Navigant Research Blog

Colorado Charges Forward with Plan to Support EVs

— February 8, 2018

While California garners deserved headlines for being the most ambitious state in promoting EVs, Colorado is pushing with its own aggressive agenda. On January 24, Colorado Governor John Hickenlooper announced the debut of the Colorado EV Plan to a crowd outside Colorado’s Alliance Center. The plan, developed in support of his 2017 executive order Supporting Colorado’s Clean Energy Transition, outlines specific programs, strategies, and goals to electrify travel corridors around the state to support the widespread adoption of EVs.

In his speech, Hickenlooper announced Colorado was eighth in EV market share last year, and that the Colorado EV Plan is “a big step toward pushing that forward.”

The plan’s five goals include:

  1. Increase adoption of light duty EVs to reach goal of 940,000 EVs in Colorado by 2030
  2. Increase the number of electric transit vehicles to 500 by 2030
  3. Increase the number of employers that provide workplace charging to employees
  4. Develop strategies and partnerships that prepare property owners for future investments in EV charging infrastructure and electrify challenging facility types
  5. Lead by example by accelerating the purchase of EVs for agency fleets and investment in EV charging infrastructure

Charging Infrastructure Expected to Benefit

The plan details that 15% of the $68.7 million Volkswagen (VW) settlement funds that the state will receive will go toward light-duty EV charging infrastructure, the maximum allowable under the settlement terms. Colorado also intends to capitalize on public-private partnerships and the grants provided through new and existing programs.

Hickenlooper spoke to how the plan fulfills Colorado’s commitment to the Regional EV West memorandum of understanding (discussed in a previous blog). This bipartisan effort brings together eight states (Arizona, New Mexico, Colorado, Utah, Nevada, Wyoming, Idaho, Montana) to connect and electrify over 7,000 miles to establish the Intermountain West EV corridor. The plan also mentions that Colorado will investigate opportunities to partner with cities, manufacturers, and transportation network companies (i.e., Lyft and Uber) to support the electrification of a variety of mobility options.

While the plan is good news for EV enthusiasts, it also marks declining support for other alternative fuel vehicles. The plan commits to changing the ALT Fuels Colorado program—which since 2014 has provided grants for the construction of publicly-accessible compressed natural gas, propane, and EVs—to begin directing funds toward the build out of the EV fast-charging corridors.

Colorado currently has only 53 DC fast-charging stations, and Hickenlooper stated that, “we probably need 4 times that, but the demand [for charging infrastructure] is not going to decrease, it’s only going to increase.” Increasing public charging infrastructure will relieve some of the anxiety that prospective and current EV owners may have about vehicle driving range.

Demand Is Great, but What’s the Cost?

The high estimate scenario for the goal of 940,000 EVs on the road by 2030 requires as many as 632 fast charger stations to support the EV population, or 580 additional chargers in the next 12 years. According to Navigant Research’s recent report, DC Fast Charging Equipment for EVs, this would require approximately $60,000 per charger, or $34.8 million. With the VW settlement funds of just over $10.3 million allowed to be used for EV charging infrastructure, this leaves the Colorado Energy Office looking for another $24.5 million from the private sector, the ALT Fuels Colorado budget, or other funding opportunities to build out the infrastructure needed to support almost 1 million EVs in the state.

 

Electricity Landscape: Expanding Demand

— January 30, 2018

On January 16, 2018, I attended the US launch of the International Energy Agency (IEA)’s World Energy Outlook (WEO) 2017 at the Center for Strategic and International Studies. Dr. Fatih Birol, Executive Director of the IEA, presented findings from the WEO and highlighted four megatrends in the global energy system:

  • Rapid deployment and falling costs of clean energy technologies
  • Growth in electrification of energy
  • China’s shift to a more services-based economy and a clean energy mix
  • The US’s position as the biggest oil & gas producer globally

Taking these megatrends into account, as well as projections on where existing policies and announced intentions may lead the energy systems, WEO’s New Policies Scenario expects global energy needs to increase by 30% between 2018 and 2040. This growth is mainly driven by India, whose share of global energy use is expected to rise to 11% by 2040. Southeast Asia also contributes immensely to overall growing demand. Developing countries in Asia Pacific are expected to account for two-thirds of global energy growth.

