Navigant Research Blog

The Dutch Blaze an EV Trail

— November 12, 2014

With the most recent alarming report on climate change from the Intergovernmental Panel on Climate Change (IPCC), governments are once again faced with the question of how to develop policies to address the climate crisis.  The IPCC says that the unrestricted use of fossil fuels must be phased out by 2100.  For some governments, like in the United States, the challenge lies in just getting the public to agree there is a problem.  But even in the European Union (EU), where there is broad consensus on the need for action, it can be challenging to convert this into policies that will successfully drive down greenhouse gas emissions.

One challenge is setting appropriate and achievable targets based on clear-headed analysis, not wishful thinking.  Another challenge is then devising the right mix of carrots and sticks to allow the goal to be met.

The Right Place

The Netherlands’ electromobility initiative is one example of how to develop and implement an environmental policy effectively.  I recently had the chance to talk with a delegation from the Netherlands about the country’s push to promote plug-in vehicle (PEV) adoption and its successes to date.  The first and most critical step was recognizing that the country had the right conditions for PEV adoption.  The Netherlands is a small country, densely populated and highly urbanized.   The Dutch tend to be environmentally conscious already, and the country has an extensive and stable grid network (fueled mostly by fossil fuels but with around 15% renewables).  The country also has some of the highest gas prices in Western Europe, thanks in part to the highest fuel tax in the EU.

Given these conditions, the government’s belief that PEVs could find success was well-founded.  The government has set a goal of having 200,000 PEVs in the Netherlands by 2020.  According to Navigant Research’s report, Electric Vehicle Market Forecasts, total light duty vehicle (LDV) parc (i.e., vehicles in use) in the country will be 8.6 million in 2020.  Two hundred thousand PEVs would be 2.3% of the total vehicles on the road.  That may seem small, but it’s actually an aggressive target, requiring PEVs to average more than 5% of annual LDV sales over the next 6 years.   According to Navigant Research’s PEV forecasts, only Norway, Estonia, and the Netherlands have broken 1% annual PEV sales as of 2014.

Tax Relief

The Dutch government offers significant tax incentives for PEV purchases, PEV leasing, and EV charging equipment installation.  The PEV purchase tax rebate amounts to around €7,000 to €10,000 ($8,700-$12,500).  Perhaps more important, however, is the income tax relief on private use of a company car.  A significant number of cars in use in the Netherlands are company cars or cars leased for company use.  PEVs were exempt from the income tax, saving drivers as much as $5,000 annually.

At the same time, the Dutch government provides incentives for EV charging station deployment, for public and workplace use especially.  As of October 2014, there were more than 9,500 public charging points in the Netherlands.  The effort to roll out infrastructure is supported by Dutch energy and grid companies.

The policies have worked: as of 2014, annual PEV sales in the Netherlands amount to 4% of total LDV sales, and there are a total of more than 32,000 PEVs on Dutch roads.  Moreover, Navigant Research forecasts that the country will actually reach the 200,000 PEV goal by 2019, a year early.

The next phase for the electromobility initiative will see it moving beyond the early PEV adopter phase and promoting further EV charging station workplace and public deployments.  The country’s next target – 1 million PEVs by 2025 – will be a challenge to reach.  But the Dutch have proven that progressive policies can truly shift the vehicle market.


High Capacity Chargers Target Europe’s Luxury Market

— February 20, 2013

Source: DaimlerThis spring Daimler will introduce the third generation of its smart fortwo electric drive (ED) vehicle to the North American consumer market.  Technically, the electric version of the vehicle has already made landfall through Daimler’s carshare program car2go in San Diego and Portland; however, this year’s introduction is especially important, as the vehicle will be the lowest priced battery electric vehicle (BEV) on the market at $25,000 MSRP.

The vehicle entered mass production in June of last year, and sales to various European markets have begun over the last few months.  In Europe the automaker offers an optional on-board 22 kW charger for its 17.6 kWh battery, which can charge the battery from a high capacity AC power supply in around an hour.  This gives the ED the potential to charge from AC power at a rate 3 times faster than all other BEVs.  Daimler has yet to announce whether the 22 kW onboard charger will be an option in North America, but it probably won’t since the standard outlet in North America can supply far less power than outlets in Europe.

The onboard charger capacity determines the amount of time it takes to recharge a vehicle’s battery.  The first generation Nissan LEAF used a 3.3 kW onboard charger, but 2013 versions are being outfitted with 6.6 kW chargers.  This upgrade allows the LEAF to be charged twice as fast when using Level 2 charging equipment.  High capacity chargers generally require a lot of space and therefore most BEVs have a max capacity charger of 6.6 kW.  Daimler’s integration of a 22 kW onboard charger is a leap forward.

Low Power Solution

However, in order for individual and fleet EV owners to use the higher capacity onboard chargers they must first install the infrastructure capable of delivering such a charge.  This is much easier in Europe, where the standard electrical outlet is 230V, whereas outlets in the United States and Canada are 120V.  The difference means that (depending on amperage) standard outlets in Europe can theoretically deliver around 19 kW whereas standard North American outlets max at 1.8 kW.  In North America, 230V outlets are usually for high power appliances like washers and dryers, but they can also be installed with the addition of a circuit from the electrical panel to the outlet.

