Navigant Research Blog

Coming Soon: A Tax on Miles Driven

— October 11, 2012

Ever since alternative fuel vehicles became a possibility, governments worldwide have wholeheartedly supported efforts to reduce greenhouse gas emissions through increased fuel efficiency standards and alternative fuel vehicles.  As average fuel economy of new vehicles increases, and natural gas, hybrid, and electric vehicles become more prevalent, those efforts are finally gaining traction.  These efficiency gains have been encouraging, but state highway and transit authorities, which derive funds for road maintenance and development through taxes on gasoline, are beginning to feel a financial crunch that will only worsen as more vehicles crowd roads while consuming less gasoline.

To confront the looming shortfalls, transportation agencies are trying to develop new revenue streams.  Among the possible options is the vehicle miles traveled (VMT) tax, which has been popular but controversial.  The justification behind the VMT tax is that the more miles a motorist drives, the more he or she should contribute to road maintenance and development.  Administering the tax, though, requires tracking mileage driven, fueling concerns over invasions of privacy.

Essentially a VMT tax is like paying a toll, except the tolling becomes more prevalent.  In England, members of parliament are advocating expanding road tolls as a solution to the estimated $3.2 billion loss in revenue due to decreased gasoline and diesel sales.  Unfortunately for motorists and governments, toll booths cannot be placed on all roads cost-effectively, and their presence increases traffic congestion.

Therefore, VMT taxes will most likely work through in vehicle devices (i.e., virtual toll booths) that track VMT through GPS and vehicle to infrastructure (V2X) technologies.  The adoption of GPS and V2X technologies will make payment seamless for the motorist, and give state and city governing agencies the ability to develop dynamic pricing schemes that not only fund road maintenance, but also can be used to manage traffic congestion.  Again, the problem with this scenario is that it means governing agencies will have to track privately owned vehicles.

Despite these concerns, transportation agencies in Minnesota, Portland, Washington D.C., and at the University of Iowa are testing VMT tax simulations, examining everything from participant reaction to congestion mitigation.  The University of Iowa study showed that, though a majority of participants were at first wary of the program, once they had experienced the actual ease of the system, a majority (roughly 70%) left the trial with a positive feeling toward the VMT tax.  In Portland, a dynamic pricing scheme showed a 22% drop in VMT at peak hours.

Opponents of these schemes will have to come up with better solutions to manage congestion and fund road maintenance.  A worst case scenario unfolded in China early this month, when the government suspended highway tolls for the Golden Week holiday; the resulting traffic congestion has been blamed for 794 deaths.


No Halt to Stop-Start Vehicle Technology Advances

— October 11, 2012

The latest Pike Research report on Stop-Start Vehicles has been published for less than a month, and already more new developments have emerged.  On October 2, Lamborghini said it will implement a stop-start system from Continental that features Maxwell ultracapacitors.  All models of the Aventador, which goes into production in late 2012, will feature the new system.  Using ultracapacitors to handle the electric power surge required to start the V-12 engine in 180 milliseconds allows the company to reduce the size and weight of the battery.  The stop-start system is estimated to contribute about 7% of the 35% goal (by 2015) that Lamborghini has set to reduce the CO2 emissions of its new models.

System design was reportedly done by Maxwell’s Italian distributor Dimac, with production responsibility handed over to Tier One supplier Continental.  Undoubtedly Continental’s experience supplying Maxwell’s ultracapacitors to PSA Peugeot Citroën for its second-generation e-HDi stop-start system were a factor in landing this business.

On October 3, Tier One supplier Denso debuted a Li-ion battery pack designed specifically for stop-start applications.  The system comprises high-power battery cells from a Tier Two source packaged with a power supply control switch and a battery management unit to monitor the charge levels.  The pack is designed to be air-cooled and does not require any additional hardware to modulate the temperature.  The system is reportedly going into production on the Suzuki Wagon R this month.

These two announcements illustrate different approaches to address the practicalities of powering a stop-start system.  With a charge-discharge cycle rate of typically 10 times that of a conventional vehicle, the traditional automotive battery simply cannot cope, and most production systems feature heavy duty absorbed glass mat batteries.  As Li-ion cells get cheaper thanks to the hybrid and electric vehicle usage demand that is pushing volumes up, the greater power capacity is attractive for stop-start systems.  The alternative is to keep a low-cost basic battery to handle the steady loads of lighting, ignition, information and entertainment systems, and HVAC, and supplement it with a high power device such as an ultracapacitor to handle rapid charging and discharging.  Both systems require robust electronics to manage the stored electrical energy effectively.

