Navigant Research Blog

Texas a Lone Star in EV Charging Infrastructure

— January 25, 2012

In the 19th century, Texas became well known for its longhorns and the Alamo. The 20th century saw the oil boom, the Cowboys, and an infamous Dallas afternoon in November, 1963. In the 21st century, the state is becoming defined by its surprisingly progressive stand on energy through its wind farms and embracing of electric vehicles.

NRG Energy and its EV Services division have been leading the drive to bring clean power and transportation to Texas. The company now controls 450 megawatts of wind power in the state, and has executed the most aggressive rollout of EV infrastructure in the country.

These two developments are closely linked, according to Arun Banskota, the president of NRG EV Services, with whom I spoke at the recent Consumer Electronics Show in Las Vegas. NRG is investing $25 million in public EV charging equipment in Houston and the Dallas-Fort Worth area, Banskota said. That’s a hefty investment in a speculative market, especially for a publicly-traded company. Despite the area’s reputation as an oil town rich in land yachts, NRG is installing 50 “Freedom Stations” in Houston and 75 in DFW. Each of the charging stations has at least one DC fast charger and one Level 2 charging station, and they cost more than $100,000 per location.

The strategy appears to be working. According to Banskota, 80 percent of Nissan Leaf owners in the two regions have signed up for the EVGO program, a subscription service that enables charging at home or around town. NRG customers can specify only clean energy when they sign up.

Banskota said the company’s wind farms produce an abundance of power at night, when demand is low, which can result in spilling the excess power or negative pricing. Enter the EVs, which can charge at night and enable NRG to generate more revenue from its wind farms. Tying wind to EV charging in Texas mirrors similar endeavors in The Netherlands and Denmark, but is unique in the United States.

Texas is one of four states (along with Hawaii, California and Virginia) that currently do not regulate EV charging services, and NRG is likely to offer a similar service in one of the other states during 2012. NRG is looking to integrate EV charging into home energy management applications so that all of a home’s energy can be managed through a single application. The company also plans to introduce vehicle to grid (V2G) technology in several states. The company acquired V2G technology from the University of Delaware, but does not expect there to be much demand for using vehicles to provide power to the grid for three to five years.


Super Bowl 2012: A Power Play

— January 25, 2012

The New Year is upon us, and President Obama has delivered his State of the Union address, which offered high-level insight on the energy sector in the US but was reminiscent of messages we’ve already heard. Now it’s time to turn our attention to another really important event of the year: the 2012 Super Bowl.  As always, this year’s game will be a staggering display of athleticism and energy consumption (rather than verbiage and applause).  These two things, generally not discussed in the same conversation, offer a more nuanced look at the energy sector here in America.

Every year the stats at the Super Bowl pile up like Tom Brady’s passing yards, including the kilowatt-hours (kWh) consumed.  The 2011 Super Bowl in Dallas, Texas set a record, becoming the most highly viewed television program in American history.  Almost 16 million people tuned in, consuming roughly 11.3 million kWh through television sets alone, according to a report by General Electric.  That’s enough electricity to power all the homes in three NFL cities – Green Bay, Pittsburgh, and Dallas – for 10 hours.

While many fans are focused on the number of touchdowns or turnovers, they’re generally unaware of the statistics they post in their own homes, through their electricity consumption.  On a wider scale, this lack of awareness plagues the energy efficient home market, the consequence of forces on both the supply and demand side.  Traditionally, consumers’ utility bills have not provided actionable information, making it difficult to interpret their consumption and how to reduce it.  Simultaneously, home builders and renovators haven’t been able to articulate a sensible value proposition for energy-efficiency measures.

Appliance designs have made considerable gains in energy efficiency, but these gains are eclipsed by the proliferation of consumer electronics, like LCD televisions and digital video recorders (DVRs).  According to the U.S. Energy Information Administration, more than 50 million U.S. homes have more than three TVs, and more than 45 million (40%) homes have a DVR.  The power consumed by appliances and electronics grew from 17% of average home energy use in 1978 to 31% in 2005, according the EIA’s Residential Energy Consumption Survey.  Advances in energy efficiency have historically mattered less to the American consumer than the newest entertainment device.

