In 2015, potentially disruptive technologies made substantial headway—and headlines—in the energy business. Our recent report Top 20 Technologies and Trends of 2015 gives details about the most buzz-worthy technology topics. Here, we present the top five of our total 20.
5. New Legislation, Products, and Pilots for Grid-Interactive Water Heating
The future of grid-interactive water heating was uncertain as the year began, but after a long decision-making process at the DOE, large-capacity grid-interactive water hears (GIWHs) were allowed to be manufactured and used in utility load management and DR programs. The legislation took effect on April 30, 2015, as part of the Energy Efficiency Improvement Act of 2015, and overruled the previous ban on large-capacity electric-resistance models. Grid-interactive water heating is the consensus term describing real-time, two-way communication between the water heater and the utility, independent system operator, or aggregation entity. The technology allows the water heater to be used as a thermal-storage medium for shifting loads, balancing renewable energy, frequency regulation, and other ancillary services. For more information on the technology, see our report Battery Killers: How Water Heaters Have Evolved into Grid-Scale Energy-Storage Devices.
The year 2015 also saw the introduction of two new water heater control products and new pilot tests. GIWHs have worked very well in a pilot program in Hawaii and a new pilot has begun in Minnesota. New Wi-Fi-enabled smart controllers for electric water heaters have been introduced to the market by Power Over Time Inc. and Sunnovations Inc. We expect to see more new products and installations in 2016—stay tuned.
4. Pilots for Inexpensive Plug-and-Play Solar
In the February 2015 Tech Roundup, we introduced a Plug and Play PV System from the Fraunhofer Center for Sustainable Energy Systems (CSE). This system was successfully installed and commissioned in less than two hours during a demonstration in 2014. A cost analysis indicates the installed cost of a Plug and Play PV System will be a fraction of that of a conventional PV system. The quick, safe, and relatively inexpensive installation is the result of a collection of innovative technologies and strategies including, most notably, the automation of the permitting, inspection, and interconnection process. The system conducts a self-test after installation but before interconnection, verifying compliance to be sure that system components match the system design and are Underwriters Laboratories–listed. The self-test results—and electronic visual documentation of parts of the system such as cable management—are transmitted to the local jurisdiction and utility through a Plug and Play PV Server, with a request for the recipient to approve interconnection. A variety of components can be incorporated into the system, including a solar connection device and conventional or lightweight modules that adhere directly to the roof, string, or micro-inverter (Figure 1).
Since February 2015, the Fraunhofer CSE has completed another successful demonstration in Boston, Massachusetts, and it’s planning another in California in early 2016. Next year, the group will run pilots with systems installed on occupied residences. To learn more about this system, visit the Fraunhofer CSE Plug and Play PV Systems page. If your utility is interested in participating in the Plug and Play PV System Alliance or Fraunhofer CSE’s system pilots, reach out to Fraunhofer CSE to see how you can be involved in the future. In the meantime, we will all anticipate the results of the 2016 pilot.
3. Cannabis Growth Strains the Grid
With the recent legalization of cannabis in some states, owners of cultivation facilities have rushed to increase production and gain market share, and they have often overlooked energy considerations in the process. This trend has created new, large demands for electricity. Cannabis is currently legal in some form in 23 states and the District of Columbia, and some experts predict that another 11 states will soon follow suit. Indoor cannabis-cultivation facilities are huge year-round energy consumers; each marijuana plant requires more energy than seven refrigerators; and each cultivation facility may contain upward of 400 plants. In Washington State, according to the article Big Potential for Energy Savings from Indoor Marijuana Cultivation by Northwest Power and Conservation Council, analysts anticipate a load growth of 80 to 160 average megawatts of power over the next 20 years due to cannabis production—the equivalent of a small city. In Oregon, where cannabis was recently legalized for recreational consumption, indoor growing operations resulted in seven blackouts over the course of the summer.
To make matters worse, because cannabis is still illegal on the federal level, no publicly funded research is being performed on ways to mitigate the energy consumption of this industry. The quick growth of the industry, the lack of publicly funded guidance, the strict environmental conditions required to grow the plants, and the inapplicability of standard commercial HVAC practices to cultivation facilities have left contractors in the dark when it comes to designing energy-efficient facilities. E Source has attempted to fill this knowledge gap with the publicly available report Harvesting Energy Savings in Cannabis Cultivation Facilities.