Growing Demand for Electricity

With a rising standard of living in many developing countries, more people will want to buy appliances and electronic devices powered by electricity. Innovative transportation technologies are gaining momentum and are projected to increase electricity demand as well. For example, China will need to add the equivalent of today’s US power system to its infrastructure by 2040 to meet rising electricity demand; India needs to add a power system the size of the current European Union. In fact, global investment in electricity overtook that of oil & gas for the first time in 2016. Dr. Birol emphasized the importance of China and India’s future energy decisions. Their decisions will play a huge role in determining global trends due to the scale of investment and deployment.

WEO Electricity Demand Projections to 2040

(Source: International Energy Agency)

Heating and Cooling Demand Ramping Up

The growing demand for heating and cooling is among various drivers for electrification of energy. In particular, consumers in warmer regions will increasingly install cooling systems. There is great potential for energy savings with energy efficient HVAC products, but that market remains largely untapped at present. According to the recent Navigant Research report, Market Data: Energy Efficient Buildings – Asia Pacific, the energy efficient HVAC market in Asia Pacific is expected to reach $25.6 billion in 2026. Specifically, China’s market is expected to grow at a 10.5% CAGR between 2017 and 2026; and 11.4% in India. Today, heating and cooling in buildings account for approximately 40% of energy consumption.

In addition to demand for heating and cooling, the EV market is expected to grow rapidly. EVs can lead to a major low-carbon pathway for the transportation sector. Notably, Europe and China are aggressively promoting EV deployments. Navigant Research projects global plug-in EV sales to reach 8.3 million by 2026.

Increasing Electricity Demands

Overall, end-use electrification is expanding. The IEA expects the share of electricity in final energy demand to increase from 18% today to 26% in by 2060. So, what does the growing electrification of energy mean? Electrification creates environmental benefits by shifting many end uses of electricity away from fossil fuel sources. It also creates opportunities for boosting energy efficiency.

While there are still many challenges to overcome, such as enforcing energy efficiency regulations and developing EV infrastructure, the electrification of large sectors of the economy holds great growth potential. This growth will be driven by rapidly evolving technologies, emerging innovative business models, and shifting regulatory environment. Together, these are referred to as the Energy Cloud, disrupting the traditional electricity landscape. To learn more about how industry stakeholders can prepare and manage their organization to maneuver through the Energy Cloud disruption and position themselves for long-term success, see Navigant Research’s white paper, Navigating the Energy Transformation.

 

The Door to Sharing EV Charging Data Is Now Open

— January 30, 2018

Industry players agree that understanding the interaction between plug-in EVs (PEVs) and the grid is critical to growing the PEV market. Utilities are interested in the analysis of charging behaviors and their impact on the daily load cycles so that they can plan for the additional load. In the US, with the exception of government-funded enterprises such as the EV Project, charging data collected by utilities, automakers, and charging service providers (CSPs) has remained proprietary to their organizations.

Electrify America Leading the Way

However, in the foreseeable future, investments by the likely largest funder of EV charging infrastructure in the US will spur greater openness by CSPs on charging data. Electrify America, the Volkswagen (VW) company that was created to comply with the terms of the diesel settlement with the Environmental Protection Agency, has been selecting CSPs that support open standards to enable the sharing of charging data.

On January 23, Electrify America, which will spend $2 billion over 10 years on charging infrastructure, awarded a contract to Greenlots to be the operating platform for an upcoming network of high power DC fast chargers. According to the press release, “Greenlots’ technology will enable Electrify America to effectively build, operate, and manage its high power charging network by providing real-time charger health status, utilization data, dynamic pricing capabilities, and predictive analytics.” In addition, Greenlots’ CEO Brett Hauser said that the company’s SKY platform will roll up data from all of the charging hardware, regardless of the vendor.

Installing Chargers

In December 2017, Electrify America announced that it would install 2,800 Level 2 chargers in workplace and residential locations in 17 of the biggest metropolitan areas across the US. For the project, which also includes multifamily and designated low income and disadvantaged community areas, Electrify America selected Greenlots, EV Connect, and SemaConnect as its CSP partners.

Both Greenlots and SemaConnect are participants in the Alliance for Transportation Electrification, a group that launched in November 2017 to promote open standards, help shape state policies and rate structures, and facilitate expansion of EV infrastructure. The open standard that the group supports is the open charge point protocol (OCPP), an international standard with origins in Europe that is gaining momentum in the US. OCPP is supported by Greenlots, EV Connect, and many of the largest global CSPs, as well as BMW.

