Navigant Research Blog

How to Save a Half Billion Gallons of Diesel

— April 16, 2014

Hosesteps_webTrying to reduce fuel use by Class 8 over-the-road sleeper cab tractors is a key challenge facing the trucking industry and regulators.  The trucks use a tremendous amount of fuel (averaging about 6.6 mpg and traveling 80,000 to 100,000 miles per year) and have to provide the driver comfort as the trucks stop overnight.  In order to provide the overnight creature comforts (sometimes referred to as hotel power), the trucks need to have a source of energy, whether an off-board source, the large truck diesel engine, or a small energy source called an auxiliary power unit (APU).  The APU industry has been espousing the fundamental truth that utilizing APUs reduces fuel use, emissions, and associated costs by reducing idle times of the large truck engines.

Yet, one of the challenges is trying to understand just how much fuel and emissions are being offset by APUs.  Having spent a large amount of my time at the Mid-American Trucking Show (MATS) this past March, I was able to speak with almost every APU manufacturer displaying at the MATS and have been able to pull together an estimate for these savings.

First, a little more background; it is not entirely clear when APUs first became widely available, but by the early-to-mid-2000s, Bergstrom, Thermo King, Carrier, and RigMaster, along with a number of other competitors, were all offering APU systems.  Today there are a lot of commonalities between the machines.  The vast majority of APUs are of two designs, either all-electric or diesel-powered.  Diesel-powered APUs use diesel from the truck’s fuel tank to fuel two cylinder small diesel engines from Yanmar, Caterpillar, Perkins, and others.  All-electric systems store energy in absorbed glass mat lead-acid batteries that can then be used to provide power to air conditioning compressors or inverters.  Other technologies that are being tested include fuel cells, lithium ion batteries, and compressed natural gas systems, but the cost-effectiveness of these systems remains essentially unmarketable.

Methodology and Findings

For the purpose of this macro analysis, I had to make several assumptions when it comes to the number of APUs on the road.  First, since there isn’t consensus on when the Class 8 sleeper cab APU market even started, I considered the start date to be roughly 2005, with about 35,000 units on the road by the end of that year.  While recognizing that this is a rough estimate, this at least gave me a starting point for calculating the scrappage rate of APUs.  Based on conversations during MATS and some combing of forums, I assumed the average lifespan of an APU to be about 6 years, and from there the number of APUs on the road today, which is estimated to be about 309,000 units, with about 25% being all-electric.

These 309,000 units translate into 486.5 million gallons of diesel saved by APUs on Class 8 sleeper cabs in 2013 (or about 1,576.5 gallons per APU).  Put into economic terms, at the average retail price of $3.89 per gallon for diesel in January 2014, the fuel costs offset by APUs are a staggering $1.89 billion.  Even taking into consideration the cost of new APU units ($8,000 estimated) and maintenance ($145 annually), the offset is $1.49 billion.  Put into environmental terms, the Argonne GREET model calculated the greenhouse gas emissions per gallon of diesel fuel consumed to be 20.2 lbs carbon dioxide equivalent (CO2-eq) per gallon of diesel fuel, so the emissions offset are 9.827 billion lbs of CO2-eq.  Of course, this analysis does not take into account the 116 truck stops that have electrification to allow drivers to shut off the engines overnight, which would further improve these fuel savings figures.

Estimated Gallons of Diesel Used by Class 8 Sleeper Cabs for Hoteling: 2013Dave H. APU chart for blog

(Source: Navigant Research)

Certainly from a macro standpoint, it’s hard to argue the benefit of APUs.  Fleets with a large number of trucks are likely to see cost benefits that are compounded over a number of trucks.  The picture is more complicated for truck owner-operators that have to justify the extra upfront cost and calculate the payback on a single unit.  This payback typically ranges between 2 and 4 years depending on the APU selected and the cost of fuel, which makes the owner-operator market seem like a good place for some targeted tax incentives.

 

The Link between Home Ownership and Energy Efficiency

— April 16, 2014

The world’s population, and how that population is housed, is undergoing a rapid transformation. Urbanization and its impact on sustainability have been well-studied in recent years. Indeed, 70% of the world’s population may live in cities by the second half of the century, but will they rent or own, and how will that affect energy efficiency?

