Navigant Research Blog

Utilities Rightly Taking Larger Role in EVs

— July 11, 2016

EV RefuelingWithin the span of a few short years, utilities have transitioned from being bystanders to becoming active participants in supporting the rollout of plug-in electric vehicles (PEVs). Legislators and utility commissioners have evolved their view of the roles that utilities can and should play, particularly in incentivizing or operating electric vehicle (EV) charging infrastructure.

A few years ago, several states, including California, prohibited utility ownership of EV charging infrastructure. Today, utilities are not only encouraged to operate charging stations, but are also compelled to do so. Public utility commissions have recognized that switching from gasoline to renewably powered electricity for transportation is good for air quality and the local economy, and many have updated their rules to allow utility participation.

Since direct current (DC) fast charging (with power delivered at 50 kW-100 kW or higher) has the potential to affect grid operations, many utilities are focusing on ownership of these assets. For example, Hydro-Québec is expanding its Electric Circuit of fast chargers along Highway 20 in the province of Quebec in Canada. Meanwhile, AGL Energy is offering a flat $1 daily fee for unlimited residential EV charging in Australia.

Change on a Global Scale

This is truly a global phenomenon. My recent travels have taken me to Honolulu, Munich, and Dubai—all of which have EV charging stations operated by utilities. In Hawaii, utility Hawaiian Electric Co. (HECO) is embracing PEVs as a method of helping to balance the power grid in the state. Hawaii has an ambitious goal of moving to 100% renewable power generation by 2045.

In many cases, PEVs are good load additions, as vehicle charging can be timed to balance intermittent solar and wind power production. Utilities are also launching pilots where PEVs are enrolled in demand response programs, as Pacific Gas and Electric (PG&E) and BMW are doing in Northern California. The new load from PEVs can help utilities replace revenue lost to the myriad of energy efficiency programs that are flattening or reducing power consumption. PEVs will also become more frequently accessed as part of the growing use of distributed energy resources (DER).

Navigant Research will discuss the many opportunities for utilities to derive value from using PEVs in demand response, as DER, and for load shifting and other ancillary services during a webinar on July 12.

 

Street Lights Are the New Smartphones

— May 11, 2016

BulbsJust as cell phones have evolved into multifunctional digital information devices, the once humble street light is becoming a hub for monitoring a variety of urban activities and sharing data with networks.

Navigant Research identified this trend in its 2015 Smart Street Management report, stating that, “Smart street lighting is becoming one of the most attractive solutions for cities looking for an immediate effect on energy consumption and operational costs while also laying a foundation for a broader range of applications.”

As street lights are being upgraded to more efficient LEDs, pole owners are seizing the opportunity to add networking capabilities, sensors, cameras, and power management intelligence to leverage the lights’ distributed electrified reach to provide a variety of services across cities. The convergence of city management technologies with street lights was on display throughout the recent Intertraffic conference in Amsterdam.

Intertraffic Conference

Examples highlighted at Intertraffic included Streetline, of San Mateo, California, which is working with Cisco on using cameras fixed to street lights as a less expensive alternative to sensors to predict parking availability. According to Kurt Buechler, Streetline’s senior vice president, the cameras cost around $100 each and are connected to a cloud service that performs analysis on the collected data. Cisco is also working on integrating cameras and Internet of Things technologies to street lights in the Netherlands via its IT networks.

Also at Intertraffic, Spain’s Circontrol announced its Trilogy offering, which combines lighting, smart parking detection, and indicators that show parking availability. Circontrol also displayed an integrated parking facility energy management system that uniquely incorporates electric vehicle (EV) charging management. Intelligent transportation systems vendor Q-Free is combining its air quality monitoring technology with street lights in Medway, England.

EV Influence

Other companies taking advantage of the ubiquitous presence of powered street lights include BMW, which adds EV charging capabilities through its Light and Charge initiative. In the city of San Jose, California, the SmartPoles pilot project is using wireless technology from Ericsson and Philips’ energy efficient lighting equipment to reduce costs while providing more flexible lighting management.

The convergence of smart parking, traffic management, EVs, and environmental monitoring—often using connected street lights to collect and share data—will bring much more holistic views to smart city managers looking to understand the full effect of transportation on urban life. Standards for data collection and communications protocols are quickly evolving to enable this broader view and will be of growing importance as cities look to understand and mitigate the effect of increased congestion and urbanization.

 

Battery Makers Moving from Supporting to Lead Actors in EV Industry

— March 30, 2016

Accumulators and batteries close up.While General Motors (GM), BMW, Audi, and others are in hot pursuit of Tesla Motors for the media’s attention, the battery makers that power their cars are becoming more prominent as industry leaders. LG Chem and the other top-tier battery suppliers are expanding relationships with the automakers that will lead these companies to selling more of the technology found inside a plug-in electric vehicle (PEV).

