Navigant Research Blog

Support for EV Charging Presents New Challenges and Opportunities

— March 9, 2017

As new EV models are introduced at increasingly low prices, the need for charging infrastructure is growing around the world. According to Navigant Research’s report, Electric Vehicle Charging Services, plug-in EVs will represent 22.6 million MWh of demand by 2020. Major efforts are underway by governments, utilities, and private companies to capitalize on this new source of energy demand that is necessary to facilitate the transition to electrified transportation. With this new demand for electricity comes both the possibility for disruptions to the grid and significant opportunities for solutions capable of overcoming these new challenges.

Motivations for Change

Around the world, governments are stepping up efforts to support the growth of the EV industry by facilitating the development of charging infrastructure. Perhaps the most significant effort is the recently announced plan for the Chinese government to support the installation of 800,000 new EV charging points in 2017 alone. The main drivers for governments to support the EV industry are to reduce air pollution, enable a new source of economic growth by supporting local vehicle and component manufacturers, and drive new infrastructure investments. These issues are particularly relevant in China, where urban air pollution is a national health crisis and where EVs are a growing domestic industry.

Private companies are becoming increasingly involved in the EV industry. In early 2017, multinational oil major Shell announced that it will begin installing EV chargers at the company’s gas stations. Shell and other oil companies are looking to EV charging as an opportunity to diversify revenue streams, as the current low gasoline prices are reducing profit margins and overall gasoline consumption is projected to continue to decline.

Challenges and Solutions

Finally, utilities in many areas have been major supporters of the transition to electric transportation. At a time when overall electricity consumption is decreasing and more customers are generating their own power, EV charging is likely to be the most significant source of new demand on the grid, and utilities are eager to help it grow. This dynamic is evident in the recently announced proposal by utilities in California to spend approximately $1 billion on new EV charging infrastructure. While EV charging is an opportunity for utilities, they are also faced with a number of major new challenges caused by the technology. EV charging causes considerable spikes in demand, often with little control or coordination. Additionally, charging stations are often located at the edges of the grid on circuits that may already be approaching capacity constraints during peak demand periods.

EVs and charging systems are integral pieces of the rapidly evolving distributed energy resources (DER) ecosystem. For many DER, the overall value and ability to effectively integrate with the existing grid is greatly enhanced by pairing complementary technologies together. Distributed energy storage may emerge as an ideal technological match for EV charging. There are already a number of partnerships between EV charging and energy storage providers aiming to reduce the effect of charging on congested infrastructure and shift renewable energy generation to align with EV charging needs. To fully realize the benefits of combined EV charging and energy storage, along with most DER, sophisticated software platforms are required to align the needs of the grid with those of customers. Software platforms with the ability to monitor and coordinate EV charging and optimize the use of energy storage to limit detrimental effects to the grid can alleviate many of the concerns that have limited the deployment of charging infrastructure to date.

 

Hopes to Spur EV Growth in South Korea

— February 8, 2016

moving white carElectric vehicle (EV) sales in South Korea reached 2,821 units in 2015, compared with 1,183 units in the year prior. Considering that the 2015 goal was to have 5,000 units on the road in the country, the EV adoption rate has been rather low in South Korea, mainly due to the lack of charging infrastructure available in the country and consumer perceptions of the vehicles. Nonetheless, the central government and municipalities are introducing plans to push more EV sales. For example, the central government mandated that 25% of the government’s new vehicle fleet must consist of EVs starting in 2015. In addition, the city of Seoul and Jeju Island are aiming to deploy 50,000 EVs respectively by 2017.

Government Plans for 2016

In December 2014, South Korea’s Ministry of Trade, Industry and Energy (MOTIE) announced its goal to deploy 200,000 EVs and 1,400 fast-charging stations by 2020. In line with this goal, the latest press release from the Ministry of Environment states that the government will subsidize sales for 7,900 EVs, 30,400 hybrid electric vehicles (HEVs), and 3,000 plug-in hybrid electric vehicles (PHEVs) in 2016.

According to the press release, an EV driver can receive up to ₩12 million ($9,928) in purchase subsidies, along with a ₩4 million ($3,309) tax incentive and ₩4 million ($3,309) for the charging equipment. Eight EV models are eligible for this program – the Kia Ray, Kia Soul, Renault Samsung SM3, Chevrolet Spark, Nissan LEAF, BMW i3, Hyundai Ioniq, and Labo Peace (a heavy duty vehicle). HEV and PHEV drivers can receive ₩1 million ($827) and ₩5 million ($4,137) in purchase subsidies, respectively, as well as ₩2.7 million ($2,234) in tax incentives. Applicants are selected on a first-come, first-served basis or by a random drawing.

Charging Infrastructure Development

On the charging infrastructure side, there are currently 337 public fast-charging stations in the country with the goal of having 1,400 stations by 2020. That said, the government plans to build 150 stations this year. In addition, some public fast-charging stations may be privatized since the government is encouraging private participation in developing EV charging infrastructure.

 

Surge of Growth for Southern California EV Charging

— February 4, 2016

Machine parkingThe Southern California electric vehicle (EV) charging market is about to get a surge of growth, as the first utility-led charging deployment programs have been approved by the California Public Utilities Commission (CPUC). Southern California Edison (SCE) and San Diego Gas & Electric (SDG&E) each received the go-ahead for their proposals to deploy thousands of EV charging stations within their service territories.

