Navigant Research Blog

In Big Cities, Fleets Turn to Alternative Fuels

— October 1, 2012

Last week I spotted an alternative fuel vehicle in Washington, DC: a hybrid Coca Cola delivery van.  According to Coca Cola, this truck, which is one of 700 operating in North America, uses 30% less fuel than its traditional counterpart.

What motivates a company operating more than 200,000 vehicles to consider alternative fuels and drivetrains (i.e.  integrating cleantech) into its fleet?  At the end of the day, it comes down to lowering operating costs.  But there are other factors that are making the switch easier.  For one, there are now more choices than ever.  Next, fleets are a great market for cleantech.  And finally, cities are taking a closer look at emissions and human health – and are encouraging businesses to do their part.

The clean transportation options for fleet managers include natural gas, hybrid vehicles, and hydrogen fuel vehicles.  ITM Power, a United Kingdom-based hydrogen electrolysis company, targets fleets.  ITM Power has coupled its electrolyzers (which generate hydrogen from water) with solar PV for completely “green” hydrogen fuel for fleets.

With their predictable routes, fleets are an ideal market for alternative fuels and drivetrains.  Range anxiety is less of an issue if a vehicle has a fixed route.  Fleet operators are also highly conscious of fuel efficiency, since fuel costs represent part of the cost of delivering the product to the customer.  In some markets, fuel costs – mainly diesel – are high, volatile, or both.  The idea of using less fuel or cheaper fuel is appealing for the bottom line.

Motivated by savings, these fleets are producing benefits that also carry over to society.  Lowering emissions of all types makes cities healthier places to live.  In order to improve air quality, city governments are sending market signals to firms operating fleets (and to government agencies that operate fleets).  The U.S.  Department of Energy has been operating the Clean Cities Initiative since 1993.  The Initiative, which includes Washington, D.C., has a mission to encourage “alternative transportation deployments.”  A similar, global effort is run by the C40, which advises 58 cities globally on how to reduce emissions and improve human health as a result.  Twelve cities are targeting transportation as one the key areas for emissions improvements.


Plugfest Marks Milestone for Interoperable HEM Devices

— October 1, 2012

We take for granted interoperability among technical gadgets.  From laptops to mobile phones to printers, we expect a basic level of common functions like being able to send a text message no matter the mobile phone or network.  Smart grid home energy management (HEM) gear currently lacks some basic interoperable capabilities – but not for much longer.

Testing among makers of electric meters, thermostats, appliances, and gateways is taking place, and by next year the latest interoperable devices should be on the market, helping to fuel wider adoption of devices that enable consumers to better manage their energy consumption.

In late July the ZigBee Alliance, the Wi-Fi Alliance, and the HomePlug Alliance formed the Consortium for Smart Energy Profile Interoperability (CSEP), which promotes Smart Energy Profile 2.0 (SEP 2), an emerging standard for connecting HEM devices to the grid.  The three companies have successfully finished their first interoperability “Plugfest” – the actual testing of gear to make sure it interoperates as planned.  More plugfests are scheduled in coming months as the consortium moves to finish its certification program.

Assuming the testing moves ahead smoothly, the ecosystem of vendors, utilities and consumers will be able to rely on SEP 2 as the common glue for energy management and automated demand response programs.  As noted in our recent report, Home Area Networks, the lack of a standard for devices to communicate and share information has inhibited the market’s growth.

The hope among industry players is that all of this behind-the-scenes work will lead to a slew of new products that work seamlessly, and that attract a wave of customers who embrace home energy management.  That’s possible, but what’s more likely is a slower rate of adoption for the next year or two as products mature and consumers discover what works and what doesn’t as they aim to reduce their energy consumption.


A Pair of MIT Scientists Try to Transform Nuclear Power

— September 27, 2012

Leslie Dewan and Mark Massie are Ph.D. students in nuclear engineering at MIT.  For most of their peers, the options upon graduating are pretty simple: teach, or work for one of the national labs.  Dewan and Massie, though, decided on an unconventional path: like a couple of Stanford grads, they’ve formed a start-up.  Incorporated in 2011, it’s called Transatomic Power, and its mission is to transform the nuclear power industry.

Transatomic’s product is called a “Waste Annihilating Molten Salt Reactor.” If you’ve read my book, SuperFuel, you’ll recognize it as an update on an old reactor technology that was pioneered at Oak Ridge National Laboratory, in the 1950s and 60s.  SuperFuel focused on another type of molten salt reactor, a Liquid Fluoride Thorium Reactor, or LFTR.  Dewan and Massie’s design is fuel-agnostic in the sense that it can run on either uranium or thorium; as the name implies, its signal feature is that it can consume spent fuel from conventional light-water reactors.  Transatomic joins a growing list of start-ups, including Flibe Energy, that are trying to revolutionize nuclear power by bringing back alternative fuels, including thorium, and alternative reactor designs.