2. The Elephant in the Room: Home Energy Management
Smart-home technology is rapidly emerging, bringing with it unprecedented opportunities for utilities to collect data on—and control—residential energy end uses. This year, we witnessed the introduction of a host of innovative smart products; new market developments like California’s Assembly Bill 793, which will promote the deployment of both residential and commercial energy-management technologies; and promising collaborations around smart home platforms from major companies. The first devices compatible with the Apple HomeKit began to trickle into the market in 2015. Nest formed a long list of partnerships with other manufacturers of connected products, ranging from smart-appliance makers such as LG and Whirlpool, to car companies (Mercedes-Benz), lighting manufacturers (Philips), and more-eclectic businesses like watchmaker Pebble and Big Ass Fans, producer of smart ceiling fans. LG even launched a sleek hockey puck—like sensor (Figure 2), which can add wireless capabilities to existing dumb appliances.
Although some may view the residential Internet of Things as a passing fad that’s unlikely to be widely adopted outside of the wealthy millennial niche, recent market research suggests otherwise. For example:
- The Shelton Group’s 2015 Energy Pulse study found that 35 percent of smartphone/tablet owners already manage some home function with a phone app, and 49 percent of the remaining owners plan to do so within the next year.
- Icontrol’s 2015 State of the Smart Home (PDF) suggests that 50 percent of consumers in North America plan to buy at least one smart-home product in the next year.
- Business Insider’s 2015 Connected-Home Report found that shipments of connected-home device are likely to grow “faster than smartphone or tablet device growth,” possibly reaching 1.8 billion units shipped in 2019.
For utilities, smart-home devices can offer a broad range of benefits, including increased availability of detailed energy-use data; improved customer engagement; and sophisticated, new load-management and DR functionalities. As disruptive developments like solar PV and battery storage systems become more prevalent in the market, and as utilities’ efficiency and carbon-reduction goals become more stringent, the potential to control nearly all major energy end uses in the home may soon become a key part of utilities’ strategies for managing the grid. With that in mind, we think utilities would be well served by reaching out to prominent third parties sooner rather than later to start developing partnerships around the smart home.
Interested in digging into this subject even more? E Source has explored this topic from several perspectives:
- Home Energy Management Is Coming: Are You Ready? provides an in-depth overview of the space and the potential opportunities for utilities.
- From Smart Devices to Smart Homes describes some of the specific home energy-management systems we think are most promising.
- The 2015 E Source Forum sessions Unraveling the Smart Home (PDF) and Positioning Your Utility for the Connected Home (PDF) provide even more insights.
1. Tesla Battery Announcement Overloads the Hype Circuits
When Tesla Motors’ CEO Elon Musk announced the advent of his company’s suite of stationary batteries on April 30, he hyped up the product’s potential use for solar storage. Musk told the crowd gathered for the announcement, “You could actually go, if you want, completely off the grid. You can take your solar panels, charge the battery packs, and that’s all you use.” Numerous news outlets picked up on Musk’s enthusiasm and broadcasted predictions that homeowners would combine the new batteries with solar panels, go off the grid, and put electric utilities out of business. In an article titled Why Tesla Won’t Disrupt Utilities, I explained why this nightmarish scenario won’t happen, and why only a trivial amount of US homes will become fully autonomous solar generators. However, the lack of a robust domestic solar market doesn’t mean that prospects for the Tesla battery line are poor. On the contrary, there are three markets that offer exciting prospects (I explored these points further in a series of blogs, too):
- Residential backup. The small natural gas generators that dominate this market have the advantage over the Tesla batteries when it comes to power and energy. Some homeowners, though, will be ready to overlook those benefits to enjoy the simplicity, quietude, and prestige associated with the batteries.
- Commercial building demand management. Combined with predictive software, these batteries charge up during times of low demand and discharge during peak times, when monthly demand levels are set. Such systems are popular in California and New York, where state and local utilities collaborate to offer incentives and vendors offer no-money-down financing. As battery prices decline, look for these vendors to expand their operations to other states.
- Grid-scale storage. Utilities use large-scale batteries for a variety of applications, such as shifting excess supply to times of higher demand, regulating frequency, supporting voltage, deferring transmission and distribution upgrades, and relieving congestion. Judging from the partnerships that Tesla has forged so far—including agreements with Southern California Edison, AES, and Oncor—it seems the company is well on its way to building the capabilities needed to compete for utility sales. Indeed, on the basis of revenue, it appears that utilities are going to be Tesla’s biggest battery customers.
Even though Tesla generated extensive public interest in its new stationary battery line, it doesn’t necessarily follow that those products will be successful. Tesla is investing heavily to get into this business and is in the process of building the world’s largest battery factory, which it has dubbed the “Gigafactory.” The company’s ability to profitably produce batteries at a high volume will heavily depend on how quickly and impeccably it scales up the Gigafactory. It remains to be seen how well Tesla performs at this highwire act and there’s good reason to be skeptical. After all, the company has yet to make a profit on its market-leading and beautifully crafted electric vehicles.