their outreach to customers and unlock more benefits through integrated demand-side programs.

ER: What will become of the EnergyConnect brand name?

TL: The EnergyConnect name will still be utilized in the market place for the time being. You will see “EnergyConnect, by Johnson Controls.” Over the next two years, this will be evaluated and a transition plan will be implemented to the appropriate brand category.

ER: What happens to the existing EnergyConnect leadership?

TL: The EnergyConnect leadership is committed to the growth of the business and will remain in place.

Article by Antonio Pasolini, a Brazilian writer and video art curator based in London, UK. He holds a BA in journalism and an MA in film and television.

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The microgrid market today is in flux. Most projects being implemented around the world feature teams with a variety of players – large and small – each contributing specific components and services to pilot projects, the majority of them still considered to be in the R&D phase.

The lack of operating experience of microgrids in a purely commercial setting translates into a competitive landscape where most microgrid players are not sure who their direct competitors are (although there are exceptions to this general rule). The companies with the most specific expertise in actually managing and controlling resources within the microgrid are still validating their software or hardware systems. It is within this space that the most fervent competition exists.

Pike Research predicts that the microgrid market could reach as high as 4.6 GW by 2016.

Each microgrid market segment – whether a commercial building cluster or a remote community – is characterized by different priorities. Within the federal government sector, and especially in the case of military bases, islanding for reliability purposes is paramount. For commercial institutions, islanding may still be important, but the buying and selling of services from onsite generation or aggregated demand reductions to the distribution utility is often more important. Furthermore, many projects touted as “microgrids” fail to meet the Pike Research or federal Department of Energy (DOE) definition, but are still precedent setting projects focused on clustering innovation at the distribution level of service.

Take the case of Schneider-Electric. In 2010, the company launched a new venture whose prime goal is to serve as a broker between utilities and large customers, especially those that own large amounts of commercial buildings. The Schneider Electric version of a “microgrid” is really a “virtual power plant” (VPP) focused on capturing and aggregating demand response (DR) resources from large commercial clients. With new managers quite familiar with the evolution of DR markets, they appear to have a very unique strategy, targeting advanced wholesale/retail markets like the PJM control area.

Schneider-Electric is currently serving as an advisory and likely partner in the innovative 400-500 MW aggregation known as Northern Westchester County Energy Action, a non-profit organization representing 14 different towns utilizing Con Edison’s transmission lines to prove-out the concept of “community choice aggregation.” Through its association with Joule Assets, Schneider Electric may be opening up the New York market to precedent setting residential customer aggregation programs, setting the stage for microgrids.

Several other companies are often bandied about as microgrid system integrators, yet most of them lack a portfolio of microgrid projects to which they can point. Well known market players such as Johnson Controls, SAIC, and others claim that they are also in the microgrid space, yet none of these firms has a single microgrid online delivering energy services. Other “integrators” such as Chevron Energy Solutions consistently decline to discuss strategy or goals, and therefore their long-term strategies in the microgrid arena remain a mystery. To date, Chevron is only involved with one microgrid project – the Santa Rita Jail in Alameda County, California.

Nevertheless, several new integrators have made a splash. For example, Eaton entered the microgrid market earlier this year. A global provider of power distribution, power quality, and industrial automation products for 100 years, Eaton was at the receiving end of a $2.4 million stimulus grant to validate its microgrid at the U.S. Army Engineer Research and Development Center’s Construction Engineering Research Laboratory (CERL). The Eaton microgrid architecture will then be demonstrated at Fort Sill, Oklahoma.

Honeywell, another major federal contractor and microgrid integrator, launched its microgrid business last year when it was awarded a cost plus fixed fee $4.6 million contract to develop mobile microgrids for the U.S. Army Tank Automotive Research Development Engineering Center. The systems can integrate distributed solar PV as well as legacy on-site fossil generation. The microgrid will be deployed for the first time at Wheeler Air Base, Hawaii. This is a remote microgrid system that the Army claims could reduce fossil fuel consumption by 60 percent if deployed widely.

Honeywell is also partnering with Washington Gas Energy Systems and others to develop a 25 MW commercial microgrid for the Department of Homeland Security’s new headquarters in Washington, D.C. Recent changes to proposed federal budgets however, may delay project implementation due to federal spending cuts.