(A quick note on the uranium fuel cycle: Most uranium in the ground is the isotope uranium-238 (U238), which is not fissile, and thus is no good for producing power.  Conventional reactors require fuel in which the percentage of the isotope U235 has been enriched up to 3% to 5%, or “reactor-grade” uranium.  Uranium that is enriched to around 20% U235 is weapons-grade.  That’s why it’s a relatively easy step for countries with enrichment capability, like Iran, to build nuclear weapons programs.  Thorium requires no enrichment.)

‘A Leapfrog Move’

“Nuclear power is in a cul de sac,” Russ Wilcox, the CEO and co-founder of Transatomic, told me in a phone interview.  “The nuclear industry knows it’s in trouble, it’s not quite sure what to do, and it’s just trying to survive for the moment.  It’s a fabulous time to do a leapfrog move.”

Wilcox was one of the founders of E Ink, which commercialized electronic paper materials originally developed at MIT’s Media Lab and ended up licensing the technology to Amazon, for the Kindle, to Barnes & Noble’s Nook, and so on.  E Ink was sold to Taiwanese company Prime View for nearly half a billion dollars in 2009. Transatomic’s plan is to build a prototype reactor in 5 years, commercialize the technology in 15 years, and have reactors come online by around 2030.  The company doesn’t plan to build and operate nuclear power plants, but to license its reactor technology.

Molten salt reactors (MSRs) can achieve much higher burn-up factors than conventional uranium reactors.  In other words, while conventional reactors harness only around 3% of the available energy in a given volume of uranium, MSRs can capture much higher percentages – up to 98%, according to Transatomic (I should note that the nuclear experts I consulted for SuperFuel believe that burn-up factors of 50% are more realistic).  Beyond that, the company is not releasing details of its patented reactor technology.

Liquid-fuel reactors, such as MSRs, also offer inherent safety advantages: because the fuel is liquid, it expands when heated, thus slowing the rate of nuclear reactions and making the reactor self-governing.  Also, they’re built like bathtubs, with a drain in the bottom that’s blocked by a “freeze plug.”  If anything goes wrong, the freeze plug melts and the reactor core drains in to a shielded underground container.  Essentially, if Transatomic’s design works as advertised, MSRs could solve the two problems that have bedeviled the nuclear power industry: safety and waste.

Noting that China plans to build a liquid-fuel reactor (likely powered by thorium) within 5 years, Wilcox says that he and Dewan and Massie – currently the entire staff of Transatomic – would prefer to build the prototype MSR in the United States, but will consider another country if the licensing or financing proves too difficult here.  (The Nuclear Regulatory Commission recently licensed a two-reactor nuclear plant in Georgia, the first new reactors to be licensed in this country since 1978.  The reactors are conventional light-water uranium powered models.)

In SuperFuel I noted that the nuclear power industry has a generational problem: most of the leading executives in the industry are now in their 60s.  It will take a new generation of scientists and technologists to spark a revival in nuclear power technology.  Transatomic Power is an encouraging sign that this is beginning to happen.


Retreat on EVs Not a Rout

— September 25, 2012

Toyota’s announcement that it is cutting back on a planned battery electric vehicle (BEV) launch is the latest bad news for believers in emissions-free driving, but it reflects the reality that vehicle batteries still need improvements before BEVs will be ready for the mass market.  While fleets with compatible driving routes and some consumers are more than happy with their BEVs today, other uses stretch the vehicles beyond their limitations.

Like several of its peers, Toyota never fully committed to bringing a BEV to the masses.  The eQ (originally the iQ) was only intended by Toyota to be a limited production vehicle for fleets at best, so reducing production to a hundred or so isn’t really significant to the overall demand for BEVs.  Toyota has always believed that fuel cell technology is the long-term answer for zero emissions driving, so the company pulling back from a tepid market should not be viewed as a surprise.

Of more concern is dwindling demand for the Nissan Leaf in the United States, and the company’s having to deal with dissatisfied customers in Arizona.   With sales of the Leaf falling below 1,000 cars for the past few months, Nissan is wisely retooling the battery pack for 2013.

As I have said several times at industry events, the state of BEV technology in 2012 is not sufficient to create a market of a million vehicle sales annually.  The automakers need to come out with battery packs that can retain a greater percentage of their storage capacity for longer, cost half as much, and have improved energy density, so that they can serve many driving cycles.  Improvements are being made on all of these fronts, and second- and third-generation BEVs will perform above today’s levels.

It’s important to note that it’s not all dark days for BEVs.  Renault ‘s electric vehicles are selling well in Europe, and the Fluence is being launched in South Korea as the Renault Samsung SM3.   Better Place is likewise having success with the Renault vehicles in Denmark and Hawaii.  And in Norway, EVs are now an impressive 3.6% of new vehicle sales.

And then there’s Tesla Motors, which is so confident about the robustness of its battery packs, that the company is curiously developing a fast charging network.

The BEV market is divided between “true believers” (Nissan, Renault, Coda, Tesla), pragmatic companies that are equally invested in plug-in hybrids (GM, Ford), and “only if we must” companies (Toyota, Fiat-Chrysler, Honda).  Going all-in today or fully dismissing the market for BEVs are both dangerous strategies.  The verdict on their long-term viability won’t be in until at least 2015, so until then, a pragmatic approach is likely best.


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