There is a chance the American consumer has started to pay attention, however.  Major organizations like the NFL have started highlighting residential energy efficiency – like investing in 800 free home energy audits in the Indianapolis area.  And according to a recent Yahoo Real Estate poll the American homebuyer’s dream home might be more energy efficient and constructed of sustainable materials.

Currently, there’s little incentive for consumers to tune in to their energy consumption.  Engaging the American public through the most popular entertainment forums (e.g.  the Super Bowl) and by using devices and outlets they already love (e.g.  televisions and social media) may be the ticket to unlocking the energy efficiency potential in the residential sector.


Reviewing Our Top Fuel Cell Trends Forecasts for 2011

— January 24, 2012

As we are publishing our 2012 Top Trend Paper on the Fuel Cell and Hydrogen Sector, now is an opportune moment to look back at 2011 predictions made by myself and my colleagues, Lisa Jerram and Anissa Dehamna, and have a look at how we did.  Were we totally off beam or we spot on?

In our first fuel cell and hydrogen white paper, published in January 2011, we said that in 2011 the following trends were going to be important:

  • The increasing importance of the hydrogen “Juniors”
  • Re-emergence of the private equity firms
  • Tipping points in the stationary fuel cell sector
  • Fuel cell vehicles will continue to see limited, but growing, deployment
  • Necessary consolidation in the fuel cell industry
  • Rising influence of Japan and South Korea in the global fuel cell industry
  • Hydrogen as an energy storage medium
  • Refocusing and rebranding
  • Rare earth restrictions as an obstacle to fuel cell adoption
  • UAVs as a key market for fuel cells

Overall I’d say we got about a 5.4 out of 10, so let’s say a C+.  I will select six critical areas and look at each in turn:

1.  The Increasing Importance of the Hydrogen “Juniors”

The hydrogen production industry is dominated by only a handful of multinational companies, which Pike Research terms the “Majors”.  Going forward, as fuel cells increasingly see commercial deployment across a growing range of applications, hydrogen will start to become visible as a fuel in hydrogen consumption graphs.  How this hydrogen will be produced is an active debate, but one trend we identified during 2010 and we forecast to see grow significantly in 2011 was the critical role of the Hydrogen “Juniors”.  These smaller, more flexible hydrogen producers, the Juniors are developing highly innovative products that have the capability to provide a fast roll-out small-scale distributed hydrogen generation sector.

That is what we said.

What happened was pretty much  as we forecast.  ITM Power, especially, had something of a stellar year.  I aked Dr.  Graham Cooley, CEO of ITM Power if he could sum up 2011 for his company for me and he replied with:

“2011 was a big year for ITM Power.  We launched our Hydrogen On Site Trials (HOST) and showed that hydrogen could be made onsite and was cost competitive with other forms of hydrogen, petrol and diesel.  HOST enabled us to engage with a number of commercial companies who had never been involved in the hydrogen sector before and showcase the reality of hydrogen as a transport fuel.

“We also launched a number of CE Marked hydrogen generation products alongside publishing our cost structure and a sale of our first hydrogen refuelling unit.”

So comparing this with what we said would happen in 2011 I’d say we were just about spot on.

2.  Tipping Points in the Stationary Fuel Cell Sector

Did we ever get this right, but almost for the wrong reasons.  We said at the start of 2011 that a number of applications and companies are still at the level of tipping points (as opposed to learning curves), with the most important one being the transition from batch manufacturing, which is usually done manually, and continuous automated manufacturing.  We also forecast that as 2011 progressed an increasing number of companies, possibly including major automotive manufacturers, would release reduced cost projections.

What we, and no one could foresee, was the impacts caused in 2011 by a number of extreme geological events.  The Japanese earthquake and tsunami, with the knock-on impact at the nuclear plant at Fukushima, is still being felt in many areas.  For fuel cells, specifically, it saw the sell-out of available subsidies for the purchase and installation of residential combined heat and power fuel cells, and the demand reaching a level that companies manufacturing the systems have had to bring in extra capacity.  We have also started to see the emergence of brand new, very large scale facilities, with the 100MW manufacturing plant from POSCO being a prime example.

Clearly the impact of exogenous events such as Fukushima are unpredictable, as least by mere mortals such as those of us in Pike Research, but even taking out the impact of these events we can still see that a number of tipping points have been reached.