Then there are microgrid evangelists such as General MicroGrids, formerly known as Balance Energy (and formerly part of defense contractor BAE Systems), which offers a business model clearly tilted toward utilities, rather than end-use customers, with islanding capability often being a secondary concern. The company is set to announce its first major microgrid in California, with the possibility of a pipeline of projects that could add up to 200 MW, but that’s all I can say right now.

The microgrid landscape is also quite dynamic. Pareto Energy of Washington, D.C. claims they were informed in early March that Army bases in Virginia were suddenly withdrawing from plans to develop microgrids due to intervention by Dominion Power, the investor-owned utility, signaling that even DOD markets are subject to uncertainty.

The bottom line on microgrids is that no one company yet offers the complete array of services to satisfy all customers. What that means is that for now, most companies would prefer to partner and learn. However, once the current pipeline of pilot projects are up and running and have been validated, don’t be surprised to see some mergers and long-term partnerships develop, setting the stage for a clearer competitive landscape with some winners and losers.

Article by Peter Asmus, appearing courtesy the Matter Network

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Government funding has played a key role in launching the microgrid market, especially at the federal government level. Yet there is, at present, few “microgrid” line items in most federal, state or local government budgets. In the Obama Administration’s ARRA stimulus package, there are categories for “customer-owned systems” and even “microgrids,” but these were never funded!

An exception to this generalization about government comes from the military. As microgrids are proven to be both reliable and cost-effective resource options, the federal Department of Defense (DOD) will continue in its historical role as a key early adopter of new technology, as was the case with aviation, electronics, the Internet, and GPS. DOD markets will be driven by “net zero energy” mandates for military bases. The Navy and Marines have the most aggressive goals: 50 percent net zero facilities by 2020. Under the best case scenario, 10 percent to 20 percent of all DOD bases in the United States will deploy microgrids by 2020 according to one reliable military source.

Why is the military so interested in microgrids? Consider these startling facts: In May 2002, a forest fire took out the two feeder distribution lines serving an Army base in the Southwest, resulting in a 16 hour outage, costing $3 million and a loss of critical mission capability. Some DOD sites report loss of power events as many as 300 times per year! The DOD has identified the vulnerability links back to backup diesel generators that are frequently oversized, poorly maintained, are dedicated to only one building or facility, and cannot share power with other buildings. On top of all that, experience has shown a low probability of being able to start immediately when called upon in times of emergency.

One of the most advanced “energy surety” microgrid projects (a concept developed by Sandia Labs) is being developed at Fort Sill, Oklahoma. The goal of this prototype is to develop the hardware, software, and controls to perform field testing of microgrids with a subset of buildings that could provide reliable power in islanded mode for a minimum of 30 days. In addition, this microgrid pilot project, expected to total 5 MW in size, is also designed to prove the ability of microgrids to shave peak demand as well as to integrate existing and new renewable energy resources into the generation mix at the military base.

The federal Department of Energy (DOE) is also funding microgrids to the tune of $55 million for eight different projects validating microgrid technologies, though only a few of these – such as California’s Santa Rita Jail (Alameda County) and Beach Cities project (San Diego County) – are bona fide microgrids. The map below highlights the variety of microgrid research and pilot projects receiving some form of federal funding.

The General Services Administration (GSA) serves as a conduit for funding infrastructure for federal facilities throughout the country. Though GSA has no specific budget for microgrids, the agency late last year announced funding for a 25 MW microgrid expected to come on-line in 2016 for the Department of Homeland Security’s (DHS) new headquarters at the former St. Elizabeth’s Hospital in Washington, D.C. GSA has earmarked $215 million in federal funding for this project that incorporates several other federal government buildings. The total price tag is $3.4 billion, showing the value of public/private partnerships. Nevertheless, recent federal budget talks may introduce delays for this showcase project, underscoring risks linked to a sole focus on the federal microgrid opportunity.

