Navigant Research Blog

Tesla Test-Drive Controversy Misses the Big Picture

— February 25, 2013

The past few weeks have seen a Wimbledon-worthy back and forth between EV advocates and detractors as they discussed the fairness of a disastrous road trip in a battery-powered Tesla Model S that was written about in the New York Times.  The dispute centers on the writer’s account, his charging behavior during the truncated journey, and the protestations of Tesla and angry EV enthusiasts that he should have taken more care in reaching his destination without depleting the batteries.  The Times’ public editor followed with a rather lame examination of the contretemps that did little to settle the basic dispute.  This whole debate, though, ignores a much larger point about Tesla’s product strategy.

As Chelsea Sexton astutely pointed out on, the idea of a road trip up and down the East Coast in the dead of winter that solely relies on two fast Tesla Supercharger stations unnecessarily stretches the vehicle’s capabilities.  Most EV owners would know better than to even attempt the journey.  But the larger question is: why would Tesla want to limit drivers of its luxury vehicle to only a few charging spots when hundreds of easily accessible public charging stations are available?

Please Compromise

The Model S includes a proprietary cable for connecting with the Supercharger network.  Tesla’s stations have faster charge rates (90 kW) than the industry standard rate of 50 kW for fast DC charging, which, as the company points out, provides an exclusive benefit to Tesla drivers.

However, all along the eastern seaboard are hundreds of charging stations that feature the industry standard SAE J1772 plug.  Tesla requires that its customer pay $95 for an adapter to take advantage of this EV infrastructure, which personally I would want included if I’m paying $90,000 for a car.  There was no mention of the Times reviewer having this adapter in his test car, which can provide approximately 20 miles of range in an hour of charging.

The route taken along I-95 during the road trip also includes two fast DC charging stations using the CHAdeMO connector, used by the Nissan LEAF and Mitsubishi i (many of the more than 130 CHAdeMO chargers now in the United States were paid for by taxpayers as part of the DOE’s EV Project).  While these fast chargers are slower than Tesla’s Supercharger, they can provide about 150 miles of range in an hour, which is fast enough for most any EV road trip.  Tesla has committed to installing 100 of its Superchargers across the United States during the next few years, many of which will be thousands of miles from the majority of Model S owners.

Tesla announced recently that it will soon offer a CHAdeMO adapter for customers in Japan, and will eventually bring it to the United States, but when I recently spoke with the company, they would not commit to a date.  By the end of this year we’ll also likely see dozens of fast DC chargers scattered across the United States that use the SAE’s combo connector, which combines the slower J1772 technology with fast DC charging capability – but Tesla Model S owners won’t  be able to power up at these locations, either.

Tesla Motors’ slogan is “Zero Compromises,” but the company’s strategy of exclusivity for charging betrays that ethos.  Model S owners would be better served by greater charging flexibility than by the company’s spat with the New York Times.


In the Gas Age, Rays of Hope for Nuclear Power

— February 24, 2013

Duke Energy’s decision to close the Crystal River nuclear reactor, following on the heels of announced closures for Dominion Energy Resources’ Kewaunee nuclear reactor in Wisconsin and Exelon’s Oyster Creek plant in New Jersey, raises some intriguing questions about efforts to combat climate change.  The list of nuclear shutdowns is likely to grow.

This shift away from nuclear in the United States  is seen by many as a boon to natural gas.  Although natural gas has been touted as a “bridging fuel” to a renewable energy future, and as a flexible resource capable of filling in the gaps when the sun doesn’t shine and the wind doesn’t blow, scientists are discovering that a growing reliance upon natural gas could actually be accelerating global climate change.

How? While burning natural gas is cleaner than coal, leaks of methane – which is more than 20 times more threatening to our climate than carbon dioxide – are far more prevalent than previously realized.  And while fracking has been viewed as a godsend, giving rise to a revived U.S. petroleum industry, there is a growing movement to tighten regulations of the controversial shale gas extraction method due to water quality concerns.  If leakage rates into the atmosphere stick to about 3%, the net benefit of natural gas to the climate is a net positive.  Anything higher and the reverse is true; recent samplings suggest in Utah suggested leakage of 9%.  Even among utilities, there is growing concern about over reliance upon natural gas.

Japan Reverses Course

The challenges facing nuclear power mirror those of increasing renewable sources.  They include high up-front capital costs and reliance upon government subsidies. Once externalities are factored in, I believe wind power will be the ultimate winner among carbon free power sources. Evidence supporting this prediction comes from markets such as Australia, where wind power is now cheaper than natural gas or coal, thanks to a recently imposed carbon tax.

Despite the gloom and doom facing the nuclear industry, a ray of hope has emerged for this purported solution to climate change in, of all places, Japan, site of the world’s greatest nuclear mishap.  Almost 2 years after the triple meltdown at Fukushima Daiichi power plant, Japan‘s government is reversing course.  Japan appeared to have ended its heavy commitment to nuclear power when the previous center-left government pledged last year to phase out all of the country’s 50 working reactors by 2040.  The return to office of the conservative government under Shinzo Abe is giving the nuclear industry a second chance.


