Tag Archives: Johnson Controls

China’s crackdown on lead-acid batteries continues

Posted on by

Recent reports indicate that the Chinese government has followed through on its promise* to crack down on pollution stemming from lead-acid battery production and recycling. The sector has been blamed for multiple instances of lead poisoning across the country. In August, China had reportedly shuttered 583 entities involved with either lead-acid production, assembly, or recycling, and temporarily closed another 1,015 for inspection and upgrading. As a result, over 80% of China’s lead-acid production has gone inactive. Further, the clampdown hasn’t been limited to small producers: The government forced Johnson Controls’ Shanghai factory to temporarily close after reports* of elevated blood lead levels arose from neighboring towns.

China’s Ministry of Industry and Information Technology has proposed phasing out all plants producing/processing less than 30,000 tons of lead per year by 2013, and limiting the construction recycling plants to those with capacity to process over 50,000 tons per year. These developments will have a significant impact on China’s massive electric bike market, where lead acid is the battery of choice (see the report, “Small Batteries, Big Sales: The Unlikely Winners in the Electric Vehicle Market“)*.

The incredible number of permanent and temporary shutdown could streamline the complex and fragmented lead-acid battery market, and increase the cost of manufacturing as lead-acid producers and handlers quickly adjust to more stringent restrictions on manufacturing and recycling – or else disappear completely. Furthermore, it will accelerate the pace at which e-bikes transition over to Li-ion*, as aggressive expansion of Li-ion manufacturing around the globe makes the batteries more competitive on cost and benefits. As a result, those wishing to enter the e-bike market for lead acid may find a simpler, albeit more strict, environment, while those interested in the Li-ion chain have an opportunity to find a place in the market.

* Client registration required.

Share this
Facebook facebook   Twitter twitter   Email email   Linkedin linkedin  

Saft’s defensive strategy against Johnson Controls paying early dividends

Posted on by

Last May, Johnson Controls filed a petition to dissolve its joint venture with French battery-maker Saft. But Saft opposed JCI’s pressure to move the JV outside the original scope of automotive battery applications and into the energy-storage market*.Saft’s resistance appeared to be vindicated in late July, with the announcement of two grid-storage projects in France totaling nearly 6 MWh of advanced lithium-ion storage.

In the first, Saft will deploy 500 Li-ion storage units of 4 to 8 kWh for the Millener Project to smooth out energy supply generated from photovoltaic installations being rolled out across several of France’s island territories. In the second, Saft announcedits listing as first-rank partner for 2.7 MWh of energy storage in mainland France’s Nice Grid project, which covers storage applications at origination and distribution substations as well as residential storage. Though energy storage and renewables are typically more cost-effective for island applications such as the Millener Project where a region lacks a robust centralized grid, the Nice Grid project provides evidence that the time is approaching for larger mainland grid storage projects. Both projects not only offer Saft the opportunity to further test and demonstrate the effectiveness of its technology, they also allow it to cultivate relationships with the numerous other project partners, including BPL Global*, Delta Dore, Edelia, Schneider Electric,Tenesol*, the European Regional Development Fund (ERDF), Alstom Grid, and EDF.

Despite its emotionally tarnished relationship with JCI, Saft made the correct tactical move to isolate its strong position in the energy storage market from JCI’s reach into the energy storage arena, which already includes a memorandum of understanding with Hitachi and an endowment for an energy storage program at the University of Wisconsin. It is important to note that, similar to its microgrid project in San Francisco*,Saft’s projects in France are subsidized by government funds,  which indicates indicating that in many applications grid energy storage is not yet market-ready on its own. Nonetheless, if Saft succeeds with its several ongoing energy storage demonstration projects, it should remain a leader in this market over the mid- to long-term.

* Client registration required.

Share this
Facebook facebook   Twitter twitter   Email email   Linkedin linkedin  

Johnson Controls looks to break with Saft

Posted on by

Last week, Johnson Controls (JCI) filed a petition to dissolve its joint venture with the French battery-maker Saft, which is opposing the proposed breakup. According to a Saft press release, JCI would like to expand the markets for JCI-Saft beyond the originally planned automotive applications, while Saft would prefer the JV not encroach on areas “where Saft is already strongly positioned and enjoys a rapid development.” The JV has found some traction in the automotive market, including agreements to supply batteries to both Ford and Daimler, and both sides indicated that the recent events will not compromise current supply and development relationships.