3.  Fuel Cell Vehicles will Continue to See Limited, but Growing, Deployment

At the start of 2011 we said that major automakers, including GM, Honda, Toyota, Daimler, ad Hyundai, have pledged to produce commercial fuel cell vehicles by 2015, or even earlier.

So far we are still on track for this 2015 launch date and in 2012 this is still a valid statement.  We went on, though, to say:

Several automakers have pledged to produce small fleets – in the hundreds – for release to consumers and fleets in this timeframe, so 2011 will see the early stages of this ramp up. 

Looking back over the last months, we would like to be able to pinpoint where these micro fleets have appeared, but the reality is that we cannot see them.  2011 in fact was somewhat quiet on the fuel cell electric vehicle front, with the overwhelming majority of releases and attendant, positive and negative, PR going to battery EVs.  On this we were wrong.

4.  Necessary Consolidation in the Fuel Cell Industry

We openly admit that this wasn’t a popular forecast – after all we were openly predicting the demise of a number of companies – but it was, and still is, valid for this phase of evolution in the fuel cell industry.

What we said in January 2011 was that the fuel cell industry is rife with small companies with strong intellectual property that are not well positioned to cross the chasm of death and reach commercial viability.  Conversely, large OEMs, energy companies, and other industrial conglomerates looking to move into the business may find it most appealing to simply acquire a company with an existing product.  Such partnerships have already been formed and 2011 may be the year when they turn into fully-fledged acquisitions.

Here but we were right on the money, with the BIC acquisition of Angstrom Power being the prime example.  BIC, a large multinational, had been working in the area for years but did not have products commercially available.  Angstrom Power, a small innovative company with strong IP, was in need of a large cash infusion.  Marriage made in fuel cell heaven!

5.  Rare Earth Restrictions as an Obstacle to Fuel Cell Adoption

I have to say that we got this one wrong.  We said that as a result of price hikes, and increased demand flow for REMs, SOFC development could be increasingly constrained over 2011, until the full impacts of the hypersensitive REMs markets are fully understood.


6.  UAVs as a Key Market for Fuel Cells

The final prediction we made for the fuel cell and hydrogen industry in 2011 was the continued deployment of tactical fuel cell-powered unmanned aerial vehicles (UAVs), and the move to large-scale adoption and refinement for military use.  Military agencies around the world will continue to allocate funding and resources to the development of this market for portable fuel cells.

We sort of got this right, but really we were about 18 months too soon.  2011 did the see the U.S. military coming out very strongly in support of the further development of fuel cell technology for multiple applications, including UAVs, but deployment was limited.

So for our final prediction we were on the right track, but not quite there.  Now it’s 2012 and of course we are publishing another ten trends – and yes we will critically review these come 2013.


Energy Storage on the Grid Forecast: North America

— January 24, 2012

Last week, my colleagues Bob Gohn, John Gartner and Kerry-Ann Adamson hosted a webinar on “The Year Ahead in Cleantech: Top Trends for 2012.”.  There were several good questions from the audience in that webinar, one of which specifically asked about the energy storage for the grid forecasts for the North American market.  I’d like to address this question in this blog post. 

Pike Research expects the Smart Energy market to reach nearly $300 billion in revenue in the next year. This includes our entire Smart Energy practice, which comprises a large number of technologies and markets. 

This diversity is reflected in energy storage for the grid, or ESG.  This area alone includes five technologies and five separate applications.  Overall, this market is expected to reach $1.7 billion in revenue in 2012. 

More specifically, North America will be a strong market for a number of ESG technologies.   The region currently has the most activity in the ESG sector as far as the diversity of technologies is concerned.   This factor, paired with the large number of local vendors (and locally held intellectual property in innovative technologies) and the diversity in the supply chain found in the United States, gives North America an advantage over other regions.   

Although the North American market will be lucrative, mechanical technologies will dominate most of the market share, followed by a nearly even split between the battery technologies.   In the case of compressed air energy storage, the United States has the innovation base and willing project integrators.   In the case of lithium ion and flow batteries, the country has a significant number of “next‑generation” developers.   

This expertise should serve the market well throughout the forecast period.   Now, whether the sodium-sulfur (NaS) battery portion of the market will end up being served by NGK Insulators, another NaS battery vendor, or another technology altogether remains to be seen. 


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