DOE Promotes Workplace EV Charging

— February 24, 2013

U.S. Energy Secretary Stephen Chu announced a new EV charging initiative last month at the Washington Auto Show.  This was the Secretary’s last new program launch before he announced he would be leaving the DOE.  The DOE’s “Workplace Charging Challenge” is intended to encourage U.S. employers to install EV charging for their employees.  The goal is to increase the number of employers with workplace charging by tenfold within 5 years.  Program participants make a commitment to “develop a plan for workplace charging in at least one major company location” – 13 companies have signed up so far.

The focus on workplace charging highlights the general consensus that PEV drivers will charge up most often at home, but that the workplace is the second most likely place for charging.  This is somewhat in contrast to the heavy focus placed on public charging spots by the media, some EV charging companies, and indeed the DOE itself.  The DOE’s two biggest EV charging initiatives, the EV Project and ChargePoint America, together lead to over 4,000 charging units being placed into publicly accessible networks.  In his remarks, Secretary Chu noted that many potential PEV customers live in apartments or condos and would rely more on workplace charging since they would not have a dedicated garage unit.

Pull, Not Push 

The workplace charging market faces some of the same challenges that the public charging market does.  One question is: how much should the employer actually charge for the use of the units?  For now many workplace owners will do what the public station owners have done and not charge anything, viewing the charging units as a way to attract and retain employees.  Longer term, they may simply bill employees as they would for parking. This issue is less daunting for the workplace sector than for public charging simply because the workplace units will not be intended as a revenue generator; however, this lack of potential revenue is also why employers need to be encouraged to install EV charging stations, which will cost thousands of dollars. Another potential problem will come as the fleet of employee vehicles grows. Businesses will then have to manage the energy use and, in particular, the potential for incurring demand charges when electricity use spikes.

The DOE workplace charging initiative also reflects the new fiscal environment for the DOE (and indeed all government agencies).  The DOE is offering no specific financial incentives for workplace installation through this program, although employers can take advantage of federal tax breaks for installing EVSE that were reinstated for 2012 and 2013 with the fiscal cliff legislation passed at the end of 2012.  Compare this to the $130 million that the DOE provided in 2009 and 2010 for the EV Project and ChargePoint America programs, via the stimulus package.  Given the political focus on reigning in government deficits, we are not likely to see such an ambitious effort, with a matching price tag, in the second Obama Administration, but we will see smaller-scale funding grants – for example, through the Clean Cities program.  Overall, though, the U.S. EV charging market will be moving forward much more on its own now, with companies and technologies rising or falling based much more on the market pull and not government push.

Workplace EVSE Unit Sales, United States: 2013-2020

(Source: Pike Research)


Advanced Energy Drives Economic Growth

— February 24, 2013

President Obama’s shout-outs to climate change and clean energy policy in both his inauguration and State of the Union speeches have generated a lot of buzz in climate and clean energy.  A new Pike Research report, commissioned by the Advanced Energy Economy Institute (AAEI), was published the week before the inauguration to quantify the “advanced energy” market, which is significantly broader than the usual definitions of “clean energy.”  The advanced energy concept could be the most realistic way of capturing the Obama Administration’s (as yet undefined) energy policy.

AEEI is a nonprofit educational and charitable organization affiliated with Advanced Energy Economy (AEE), a national association of business leaders with the stated goal of making the global energy system more secure, clean, and affordable.  The organizations define advanced energy as a broad range of products and services that constitute the best available commercial technologies for meeting energy needs today and tomorrow.  The report, “Economic Impacts of Advanced Energy” draws upon more than 60 previously published Pike Research studies, as well as information gathered by Navigant’s Energy Practice, to provide an assessment of advanced energy markets measured by revenue generated by the individual product categories, globally and within the United States. The following excerpt spells it out:

“Advanced energy is not static but dynamic, as innovation and competition produce better energy technologies, products and services over time.  Today, electric and plug-in hybrid cars, natural gas-fueled trucks, high-performance buildings, energy-saving industrial processes, high-capacity wind turbines, on-site solar power, and advanced nuclear power plants are all examples of advanced energy, as they diversify energy sources, reduce health and environmental costs to communities, and use energy resources more productively.  While advanced energy represents an opportunity for U.S. companies and workers, not only to serve the domestic market but to export goods and services into the global energy market, this opportunity has never been quantified in one place.”

AEE Chart 2

Key findings from the report include:

  • In 2011, global revenue from the seven advanced energy segments reached nearly $1.12 trillion.
  • The U.S. advanced energy market reached $132.0 billion in 2011, representing nearly 12% of the global market. The domestic advanced energy market is expected to grow to an estimated $157.0 billion in 2012, with the U.S. share of the global market expected to rise to 15%.
  • The U.S. advanced energy industry contributed $13.9 billion in federal tax revenue in 2011, plus another $6.7 billion in state and local tax revenue, for a total tax contribution of $20.6 billion.
  • Globally, advanced energy is larger, by revenue, than pharmaceutical manufacturing, and roughly 2/3 the size of telecommunications.
  • In the U.S., advanced energy is larger than the trucking industry that distributes goods throughout the country and more than twice the size of the commercial casino industry.

The benefit of AEEI’s big-tent approach to advanced energy is that it brings together a critical mass of interests that should be able to generate momentum that will translate into policies that could reduce carbon emissions while expanding the economy.  By the same token, however, the centrist approach, because of its inclusion of nuclear and natural gas in particular, will ruffle some feathers along the way.  These are not easy decisions for utilities, grid operators, and ratepayers – let alone policymakers – but the new report at least provides some real-world baselines and defines one possible path forward.


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