Navigant Research Blog

Tesla Introduces a Missing Piece for PEVs

— May 15, 2015

In late April, Tesla announced the expansion of its product line beyond cars to include battery systems for homes and utilities. Called the Powerwall, the system can store 7–10 kWh of energy and respective costs are $3,000 and $3,500. Adding a battery to a home enables greater utilization of solar generation and of off-peak pricing in time-of-use (TOU) rate plans. For utilities, the home system may be considered a threat because it enables consumers to bypass services entirely; however, it also presents opportunities to mitigate potential energy management problems stemming from the rapid increases in residential solar installations and plug-in electric vehicle (PEV) adoption happening now.


The grid is constantly being monitored to match electricity supply with demand. As demand fluctuates throughout the day, resources are ramped up or down in response to keep grid frequency within a narrow range of around 60 Hz. The more reliable generation resources are in responding to shifts in demand, the more cost-effective the grid is. Traditional generation resources like nuclear, coal, and natural gas are dependable generators; however, renewable resources like solar are not, because generation depends on the weather. This means that solar requires additional grid resources like batteries to backfill lapses and absorb spikes in generation.

PEVs can create additional problems because most can consume up to 6.6 kW from home electrical infrastructure. The most power-intensive appliances in a home (clothes dryer, dishwasher, or oven) can use from 2 kW to 5 kW. While there is enough energy produced by the grid to supply massive amounts of PEVs, there may not always be enough power (instantaneous energy). So the challenge created by PEVs is the collective charging behavior of a 9-to-5 workforce that plugs in at the end of the work day.
In the near term, this behavior is a threat to distribution-level transformers in neighborhoods with high PEV concentrations. In the long term, this may exacerbate problems stemming from widespread solar generation, as the sun will be setting when people are plugging in. The theoretical lapse in generation and leap in consumption will require grid operators to ramp generation assets quickly and significantly; not a cheap or easy exercise.


The root cause of the above challenges is that most electricity is consumed almost immediately upon generation because there are few storage resources on the grid. The PEV itself can be a solution, as grid operators can manage battery charging; or, in more advanced PEVs, the car itself may be able to supply power back to the grid. In both cases, the PEV owner is compensated financially and most of the costs of adding grid-level storage are avoided by the electric power sector. Pilot programs utilizing PEVs for such services are already underway. However, there will always be limits to these services, as PEVs are not always plugged in, don’t always need a charge, and sometimes do need to charge regardless of compensation.

Enter the home battery. Though the upfront costs are high for the homeowner, there are multiple economic benefits that may be had by both the owner and the utility. As mentioned above, it enables lower energy costs for the homeowner, and for the utility, a home battery can directly mitigate the challenges posed by intermittent residential solar generation and PEV charging at the distribution and generation level. Even more than that, it provides an opportunity for energy aggregators and utilities to incorporate homeowners into lucrative grid-service markets in a manner that is more reliable and consistent than PEV integration into these same services. Though reservations have been significant early on, the $3,000–$3,500 price point will be a hard sell to individuals in the mass market; it’s unlikely home batteries will exhibit similar gains to PEV and residential solar market growth without some financial incentives from utilities and/or governments, both of which stand to benefit from this technology.


Solving the EV Charging Puzzle

— May 11, 2015

When Tesla, Nissan, and General Motors (GM) introduced plug-in electric vehicles (PEVs) to the mass market, arguments against PEVs mainly cited weaknesses with vehicle cost, range, and limited publicly available electric vehicle supply equipment (EVSE). The first two weaknesses are difficult to solve, but their solutions are fairly straightforward: battery cost cuts through economies of scale and range increases through the development of better batteries. However, solving the third weakness is more nuanced. For instance, it’s been assumed that simply increasing public charging infrastructure will increase the adoption of PEVs, which has led to multiple government- and utility-funded initiatives on public infrastructure build-outs.

A Contradiction

Though it’s arguable that the public charge point build-out on behalf of the EV Project has been integral to PEV sales growth (most likely as passive marketing), data from these and other early infrastructure projects has suggested that PEV owners overwhelmingly charge at home rather than at the public points. This fact questions the practicality of these initial public infrastructure investments. Yet, data analyzed from a survey discussed in Navigant Research’s Electric Vehicle Geographic Forecasts report suggests that a lack of charging infrastructure still seems to be the biggest drawback to PEV ownership, as illustrated in the chart below.

Primary Drawback to PEV Ownership, United States: 2015              

(Source: Navigant Research)

What this contradiction appears to indicate is that yes, there is a need and likely a business case for public EVSE, but it needs to be in the right place. The trouble is that building owners are unlikely to invest in EVSE unless they see a need from residents, employees, or customers. And these groups are unlikely to ask for these services unless they have a PEV, which is unlikely if they don’t have places to plug in the PEV. What this all means is that the EVSE industry has to continue to find the right places for both the PEV owner and the building owner—or run the risk of placing infrastructure where it’s unnecessary.


An innovative approach to solving this problem is underway thanks to the efforts of a San Francisco-based non-profit organization, Charge Across Town. In mid-April, the organization launched the Driving on Sunshine campaign, which showcases EVSE company Envision Solar’s integration of solar power and energy storage into a mobile EVSE unit named the EV ARC. The campaign places three EV ARCs at predetermined locations throughout San Francisco for 3-month periods and collects data on site usage. Findings on the data will be used to inform on public EVSE use and determine where units may be most effectively placed for consistent use; units will be donated to sites with the most use.