Further down the food chain, government support is rare. The only two states investing in microgrids in any substantial way are California and New York. Municipal utilities scattered throughout the country are pushing forward with microgrid-like projects, but political uncertainty can also wreck havoc with these plans at the local level. One of the leading private microgrid developers just had to delay its lead showcase project in the Northeast due to last November’s election results changing priorities at the local government level. At last count, over 25 different microgrids under development by this same single developer have been canceled, some with signed power purchase agreements in hand!

Despite these perils, large players such as GE, Lockheed Martin, Honeywell, and Eaton are now active in the government microgrid opportunity, but mostly at the federal level. In order for microgrids to offer a truly compelling alternative to the top-down smart grid programs being pushed by investor-owned utilities, these monopolies must too play a role. To date, only a handful (San Diego Gas & Electric and American Electric Power being the best examples) see the light. Rather than viewing microgrids as a threat, they see them serving as valuable demand response resources and complementary to efforts to integrate better storage options into our grids.

Smart, investor-owned utilities will offer a wide range of smart grid options, including distributed microgrid networks.

Photo by Rosa y Dani/flickr/Creative Commons

Article by Peter Asmus

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No one would disagree that this is a good time to be in the energy efficiency business. Another report, this one out last week, signals just how good.

Conducted by Comverge, the survey of more than 100 US utilities found that 92% plan to increase their efficiency budgets by at least 10% in 2011. Comverge also found that 22% plan to boost their EE budgets by more than 20%.

However, it is not always easy to pinpoint where the business opportunity lies, since they may emerge from so many different sources: utilities, government agencies, energy companies seeking to subcontract, or large energy consumers and others.

Further, the opportunities tend to be diverse, given that the energy efficiency industry encompasses so many different kinds of businesses — installers, green builders, architects, consultants, load managers, appliance and car manufacturers, information technology companies and more. Any search requires casting a broad net.

Here are a few recent opportunities that Energy Efficiency Markets picked up in its weekly search.

The Maryland Energy Administration seeks a consultant to help with state planning, preparation, and implementation of energy efficiency procurement contracts. Bids are due March 2.

The New Hampshire Office of Energy & Planning is looking for help with marketing, outreach, education and strategic communication planning for energy efficiency and renewable energy. Bids are due in two phases, March 30 and June 9.

The US Department of Energy’s Tribal Energy Program seeks applications for the assessment and deployment of energy efficiency improvements in Indian country. Bids are due March 16.

American National Standards Institute seeks an administrator and technical assistance for a new certification program that will provide third party verification of energy efficiency at industrial and commercial facilities. Proposals are due March 10.

The Minnesota State Energy Sector Partnership is looking for innovative proposals from Minnesota-based businesses and organizations to train state residents for jobs in the energy efficiency and renewable energy industries. Proposals are due March 3.

The New York Energy Research and Development Authority seeks proposals to expand the amount of customer load involved in facility peak load reduction or demand response programs for dynamic electric pricing. Bids are due March 15.

Elisa Wood is a long-time energy writer whose work appears in many of the industry’s top magazines and newsletters. She is publisher of the Energy Efficiency Markets podcast and newsletter.

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Pike Research recently published its free (!) white paper Smart Grid: 10 Trends to Watch in 2011 and Beyond and have received some interesting feedback. Since most of this has been expressed privately, I thought I would aggregate comments on each trend and share it here.

No. 1 – Security Will Become the Top Smart Grid Concern. There was universal agreement here, with a few saying “uh-oh, I better learn more about this”. Awareness is growing, as are some potentially game-changing solutions for securing embedded computing and communications environments.

No. 2 – Distribution Automation Will Rival AMI as the Most Visible Smart Grid Application. Judging by the high interest in a recent webinar on this subject, the benefits of emerging distribution automation technologies is not a big secret. Stimulus-assisted demonstration projects, both in the U.S. and Europe, will provide some useful metrics.

No. 3 – The “Bakersfield Effect” Will Continue, but Some Consumers Will Actually LIKE the Smart Grid. I had no idea there were already so many Bakersfield jokes, thanks mostly to Johnny Carson. Already famous for Coccidioidomycosism (aka “Valley Fever”), Bakersfield is also home to “smart-meter-itis”. Sorry folks, I’m sure Bakersfield is a lovely place….

