Navigant Research Blog

Electric Scooter Sharing Programs Improving Mobility in Major Cities

— February 24, 2016

e-bike, settingThe iconic city of Paris, France will be implementing an electric scooter (e-scooter) sharing program in an effort to reduce the heavy traffic congestion and air pollution plaguing the city. Slated to begin in the summer of 2016, the rental program will consist of around 1,000 e-scooters from the German manufacturer GOVECS and will be managed by EV rental firm Cityscoot. The e-scooters have a top speed of 28 mph and an electric range of 65 miles. An interesting feature on the Cityscoot scooters is a keyless ignition; subscribers receive a text message with a code on their smartphone that unlocks the e-scooter.

Cities Looking For Alternatives

Paris is hoping that offering alternatives to personal vehicle use will result in fewer incidents similar to last summer, in which driving bans had to be instituted and pollution levels in the city of lights briefly surpassed those of Shanghai. Many other city governments in Europe are also looking for ways to improve mobility in their cities, as Barcelona, Spain was the first to introduce an e-scooter sharing program back in 2013. Should the Paris project prove successful, London, England is expected to be the next target for Cityscoot.

The trend is not limited to Europe, however. Slowly but surely e-scooters are becoming more popular in highly populated U.S. cities. Scoot Networks is a smartphone-activated e-scooter sharing company located in San Francisco, California. The company has been expanding its supply quickly due to high demand and now has close to 400 e-scooters for use in the Bay Area at over 35 locations. Each scooter has an electric range of 25 miles and a top speed of 30 mph.

According to Navigant Research, the global market for e-scooters is expected to grow from about 4.1 million annual unit sales to just under 4.5 million by 2024. If e-scooter sharing programs can prove to be successful in early adopter cities such as Barcelona, Paris, and San Francisco, other major cities are likely to follow suit and the market could grow more quickly than expected.

E-Scooter Sales by Region, China and Rest of World: 2015-2024

Ryan Scooter Blog

 (Source: Navigant Research)


Utility Programs May Be Doing More than We Give Them Credit For

— February 24, 2016

light bulbsMany utilities run programs that incentivize their customers to buy increasingly efficient devices, with the ultimate goal of making these efficient devices the new normal. These programs are often accompanied by marketing campaigns to educate the public about the new technology and encourage people to adopt it. The long-term strategy is that this combination of incentives and messaging makes customers more comfortable with new technology, eventually leading them to purchase it regardless of whether or not it is still being incentivized by the utility. Making this change to the norm is called market transformation.

The accounting that goes into determining how much savings utilities can claim for this market transformation process is tricky. Let’s use lightbulbs as an example. Utilities are supposed to be able to claim credit for purchases of efficient lightbulbs that their programs are responsible for influencing. While it’s easy to count how many lightbulbs the program incentivizes each year, calculating how many efficient lightbulb purchases the program influenced is not that simple.

Determining Influence

First off, there are people who bought incentivized lightbulbs but who would have still bought the more efficient lightbulbs even if the program didn’t exist. These customers are known as free riders and shouldn’t be counted; the number of free riders in a program is often estimated and subtracted from program sales.

There are also people who may have received one efficient lightbulb in a kit and decided to purchase a few more without getting the incentivized price. These extra purchases are called program participant spillover. Beyond that, there are people who learn about the benefits of the new technology—from program advertising, retailers stocking more of the efficient technology on their shelves, and price reductions from increased sales volumes—and purchase it without the incentivized price; this is called non-participant spillover. “Market effects” is the term used to describe these spillover purchases and others that aren’t counted because they are very difficult to estimate; however, the utility should get credit for influencing these purchases.

Navigant’s Market Transformation Model endeavors to measure the full impact of utility programs by forecasting what would have happened in the market without the program and comparing this to actual market activity. The Market Model has been used to estimate the market effects of lighting programs in both the residential and commercial sectors. In Michigan, the model was able to show that utility programs were making a larger impact on the market than just the number of lightbulbs being incentivized. By correctly attributing market effects beyond the sales incentivized by programs, we can give utilities the credit they deserve and better support them in spurring the shift to more efficient lightbulbs and other devices.


Mexico’s Power Market Moves Ahead

— February 22, 2016

GeneratorOn January 26, for the first time in Mexico’s history, electricity could start being sold between private parties without the state acting as an intermediary. This is the end result of 3 years of legislative and regulatory work that included a constitutional reform in December 2013 that allowed private enterprises into the country’s energy market (both oil & gas and power).