The charging stations are likely not inexpensive; however, it’s feasible to consider that a utility with big plans for infrastructure development (Pacific Gas & Electric, perhaps) would benefit greatly from a similar approach to siting public EVSE installations. Further, it would provide incredible value to potential host sites in actually determining the efficacy of EVSE placement without the added costs and embarrassment of a never-used public EVSE station.


California Utilities Look to Manage EV Charging

— March 27, 2015

Through multiple programs aimed at both supply and demand, California has developed the most vibrant market for plug-in electric vehicles (PEVs) in the world. According to the forthcoming update of Navigant Research’s report, Electric Vehicle Geographic Forecasts, the total number of light duty PEVs in California is expected to surpass 140,000 by the end of this year and 1.5 million by 2023. The state’s electric power sector is taking note because the speedy PEV market growth may pose problems if PEV charging isn’t managed well.

The most likely problems will occur at the residential transformer, where a cluster of PEVs may outstrip a transformer’s capacity, requiring costly upgrades and/or repairs. To date, this issue has been fairly minor, with California’s three major utilities (Pacific Gas and Electric [PG&E], Southern California Edison [SCE], and San Diego Gas & Electric [SDG&E]) reporting that, of the 97,350 PEV customers in their combined service territories from July 2011 to October 2014, there have only been 126 PEV-related infrastructure upgrades.

Getting Worse

These problems are likely to worsen with the aforementioned 10-fold increase in PEVs in under 10 years. Looking ahead, the California Public Utilities Commission (CPUC) launched a PEV submetering pilot in September 2014 through the big utilities. The pilot is designed to lower energy costs for PEV owners through time-of-use (TOU) rates that incentivize off-peak charging and measure their energy consumption for vehicle charging apart from their overall energy consumption. By separating PEV charging, utilities could assess how best to influence PEV charging beyond TOU rates to avoid infrastructure upgrades.

Although TOU rates are effective at managing demand for a more efficient grid at the generation and transmission level, their effect on localized demand issues like transformer capacity is limited. Automated charging of PEVs based on TOU rates essentially creates a new spike in demand at the beginning of the off-peak period. This spike looks marginal at the grid level, but can be fairly drastic at the transformer feeding a cluster of PEVs.

Leading Edge

Thus, utilities, electric vehicle supply equipment (EVSE) manufacturers, and EVSE service providers are looking to create more dynamic and advanced PEV charging schemes to manage charging at all levels of the grid. Greenlots, for example, recently announced its partnership with EVSE LLC to demonstrate the company’s SKY Smart Charging system in 80 Level 2 workplace chargers at SCE facilities. The SCE project will examine how PEV owners respond to demand response events and dynamic pricing schemes for a number of purposes, including mitigating local transformer issues.

Outside of California, other PEV markets are expanding, too; utilities in these areas will need to begin testing and implementing similar technologies and programs soon. Companies competing for utility services in California now will be well served by expansion elsewhere and likely represent the leading edge of charging services development for years to come.


Making Sense of the Apple iCar

— March 23, 2015

Since early February, evidence has been piling up suggesting that Apple may develop an electric car to launch by 2020. Apple has yet to verify that it’s developing a car, but that has not stopped many from speculating what the Apple car might look like or how Apple might enter the automotive industry. Dan Akerson, the former CEO of General Motors (GM), weighed in on the subject, saying that instead of building cars, Apple should team up with automakers to develop operating and entertainment systems for vehicles.

As Akerson pointed out, the auto industry is dealing with heightened regulatory and safety standards alongside low profit margins in comparison to Apple’s other product lines, creating a grim outlook for any company looking to enter the auto industry. It should be noted, though, that Apple would be entering an auto industry that is significantly different than the one Akerson has known.

Beyond ICEs

For the last 100 years, the light duty vehicle hasn’t evolved much beyond the conventional internal combustion engine (ICE) with four wheels and multiple cup holders. To be sure, the established auto industry has made drastic improvements to this basic concept. But in the next 100 years, vehicles are going to look a whole lot more like smartphones, a category in which Apple has some expertise.

While plug-in electric vehicles (PEVs) represent only a small fraction of the vehicle market now, their numbers are growing quickly and will continue to increase, as electricity is clean and cheap and batteries are getting cheaper and better. Already, automakers are displaying fully electric vehicles for the mass market with 200+ mile ranges, to be sold within the next 3 years. Much of the established auto industry’s expertise and capabilities still center around making cars with ICEs. When that technology becomes obsolete, space will open for new competitors to emerge, such as Tesla and, yes, Apple.

Connected Future

Even more quickly than vehicles are becoming electrified, they’re becoming connected. A white paper published by the Continental Automated Buildings Association (CABA) outlines the advantages of connectivity for motorists, primarily around safety and autonomous driving. Additionally, vehicle connectivity can lower the cost of electricity for PEV owners and help create a more efficient and cleaner grid infrastructure. These developments are detailed in Navigant Research’s new report, Vehicle Grid Integration.

Though Apple would encounter struggles entering the established auto industry, the war chest Apple has should be more than enough to overcome those struggles. Further, there is, arguably, no other non-automotive company better positioned to provide an electric/connected vehicle than Apple. In fact, if Apple isn’t planning to develop a car, it could be missing out on a big opportunity to enter the fastest growing segment of one of the largest global markets.


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