The dissolution of JCI-Saft would significantly shakeup the intensely competitive electric-vehicle battery market. While governmental support has primed an aggressive build-out for lithium-ion (Li-ion) batteries destined for electric vehicles, growth has been slow and the number of players grabbing firm supply contracts are few and far between (see the report: Small Batteries, Big Sales: The Unlikely Winners in the Electric Vehicle Market – client registration required). LG Chem has emerged as a clear front-runner, while other substantial suppliers like SB LiMotive and JCI-Saft have found more limited success. Trailing the pack are emerging suppliers such as A123 and Ener1 (see also the May 11, 2011 LREVJ – client registration required) which have taken major financial hits due to overly aggressive estimates regarding their electric-vehicle businesses. JCI likely surveyed the landscape and saw that it would be wise to target applications outside of the automotive realm to find more market opportunities for the JV’s Li-ion batteries.

While the consequences of the falling-out remain to be seen, this scenario shows that both parties don’t view the automotive market as the strong growth opportunity that likely drove the original partnership. JCI realizes that it has already missed out on the opportunity to take the initial front-runner position for automotive applications, while Saft appears not to value the automotive market as a big enough opportunity to risk exposing its utility business to JCI via JCI-Saft, where it could be forced to cannibalize existing business.

Additionally, virtually all the major Li-ion producers have recognized that applications outside of automotive will be crucial to justify the major build-out of capacity – with grid storage the most common target. Examples include A123 and Altair Nanotechnologies, both of which made rapid shifts to grid applications once their automotive efforts slowed. While grid storage could be a significant area of growth for Li-ion (see the report: Grid Storage – Islands of Opportunity in a Sea of Failure – client registration required), it remains nearly as uncertain as the automotive market, as the U.S. Federal Energy Regulatory Commission (FERC) still has not determined how energy storage for the grid will be regulated. FERC is considering a pay-for-performance framework in the regulation market, which could potentially place a premium value on Li-ion batteries’ ability to balance supply and demand (frequency regulation). A final determination, however, is not due until sometime in 2012. In the meantime, battery-makers must place bets in both automotive and grid storage knowing that each holds as much peril as promise.

Share this
Facebook facebook   Twitter twitter   Email email   Linkedin linkedin  

The demand response market shakeout continues

Posted on by

On March 3, the building controls giant Johnson Controls announced its acquisition of EnergyConnect, a demand response company, for $32 million. EnergyConnect offers a software-as-a-service energy dashboard focused on the commercial and industrial (C&I) ”price-response” demand response market, which helps customers save money by shifting consumption to times with lower electricity rates. It also offers traditional “dispatch” demand response to reduce energy consumption during periods of peak demand. 

Building on a 60% revenue growth in 2010, EnergyConnect further increased its acquisition appeal in January when it won a multi-year contract with the California State University (CSU) system, which also happens to be a customer of EnergyConnect’s competitor EnerNOC. This head-to-head competition of direct response players within one institution is indicative of the increasingly competitive C&I marketplace, and the competition will only get hotter as building management systems integrate more deeply with smart-grid systems. 

The strategic alignment of Johnson Controls with EnergyConnect furthers the ongoing consolidation in the DR industry, highlighted last year when Honeywell acquired Akuacom (see the May 17, 2010 LRGJ*). The “big four” building controls companies – JCI, Honeywell, Siemens, and Schneider Electric – all now have significant stakes in the lucrative C&I demand response market. As these diversified companies supplement their core offerings with a demand response add-on it will squeeze pure-play demand response providers like EnerNOC and Comverge by driving their margins down (see the November 17, 2010 LRPJ*).

As we reported last fall (see the September 29, 2010 LRPJ*), it is not only the building controls companies who are applying the squeeze, but also utilities (see the September 22, 2010 LRPJ*) and third-party deal-makers. As the size of the pie for C&I demand response grows, the winners will be determined not only by their ability to find new slices in uncharted territory, but also their ability to take bites out of competitors’ pieces by offering multiple DR services. Clients should divest investments in pure-play demand response companies, and look to establish partnerships in the building IT space before the best offerings are off the table (see the Lux Research report, Sifting Winners from Losers in the Building IT Acquisition Frenzy*).

