Navigant Research Blog

Forklifts Forecast Robust Future for Fuel Cells

— December 18, 2012

My first blog post when I joined Pike Research 2 years ago was about fuel cell forklifts.   Not the sexiest of topics, I know, but over the past 12 months there’s been a major uptick of interest in alternatives to conventional lead-acid batteries, which include not only fuel cells but also advanced batteries.  Lead-acid batteries are well entrenched in the forklift market and provide operators with zero emissions operations at low cost.  However, they have a number of drawbacks, the most notable of which is the length of time needed for recharging and cool down.  This process can take 16 hours and requires significant space set aside for the batteries to sit during this time.  Many forklift operators have been eagerly waiting for a viable alternative to appear for years.  From the technology provider perspective, fuel cell advocates have looked to this market as an early win for fuel cells, while advanced battery and fast charging companies see it as an opportunity to expand into new markets.  So, where are we on displacing the lead-acid battery as king of electric forklifts?

The good news is, shipments of fuel cell forklifts have grown over the past 2 years, nearly doubling since 2010, albeit from a very low baseline.  Fuel cells now capture around 1% of annual electric forklift sales in the United States.  That’s respectable for a new technology that’s still in its first few years of commercial availability.  Some of this growth, however, was funded by the 2009 American Recovery and Revinvestment Act, and it appears that demand has slowed in 2012.

Now, for the bad news. The fuel cell forklift business is still far too dependent on a single supplier, Plug Power.  I remain concerned, as I was 2 years ago, that this poses a risk to the application’s long-term success. We also have not yet seen success in forklifts lead to the same type of fuel cells transferring to similar applications, such as ground support equipment for aircraft.  That said, fuel cells have proven that they can provide a good return on investment (even at a cost of 2 to 3 times that of the batteries they replace) for very busy warehouse operations.  In its 3Q 2012 financial results, Plug Power reported  that its “new product platforms have a material cost that is now 60% of the product’s price” – a positive trend that must continue for fuel cells to be more competitive for forklifts and for other industrial applications.

As for lithium ion batteries, this technology faces some critical challenges in adapting to forklift vehicles, which have been designed and built around heavy lead-acid batteries.  Nevertheless, the promise of this alternative to offer longer runtime and cycle life, as well as opportunity charging, will continue to attract both battery and charging equipment players to this market.  Pike Research plans to explore the opportunities and challenges for advanced technologies in the materials handling market further in our Smart Transportation practice in 2013.  I welcome conversations with folks working on forklifts and their batteries as we explore this sector further.


In London, EV Charging Loses the Wires

— December 14, 2012

Sometime in the next few weeks the most significant trial to date of wireless EV charging will begin in London.  Mobile software and chipmaker Qualcomm, which acquired New Zealand-based HaloIPT, a developer of wireless EV charging technology, in November, 2011, will be piloting wireless-enabled vehicles from Renault and racecar designer Delta Motorsport (maker of the E4 coupe EV) in various parts of the British capital.  I interviewed Qualcomm’s London-based senior director for strategic marketing, Joe Barrett, for Pike Research’s just-published research brief, “Wireless Charging Systems for Electric Vehicles.”

Building on its long experience in microchips and software for mobile devices, Qualcomm has developed a customized architecture for its wireless EV charging system based on coils, made of a ferrite material that has very low resistance to magnetic fields, arranged in a double-D shape and embedded in a rectangular charging pad.  This technology, Barrett claims, allows for higher degrees of misalignment between transmitter and receiver than other systems under development.

Qualcomm is also pushing a more ambitious business case for the technology.  The standard line of companies developing wireless EV charging is that it will spread because it’s more convenient: drivers would rather simply pull the car over a charging pad, and have it connect automatically, than have to get out and plug in a charge cord.  That makes sense, as far it goes – many people in this fledgling sector compare it to garage door openers, a simple convenience that fuels a sizable global market – Barrett offers a rationale for the technology that goes beyond convenience alone.

“The growth of EVs has been slow because of two things,” Barrett told me.  “No. 1 is always range anxiety.  But the real reason is cost: an EV is a lot more expensive than a comparable conventional vehicle, by $15,000 to $20,000. That’s a barrier. Wireless charging has the potential to address that.”

Briefly, Barrett’s argument is that EV charging must shift from once a day, usually overnight, to many brief top-offs throughout the day.  That will allow automakers to install smaller, and thus cheaper, batteries.  The battery accounts for most of the price premium for an EV over a conventional car.  Seeding big cities, like London, with many wireless EV charging stations (which can be installed more easily and less expensively than conventional, wired charging facilities) would enable that shift.

Seen in this way, wireless EV charging is no longer simply a timesaving device; it’s a potential enabler for the entire EV market.  That’s an intriguing notion, if still some years away.  New forms of infrastructure can spread very rapidly, given sufficient demand – think of how fast WiFi hotspots sprang up – and big cities have a definite interest in enabling new forms of clean transportation, particular in Europe.  Assuming the London trial is successful, Qualcomm plans to have systems available, most likely as a dealer option, by 2015 at the latest.


Policy Support Signals Positive Growth for Advanced Biofuels

— December 14, 2012

This has been a tough year for the U.S. biofuels industry: drought curtailed corn starch ethanol production and investment in the industry shrank to its lowest level in nearly a decade.  Headed into 2013, though, industry momentum appears to be regaining steam.  Led by advanced biofuels, the potential for expanding biofuels production has improved dramatically as Washington offers clarity on key policy issues.

