Navigant Research Blog

Why Recargo’s EV Charging Payments Service Is Free

— October 11, 2013

If you want to flummox a pair of research analysts, tell them you are launching a new product that no one has to pay for.  At last week’s Plug-In 2013 conference in San Diego, electric vehicle (EV) software and services company Recargo announced a system to let users of its charging station finder app, PlugShare, pay for their charging sessions through the app itself.  As Forrest North, Recargo’s chief operating officer, explained to my colleague, John Gartner, and me, the company is offering this service for free – not only to EV drivers, but to any EV charging network operator that agrees to participate.  Its first partner is U.S. EV charging company SemaConnect, which has 300 public stations accessible through this app.

Why would Recargo offer this for free? One reason is that PlugShare’s customers are EV drivers, not charging equipment companies or site hosts.  The company says that a key part of its mission is to make EV driving as easy and seamless as possible, and this new service helps to do that.  Recargo gave a demonstration of the system, Pay With PlugShare, at the Plug-In show.   The interface is clean and simple.  Once drivers have entered credit card information, it remains available for any charger.  Drivers simply select the charger they wish to use and begin charging.  The app shows how much the station charges drivers, how long the car has charged, and the total fee.

Forget About It

If Recargo can sign on more network operators, this app has the potential to address the major barriers in the EV world: charging network accessibility and ease of use.  Today, drivers must carry a separate access token for each network of charging stations.  For non-members, many stations have a phone payment system or a phone number a driver calls to get an access code.  Even a slight inconvenience in accessing a station will turn off some drivers, and, as we have discussed, public stations really need to maximize usage to make any kind of business sense for the operators.

Some companies argue that the easiest solution to this problem is simply to equip public chargers with credit card readers.  Indeed, this is already happening, and the new Pay With PlugShare app will not replace that as an option.  But, there is an attractive simplicity to using the same app to find the station to pay for charging at it, as well.

Rich Data

The app is designed to work with the payment scheme configured by the network operator and the charging station host.  It is easy to see why participating in this payment app would be attractive for companies that are competing against the two giants in the U.S. EV charging market, ChargePoint and ECOtality (although the fate of ECOtality’s Blink network, in the wake of the company’s bankruptcy, is not clear).  Ironically, Pay With PlugShare will be competing with CollaboratEV, the venture launched by these two companies to establish cross-network access for EV drivers.

While Recargo is not charging for the Pay With PlugShare service, North was quick to note in our conversation that it aims to be a revenue-generating venture.  The company says PlugShare has more than 20,000 charging stations in the United States and Canada and 30,000 reviews from users.  This gives it a tremendous amount of data on EV charging habits, which should have real value to the industry.  Pay by PlugShare may drive more users to its app and add to this valuable data stream.


Energy Efficiency and Demand Response: Friends or Frenemies?

— October 11, 2013

Energy efficiency (EE) and demand response (DR) are usually considered two sides of the same coin to the point that even relatively energy-aware consumers may not understand the differences.  Consumer education on the opportunities and benefits of EE and DR capabilities continues.  At some point, though, EE and DR goals can come into conflict, as more efficient and lower overall energy use generally leads to less load that can be shed during a DR event. As anyone who has parented teenagers will know, navigating such “frenemy” relationships can be a challenge

DR, in its most basic form, offers customers payment for energy non-use during peak periods, or DR events, with the overall aim of reducing demand on the grid as an alternative to adding additional generating capacity. The financial payback can be enticing, as the peak demand being displaced is often the most expensive.  The challenge, of course, is proving a negative – that the energy not used would have been used if some specific action or sacrifice was not made.  The establishment of clear baselines from which demand avoidance can be measured against is a key element of DR programs, and, unsurprisingly, has been a source of abuse and even fraud.  Yet, most DR programs are reliable and effective.

Efficient Is Not Always Better

The broader issues come when energy efficiency improvements permanently lower the baselines and reduce the amount of load that can be shed for a given facility.  For example, a more efficient HVAC system can significantly reduce the average energy consumption of a building, but will also reduce the amount of energy that can be deferred during a DR event.  A similar dilemma may arise within a building energy retrofit itself.  Investments in an advanced lighting control system that automatically controls fixtures based on occupancy or other parameters can offer very quick paybacks with inefficient fixtures.  But, it may have a weaker business case if the fixtures are already very efficient, as may be the case with LEDs.

Commercial building energy managers may ultimately find themselves in the odd position of having a stronger business case for using an inefficient system, which enables lucrative DR program payments, than a more efficient, lower average energy use system.  On a broader scale, such conflicts arose earlier this year regarding proposed new water heater efficiency standards, which would effectively mandate new technologies for larger water heaters (more than 55 gallons) that would be incompatible with long-standing and effective DR programs, leading to opposition from utilities dependent on these programs for grid management.

The Long View

My recent conversations with commercial building operators and energy management solutions suppliers indicate that the potential conflicts between EE and DR goals have not yet surfaced, mostly because there is so much low-hanging fruit available for both types of programs given the poor energy management of most commercial buildings today.

The best advice for building operators and policy makers may be the kind you would give a teenager: Try to keep a longer-term perspective.  Apparently, straightforward either/or decisions, such as choosing between more efficient lighting or better lighting controls, may really be and decisions; best when deployed together and enabling both lower average energy costs and the ability to participate in more advanced DR programs as they emerge.  The longer-term building-to-grid vision of a flexible grid with transactive consumers depends upon it.