*Client registration required.

Share this
Facebook facebook   Twitter twitter   Email email   Linkedin linkedin  

Global micro-hybrid storage sales by technology

Posted on by

Graphic of the WeekMicro-hybrid vehicles draw battery power only to power start-stop systems or cabin electronics, as opposed to full hybrids which use storage for propulsion. Yet, the micro-hybrid market will fuel a 57.5% CAGR for energy storage technologies through 2015. Overall, this storage market (including replacement batteries) is on track to grow from just below $280 million in 2010 to over $2.7 billion in 2015, a CAGR of 57.5%.

Unsurprisingly, the opportunity has attracted multiple storage technologies, including flooded lead-acid (FLA) batteries, enhanced flooded batteries (EFBs), adsorbed glass mat batteries (AGM), and advanced lead-acid systems that often incorporate ultracapacitors. This week’s graph looks at how the growth of each technology will track over the next few years.

EFBs rival AGM batteries in unit sales by mid-decade. While EFBs were found in only 17% of the microhybrids made last year, by 2015 this number will nearly rise to 50%. Along with replacement sales, that spells over 23 million EFB packs sold in 2015. While AGM batteries will continue to dominate in Europe, EFBs will be more popular in almost every other region. In dollars, the global EFB market (including replacement sales) will jump from a mere $30 million in 2010 to over $1 billion in 2015, a CAGR of 102.3%, led by suppliers like Johnson Controls, Exide, and GS Yuasa.

AGM batteries’ dominance of Europe will lead to steady growth over the next five years. While AGM batteries’ market share will drop, they’ll remain the biggest market for the foreseeable future. The number of AGM battery packs sold globally – including replacements – will grow from just under 3 million units in 2010 to more than 27 million units by 2015. AGM’s lead in terms of dollars is more significant, with the market growing from just under $250 million in 2010 to more than $1.6 billion in 2015, a CAGR of 45.9%, led by suppliers such as Johnson Controls, Exide, and Banner Batterien.

Micro-hybrid storage systems that incorporate ultracapacitors will see the fastest growth. PSA’s e-HDi system, sourced from Valeo, is the model of ultracapacitor-enabled micro-hybrid storage systems, with a small pack of ultracapacitors working alongside an AGM battery. With Maxwell Technologies as the leading supplier of the ultracapacitors for such systems, the number of micro-hybrids containing ultracapacitors will grow from under 50,000 in 2010 to 1.9 million by 2015. Equivalently, global ultracapacitor sales for microhybrid applications will grow from $2 million in 2010 to more than $55 million in 2015, a CAGR of 95.6%.

Source: Lux Research report “Micro-hybrids: On the Road to Hybrid Vehicle Dominance.” (client registration required)

Share this
Facebook facebook   Twitter twitter   Email email   Linkedin linkedin  

Smooth, Strong Growth Seen for Emerging Green Services

Posted on by

Smooth, Strong Growth Seen for Emerging Green ServicesAlthough growth in established green building technologies – those that improve on a building’s existing energy profile – has kept pace with overall construction growth, many emerging green technologies are on an accelerated growth curve. Most notable among them are those in the green services category, which encompasses demand response, building energy management and smart meters. In 2009, this segment represented only 11% of the overall green building market with $16 million in revenues. But it is on track to expand to $55 billion in 2020, reflecting a robust 12% CAGR.

The bulk of green services revenue lies in energy service companies and the fractured engineering and design services delivered by firms such as Ameresco, Honeywell Building Solutions, Johnson Controls Government Systems, Con Edison, Carrier, and Siemens Government Services. But the strongest growth will derive occur in demand response, which we project will expand from $0.6 billion today to $12 billion in 2020, reflecting a 31.6% CAGR.

Revenue from building energy management services is estimated to grow at a more conservative, but still robust 12.9% CAGR, from $2.2 billion to $8.5 billion in 2020. Technologies within this category enable real-time control (and minimization) of energy consumption for HVAC, lighting and other building systems. Hence, we include smart meters under the services category. Provided by companies such as Itron, eMeter, Eka Systems, Tendril Networks, and Landis+Gyrh, smart meters provide the real-time information about energy consumption that enables energy management.

Smart meters are expected to grow from $0.7 billion this year to $10 billion in 2020, a 27.8% annual pace.