Observing Results and Driving Adoption

By selecting vendors focused on storing and sharing data in a standard format, Electrify America will be able to see what is happening across its network, regardless of which vendor’s equipment is being used or which CSP is managing the equipment. For example, it will be able to track patterns of how electricity consumption from PEVs is influenced by weather, how the hourly load impact differs by region, or how charger utilization in different geographies can inform future investments in charging infrastructure.

While not all EV CSPs have embraced the notion of standardizing and sharing data, the size of Electrify America’s investment will likely encourage greater adoption of this notion from charging companies looking to get in on the action of VW’s substantial investments. The next formidable hurdle is for automotive manufacturers to also embrace open charging data. It is an encouraging step that Britta Gross of GM is among the participants in the Alliance for Transportation Electrification. Industry observers will be watching to see who joins this movement next.

 

Shell’s Acquisition of First Utility Augurs a New Wave of Competition

— January 16, 2018

At the start of 2018, a warning shot was fired across the utility industry’s bow: competition is showing no sign of abating. If anything, competition is actually heating up. The nature of utility industry competition has changed dramatically since the start of the decade.

If we rewind 5 years, utilities’ biggest competitors were other utilities. Telcos and high street retailers posed a moderate threat, as some showed an interest in the addition of energy supply to existing, mass-market services such as mobile and fixed-line communications, broadband, pay-TV, and financial services.

Telcos Contemplating Market Entry

Over the past decade, I have advised numerous telcos on opportunities in energy, some of which have moved into the space. Most of the market movement has taken place in collaboration with utilities, which essentially whitelabel energy supply. However, the impact of telcos on the energy industry (and vice versa) has been underwhelming. Why? Because there has never been an imperative for telcos to sell energy, or utilities to sell telco services. It’s a nice-to-have add-on that may help reduce customer churn, but little else.

EV Growth a Clear and Present Danger to Oil Majors

The present day competitive environment has shifted significantly. Utilities face new threats from new entrants with a significantly greater reason to enter the world of energy services. Nothing underlines the shift in competitive pressure more than Shell’s acquisition of the UK’s First Utility, the first major energy supply business to be acquired by an oil major.

This acquisition should come as no surprise to anyone monitoring the energy landscape. My last blog of 2017 called on utilities to improve their peripheral vision and monitor competitive threats. It seems that many oil majors have a more mature peripheral vision, and are already acting to mitigate future potential risks to their core business.

The shift to EVs causes significant concern for oil majors. By Navigant Research’s reckoning, plug-in EV sales in 2017 exceeded 1 million for the first time; the significant investments in recharging infrastructure and increasing concerns regarding the pollution of internal-combustion engines will only accelerate the shift to EVs. Any oil major extrapolating EV adoption to an extreme scenario of ubiquitous EVs will recognize the potential disaster for service station businesses.

Oil Majors’ Competitive Response Covers the Entire Value Chain

However, EVs present an opportunity to oil majors. Most oil majors have renewable energy subsidiaries, and EVs present a new customer segment; existing service stations are perfectly placed to convert to EV charging points and 30-minute recharge times are an additional opportunity to attract customers into a retail store. But EVs are just one part of a wider energy service ecosystem which oil majors are targeting. Shell’s recent investments and acquisitions include a sizeable portfolio of grid-scale renewables generation; Sense, a smart home technology vendor; EV recharging points in the UK; and an energy supply business with 850,000 customers.

Oil majors, if certain scenarios play out, could suffer significant loss of value in the energy transition. This has helped create significant momentum behind oil majors’ activity in downstream energy, eclipsing any efforts from telcos over the past decade.

Shell and most other oil majors recognize there is significant value up for grabs in downstream energy. Their challenge is how to pull together their different acquisitions into a service that offers significant differentiation from utility industry incumbents. The challenge for these incumbents is a credible competitive response: utilities in competitive markets must first recognize value-at-risk from non-traditional competition, then develop products and services for the 21st century consumer.

 

Blog Articles

Most Recent

By Date

Tags

Clean Transportation, Digital Utility Strategies, Electric Vehicles, Energy Technologies, Policy & Regulation, Renewable Energy, Smart Energy Practice, Smart Energy Program, Transportation Efficiencies, Utility Transformations

By Author


{"userID":"","pageName":"Electric Vehicles","path":"\/tag\/electric-vehicles","date":"2\/20\/2018"}