Mexico’s liberalized market, managed by a new independent entity called CENACE, consists of a short-term wholesale electricity market and a Clean Energy Certificate (CEL) market. A CEL is an electricity generation credit that certifies that electricity was produced using clean energy sources such as wind, solar, biomass, geothermal, or others. CELs can be bought by large consumers and residential suppliers to prove that a percentage of their electricity comes from clean sources. Under this new market model, end users are divided between so-called qualified and basic consumers. Qualified consumers are those with aggregated demand over a set limit (3 MW for 2016, 2 MW for 2017, and 1 MW thereafter). This qualified consumer market will be unregulated, with prices and delivery terms to be negotiated between parties.

Users with lower demand fall under the regulated market. In this case, pricing and delivery terms offered by a supplier will be overseen by Mexico’s Energy Regulatory Commission. Most users in this category receive subsidized electricity prices and are therefore unlikely to leave CFE, Mexico’s state-owned utility. However, interestingly enough, some commercial users with small loads and residential users consuming more than 500 kWh per month have to pay the highest electricity prices in the country. In theory, this could benefit with new electricity retailers entering the market or lead to the creation of consumer cooperatives that enter the unregulated market as a single entity.

Too Early to Call

It is still too early to say if the market will be a success. The price at the Baja California node (the first to be traded) averaged MXN 354.69 ($19.21) per MWh on the first day of operation—not bad for a node on an isolated grid. In addition, CFE is tendering purchase agreements for 6.3 CELs with an ambitious (but I believe achievable) ceiling price of $70 per MWh ($23.4 for the certificate and $46.6 for the electricity). Technical bids were presented for more than 15 times the capacity of electricity and CELs in the solicitation, totaling 102 TWh and 109 million CELs.

Nevertheless, there are issues to be ironed out. At the end of October 2015, there was only one supplier registered for both the wholesale and regulated market and, not surprisingly, it was CFE. At the moment, Mexico lacks the soft infrastructure needed to successfully run a market. Mexico does not have experienced power traders, few in the country understand electricity consumption patterns, price discovery is done without any historical reference, and contracts have yet to be optimized or tested in court. In the generation side, the new CEL market has to prove that is strong enough to clean up the country’s energy mix.


Solar Customers in Nevada Compensate for Changes in Net Metering with Storage

— February 22, 2016

clean energy backgroundThe Nevada Public Utilities Commission’s (PUC’s) recent decision to dramatically alter the net metering policy for rooftop solar customers has created an uproar and cast doubt on the state’s solar future. The fight began in December of last year when the PUC voted to not only increase the fixed charge to NV Energy customers who own rooftop solar from $12.75 per month to $38.51 per month in gradual increases over the next 4 years, but also decrease the credit solar that customers receive for the excess energy they send back to the grid from $0.091/kWh to $0.026/kWh. However, perhaps the most controversial part of the decision is its retroactive effect on nearly 18,000 existing rooftop solar customers. The new pricing took effect on January 1 of this year.

Regulators argue the new pricing scheme makes solar customers pay their fair share for use of NV Energy’s grid. But the new pricing could be a deal breaker for most solar customers. According to solar companies, the pricing changes could erase all the savings from going solar over the next couple of years. That prospect has spurred a group of solar customers to file a class action lawsuit against NV Energy, seeking payment for being misled into purchasing solar systems “that do not provide the promised rebates, discounts, and rates.”

Operations Shutting Down

Solar companies say the new pricing will effectively kill Nevada’s rooftop solar market. Several companies have already been forced to shut down operations in Nevada, including Sunrun, Vivint, and the largest solar installer in the United States, SolarCity. In fact, SolarCity has begun laying off 550 employees and closing the doors of a new training center. Due to this backlash, the PUC released a draft order saying it will reconsider “grandfathering” in existing solar customers to protect their investments, but there is no mention of reconsidering the net metering policy overall.

Despite the seemingly dismal future for rooftop solar in Nevada, existing solar customers still have options. Naturally, higher fixed charges and lower net metering tariffs can incentivize existing solar consumers to use as much of their self-generated power as possible, as opposed to selling the excess power back to the grid. This is where solar plus storage comes into play. Integrating solar panels and energy storage allows customers to generate energy during the day and store that energy to use at a time when the consumer would otherwise be paying a retail electricity rate. Products like the Tesla Powerwall can change the equation for customers, and many anticipate that these types of technologies will forever change the energy industry.

Instead of harshly fighting trends and upsetting customers, smart utilities and PUCs must find a balance and be more willing to embrace new technologies and the reality that customers now have more energy choices than before.


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