Navigant Research Blog

Dockless Systems Creating Better Business Case for E-Bike Sharing

— February 20, 2018

Just as electric bicycle (e-bike) sales in the US have not been as robust as in Europe, e-bikesharing programs have been similarly slow to develop. However, a number of dockless e-bikeshare programs have recently been deployed in the US—removing major costs and user friction points traditionally associated with dock-based bikesharing.

Over the last several years, a combination of urbanization, city policy, and bicycle lane expansions have driven new growth in the global bikesharing industry. As a result, bikeshare companies have been raising enormous sums of money, particularly in Asia. Chinese bikesharing companies Mobike and Ofo have raised over $2 billion so far for their operations.

In comparison to conventional bikesharing, e-bikesharing is much newer and far less widespread—largely due to the higher associated costs and added complexities of recharging e-bikes (which is generally done by fleet teams). However, the business case and user experience for e-bikesharing is improving considerably through the advent of dockless sharing programs that avoid the need for expensive new infrastructure and can be provided without government subsidies (unlike dock-based systems that generally receive public funding). In terms of user costs and convenience, many public bikeshare programs mandate a day pass purchase with a price tag of $7 or more for a single ride and keep the bikes at special docking stations where the bikes must be returned. Conversely, dockless programs charge as low as $1 per half-hour rental and customers have the added convenience of dropping off their bicycle wherever they please when finished.

Major Dockless E-Bike Programs Being Deployed

In 2017, the first dockless e-bike share program was launched in the US from New York-based JUMP Bikes. The company’s program is currently available in San Francisco (roughly 250 e-bikes deployed) and Washington, DC (150 e-bikes), with plans to expand to other cities such as Sacramento, California and Providence, Rhode Island by the end of 2018. In early 2018, the company raised an additional $10 million in funding for its expansion plans (along with an original $7 million investment). JUMP is also partnering with Uber to provide San Francisco residents and visitors with the ability to rent JUMP e-bikes directly from the Uber app.

LimeBike is another dockless bikeshare (and now e-bikeshare). Called Lime-E, the e-bikeshare service is expected to be available in Seattle and Miami in early 2018. At the end of 2017, LimeBike raised an additional $50 million in funding on top of its initial $12 million seed round.

Dock-Based Programs Now at Risk

Dockless e-bikeshare companies are leveraging smartphone technology (which is used to unlock the e-bikes) and existing infrastructure (e.g., public bicycle racks, parking meters, etc.) to replace the expensive new docking infrastructure traditionally required for bikesharing programs. Additionally, improving lithium ion battery technology is resulting in e-bikes that have longer ranges, are lighter, lower in cost, and remarkably similar to traditional bicycles. Together, these trends are directly enabling e-bikes, which are generally more expensive than regular bicycles, to be increasingly used in sharing schemes. Dock-based programs (for any type of bicycle) are now facing a significant threat to their market share unless they can add more docking locations to match the convenience of dockless systems, keep their user fees competitive with dockless programs, and reduce their reliance on government subsidies.


Old McDonald Had a Grid, EIA AEO

— February 15, 2018

The US Energy Information Administration (EIA) released its 2018 Annual Energy Outlook (AEO) on February 6. Several short- and long-term trends warrant highlighting as follows:

  • US net energy exports occur over the projection period to 2050 in most scenarios that are modeled.
  • The US becomes a net energy exporter by 2022 in reference case, due to strong domestic production and relatively flat demand.
  • The fuel mix of energy consumption changes significantly over time, with natural gas and renewables growing while coal, nuclear, and oil decrease.

Energy Consumption by Source (Reference Case) – Quadrillion British Thermal Units

(Source: US Energy Information Administration, Annual Energy Outlook)

GDP Outpaces Energy Consumption

Residential and commercial sectors will likely have increased energy efficiency offsets growth in energy demand in residential and commercial sectors. Energy consumption grows about 0.4% per year on average, while GDP is expected to average 2.0% annual growth to 2050 in the reference case, showing a decoupling between economic expansion and energy use. Lighting displays the largest drop in both sectors due to the increasing penetration of LEDs.

On the residential side, all types of appliances are expected to become more efficient, water heating shows a sizable decrease due to heat pumps, among other reasons, while cooling actually has an increase resulting from a continued population shift to warmer parts of the US, lower heating demand, and increase cooling demand. However, increased adoption of electronic devices contributes to growth in residential use of electricity.

