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Copyright © 2014 by SDTC™ Sustainable Development Business Case 33

8 Market Assessment

Market assessments were conducted for each of the sub-sectors using the methodology outlined in Section 14. The assessments considered a mix of common drivers that affected a broad number of sub-sector markets, as well as issues that characterized individual sub-sectors. The broader drivers are described below, with sub-sectors identified where the impact is strongest.

• Price of natural gas: while natural gas forecasts are not unanimous, the majority expect that prices will remain comparable to levels seen in the last 2 to 3 years. These low natural gas prices encourage adoption in some sectors where natural gas is competing against other fuels (e.g. transportation), but can discourage the adoption of technologies focused on incremental efficiency improvements (e.g. high-efficiency water heaters) by lowering the return on investment.

- - Increases economic efficiency in transportation and power generation.

- - Decreases economic efficiency in residential, commercial and industrial.

• Regulations: regulation is only expected to have a higher impact in the transportation sub-sector, where emissions regulations may incentivize natural gas adoption. In other sub-sectors, regulations are considered likely to spur the adoption of already existing technologies (e.g. natural gas power plants to replace coal power plants) rather than drive the adoption of the next generation of technology.

- - Decreases time to market for transportation and power generation.

- - Small increase in economic efficiency for transportation and power generation.

Table 15 provides the key sub-sector-specific points that were considered while assigning ratings to the markets.

Table 15: Rationale for Market Analysis - Key Points

Sub-Sector Time to Market Economic Efficiency

Residential Incremental efficiency improvements are expected to

reach the market in the near term, with CHP and smart energy networks further out.

This slowly-growing sub-sector is expected to absorb technologies vs. generate spinoffs into other sub-sectors. Current drivers for new technologies are low but demand is expected to increase in the future. Commercial A broader range of customer types is expected to drive

adoption of efficiency options faster than the residential and industrial sub-sectors. Many technologies are expected to reach the market in the near-term.

Moderate potential for technology development within the sector with high replicability and some spinoff potential.

Industrial The industrial sector is more conservative and it will be

more difficult for new technologies to reach the market.

As a hub for R&D, technologies developed for industry are expected to have potential applications in the commercial and residential sub-sectors. Power Generation Power generation is a mature market and most

improvements are at an earlier stage of development. The market is risk averse and there is a perceived difficulty in replacing incumbent technologies.

There is a moderate opportunity for replicability and technology spinoffs. Evolving regulations are expected to create market demand in the future.

Transportation Significant infrastructure requirements and non-technical

needs will delay the next generation of technologies from reaching the market.

Development and infrastructure costs are expected to be high. The potential for replicability is very high with a significant future need for technologies. Renewable Natural Gas Near and medium-term technology adoption may be

affected by higher production costs and infrastructure requirements.

Replicability will be high but spinoff potential low since technologies are focused exclusively on this sub-sector.