Navigant Research Blog

Fuel Cell and Hydrogen News Roundup

— February 14, 2012

Given the rapid pace of development in the fuel cell and hydrogen sectors it’s worth taking a quick look back at the major developments so far for 2012.  This is not designed to be an exhaustive list but to provide some snapshots of interest.

Some key highlights, as of February 1:

  • 932 kilowatts (kW) of new fuel cell installations, from the stationary, transport and portable sectors
  • New orders have totalled a whopping 54,034 kW of fuel cell power
  • Orders and installations of polymer electrolyte membrane (PEM) fuel cells totalling 53.9 megawatts (MW), solid oxide fuel cells (SOFC) 500 kW, phosphoric acid fuel cells (PAFC) 400 kW and alkaline fuel cells (AFC) less than 50kW
  • Fuel cell stacks from Canada dominated shipments, but in fuel cell systems the United States dominated
  • The most northerly hydrogen refuelling stations, from H2 Logic, opened above the Arctic circle
  • UKH2Mobility grabbed the most headlines (in Europe at least)

In terms of government intervention, three pieces of critical policy and/or legislation made headlines in January. First, China announced that it would remove all sales tax from locally manufactured battery EVs and fuel cell EVs.  This move effectively cuts the price of the vehicles by 9%. The Chinese government is also offering a further subsidy for adoption, again for locally produced vehicles only, of $19,000. Foreign-produced vehicles are expected to face a 25% import duty.

Also, the California Air Resources Board passed the revised version of the state’s Zero Emission Vehicle (ZEV) mandate. The 2012 version of the ZEV mandate covers car and light duty truck model years 2017 to 2025 and, if kept in place, should see ZEVs or plug-in hybrid vehicles accounting for 1 in 7 of new cars sold in California by 2025. To put it another way, more than 1.4 million ZEV and plug-in hybrid vehicles will be on the road in California by 2025.

Finally, in Japan the eco-car tax reduction will be continued throughout 2012 for fuel cell vehicles, BEVs and plug-in hybrid vehicles. The cars will also continue to be exempt from the so-called weight tax and acquisition tax.

Looking ahead, we have already seen news of the Feed-in-Tariff (FiT) for micro combined heat and power (mCHP) being raised in the UK; the largest PEM power plant in the world up and running; and the announcement of a 1MW hydrogen storage product launch during the Hannover Fair in April.


Latin America Ready to Break Out With Smart Meters

— February 13, 2012

Latin America is on the verge of breaking out of the smart meter doldrums.  Up until now, the region has lagged behind North America and Europe in the deployment of smart meters, but that is about to change, and 2012 looks to be a launch-pad year.

Here are some recent signs that things in the region are heating up for smart meters:

  • In Ecuador, Eléctrica de Guayaquil has completed the installment of Latin America’s first meter-to-cash system, according to Itron, which provided the technology; the communication system now collects meter data and feeds it to Itron’s meter data management (MDM) system.  The new system enables the utility to better manage energy losses with more precise tamper-proof meters that feature accurate measurement and sensing capabilities.
  • In Brazil, ANEEL, the nation’s electric power regulator, is planning for a nationwide deployment of some 63 million meters by 2021, with large-scale meter deployments starting in 2012.
  • Also in Brazil, anticipation is growing for a possible new smart meter factory to be built by ATC International Group, a Chinese manufacturer.  ATC intends to build the plant to meet Brazil’s growing demand for smart meters, and the company is waiting for Brazil’s government to finalize rules for the minimum technical requirements before moving ahead.  Those rules are expected to be announced in early 2012.
  • DistribuTECH, the noted North American electricity transmission and distribution show, will launch its first South American version of the event in 2012.  Called DistribuTECH Brasil, it will take place in Rio de Janeiro from September 25 to 27.  The show “will be a game changer,” says Teresa Hansen, DistribuTECH’s chairwoman for both continents, who adds in a release that “we’re about to see a huge boom in Brazil’s electricity transmission and distribution industry.”

Beyond the event hype, you know an industry is gaining traction when a trade show of this magnitude makes a move to a particular territory.

Clearly, Brazil is at the forefront of the coming growth for smart meters in the region.  It has the population base and a rapidly growing economy that can support deployments of this scale.  In addition, the country is trying to boost its reputation as an economic force, especially as it will host two major sporting events that will bring worldwide attention: the 2014 FIFA World Cup and the 2016 Summer Olympics.  A smart meter deployment fits nicely with its image-polishing efforts.  We expect other Latin American countries to make announcements about smart meter rollouts over the next several years as well, as they follow Brazil’s example, and learn from its mistakes.  Certainly, it will be an interesting time for smart meter vendors as they compete in this region.


