Navigant Research Blog

Ireland Likely to Outpace U.S. in EV Adoption

— October 31, 2011

Despite several years of economic woes and rapidly expanding debt, a country commits to plug-in electric vehicles and an aggressive roll-out of charging infrastructure.  The Republic of Ireland (you were thinking of someplace else, perhaps?) is installing 1,500 public charging stations this year, which puts the country on pace to have a far and away greater penetration per capita than the United States.

ESB, Ireland’s leading electricity provider, sees great utility in the deployment of PEVs and charging infrastructure as the company increases the percentage of wind and other renewable energy to 40% of its total generation.  ESB is building out the infrastructure to support the government’s goal of 10% of all vehicles being electrified by 2020.

To put it in perspective, Ireland will install 1,500 public charging stations in 2011, while the U.S. will see double that number, despite a population that is more than 60 times greater.  When you consider that Ireland has no domestic PEV manufacturers, and just two imported vehicles (the Nissan Leaf and Mitsubishi i-MiEV) available today, the commitment is all the more impressive.  The country will also see 2,000 residential and 30 fast DC (CHAdeMO) charging stations installed by year’s end.

ESB is streamlining EV charging by creating a single-card payment system so that customers can switch electricity providers or charging locations and have the fees consolidated back to their home account.  ESB will also use smart charging to manage the equipment so that PEVs can participate in grid services, a step that utilities in the U.S. (with the exception of NRG) have been slow to take.

An agreement between Ireland’s two governments in late October will extend the EV network across the border into Northern Ireland so that the entire Emerald Isle can function as one.  As quoted in the Belfast Telegraph, Thierry Sybord, managing director of Renault UK, said, the agreement with Northern Ireland “provides a unique opportunity to explore cross-border collaboration with the Republic of Ireland.”

So PEV drivers anywhere in Ireland will be able to roam freely with their car (like their cell phone) and receive consistent service and billing.  This bodes well for consumer interest in PEVs.  Other countries such as Spain and Portugal have similar programs in development, and each is likely to have adoption rates higher than in the U.S., where no national plan has been proposed.

It’s encouraging to see the desire to reduce emissions and increase domestic renewable energy production bringing together an area that has seen more than its share of conflict.


Is Fuel Efficiency Finally Starting to Drive Down Gas Tax Revenue?

— October 31, 2011

In October, the U.S. General Accounting Office released a report with a rather startling title:  “All States Received More Funding Than They Contributed in Highway Taxes from 2005 to 2009.” 

To explain, all U.S. states send money collected from fuel taxes and a handful of other fees to the federal Highway Trust Fund.  This money is then reapportioned back to the states in what has been often been a contentious process.  States that get back less than they contribute are considered “donor” states, and perhaps not surprisingly, they complain about this.  What this GAO report says is, from 2005 to 2009, every state in the U.S. was a “donee” state, receiving more from the Highway Trust Fund than it contributed.  The federal government chipped in additional money from general tax revenues to support states’ highway and mass transit investments.

So how did every U.S. state turn into a trust fund beggar in this period?

As noted, the Highway Trust Fund receives excise taxes collected on motor fuels, levied on gasoline, diesel fuel, gasohol, and fuels, as well as taxes related to trucks, trailers, and other heavy-use vehicles.  It has long been predicted that efforts to reduce hydrocarbon fuel consumption from the U.S. passenger vehicle fleet – whether through greater fuel efficiency, proliferation of electric cars, or growing use of other transportation modes — will start to reduce fuel tax receipts.  Has this finally happened?  Well, the GAO report says that the purchasing power of the trust fund dropped, in part because the federal gas tax rate has not increased since 1993.  And the report notes that contributions did decrease, but only from 2007 to 2008.  So, for the period through 2009, it’s not clear whether the fuel efficiency predictions had finally come true.  However, the Congressional Budget Office is forecasting another revenue shortfall by the end of fiscal year 2012.  And the GAO report concludes that fuel taxes may not be a viable long-term source of transportation funding as vehicles become more efficient and increasingly run on alternative fuels. 

This is particularly relevant right now because Congress is working on its next transportation authorization bill, which would set spending levels for another six years.  Congress will have to grapple with the issue of funding, in the midst of an election year cycle where discussions about revenue are constant fodder for politicking.

But the trends going forward are clear – all indications are that the U.S. vehicle fleet will become more efficient and more electrified.  This doesn’t have to be a major technology transformation either.  As my colleague Dave Hurst recently wrote, it could be a simple transmission change.  Stop start vehicles, which simply incorporate more robust batteries and starter systems than in conventional ICEs, can reduce fuel consumption by 5% to 10%, and come with a price tag only slightly higher than today’s ICEs.  Pike Research projects sales of these vehicles to take off in 2012, reaching 25 million globally by 2017.