No. 4 – Smart Meter and AMI Focus Will Shift Toward Europe and China. A minor correction: I mentioned that ERDF in France is running three pilots, of 100K meters each, using different vendors. In fact, they’re running 2 pilots, one of 200K meters (Lyon) and one of 100K meters (Tours). Three suppliers, Iskaemeco, Itron, and Landis+Gyr, are each supplying ~100K meters, which are fully mixed throughout each pilot. I was also remiss in not mentioning the leading role of Atos Origin, the international consulting and system integration firm, in the development of this project. However, all this only reinforces my major point highlighting the uniqueness and importance of the successful multi-vendor interoperability demonstrated by this project.

No. 5 – The “Year of the HAN” Will Not Arrive … Yet. I expected some vendor pushback on this assertion, but instead have received what amounts to a collective sigh of resignation. Certainly there are many interesting pilots and deployments underway. Interestingly, many are decoupled from the smart meters that had been seen as essential. The opportunity remains, but will require patience.

No. 6 – The Demand Response Business Transformation Will Accelerate. No arguments here, and more vendors and utilities are excited by the transformation than nervous.

No. 7 – The ARRA Smart Grid “Stimulus” Will Finally Have a Positive Impact. I would have thought that any assertion that the stimulus has thus far been less than stimulating would generate an argument, especially during the height of the mid-term election season. Not so.

No. 8 – The Standards “Horse” Will Begin to Catch the Deployment “Cart”. This generated requests for prognostication on which technology will “win”. It is climbing out on a limb to say “IP”. We do forecast over a dozen different technologies in our Smart Grid Networking and Communications report, but it is up to the reader to judge whether there are “winners” and “losers”.

No. 9 – Data Management Will Be the Next Bottleneck to Smart Grid Benefits. More and more vendors are promising means to obtain useful information from the mountain of data coming from the smart grid. Perhaps we should be more optimistic re: a bottleneck. However, we failed to mention how growing privacy concerns could muddy the waters for the more interesting profiling applications.

No. 10 – Existing Data and Telecom Vendors Will Get Serious About the Smart Grid. Several of these vendors assure me they already are serious. I guess we will have to see how many utilities agree.

Article by Bob Gohn, appearing courtesy Matter Network.

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Market drivers in the home energy management (HEM) space are indicative of any residential energy efficiency market –they pivot on energy efficiency measures and applications affecting the bottom line. Additionally, in the residential energy efficiency space –and more specifically HEM– consumer engagement and the promotion of energy efficiency and demand response (DR) will have to be the driving force in reducing capital expenditures (capex).

Consumer participation even trumps the market accepted differing channel paths that HEM vendors will penetrate while trying to supply more devices and create larger profit margins.

The current market-accepted winning business model to distribute energy information displays (EIDs) is by penetrating a utility’s customer channel into the home. This is the case in North America and even more so in the UK, where EIDs will be offered (in addition to smart meters) by British energy companies. Yet, the most challenging hurdle for the market to overcome –as a Pike Research senior analyst likes to say– will be the EIDs “mean time to drawer,” resulting in non-use of the device.

If consumer behavior does not change, and families do not begin to manage their energy via an EID, then crucial data will never be created, thereby hindering many potentially vital algorithms and tools built around consumer energy data in the future. The quicker the “mean time to drawer,” the higher the possibility that EIDs become vaporware –and the HEM market a “bubble,” as so many have suggested before.

But consumers might start viewing energy and the managing of it much as they do their bank accounts. Here, beyond simply increasing energy efficiency and residential DR for consumer benefits, consumer engagement will also create new revenue streams through increased data production.

The EID –whether consumer advocate groups like it or not– will provide insight to the behavioral and fiscal attributes of residential energy end-users. This data will enable two very powerful groups –advertising agencies and politicians– to make informed business and governing decisions. Where advertisers (i.e. Google) will sell us swimsuits when they glean that we have been heating our pool, legislatures and policy makers will carve out specific carbon pricing and renewable portfolio standards that level the playing field for those most affected: the utility industry, end-users, and the environment.

The result of increased energy efficiency and demand response in the residential sector has far-reaching implications through periphery benefits and the trickledown effect, also. One such case is lower customer service costs for utilities, which will force the hand of the regional public utility commission (PUC) to lower rates.