Pentagon Looks for Energy Savings

— February 13, 2012

In these times of tightening budgets and linger economic uncertainty, the energy savings performance contract model appears to be enjoying growing popularity.  In our most recent analysis of the ESCO market in the United States, one of the most interesting dynamics in the market is the federal sector’s growing appetite for third-party financing.  This is a new course for the U.S. government and for the Department of Defense in particular, which has not favored the ESPC model historically.  It now appears the Pentagon, which spends roughly $4 billion annually on energy, is reviewing a broad menu of tools and resources that will ensure compliance with energy-saving mandates.

Third-party financing, accessed through guaranteed savings contracts, presents a unique opportunity for the DoD to reach energy savings targets in its portfolio of buildings, despite declining Congressional appropriations.  In these budgetary conditions the approach calls for low-cost, scalable tools that will assess initial energy performance and identify opportunities for improvement, and provide on-going feedback, without requiring an onsite energy auditor.  Such a tool exists: FirstFuels’s Rapid Building Assessment, which my colleague Eric Bloom wrote about last September.  It appears FirstFuels’s RBA, like the ESPC model, is seeing growing adoption in the federal sector.

Rapid Building Assessment was one of 27 proposals selected by the Department of Defense’s Environmental Security Technology Certification Program (ESTCP) to demonstrate how energy technologies can save the military dollars and kilowatt-hours.  The “zero-touch” software aims to assess energy performance across the DoD’s more than 300,000 buildings using algorithms applied to consumption data to deliver actionable intelligence on building energy performance.  At roughly $2,000 per building, RBA can track down energy savings opportunities without human interference, cutting costs from the start.  And with the help of the widely used International Performance Measurement and Verification Protocol (IPMVP), RBA can provide feedback on actual savings.  Measurement and verification is a requirement for Federal sector energy savings projects.

The energy consumption profile of the Department of Defense is unique, given its particular operational requirements, which can mean big costs even just to assess energy savings opportunities.  Given the time and monetary constraints the DoD faces in implementing energy efficiency measures, the selection of FirstFuel’s RBA could be the solution to getting out from between that rock and hard place.


Going Green a Win-Win For Fleet Operators

— February 7, 2012

Over the past few weeks I’ve been crunching some numbers on how alternative fuel vehicles compare on lifetime ownership costs.  I am doing this not because I am a masochist, but for an upcoming Pike Research report on Total Cost of Ownership (TCO) estimates for fleet operators.  The initial results demonstrate yet again the basic advantage of going small for fleets that want to save on fuel costs – but they also reveal that small isn’t the only way.

My analysis dovetails nicely with a recent report by Automotive Fleet on the top five concerns facing commercial fleet operators.  According to the survey, three of the top five issues that fleet operators expect to grapple with in 2012 are:

  • Cost-reduction.
  • Fuel price volatility
  • Implementing green fleet initiatives

As Pike’s past analysis on the potential market for hybrid electric vehicles in fleet operations makes clear, fleet operators have been struggling with these issues for several years.  Fleet operators are increasingly looking to reduce their fleets’ environmental footprint, either as part of their own “green ethos” or due to legislative or regulatory requirements.   At the same time they need to keep an eye on costs, since their primary responsibility is the bottom line.  So, are these priorities in conflict or can they work together?  The simple answer is , a bit of both.

Fuel costs are one of the biggest, if not the biggest, items in fleet operators’ annual budgets.  So, if going green also means lower fuel costs, fleet operators win on both counts.  The preliminary results from my analysis confirm that if fleets want to go green and keep costs down, their best bet is to stay small.  This analysis looked at vehicle cost, maintenance, fuel costs, and available tax incentives  – in order to keep the comparison focused on the trade-offs in switching fuels and propulsion technologies.  Two of the lowest cost options were the small hybrid cars (sized like the Honda Civic, for example) and the compact gas car.  Even at today’s low gas prices, the small hybrid managed to best a comparably-sized gas car in total ownership costs over a 120,000-mile life, and if gas prices rise, as they almost certainly will, this benefit will increase.  Some of the other very low TCO options were the compact CNG (compressed natural gas) sedan and the small to mid-sized battery EV with its $7500 federal tax credit.

But it wasn’t just the small cars that could help fleet operators reduce fuel costs while operating cleaner.  At the mid-sized sedan level, the hybrid option still showed lower lifetime costs than a comparable gas car. And this is without the benefit of a tax credit, as these have expired for conventional hybrids.  Hybrids will, of course, pay back their price premium even more quickly with higher fuel prices – making hybrid adoption a strategy for hedging against future increases in the price of gas, and addressing fleet operators’ third major challenge, fuel volatility.

The final note here is that, while operating costs and total lifecycle costs may be lower with hybrids and other alternative fuel options, the fleet operators still face a challenge in fronting the initial higher vehicle costs.  This is where the desire to go green and watch the bottom line come into conflict.  And why fleets look for grants that can offset the initial price premium and help them make the business case for buying hybrids.  What my analysis shows so far is, hybrids can pay off the investment for fleets that keep their vehicles for a long time.


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