Both these systems have advantages and disadvantages, and as with most things automotive, the tradeoffs are in cost, size, and performance.  We expect to see further announcements of new batteries and energy storage technologies for stop-start systems in the coming months as OEMs begin to implement the fruits of their recent research.  Evidence of this in the United States, where the EPA testing doesn’t include enough stopping to demonstrate the practical benefits of stop-start technology, can be seen in Ford’s recent PR efforts to raise awareness.  Those benefits are too important to ignore under the pressure of increasing legislation and the consumer demand driven by rising fuel prices.


Ireland Gets Single Payment System for EV Charging

— October 11, 2012

Anyone taking a road trip in a plug-in electric vehicle in the United States will likely encounter charging stations from multiple vendors, which require either signing up for several payment cards or paying higher rates to use a credit card.  Drivers in Ireland don’t have this hassle anymore, as the country now has a single payment system.

Ireland’s Electricity Supply Board (ESB), which oversees the power grid, has teamed with IBM to implement a smart charging platform that enables drivers to roam across utility service territories and pay for electricity using one card.  IBM manages the IT infrastructure for Ireland, which provides data to grid operators about the impact of EV power consumption.  Sharing this data benefits consumers by simplifying the payment for and monitoring of EV charging, and helps utilities by anticipating potential pain points in the distribution grid where frequent daytime charging could add to peak energy demand.

IBM’s cloud-based Intelligent Electric Vehicle Enablement Platform is built on the company’s Smart Cities technologies and will manage the data flow from the nearly 1,000 charging spots currently installed in Ireland.  By 2020 Ireland is expected to have nearly 40,000 charging locations in public and residential locations, according to Pike Research’s recently published report, Electric Vehicle Charging Equipment Europe.  Ireland will have greater penetration of PEVs than the United States, thanks in part to this streamlined system.

Annual EV Supply Equipment and PEV Sales in Ireland, 2012-2020

(Source: Pike Research)

Ireland is part of the European Union’s Green eMotion project for insuring interoperability of PEVs, charging equipment, and the grid.  Ireland has ambitious goals for integrating both electric vehicles and renewable energy as part of the country’s emissions reduction strategy.  Like Ireland, the government of Portugal has also established a single payment system for EV charging.

Many of the large cloud computing companies, including IBM, SAP, Microsoft, and Oracle, see harvesting and managing data from PEVs and charging infrastructure as a considerable revenue opportunity.  The charging of electric vehicles has the potential to overload transformers or extend peak demand, and utilities are beginning to take an interest in acquiring this data.  Spending on managing electric vehicle data across Western Europe could reach $297 million by 2015, according to Pike Research’s report, Electric Vehicle Information Technology Systems.


U.S. Military Sticks to its Guns with Large Renewable Installations

— October 11, 2012

The U.S. military is taking an all-hands-on-deck approach to deploying cleantech for military applications (including facilities, vehicles, and soldier power).  The application with the most firepower is medium-to-large-scale installations – up to 12 megawatts (MW)  –  at U.S. bases – with biomass, solar PV, wind, and geothermal expected to be the primary sources of renewable energy.

Large-scale solar PV projects currently in operation on Department of Defense (DOD) property include Nellis AFB (14 MW) and Fort Carson Army Base (2 MW).  A year-long ICF International study commissioned by the DOD found potential for 7 GW of solar to be installed at seven sites in desert bases in California and Colorado alone.  Pike Research only expects a fraction of this to actually be developed, but it nonetheless underscores the size of the opportunity and the financial feasibility of deploying solar PV.  The following table illustrates some of the most economically viable military sites for solar development.

(Source: ICF International)

The Army’s Energy Initiatives Task Force (EITF), which is directing the implementation strategy for the Army, has screened 180 Army and National Guard sites and has identified potential for 20 renewable energy installations totaling 683 MW.  Of that total, 183 MW have moved from the EITF planning pipeline to the execution portfolio.  Of the 183 MW in the execution portfolio, biomass currently represents roughly 75 MW, solar represents 55 MW, and other (unnamed) technologies represent 53 MW.  The following map provided by EITF shows the large-scale renewable energy installation opportunities either under consideration or undergoing review.

(Source: EITF)

Despite the massive potential for 100+ MW deployments, the U.S. military appears to (wisely) be sticking to installation sizes that it has experience with.  A $7 billion request for proposal (RFP) released by the Army in August 2012 called for renewable energy projects across several sites to generate 2.5 million megawatt-hours of power over the next 30 years – all via projects up to 12 MW (the military will not own the power plants, but instead pay a fixed rate over the lifetime of the contract).  Twelve MW is large enough to make an impact on the overall renewable energy use at the base, but small enough to avoid the large amount of red tape, environmental and wildlife concerns, water use, and transmission issues associated with much larger renewable energy deployments.


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