Net Metering Fight Gets Strange

— October 10, 2013

The rapid spread of net metering has unleashed plenty of Sturm und Drang during the past year.  Let’s face it, when the Tea Party and the Sierra Club join forces, there’s definitely something strange going on (more on that below).

Here is a small sample of recent headlines that illustrate the sharp feelings involved:

“AB 327: From California Solar Killer to Net Metering Savior?” GreentechMedia, September 4, 2013

“Rooftop solar net metering is being fought across U.S.”The Denver Post, September 1, 2013

“Arizona Mulls Solar ‘Tax’”, August 1, 2013

“Can Germany afford its ‘energy bender’ shift to green power?” BBC News, July 9, 2013

“Dragons’ Den solar power business goes bust” The Guardian, October 4, 2012

For about a century, the electric power industry was guided by a straightforward business model:  utilities build power plants and generate and distribute electricity; regulators approve rates to prevent monopolistic pricing and provide a fair return on investment to the utility and its investors; and consumers pay that rate to the utility for the kilowatt-hours consumed.  The power flowed in one direction and payments for that power flowed back upstream.

Cracks in the Foundation

Today, however, the world of electricity generation and distribution is going through a major transition.  In addition to a growing number of deregulated markets, the accelerating adoption of renewable distributed generation (DG) — primarily solar, but also wind and biofuels — means that the old business foundation upon which utilities rest is cracking.

As solar penetration deepens, there are legitimate concerns, primarily over how utilities can continue to maintain the distribution grid when fewer (and generally lower-income) ratepayers are supporting it.  Major utilities across the United States are now putting forth controversial proposals to either charge a monthly fee to solar customers, or to reduce the amount those customers receive per kilowatt for excess energy.  Solar advocates are up in arms, but without a change to the system, the shrinking base of traditional utility customers will bear the brunt of paying to maintain and upgrade an aging distribution network.  How these issues are resolved will affect electric utilities worldwide for years to come.

Strange Bedfellows

Meanwhile, the solar industry, which was injected with billions in government and utility-sponsored subsidies, is now at risk of the severe after-effects of that artificial growth spurt.  Businesses, jobs, and economic growth are at risk if those subsidies are withdrawn too abruptly.

Finally, consumers who have made the investment in solar panels based largely on net metering’s advantageous payment structure are worried that while they may be grandfathered in their utility’s current program, any new buyer of their home might not be.  Home values will likely decline if net metering reform takes place.  At the same time, the solar-challenged neighbors of these homeowners are seeing electric rates rise steadily as this table from the U.S. Energy Information Administration illustrates.

Average Price of Energy, United States: 1990-2011


(Source: EIA)

Beyond these primary stakeholders, environmental groups, like the Sierra Club, and political groups, like the Tea Party, have joined the fray.  The former is promoting the need for greener energy, and the latter is worried about private property rights.  (In Georgia, consumers are not allowed to lease solar equipment, which has led to the teaming of these strange bedfellows on the solar battleground.)

The problem is complex and a solution that is fair to all may simply not be possible.  None of the stakeholders is likely to get everything they want in a solution, but if the reality-TV drama of today doesn’t give way to balanced compromise, and soon, it is likely that no one will get what they need for long-term survival.  In my next blog, I’ll examine the problems Germany is now facing as a result of the rapid transition to renewables, including the fact that its carbon emissions actually increased in 2012, partly as a consequence of its DG policies.


Boston Leads the Way on Energy Efficiency

— October 10, 2013

With a few exceptions like San Diego, U.S. cities have been slower than their counterparts in Europe and Asia to adopt the smart city label.  That doesn’t mean they don’t understand the important interplay between economic development, sustainability, and quality of life that define many smart city programs.  A new report from the American Council for an Energy-Efficient Economy (ACEEE), a nonprofit organization that works to advance energy efficiency in the United States, highlights the progress that U.S. cities are making toward a range of energy efficiency measures.  The 2013 City Energy Efficiency Report Card assesses energy efficiency programs across the 34 largest U.S. cities and ranks them across five areas: transportation, local government operations, buildings, energy & water utilities, and general community initiatives.

At the top of the rankings is Boston.  The report draws particular attention to Boston’s community initiatives and above all to its relatively strong showing across all five categories.  The ACEEE report also singles out Portland for its progress on transportation and local government operations, Seattle for its lead in building policies (see also the work Microsoft is doing with the city in this area), San Francisco for its utility programs, and Austin for energy efficiency policy.

Only Connect

Overall the report shows a strong commitment among U.S. cities to improve energy efficiency as part of broader initiatives around the environment, quality of life, and economic renewal.  As cities build on these efforts, one opportunity is to develop more connected thinking across diverse projects, which when brought together can provide a strong basis for a smart city vision.

Boston provides an example of how cities might make progress here.  It has strengthened its commitment to improving its energy performance through its decision to implement an enterprise energy management system (EEMS) for all city operations. Based on Schneider Electric’s StruxureWare solution, the Boston system will help monitor energy use, greenhouse gas emissions, and related conservation projects including those spanning city buildings, traffic systems, and street lighting.

It’s not surprising to find Detroit at the other end of the rankings in 33rd position (only Jacksonville scored lower).  City leaders and citizens in Detroit can make a strong case for having more important concerns at the moment.

Meanwhile, the progress other cities are making suggests that a commitment to energy efficiency and other environment programs is becoming central to the vision of the modern U.S. city.  Hopefully, energy efficiency will be a key part of Detroit’s rebuilding strategy.


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