Source: Lux Research report “Diamonds in the Rough: Uncovering Opportunities in the $277 Billion Green Buildings Market.”

Share this
Facebook facebook   Twitter twitter   Email email   Linkedin linkedin  

Strong interest in efficiency from building owners around the world, but cash remains bottleneck

Posted on by

Johnson Controls reached some surprising conclusions in its latest Energy Efficiency Indicator Global Survey results, which it released in June. The survey includes feedback from 2,882 respondents. Among them, CEOs, CFOs, real estate leaders, and facility managers from organizations ranging from small businesses to global corporations, and from a variety of industries, including manufacturing, healthcare, information and communication technology, construction, consulting, retail, and government sectors.

It found that 71% of respondents say they are paying more attention to energy efficiency now than they were one year ago, and 85% indicate that energy efficiency is a priority in planned new construction and retrofit projects. Moreover and most surprisingly, 56% claimed to have invested more in energy efficiency in the last 12 months compared to historic levels – despite the global recession. Overall, 60% say that energy management is extremely or very important to their organizations. What’s more, respondents from India and China are more likely to consider energy management very or extremely important – 85% – compared with 53% of those in EU and the U.S.

Not surprisingly, 97% of the respondents said that cost savings was the top reason for interest in efficiency measures, which far outstripped other priorities, such as greenhouse gas reduction and enhancing public image and government/utility incentives. The results also showed that building owners and managers prefer to decrease the energy footprint of a building, rather than install onsite renewable energy and purchase renewable power by a 3:1 and 4:1 margin, respectively.

However, the economic incentive for improving energy efficiency also has its inverse; namely that 65% of respondents cited lack of capital budgets, uncertainty over savings, and insufficient payback as the primary barriers for adopting energy-efficient measures. Thus, cash is king and will remain the primary driver in decision-making in the buildings sector (as noted in our recent report “Diamonds in the Rough: Uncovering Opportunities in the $277 Billion Green Buildings Market“).

Fortunately, energy-efficiency technologies and their purveyors are getting due recognition from those in the position to adopt, and Property Assessed Clean Energy (PACE) bonds and similar financial packages in the EU and the U.S. (see the May 3, 2010 LRGJ – client registration required) will go a long way to solve capital issues and return on investment (ROI) problems. Also, the survey makes clear that technology developers – and investors looking to put money to work in the building efficiency space – should look to provide equipment and IT as a service, with its attendant lower upfront costs and risk, rather than traditional sales.

Share this
Facebook facebook   Twitter twitter   Email email   Linkedin linkedin  

Honeywell’s entrance into demand response sends shivers through the nascent industry

Posted on by

Earlier this month, Honeywell announced its acquisition of Akuacom, a Bay-area company that provides automated demand response technology and services for the smart grid. The acquisition beefs up Honeywell’s current smart-grid portfolio by enabling it to provide utilities and independent system operators (ISOs) two-way communication with energy management systems at commercial and industrial sites. This capability lets utilities and ISOs automate the delivery of price and reliability signals to these facilities and more effectively trim peak demand.

With nearly ubiquitous temperature and HVAC controls (several of which already interface with demand response software), Honeywell is already one of the “big four” building controls firms – along with Johnson Controls, Siemens, and Schneider Electric. The company is currently the largest residential demand response player in North America. It also has a presence in more than 10 million commercial buildings and thousands of industrial plants. As such, adding demand  response technology will let Honeywell leap from inside the building envelope to the utility and provide an end-to-end connection between energy provider and user to reduce peak energy demand and maintain optimum building efficiency.

The acquisition marks the beginning of industry consolidation that will see a handful of winners emerging from the demand response segment. Among them will be established early entrants like EnerNOC, and a half dozen or so alignments between large building control players and key demand response firms. There may also be one or two stranger alliances between large appliance makers and demand response firms, such as by the Tendril-GE pact. Thus, look for a few more high-profile demand response acquisitions to occur as  other stalwart control firms quickly follow suit in the wake of Honeywell’s Akuocom acquisition. Meanwhile, we also expect the vast majority of mass-produced, VC-backed demand response and building energy management firms to be frozen out of the market and fall off the map.

Share this
Facebook facebook   Twitter twitter   Email email   Linkedin linkedin