Electricity used for commercial HVAC equipment is likely to drop by more than one-third from 2017 to 2050 in the reference case because of increases in energy efficiency and a continued population shift toward warmer parts of the country in the South and West. Although the US has no federally-mandated commercial building energy code, state and local-level building codes reduce energy used for heating and cooling.

Use of Purchased Electricity per Household (Reference Case) – Thousand Kilowatt-Hour per Household

(Source: US Energy Information Administration, Annual Energy Outlook)

Use of Purchased Electricity per Square Foot of Commercial Floor Space (Reference Case) – Thousand Kilowatt-Hour per Square Foot

(Source: US Energy Information Administration, Annual Energy Outlook)

Natural Gas or Renewables Take the Lead

Most new electricity generation capacity will likely be natural gas or renewables after 2022 (per the reference case), as a result of low natural gas prices, declining renewables technology costs, and supportive policies, mostly at the state level. These findings lineup with Navigant Research’s recent forecasts in its Global DER Deployment Forecast Database report, which expects distributed energy resources capacity additions to outpace centralized generation going forward.

Annual Electricity Generating Capacity Additions and Retirements (Reference Case) – Gigawatts

(Source: US Energy Information Administration, Annual Energy Outlook)

Light duty vehicle fuel economy will likely improve as sales of more fuel-efficient cars grow and as electrified powertrains gain market share, but gasoline vehicles remain the dominant vehicle type through 2050 in the reference case. Combined sales of new EVs, plug-in hybrid EVs, and hybrid vehicles are likely grow in market share from 4% in 2017 to 19% in 2050.

Light Duty Vehicle Sales by Fuel Type – Millions

(Source: US Energy Information Administration, Annual Energy Outlook)

During the press conference where these results were reported, there were audience questions that challenged some of the AEO’s assumptions about renewable energy and energy efficiency growth. Such concerns have also been raised after reading the report as well. The AEO does include a number of high and low cases to try to represent the range of potential outcomes. It is important to consider the AEO as a point of reference, but not take it as gospel. As a professional market research analyst, my goal is for my analysis and forecasts to reflect the general trends in the industry and spark intelligent debate.


The Positive Side of Negative Emissions

— February 15, 2018

In recent years, awareness has grown on the need for CO2 removal to avoid dangerous levels of climate change, and companies are increasingly looking to include negative emissions in corporate climate strategies. As a part of Navigant, Ecofys finds that sufficient scalable and affordable options for negative emissions exist, and that instead of being a burden, they carry many environmental and social co-benefits.

The Need for CO2 Removal

A key element of Paris-consistent scenarios are technologies that enable the removal of CO2 (greenhouse gases [GHG]) from the atmosphere, which need to absorb up to 3 GtCO2 per year as soon as 2030 to meet the “well below 2˚C target.” This is comparable in scale to roughly all of the European Union’s current annual CO2 emissions. The rationale of engaging in CO2 removal (CDR) is threefold:

  1. Even the most ambitious mitigation strategies will see residual emissions in hard-to-abate sectors, such as aviation or agriculture, and in order to reach net-zero emissions around mid-century, compensation with CDR is essential.
  2. The speed at which global emissions are reduced is limited because of inertia in the global energy system, but with CDR this process can be accelerated. An immediate, steep downward trajectory is needed to avoid overshooting climate targets and to avoid more negative emissions later this century—CDR can support such a trajectory.
  3. CDR puts a cap to the cost of emissions reductions, thereby improving the cost-efficiency and feasibility of achieving carbon budgets.

This makes CDR especially relevant for organisations that will play a key role in the transition to a zero-carbon economy, such as energy-intensive industries, agriculture and food companies, and governments. Through studies for the UN Environment Programme and the UK Committee on Climate Change (amongst others), Ecofys, a Navigant company, is at the forefront of developments in this field. The team observed that these projects often carry more benefits than their potential to draw carbon from the atmosphere.