Installing the necessary infrastructure to deliver such a high power charge is not necessarily expensive in comparison to the purchase price of the BEV; however, the cost may be unnecessary as charging at lower power capacities is proving sufficient for many early BEV adopters.  A survey of 3,703 fleet EVs administered by Fleetcarma measured vehicle rest times and states of charge (SOC) at the end of the day.  The survey found that charging at 1.3 kW could meet the needs of 88% of the average fleet BEV.   The 22 kW onboard charger would be an intriguing option for the North American market, but its incremental costs will make it of interest to only a few early adopters.  Like the 35-hour work week and real Champagne, it will likely remain a European luxury.


Energy Pool, Europe’s Largest Aggregator, Eyes Rapid Growth

— December 11, 2012

French energy giant Energy Pool, majority owned since 2010 by Schneider Electric, is currently the largest aggregator of demand response (DR) in Europe, with curtailment capacity of around 1,000 megawatts (MW) and a penetration rate of close to 80% in France.  Today, Energy Pool manages curtailment capabilities at 70 sites, representing 50 customers.   By the end of 2013, its DR capacity is expected to be upgraded to 1,500 to 2,000 MW.

So far, Energy Pool’s growth has primarily come from large industrial customers that participate in the company’s emergency or interruptible load DR programs.  However, Energy Pool is increasingly aggregating load from high-energy users within the commercial sector, such as hospitals, shopping malls, and retail stores.  Participation in DR by this customer segment is expected to ramp up in the coming years.

Although Energy Pool’s customer base is primarily located in France, the company’s goal is to expand its presence abroad.  Initially, it plans to focus on the industrial sector in Belgium in 2013, soon to be followed by other countries in Europe.  The company is counting on a push for DR within the EU because of the European Union’s aggressive energy and climate change policy to reduce carbon emissions (20% from 1990 levels) and energy consumption (by 20%), while increasing the use of renewables (by 20%) by 2020, thus creating new supply-demand challenges for the grid.  Another major market driver in Europe is the expectation among business and building owners that the price of electricity, which has so far remained relatively low, will rise.  Moreover, payments by Energy Pool in exchange for load curtailment, along with lower energy consumption, and hence costs, are also strong incentives to take part in the company’s DR initiatives.  According to Energy Pool, their customers’ electricity bill could decrease by 3% to 10% in a year.

Although it can expect serious competition from EnerNOC, which has recently been establishing a foothold in the United Kingdom, and emerging aggregator KiWi Powers, which is headquartered in London with a fast-growing DR business, Energy Pool can leverage the significant resources of Schneider Electric and its long legacy as a building management systems provider.  Schneider’s long-term relationship with building owners and facility managers throughout Europe and other parts of the world gives Energy Pool access to a large number of potential DR customers.  The company has won several significant DR contracts.  (For example, Energy Pool, which declined to release specific customer examples, says it has recently signed a deal to manage the load capacity of 20 large office towers in the business district of a major city.)  Such deals reaffirm the company’s ambition to accelerate its growth in Europe and elsewhere.


Winter Coming, Europe Looks to Battery Storage

— November 7, 2012

As Europe prepares for the looming winter season of high peak electricity demand, large grid operators and utilities in Europe are increasingly looking to the value of battery storage on the grid.  Several notable projects have emerged this year that highlight a preference for established battery providers and for one battery type: lithium ion.  Each highlights a different potential pathway to market for advanced batteries in Europe.

Italy and Spain, both markets that lie at the edge of the European Union’s emerging Super Grid, are now home to two significant lithium ion battery installations.  In Italy, which imports significant volumes of power, Enel has awarded a contract to NEC for the installation of batteries at a substation in the southern region of Calabria.  While no substantive details about the project have been released, NEC brings nearly a century of experience developing technology and a global presence to the project.  Working directly with the utility Enel highlights one potential pathway through which batteries might populate the grid.

In Spain, renewables developer Acciona has partnered with Saft to pair utility-scale solar with a 560-kilowatt-hour lithium ion battery installation. The falling costs of solar power are driving solar installations globally, but distributed systems pairing solar with batteries have only begun to emerge, thanks to unique financing mechanisms like solar leasing.  What Acciona and Saft are undertaking may highlight what independent power developers can do with bulk solar and utility-scale battery systems, when backed by significant experience and capital.  Acciona’s 2011 revenues exceeded €6 billion.  In this case, the business models for developing merchant power plants that combine renewables and batteries remain unchartered territory.  The coming years will be illustrative to this end.

Providing market experience and technical knowledge, these projects could open the door for battery storage.  With each installation the grid storage industry discovers a new technical or market issue, either resolved or in need of modification.  The pace at which the industry is developing could allow for the emergence of new technologies, ones that may be more cost-effective or technically savvy.

These two projects highlight different approaches to battery storage development, with Enel embodying a growing technical need for storage on the part of utilities.  Conversely, Acciona may offer a glimpse of a merchant developer approach.  Regardless, with these early projects, Saft and NEC are carving out important first-mover positions in the European market, relying on reputations of technical achievement and deep pockets which will help them bridge the gap to the emergence of a commercial market, a market Pike Research believes is still a number of years out.


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