Navigant Research Blog

Hawaii Becoming an EV Paradise

— September 25, 2013

Sales of electric vehicles (EVs) in California are by far the highest in the United States, but the state with the greatest density of EVs sold is further west.  According to Navigant Research’s recently released report Electric Vehicle Geographic Forecasts, by 2022, 10% of all new vehicle sales in Hawaii will be plug-in electric vehicles (PEVs).  Most of the top states that will be selling EVs in 2022 (see the chart below) are known for being progressive, environmentally friendly, and tech savvy states, such as Oregon, Washington, and Vermont.  West Virginia, which is one of the top consumers of coal in the country, is an anomaly, thanks to a generous $3,500 state incentive for buying a PEV.  This illustrates the effectiveness of financial incentives in moving drivers from gas to electricity – even if that electricity may not come from a renewable resource.

PEV Sales as a Percentage of Light Duty Vehicle Sales, Top 25 States: 2022


(Source: Navigant Research)

In 2013, Hawaii will barely edge out California in PEVs as a percentage of new vehicles sold (2.7% to 2.6% ), according to the report.  One major factor is that Hawaiians pay more for gasoline than anywhere else in the United States, with prices currently ranging between $4.25 and $5.00 a gallon.

Hawaii will be the leader in PEVs sold thanks to strong support through the state government, local EV associations, and the state’s power provider, the Hawaiian Electric Company.  As outlined in a new report from Maui College and Berkeley Law at the University of California, Hawaii has done many things right, including offering PEV-specific electricity pricing, establishing a law to enable residents of multi-unit dwellings to install charging stations, and building a foundation of charging infrastructure.

But like every state, Hawaii still faces challenges, including rules that discourage new installations of rooftop solar and the uneven distribution of charging equipment across the islands.  Hawaii has benefited from EV charging infrastructure that was part of a grant from the U.S. Department of Energy.  However, some of its charging stations are in flux, as they were originally installed by the now defunct Better Place and are being taken over by OpConnect, which will expand the number of charging stations.

Hawaii could be adding even more PEVs if there were greater support from car dealers and rental agencies.  Enterprise has EVs for rent in Hawaii, but it is more of an afterthought than a strategic business initiative.  Enterprise in Honolulu has just two Nissan LEAFs, while there is only one available in Maui (which I drove during a recent 2-day visit).  You can’t reserve the LEAF on Maui in advance, and Enterprise doesn’t have an EV-specific rental rate.

More than 100 Nissan LEAFs have been sold through the Nissan dealership on Maui, which is very impressive considering Maui has about half of the population of Boulder County, Colorado, where I live.  But the Nissan dealer on Hawaii’s big island won’t sell the LEAF, forcing residents there to pay additional fees to purchase the vehicle from another island.  The dealer told LEAF owner Doug Teeple that he would not sell EVs because he does not believe in climate change.


U.K. Smart Meter Deal Gives L+G Smart Meter Lead

— September 25, 2013

Meter manufacturer Landis+Gyr (L+G) struck gold last week with a mammoth deal valued at $956 million for the delivery of more than 10 million smart meters to British Gas (BG) during the next 6 years.  The nearly $1 billion contract provides L+G with a well-defined runway for its business and pressures competing meter manufacturers to come up with similar transactions in the deregulated energy market in the United Kingdom.

Under the terms of the deal, L+G will be the majority supplier of smart meters to BG, the leading energy supplier in the United Kingdom.  BG plans to install a total of 16 million smart meters in customers’ homes by 2020,  the deadline year imposed by the U.K. government for all homes throughout Great Britain to have smart meters installed.

The Competition

With the announcement of this deal, both companies will be adding employees.  L+G, which is owned by Toshiba Group, expects to double its U.K. workforce to 1,200, as well as expand its manufacturing facilities.  For its part, BG will hire 500 additional workers to install the meters and provide energy efficiency advice to customers.

British Gas has installed more than 1 million smart meters in homes so far.  It leads its rival energy suppliers as it tries to solidify its position as an innovator ahead of the massive rollout of smart meters set to begin in 2015.  The strategy seems to be working, as suppliers I’ve talked to say BG has seen a reduction in customer churn because of the new meters, which tend to increase customer engagement.  Also, the company estimates customers save about 5% on annual energy bills after the new meters are installed.

The deal between BG and L+G was not a big surprise; the companies have been working together on smart metering for a couple of years.  Competitors like Itron, Elster, and Sensus will have to continue looking beyond BG for smart metering deals in the United Kingdom.  Energy suppliers like E.ON UK, npower, ScottishPower, and SSE will be the likely targets for these competing meter makers hoping to win a share of a market that will eventually total some 50 million smart meters by the end of 2020.


EPA Rules Open New Era For Clean Energy in U.S.

— September 24, 2013

The new rules on carbon emissions from power plants proposed last week by the Environmental Protection Agency mark an important milestone for the closing of the coal era in United States history, and potentially for the opening of a new era of clean, distributed power generation – but they really only reinforce broader trends that were already underway.