A Worthwhile Investment

Methods for GHG removal are incredibly diverse, and some options are already being deployed at limited scale, while others are facing obstacles or may appear futuristic, such as bioenergy with carbon capture and storage, or the direct capture of carbon from the atmosphere. Given the multiple co-benefits CDR can deliver, some of the more developed methods are frequently referred to as no-regret options and reflect the social, environmental, and financial ROI that may result from their application. Such options are illustrated in the figure below.

Environmental Benefits of CO2 Removal Options

(Source: Ecofys, a Navigant Company)

Looking at opportunities with investment costs <$20/tCO­2, the global potential for these methods is estimated at 4.1 GtCO2/yr in 2030, which indicates that a significant share of the 3 GtCO2/year removal needed by 2030 to meet the well below 2˚C target could be achieved through the discussed methods. The examples provided illustrate that, while beneficial to the environment and people, CDR can make economic sense as well. However, it should be noted that business cases may differ strongly between regions and policy context, meaning that opportunities for negative emissions should be identified on a case-by-case basis—first within the scope of existing business activities and lastly by looking outward for other low-hanging fruits.

Get in touch with one of our experts to discover the potential options for CO­2 removal related to your business supply chains.


European Utilities Have Increased Their Activity in New Energy Platforms: Part 3

— February 15, 2018

The energy industry is experiencing a profound transformation as the sector moves towards the more intelligent, more distributed, and cleaner use of electricity. Utilities’ traditional business models are being challenged by disruptive firms offering new services leveraging new technologies. In the first post of this blog series, I described how European utilities have reinforced their strategic interest in new energy platforms. In the second post, I showed that regional differences in new energy platform activity persist between North America and Europe. In this post, I argue that some of the new energy platforms have been highly active recently as European utilities strive to build their portfolio of digital services.

DER Integration and Electric Mobility Are Still Leading

Distributed Energy Resources (DER) Integration and Electric Mobility remain the leading new energy platforms, and they experienced increased levels of activity throughout 2015-2017.

(Source: Navigant Consulting, Inc.)

Most of the selected European utilities have announced key partnerships, investments, and acquisitions in these two platforms. A 50% increase in the number of announcements was recorded between 2015 and 2017. Activity in the Internet of Things, Transactive Energy, and Telecommunications Networks platforms has been steady, with the most active utilities being Centrica, ENGIE, E.ON, and Innogy. Fewer announcements were made in Smart Cities in 2017 versus the previous 2 years. Most originated from Enel and ENGIE, which remain pioneers in the platform serving municipalities and local communities.

Activity Types Are Shifting

There has been a shift in the activity type by platform. The Electric Mobility platform once consisted almost entirely of partnerships. Utilities would typically sign agreements with car makers and EV supply equipment providers to develop bundled offerings and run pilot programs. In 2017, several investments and acquisitions were announced: Total invested in Xee and OnTruck, ENGIE acquired EVBox, and Enel acquired eMotorWerks. This is representative of a platform getting more mature as utilities better understand where the value lies and which companies are the key acquisition targets. The activity in this platform has also intensified because the prospect of electricity as the major transportation fuel is becoming clearer. Several major car makers have announced aggressive plans to electrify their vehicle offerings, providing more evidence that the mobility sector is changing rapidly.

Lastly, the number and size of acquisitions have been increasing. The largest deals announced in 2017 are EnerNOC’s acquisition by Enel for $250 million and REstore’s acquisition by Centrica for €70 million ($80 million). Both companies had established leading positions in the demand response (DR) markets: EnerNOC in the US and part of Asia Pacific, and REstore in Europe. These deals epitomise the DER Integration platform reaching a critical maturity state. After several years of market consolidation among DR players, some large utilities are buying their way in by acquiring the leading, established players.

The Race Is Intensifying

The race to new energy platform services has intensified among European utilities. Players building a balanced portfolio across several new energy platforms and multiple geographies are more likely to succeed in a fast-moving industry. While numerous products and services developed by the new energy platform companies seem promising, not all of them will be successful. Utilities need to strategically select the players that have the most agile talent and can quickly react to market changes and evolving customer needs. Some of the new technologies are prone to disrupt the energy industry. Incumbent utilities should watch market signals and adjust their portfolio of partnerships, investments, and acquisitions accordingly. Some of the utilities covered in this analysis appear to be further along, while others are still defining their strategic priorities. 2017 was a highly active year for new energy platforms—2018 will be a year to watch.


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