Last week, in a vote on partisan lines, the U.S. Senate extended support for the military’s efforts to scale up advanced biofuels production.  As reported in Biofuels Digest, it approved an amendment offered by Senator Kay Hagan of North Carolina to repeal a section of the annual Defense appropriations bill that would have prohibited “the Secretary of Defense or any other official from the Department of Defense (DoD) from entering into a contract to plan, design, refurbish, or construct a biofuels refinery or any other facility or infrastructure used to refine biofuels unless such planning, design, refurbishment, or construction is specifically authorized by law.”

Over the past year, the U.S. military has emerged as a key torchbearer leading the commercialization of advanced biofuels.  Spearheaded by the Navy, which signed a Memorandum of Understanding (MOU) with the U.S. Department of Agriculture (USDA) and Department of Energy (DOE) to develop cost-competitive advanced biofuels, the DoD has been a lone bright spot for an industry that has suffered from press blowback and investor retrenchment in recent years.

Only $84 Billion to Go

Prior to the Hagan amendment, the Senate approved another amendment, offered by Senator Mark Udall of Colorado, to repeal section 313 of the annual Defense appropriations bill.  Offered by Republican Senator James Inhofe of Oklahoma, Section 313 would have prohibited the DoD from procuring alternative fuels if they cost more than their conventional counterparts.  The section was introduced in response to the U.S. Navy’s highly criticized purchase of advanced biofuels from firms like Solazyme and Dynamic Fuels for its “Great Green Fleet” exercises off the coast of Hawaii, at an estimated price-tag of $15 per gallon.

These bills are expected to facilitate public-private partnerships and funnel much-needed capital to support advanced biorefinery construction within the United States.  In our Industrial Biorefineries report, Pike Research forecasts that at least 13 billion gallons of advanced biorefinery production capacity will come online over the next decade in the United States.  Although that falls short of the 21 billion gallons of advanced biofuels carved out under the EPA’s Renewable Fuel Standard (RFS), more than $60 billion will be invested over that same period.

With the minimum cost of scale-up to meet RFS’s advanced biofuel production mandate estimated at $84 billion, the industry still has significant ground to make up.  Although continued federal support will help assuage investor fears, uncertainties around feedstock supply and production profitability persist, translating into high levels of risk for investors.

Advanced biofuels, which address these concerns at least in part, have enjoyed a rising tide of policy support in recent months from Washington.  In August, Congress allocated $170 million to support the development of military biofuels and other defense initiatives, voted to extend key tax credits for advanced biofuel producers, and granted algae producers tax credit parity with other feedstock pathways.  Meanwhile, the recent commissioning of first-of-kind facilities from advanced biofuel producers KiOR and INEOS Bio are strong indicators of a maturing cellulosic biofuels industry.


Canada Takes EV Charging Station Plunge

— December 14, 2012

Canada has lagged behind the United States as a plug-in vehicle (PEV) market, both in terms of PEV availability and sales.  However, as reported in the Pike Research Electric Vehicle Geographic Forecasts report, all Canadian provinces are expected to have some PEV availability by 2013, and the country will experience a growth spurt in PEV sales over the next few years.  Pike Research projects that most sales of PEVs will occur in Canada’s largest cities, with Toronto, Montreal, and Vancouver anticipated to have the highest concentration of PEVs.  (Tesla made a splash by recently opening its first Canadian dealership in Yorkdale, Toronto.)

In anticipation of increased PEV sales, Quebec, Ontario, and British Columbia are each funding deployments of electric vehicle charging stations:

Quebec’s Circuit Electrique is the first to get EV charging equipment out and ready, with this program sponsored by Hydro Quebec.  The Circuit Electrique will feature a network of 120 public charging stations; as of December 2012, over 100 were in operation.  Drivers pay just $2.50 per charge, no matter how long the car stays, although the program’s operators anticipate that PEVs will not park at the stations for too long, something that has been a problem with some public charging spots in the United States.  Drivers access the units with a prepaid card.  The charging stations use Aerovironment hardware.  For now, the stations are concentrated in greater Montreal and Quebec City.

Earlier this year, the British Columbia government launched an extremely ambitious program to support deployment of 600 public EV charging stations by April 2013.  The province will provide a rebate of up to C$4,000 (US$4,036) for570 Level 2 chargers and a C$25,000 (US$25,230) rebate for up to 30 DC chargers.  The stations must be available for public or fleet use and networked.   The province expects to collect data from station usage, much as the DOE has from the Ecotality and Coulomb chargers funded by U.S. stimulus money.  Installation is to be completed by March 31, 2013.

The Ontario government is providing C$80 million (US$81 million) for public EV charging deployment.   The government is awarding funding based on an RFP process.   In addition, the non-profit Plug’nDrive Ontario has partnered with Hydro Quebec to support EVSE buildout across the two provinces.

In some ways, Canada is now going through the same phase of the EV charging equipment market that the U.S. did a few years ago, when the DOE launched its initial EV charging programs.  While this helps ensure the availability of public charging to support the emerging PEV market, it also has a distorting effect on the EV charging market, as manufacturers end up focusing on the government-fed demand, thus delaying the task of finding a true business case for public charging.  The United States is exiting this phase now, and equipment manufacturers are being hit with the cold reality that companies are much less likely to deploy a station for public use when they have to pay full price.  Companies in Canada should take heed and make sure they look beyond this temporary market bump.


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