Customer service is one of the highest operational expenditure line-items on a utility’s balance sheet. This cost will be driven down because utility call-centers will be in lower demand. Rather than call the utility, consumers will have the power of information at their fingertips be it information about energy usage, basic FAQs, online databases or chat assistance over the internet.

Jevan Fox is a research analyst contributing to Pike Research’s smart energy practice.

Article appearing courtesy Matter Network.

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Virtual power plants (VPPs) rely upon software systems to remotely and automatically dispatch and optimize generation or demand-side or storage resources in a single, secure web-connected system. In the U.S., VPPs not only deal with the supply side, but also help manage demand and ensure reliability of grid functions through demand response (DR) and other load shifting approaches, in real time.

In short, VPPs represent an “Internet of Energy,” tapping existing grid networks to tailor electricity supply and demand services for a customer, maximizing value for both end-user and distribution utility through software innovations.

Without any large-scale fundamental infrastructure upgrades, VPPs can stretch supplies from existing generators and utility demand reduction programs, delivering greater value to the customer (lower costs, new revenue streams) while also creating benefits to the host distribution utility (avoidance of capital investments in grid infrastructure or low-capacity peak power plants) as well as the transmission grid operator (regulation services such as spinning reserves). When compared to the fossil central station power plants that dominate electricity markets worldwide, one of the primary advantages of VPPs is they can react quickly to changing customer load conditions, are dynamic and deliver value in real time.

Three heavyweight companies to watch out for in the VPP space are Siemens, Schneider Electric, and Cisco.

Siemens was one of the first firms to explore the concept of VPPs, playing a key role in providing the management system for one of Germany’s pioneering efforts. A VPP project that has been operating since October 2008 aggregates the capacity of nine different hydroelectric plants ranging in size from 150 kilowatts (kW) up to 1.1 megawatts (MW), with a total VPP capacity of 8.6 MW. The VPP framework opened up new power marketing channels for these facilities that would not have been viable if these distributed energy resources (DER) were still operating as stand-alone systems.

The key technology Siemens is offering to the VPP market is its Decentralized Energy Management System (DEMS), which is designed to enhance both wholesale and distributed generation operations according to pre-defined economic, environmental or energy-related priorities. The company is now engaged in a variety of smart grid projects in the U.S. that could be considered VPPs (or at least stepping stones to future VPPs) in Kansas, Texas and Hawaii.

The Schneider Electric version of a VPP is focused on capturing and aggregating DR resources from large commercial clients. With new managers quite familiar with the evolution of DR markets, they appear to have a very focused and unique strategy, targeting various advanced wholesale/retail markets, such as the PJM control area. With an emphasis on dashboard presentations, they seem to have a well-tuned business entry strategy.

In 2010, the company has launched a new venture whose prime goal is to serve as a broker between utilities and large customers – especially those that own large amounts of commercial buildings. Worth over $27 billion, this French company has a market presence in over 100 countries, with its largest portion of business (44 percent) in Europe, followed by North America (27 percent) and Asia-Pacific (19 percent).

Last, but not least, is Cisco. Top managers for its VPP business segment come from Southern California Edison (SCE), a utility whose large-scale efforts in DR – representing over 1,000 MW of DR capacity – and development of up to 500 MW of utility-owned distributed solar PV distributed throughout its service territory in 1 to 2 MW distinct systems – represent the perfect utility partner to launch such a new business enterprise. With its “Building Mediator,” Cisco is also targeting this network device on energy-intensive corporate buildings, a venture with downside risk.

Cisco sees its function as playing a role in the coordinating aspect of bringing DR and distributed renewables together, and is therefore involved with a pilot project involving SCE, the U.S. Department of Energy (DOE), and the City of Irvine in southern California. In Cisco’s view of the world, the VPP is a much better platform to aggregate and boost value from the full capability of grid networks than the microgrid.

At present, the focus of Cisco’s VPP business strategy is DR, but in the long-run, Cisco sees its role as “developing a communications fabric that connects prices to devices, and helps create a level playing field for all of the key elements of a distributed energy network – DR, distributed generation and storage.”

Article by Peter Asmus, appearing courtesy Matter Network.

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