This marks a major transition in the EV charging market in California, as utilities had previously been forced to sit on the sidelines while the plug-in electric vehicle (PEV) market launched and EV charging demand grew. This meant that utilities could not directly participate in a market that could provide a significant new revenue stream over the long term. The CPUC’s December 2014 decision to allow utility ownership of EV chargers has opened a new avenue for funding charging deployments via a stakeholder with (relatively) deep pockets and a stake in the growth of electricity as a transportation fuel.

California did have something of an EV charging gold rush when the U.S. Department of Energy (DOE) funded two major public charging deployment programs in 2009. The ChargePoint America and The EV Project programs resulted in over 6,300 public and private charging station installations (excluding residential). California got around a third of these; roughly 2,000 Level 2 and direct current (DC) fast charging stations were deployed in the state from 2011 to 2013. At the same time, California saw its DC fast charging installations grow thanks to the settlement between the CPUC and NRG Energy. The company, through its EV charging arm eVgo, committed to installing 200 fast chargers under this settlement from 2012 to 2014.

Charging Stations on the Rise

This new surge of stations will target a different segment of the market. The focus on public stations is waning somewhat, as utilization rates of public Level 2 stations have been mixed and as the market anticipates long-range battery electric vehicles (BEVs) that will have little need for short-term opportunity charging. What the PEV market does still need is charging at workplaces and at condos or apartment complexes. The DOE reports that there are 5,500 charging stations deployed at office facilities operated by its 250 partner companies in the DOE Workplace Charging Challenge. Navigant Research estimates that in total there may be around 9,000 charging stations in workplaces in the United States.

While this is a good start, workplace chargers need to expand beyond early adopters, as offices are going to be key to supporting PEV charging needs. SDG&E has said it will target multifamily communities, another critical next frontier to support increased PEV demand. SDG&E notes that 50% of its housing consists of multi-unit dwellings, representing a large and relatively untapped market for PEV drivers. Through all of this, utilities will need to manage the deployment process carefully to ensure that chargers are being placed in the best locations; that their charging company partners are secure, long-term partners; and that funds are optimized to buy charging stations that provide necessary data and management capability but are not over-equipped for the job they’re asked to do.

 

U.S. Federal Government Expands EV Charging Infrastructure Support

— February 1, 2016

EV RefuelingThe FAST Act transportation bill that became law in December 2015 contains an important provision to increase the coordination of activities of all players in the electric vehicle (EV) charging infrastructure ecosystem. Thanks to funding reauthorizations in the law, individuals and organizations that purchase EV charging equipment in the future will receive a federal tax credit for either commercial and residential chargers, as reported by Green Car Reports. This incentive is expected to spur additional sales of charging infrastructure that reduces range anxiety and increases sales of plug-in electric vehicles (PEVs).

More significantly, the Act requires the U.S. Department of Transportation (DOT) to “designate national electric vehicle charging and hydrogen, propane, and natural gas fueling corridors,” as well as to identify “standardization needs for electricity providers. …”

Increasing Installations

Since 2009, there has been considerable effort to increase the installation of publicly accessible EV chargers. These include the federal EV Project and ChargePoint America programs, as well as recent collaborations such as those between BMW and Nissan—notable because they support different fast charging standards—and Nissan’s growing effort in using multiple charging networks to provide free charging to customers as they roam.

The U.S. Department of Energy’s (DOE’s) EV Workplace Charging Challenge, a voluntary program for employers that install EV infrastructure, continues to progress rapidly, as highlighted in the program’s recently published interim report. According to the report, individuals whose employers offer workplace charging are 6 times more likely to own an EV than the average person. And workplace chargers aren’t just sitting idle; the report states they are delivering an average of 9.6 kWh of power per day.

Thus far, however, there has not been a national effort that adds utilities, state governments, and other key players to the development of charging networks and infrastructure. The FAST Act is looking to greatly encourage coordination by requiring the Secretary of Transportation to engage with stakeholders to include:

  • The heads of other federal agencies
  • State and local officials
  • Representatives of:
    • Energy utilities
    • The electric, fuel cell electric, propane, and natural gas vehicle industries
    • The freight and shipping industry
    • Clean technology firms
    • The hospitality industry
    • The restaurant industry
    • Highway rest stop vendors
    • Industrial gas and hydrogen manufacturers

The DOT has 1 year to identify these corridors, a not insignificant task that will require analyzing EV sales data, forecasts for future purchases for both plug-in hybrid and battery electric vehicles (BEVs), and the expected required volume of charging infrastructure, analysis of vehicle miles traveled by region. Identification of locations (using geographic information systems mapping) of the logical linkages between EV hotbeds where roadside charging is likely to be most beneficial is also a needed step. The corridors will require primarily DC fast chargers to enable BEVs to travel longer distances by recharging in under an hour, as well as some Level 2 chargers for extending the electric range of plug-in hybrid EVs that don’t have fast charge capabilities.

If these corridors are successfully electrified, we can expect greater concentrations of EVs in adjacent cities, ultimately resulting in improved urban air quality and reduced CO2 emissions.

 

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