With fuel consumption going down, the U.S. will likely have to consider alternatives to the current Highway Trust Fund revenue stream.  Earlier reports to Congress have proposed taxes based on vehicle miles travelled or freight-based charges.  In my next blog post, I will explore some of these options, especially the VMT based fees which could capitalize on the increased availability of driver location data from GPS and smartphones.


The future of the ESCO Industry in a Post-ARRA World

— October 27, 2011

In this tumultuous political climate, one that stands only to get more heated, the future of the economy continues to weigh heavily on the American people as well as on budgets for energy measures.  The American Recovery and Reinvestment Act was supposed to provide a bump to a number of sectors during a time of economic contraction but many have experienced less than what they expected to.  The energy service company (ESCO) industry is a prime example.

Close to $41 billion of ARRA money was earmarked for energy efficiency measures.  The legislation aimed to move money through grants, loans, tax benefits, and entitlement programs to weatherize old homes, stimulate retrofits of commercial buildings and public housing, and update military bases across the U.S.  While it’s true that this money has been doled out, through state energy offices and through contracts for energy savings performance contracts among other ways, the program has had less success than originally hoped for.  The ESCO industry is particularly aware of this issue because during the time ARRA programs were announced and the present time, there has been a marked decrease in energy savings performance contracts (ESPCs) as well as ESCO revenues.  A once rapidly growing market is experiencing slower growth than anticipated.  And while budgets for energy efficiency are being decreased across federal, state, and local governments, the need, and sometimes mandate, for advances in energy efficiency have not diminished. 

This conundrum is one of the primary focuses of this year’s National Association of Energy Service Companies conference in San Diego.  Next week major technology vendors, department heads, and policymakers will come together to address how energy efficiency will “ride the wave” into a time when financial markets have stabilized, the appetite for risk has returned, and the real estate market has regained some of its former resilience. 

The market surely hasn’t stalled entirely; it appears to be in a holding pattern for the time being.  The post-ARRA world is likely to be focused pathways for market growth that are technical, financial, and legislative in nature – all areas to be covered at the NAESCO annual conference. 

Here are some of the questions I’d like to explore next week in San Diego. 

  • What was the true impact of the ARRA on the ESCO market?
  • How will the work of mechanical engineers and software engineers converge in buildings?
  • Will ESCOs address the energy needs of data centers with the ESPC model?
  • As project costs increase, how are ESCOs and their potential clients addressing the increasing length of payback periods?
  • With the great minds behind energy efficiency in the Department of Defense and the four branches, what innovative approaches will come out of the military establishment, including changes to contract structures and comprehensive energy upgrades?

To set up meetings with Pike Research staff, please feel free to reach out to us


What Will the EU 2050 Energy Roadmap Look Like?

— October 27, 2011

At some point between now and the end of 2011, the European Commission, the regulatory body of the European Union, will release its much anticipated Energy Roadmap 2050. This Roadmap follows the “Low Carbon Economy Roadmap 2050”, adopted by the Commission on 8 March 2011, and the “Roadmap to a Single European Transport Area.” The impact of these documents on the technology options in Europe was documented in the recent Pike Research White Paper “Current EU Policy & Development of Smart Energy & Smart Transportation.”

With the recent purported leaking of the Energy Roadmap 2050 to selected journalists, this is an opportune moment to go through what little we know for certain, and what we might see.

Starting with what we know:

  • The Roadmap is due for release before the end of 2011 and is set out to complement the Low Carbon Economy Roadmap 2050;
  • Achieving the initial 20/20/20/20 target is seen as a precursor to the roll-out of the much more ambitious carbon reduction targets shown below.

And that is the sum total of what we know for certain.

If news providers such as Die Welt and Reuters are to be believed, the Energy Roadmap will include:

  • A scenarios approach to energy modelling, rather than the flat out forecasting approach;
  • The inclusion of around 18% nuclear in most scenarios, with Die Welt hypothesising that this is due to concerns over the development and deployment potential of CCS hindering the development and use of so called clean coal;
  • Renewable penetration up from the current 10% across the EU, to between 55% and a startling 97% in a high penetration scenario;
  • The uncontroversial conclusion that we are continuing to move to a more electricity-based society, with most scenarios showing a doubling of electricity’s share of final energy demand to between 36 and 39% in 2050.

What we don’t know, though, are the biggest pieces of the puzzle:

  • The projected impact of energy efficiency on final energy demand;
  • The projected rate of growth, or decline, of energy demand across the EU;
  • The demand for new solutions to old problems;
  • How the multi-billion dollar annual investment for any massive shift in energy sourcing will be raised;
  • How each country will implement the plans and their preferred energy mix.

Putting it all together, it could be said that the leaks have whetted the appetite, or sharpened the knives, of every energy industry that currently exists. The one clear winner though? Without a doubt this will be energy storage. We, as never before in the EU, are going to need to think long and hard and implement widespread storage of renewables if they are to be economically and technically feasible, even at the lower 55% penetration scenario.

A debrief of the EU Energy Roadmap 2050 will be published on this site once the final document has been published.


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