Home ownership rates, like urbanization, are undergoing broad changes. Unlike urbanization, the direction and magnitude of the changes in home ownership vary regionally. Nonetheless, the rate of home ownership is on a wild ride. In the United States, home ownership is at an 18-year low. Meanwhile, Germany, famed for its renting culture, is facing a property rush.

The ownership of a home should influence investment decisions in energy efficiency. Renters have little incentive to invest in lowering utility bills if the paypack period is longer than the expected occupancy. Why would a renter install an LED light bulb that lasts for 20 years if he or she plans to move out in 2 years?  The value proposition of energy efficient investments is similarly poor for landlords.  For many improvements, such as better insulation and more efficient HVAC, the benefits are largely felt by tenants, but the cost is incurred by landlords.  In fact, data from the Energy Information Administration indicates that renters consume on average 33% more energy per square foot than homeowners do.  Home ownership has a profound impact on energy efficiency.

Household Energy Consumption, United States: 2009

Household Energy Consumption, United States: 2009

(Source: U.S. Department of Energy)

However, what about Germany? It is a country with a historically low ownership rate and a strong culture of renting, but it has been a beacon of innovation for home energy efficiency.  The first Passivhaus and the Passivhaus Institut are located in Germany, as is a house that generates enough electricity to meet its own needs and power a car.  Of course, ownership is only one factor.  Government regulation has played a large role in establishing Germany’s market for energy efficient homes.  In contrast, U.S. innovation in home energy efficiency is often driven by what homeowners want rather than what regulations dictate.  The Nest Learning Thermostat, for instance, was developed by Tony Fadell because he realized there was value in expanding the limited features of conventional thermostats.  Though, as fewer Americans and more Germans buy houses, it will be interesting to see how dynamics in innovation shift. After all, property ownership does change your world view.

 

Automakers Look To Stay Relevant in Rapidly Changing Mobility Landscape

— April 15, 2014

How fast is the urban mobility landscape changing?  Last year, when Navigant Research published its Carsharing Programs report, San Francisco, California-based rideshare company Lyft operated in around four U.S. cities and touted 30,000 members.  A year later, Lyft operates in 30 U.S. cities and, in April, the company raised $250 million in a Series D investment round.  Lyft immediately began making moves to secure greater market share by lowering its prices in all cities by up to 20%.  Meanwhile, Uber, the U.S. leader in app-based car services, continues to add new UberX service locations, including one in Singapore, after raising $258 million in funding in August 2013.

Granted, Uber and Lyft are not carsharing companies exactly.  They are mainly alternatives to taxi or livery services.  But they do share DNA with carsharing.  These companies operate somewhat like peer-to-peer (P2P) carsharing services, such as Relay Rides, which also serve as a way for non-professional drivers and those in need of a car to connect, as well as to maximize the utility of someone’s underutilized car.  And, P2P car services could compete with one-way carsharing, a business model that has taken off in the past few years thanks to companies like Autolib’, car2go, and DriveNow.  These services are all part of the new collaborative economy, which depends on a radically new attitude toward car ownership and the ubiquity of smart devices, apps, and software that makes the collaboration as seamless as possible.

Changing Times

The dramatic growth of P2P car services is just one example of how dramatically the transportation landscape is changing, with a clear shift away from the privately owned car as a primary transportation mode.  Yes, this change is still largely concentrated in major urban areas and in developed countries.  Meanwhile, rising car markets (like China) continue to show increases in sales to first-time car buyers, even as the pace of auto sales growth has slowed somewhat.  Still, in a world that is becoming increasingly urbanized, and with the rise of megacities (cities with populations of 10 million or more), this mobility transformation is going to spread.  In the world’s large cities, automakers will find their businesses increasingly squeezed by a range of other transportation options, including the P2P car services and carsharing.

How much of a threat will these options be to car companies?  Carsharing will cut into car sales to some degree, but based on Navigant Research’s forecasts, vehicle sales reductions directly related to carsharing will be tiny compared to the total passenger car market, which globally reached around 82 million in 2013.  But, the broader transformation of urban mobility will have an impact on auto sales, as the many options for personal mobility make it easy to forgo buying a car during the time that fuel costs will be rising, along with the indirect costs of driving such as parking and traffic congestion.