Acting on the vows taken by President Obama in his second inaugural address and his June 25 speech on climate change, the EPA has said it will restrict new coal-fired units to a limit of 1,100 pounds of carbon dioxide emitted per megawatt-hour (MWh), well below current levels of around 1,800 pounds from modern coal plants.  Natural gas-fired turbines at small power plants (under 850 million BTU) would face the same maximum level,while larger gas plants would be limited to 1,000 lbs of CO2 per MWh.  To many, the handwriting on the wall for U.S. coal plants has now become an obituary.

“Today’s historic announcement makes it impossible to build new conventional coal plants,” said the Sierra Club’s Bruce Nilles, in a phone conversation.  Even before today’s announcement, he adds, coal was already in decline: “an advanced coal plant with full pollution controls, scrubbers, a baghouse, and so on, actually can’t compete against wind power and gas-fired generation.”

From All Sides

As an example, Nilles points to the recent announcement by MidAmerican Energy Corp., an Iowa-based producer part owned by investor Warren Buffett, that it will invest $1.9 billion in new wind power capacity, adding up to 1 gigawatt of new wind capacity by 2015.

Operators of coal-fired power plants are caught in a vise of tightening carbon limits, on one side, and competition from low-cost natural gas and falling prices for wind and solar power, on the other.  Dozens of coal plants are likely to be retired in the next 7 years.  That’s not to say that coal is going to shuffle quietly off the energy stage.  There might be fewer coal plants by 2020, but they are likely to be producing more power, according to Vic Svec, senior vice president for investor relations at Peabody Energy, the largest U.S. coal producer:  “Within the U.S. there’s this focus on the fact that there aren’t any new coal plants on horizon, and people see that as the imminent decline of coal use,” Svec told me in a phone briefing.  “What’s lost in this discussion is there is significant additional capacity available in the existing fleet.  Even if you account for 70 GW of plant retirements in the next decade, we could see a one-third increase in coal use from those remaining plants, before we need to build another coal plant.”

For the coal industry, that’s the optimistic view; investors are less sanguine.  In midday trading on the Nasdaq on Friday, Peabody Energy’s share price had dropped more than 3%.


GEI Fuel Cell Plant Marks New Phase for the Industry

— September 24, 2013

GEI Global Energy Corp. (GEI) announced on Monday an agreement with Owl Eco Group to build a 100 MW fuel cell power plant, located in Pennsylvania, amid the Marcellus shale natural gas fields.  Not only would this be the largest fuel cell installation in the world, but also, in terms of revenue, it would represent nearly 45% of global revenue from the fuel cell stationary sector in 2012.

The value of the deal, the companies said, is $470 million, equating $470,000 per 100 kW system, assuming 1,000 100 kW systems.  This 100 MW deal, if installed, represents a step forward not only for GEI but also for the industry as a whole.

Significant challenges remain.  In June, GEI launched a fundraising round to raise $1.5 million to complete a series of field tests of a 50 kW fuel cell “generator.”  It is unclear from the announcement if this new 100 kW base unit system is a scaled up version of the 50 kW X5 generator, which in itself is projected to cost up to $10,000 per 50 kW system, at an unspecified production volume.

A Few Hiccups

Also, the systems that would be deployed in this project are high temperature polymer electrolyte membrane fuel cells (HT PEM FCs).  To date, these have represented a niche market for fuel cells with a limited supply chain.  With BASF recently exiting from the production MEAs, a core component in HT PEM fuel cells, this leaves the supply chain potentially without a large corporate, low risk, component manufacturer.  The volumes of components needed to service this deal are likely to also represent a supply chain bottleneck, as suppliers are likely to be required to increase volumes – assuming that they have access to the finance to undertake this.

What’s more, to date no large-scale deployment of HT PEMs in the stationary fuel cell market has been successful.  In 2012, ClearEdge Power announced a 50 MW HT PEM deal, with systems to be deployed in Gussing, Austria.  Following that announcement, ClearEdge Power stopped all shipments of its 5 kW HT PEM units because, in the words of the company’s CEO, “Mechanically, we needed to think of a better plant. We stopped shipping not because we didn’t have a good product. We wanted to make sure we delighted the customers.”

The program has since resumed with a single 5 kW system installed in August 2012, but the full impact of the hiccup on the HT PEM system development program is still very unclear.


To fulfill this deal GEI will need to undertake some significant steps forward. These are likely to include:

  • Additional fundraising
  • Moving to a third-party contract manufacturing structure or developing in-house manufacturing capacity
  • Accelerated testing of systems
  • Working with the HT PEM supply chain to ensure a reliable supply of high-quality components

GEI CEO K. Joel Berry has shown some calculated bravery in announcing this deal so early on, but the industry and the finance community have had their expectations raised before.  So GEI should expect some very tough questions before this deal is taken as anything more than a non-legally binding long-term goal.


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