Most notably, South Korea-based LG Chem is now supplying not only battery packs, but also motors, inverters, and onboard chargers to GM for the upcoming Chevrolet Bolt. LG Chem expects its automotive battery business to reach $1 billion annually this year, and the company is pushing harder into stationary energy storage as well.

LG Chem committed early to the EV battery market, and Navigant Research (then Pike Research) ranked the company as the leader in the industry as early as 2012. It retained its position during the November 2015 Navigant Research Leaderboard Report: Lithium Ion Batteries for Transportation.

EV Battery Manufacturer Rankings, January 2012 (Left) and November 2015 (Right)

John Blog Charts

(Source: Navigant Research)

LG Chem recently won a contract to supply batteries for the upcoming Chrysler Pacifica plug-in hybrid. The company has the most diverse group of customers in the industry, supplying EV batteries to Daimler, Ford, Renault, and Volvo.

Meanwhile, competitor Panasonic is expanding in the burgeoning Chinese EV battery market  by forming a joint venture with Dalian Levear Electric Company to start producing batteries in the country, according to Automotive News China. Panasonic was the world’s largest supplier of EV batteries in 2014 with a 38% market share, according to Navigant Research’s Advanced Battery Tracker 4Q15 report. Panasonic is partnering with Tesla Motors to build the gigafactory, a $5 billion battery manufacturing plant that currently under development in Nevada. Tesla Motors recently canceled the larger 10 kW version of its pricey Powerwall home energy storage system, which was using batteries manufactured by Panasonic. Panasonic also supplies EV batteries to Audi, Ford, Honda, and Volkswagen.

Samsung SDI, LG Chem’s neighboring competitor in South Korea, said it will begin shipping batteries this year to enable a 300 km (186 mile) driving range for EVs, and it’s intent on doubling that range by 2020. Samsung will continue to sell batteries to BMW for the soon-to-be-upgraded i3, as well as the i8 sports car, and to Fiat for the 500e.

The quality and performance of the battery can make or break a PEV, and battery makers such as LG Chem will continue to benefit from that importance to further leverage their relationships with automakers.

 

 

Used PEVs Open Price-Sensitive Buyer Market

— March 7, 2016

moving white carOne of the challenges of increasing sales of plug-in electric vehicles (PEVs) has been their lack of affordability for the majority of car buyers. However, the new generation of PEVs is becoming more economical, and the increasing inventory of used PEVs for sale is opening the technology to a broader spectrum of car buyers.

PEVs originally sold in 2012 are coming to the used market after their leases have completed or their owners have upgraded to newer electric models with longer driving ranges. Used PEVs, which generally have reduced maintenance costs due to fewer mechanical parts to wear out while relying on a much cheaper fuel source, can be an affordable first or replacement car for cost-conscious buyers who closely monitor their monthly expenses.

For example, many used 2012 model year Nissan LEAF ($10,000-$12,000), Mitsubishi I-MiEV ($8,500-$10,000), and Chevrolet Volt ($15,000-$18,000) cars can be found on Carmax.com that fit within a much greater percentage of budgets than a new PEV. While only in Colorado can used PEV buyers get a state tax credit, pre-owned PEVs are around half the cost of a new model—even after all incentives are factored in.

Results from Navigant Research’s 2015 survey of American consumers found that 77% expect to spend $30,000 or less for their next car. This expectation excludes them for considering nearly all of the PEVs on the market—even after factory, dealer, or government incentives are included.

Consumers’ Expected Purchase Price for Next Vehicle

John Blog March                                                                              (Source: Navigant Research)

However, more economically diverse consumers that become aware of the benefits and savings from owning a used PEV may consider staying electric with a new vehicle purchase as their incomes allow. This should enable sales of PEVs in future years to grow even more quickly, as experience with a PEV greatly increases the desire to own one.

Addressing Affordability

Automakers continue to address affordability with their PEV pricing strategies. Due to disappointing sales in China of its localized version of the Nissan LEAF (thought to be linked to its higher price), Renault-Nissan will develop a less expensive battery electric vehicle (BEV) for the Chinese market, according to Automotive News Europe.

The PEVs that will be released in the next 18 months in the United States promise greater value through longer driving ranges at a lower cost per mile. Unfortunately for companies like Tesla that are looking to address more cost-conscious consumers, they may start to run up against the 200,000 vehicle cap on customers being able to collect the full federal tax credit. Middle-class car buyers receiving a smaller tax credit for a $35,000-ish Tesla than was available for a nearly six-figure vehicle could be an unintended irony of the current federal tax rebate structure.

 

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