This helps explain automakers’ interest in offering carsharing, which has the potential to provide substantial revenue.  BMW and Daimler in particular each came roaring into this market in the last 18 months, capturing significant market share in the European cities where they operate.  Daimler reports having 600,000 members in its car2go service, while BMW reports 215,000 members in DriveNow.  In the new Navigant Research report Alternative Revenue Streams for Automakers, revenue from original equipment manufacturer (OEM)-owned carsharing services is forecast to be in the billions as overall demand for collaborative car ownership grows and more OEMs enter this market.  Carsharing represents a prime opportunity for automakers to ensure they play a central role in the changing mobility landscape.

 

Decoupling H, V, and AC: DOAS and More

— April 14, 2014

Buildings have long been a target for energy efficiency improvements, as they consume a substantial portion of the world’s energy supply (about 40% in the United States).  More recently, the detrimental effects of poorly designed buildings have been established and buildings have been identified as an area to improve the health of occupants.  Though heating, ventilation, and air conditioning (HVAC) systems can be used to accomplish both of these goals, they typically cannot achieve both goals simultaneously.  Conventional approaches to improving indoor air quality (IAQ), such as increasing the ventilation rate or increasing filter efficiency, require using more energy, while increases to energy efficiency (such as improving a building’s seal to reduce infiltration) can have adverse impacts on IAQ.  However, addressing the requirements of heating, ventilation, and air conditioning separately have produced innovative approaches to improve health and reduce costs.

A Flawed Paradigm

Heating, ventilation, and air conditioning are generally lumped into a single system.  Why not?  For the most part, each task requires a box with fans and coils.  Using a single rooftop unit or air handling unit to provide ventilation, filter recirculated air, and produce comfortable temperatures is convenient.  Unfortunately, a single system can have a difficult time maintaining adequate control over disparate conditions.  In practice, adequately addressing IAQ takes a back seat to maintaining space temperature.

In fact, there is evidence that traditional HVAC designs systematically under-ventilate.  Thermostatically-controlled variable air volume (VAV) systems do a poor job of matching airflow to ventilation requirements, particularly in conference and meeting rooms when they are first occupied.  More people in a room increases the generation of both heat and carbon dioxide (CO2).  However, thermostats have a dead-band, an allowable deviation between the actual and desired temperature to avoid short-cycling and simultaneous heating and cooling. As a result, there is a time lag between when the space is occupied and when more than the minimum airflow is delivered.  Moreover, depending on the conditions, the 55°F supply air can offset the temperature rise quickly and return to the minimum position as the CO2 of the space continues to rise.  Theoretically, the minimum damper position should meet the ventilation requirements of a fully occupied room, but improper damper minimums or poor controls integration can lead to under-ventilation.

Separation of IAQ and Thermal Comfort

Decoupling ventilation requirements from thermal comfort through a dedicated outside air system (DOAS) is one way to address this ventilation issue and improve IAQ.  A DOAS provides 100% outside air to a building to meet the building’s ventilation needs.  Typically, it is equipped with some form of energy recovery to precool and dehumidify or preheat and humidify supply air from what is captured from exhaust air.  As a result, the system ensures adequate ventilation and prevents the spread of contaminants between spaces.  Including a DOAS in a building design improves a building’s IAQ by managing it separately from heating and cooling requirements.

However, improving IAQ does not have to be part of HVAC at all.  Introducing filters and outside air into a system that is already designed to move air is convenient, but the same effect can be accomplished by other means.  Adding plants into a space, for instance, can help reduce CO2 and ozone.

The future of IAQ might not be in HVAC, but in the building itself.  Lauzon, a North American flooring manufacturer, has developed a flooring-based solution, called Pure Genius coating, to manage volatile organic compounds (VOCs).  The coating uses photocatalytic titanium dioxide to break down VOCs into water and CO2.  Of course, when maintaining IAQ, converting VOCs to CO2 is a bit like robbing Peter to pay Paul.  However, it shows the advances that materials are making.  Solutions to the current limitations of HVAC equipment might come from outside the mechanical universe rather than from incremental engineering improvements.

 

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