Cleantech Market Intelligence
Price Gap Challenges Transportation Innovation
Renewable energy technologies such as solar and wind power are increasingly becoming cost-competitive alternatives to traditional generation sources. The consulting firm Eclareon says that the levelized cost of commercial solar power has pulled even with retail electricity rates in Italy and Germany. Navigant Research’s Solar PV Market Forecasts report states that by 2020, solar photovoltaic systems will have an installation cost in the range of $1.50 per watt to $2.19 per watt throughout the world, and will thus achieve grid parity without subsidies in almost all geographic locations. When cost-competitive solar and wind are combined with existing hydropower resources and advances in energy storage capabilities, the electricity sector can and will continue to reduce emissions.
On the other hand, the transportation sector almost exclusively relies on high-carbon fuels like gasoline and diesel, and thus may become the sector where attaining major emissions reductions will be the most difficult. The biggest obstacle is the relatively large cost gap that exists between zero emissions vehicles (ZEVs) and their internal combustion engine (ICE) counterparts.
Reasons for Optimism
This gap will have to be at least partially addressed by increasing investment from the world’s major suppliers and automakers into alternative technologies. According to KPMG’s Global Automotive Executive Survey 2014, only 9% of automotive executives surveyed plan to invest the most in battery electric vehicles (BEVs), with 46% reporting ICE downsizing and optimization as the technology they plan to invest in most heavily. This means that small improvements to ICE vehicles should be expected over major improvements in BEV performance and prices, at least from the major automakers. The Intergovernmental Panel on Climate Change (IPCC) recently stated that, without the implementation of major mitigation strategies, transport emissions could double by 2050 to more than 13 gigatons of carbon dioxide, up from 6.7 gigatons in 2010, which represents 22% of the world’s total emissions.
With the demand for personal vehicles growing in economies like China, India, and Brazil, the challenge of significantly reducing transportation related emissions is huge. Still, there are some reasons for optimism. Hopes for viable ZEVs largely lie in the area of battery and hydrogen fuel cell technology advances. One of these eight potential electric vehicle battery breakthroughs would be a great start.