Navigant Research Blog

EV Makers and Utilities Unite to Realize V2G Potential

— August 7, 2014

The first major trial using electric vehicles (EVs) across the United States to strengthen the grid is about to begin.  For the first time, multiple utilities and car companies are cooperating in a deployment of vehicle-to-grid (V2G) technologies coordinated by the Electric Power Research Institute (EPRI).

Announced at the Plug-In 2014 conference in San Jose, California, on July 29, the Open Grid Integration Platform will use grid standards for utilities to communicate with a newly created central server that will relay the information to vehicles in many states.  Sumitomo Electric developed the platform, which enables automakers to relay information to vehicles using telematics systems or any communications pathway of their choosing, according to Sunil Chhaya, the innovator and technology leader for energy and transportation at EPRI.  The pilot project relies on smart grid standards (OpenADR and SEP2) to push V2G to become viable nationally; previously, trials required custom hardware and software that was specific to a utility and EV charging station.

Smartphones + Cars + the Grid

V2G applications, including demand response, frequency regulation, and voltage regulation, modulate the power flowing to (and, in some cases, from) EVs to enable grid operators to match power supply and demand.  Phase 1 of the project will test demand response; future phases will trial regulation services.  According to Navigant Research’s report, Vehicle to Grid Technologies, by 2022, demand response programs will be able to control nearly 640 MW of load from EVs.

The project will include cars from eight automakers (Honda, BMW Group, Chrysler, Ford, GM, Mercedes-Benz, Mitsubishi Motors, and Toyota) and involves 15 utilities and grid operators, including major utilities like Duke Energy, Southern Company, Southern California Edison, and Pacific Gas and Electric.

If this technology is commercialized, automakers are expected to integrate grid communications into mobile phone applications so that EV drivers will know when their vehicles are participating in a grid service event.

No Fees, Yet

While there are many ways that information can be shared between the grid and EVs, Watson Collins, the manager of business development at Northeast Utilities, said in an interview at Plug-In that the extensive project will determine whether this method is “the best, lowest-cost way.”

Collins said the trial will not include payments to the participants who will primarily be utility employees, but a commercial program would provide incentives for participation.  Each utility’s public utilities commission (PUC) would have to approve any V2G compensation system.

Automakers could charge fees for the use of their communications platforms in V2G services.  This test platform does not require the participation of EV supply equipment or EV service companies, which, if implemented nationally, could cut them out from future V2G revenue streams.

Chhaya added that utilities will benefit, as they will be able to target potential stress on feeders or transformers caused by EV power consumption.  Utilities will be able to see which houses the EVs are drawing power from to determine how much load is coming from the car versus the residence.  This will enable utilities to “use a scalpel instead of a butcher knife” to detect and manage EV load in specific geographic locations.

 

Leasing EV Chargers and Profiting

— July 10, 2014

There are about as many business models for operating electric vehicle (EV) charging stations as there are flavors of Baskin-Robbins ice cream, but so far, none of them have been clearly profitable.  While worldwide sales of plug-in electric vehicles (PEVs) have grown to more than 12,000 monthly, in most locations today, there isn’t enough traffic for EV charging stations to directly pay back their cost within 3 years, which is a typical required return on investment.

Several hardware companies are trying to lower the cost of the equipment, which could reduce the payback period.  In the United Kingdom, electric vehicle supply equipment (EVSE) company POD Point is now leasing charging stations to lower the upfront cost.  For approximately £50 ($85) per month installed, POD Point will provide a commercial charger, which the company says requires just two charging sessions per day to be profitable.  Leasing can be a viable option for companies looking for an easy way to enter the market, and the leasing company has a vested interest in making sure that the stations remain operational.

Dig It

For companies that prefer to purchase the hardware outright, ClipperCreek recently began to offer a commercial charger for just $395 before installation costs.  A pay-by-mobile phone system from Liberty Access Technologies that manages up to 10 charging stations and enables fees to be collected can be added on.

The cost of installation, which can require trenching, running conduit curbside, and upgraded power delivery to the location, remains the Achilles’ heel of profitable EV charging, and unfortunately, there’s little leeway in reducing the contractor and cabling fees.

Automakers are getting involved to lower the cost and pain of EV charging.  Tesla bundles the costs of accessing its SuperCharger network with the vehicle purchase price, while Nissan is paying for the first 2 years of charging a LEAF with its recently announced No Charge to Charge program.  Nissan has teamed up with AeroVironment, NRG, and the Car Charging Group on the EZ-Charge program, which gives EV owners a single payment card for accessing chargers from these EVSE providers.  EV charging company ChargePoint was supposed to work with EZ-Charge too, but backed out of the agreement.

In Japan, Nissan has joined with Toyota, Honda, and Mitsubishi to form Nippon Charge Service, an EV charging company that will provide incentives for companies to offer commercial EV charging at retail outlets.

Lattes Not Included

As detailed in Navigant Research’s Electric Vehicle Charging Equipment report, to be profitable today, most commercial EV charging stations need to bundle the cost of charging with some other service or fee structure.  These include combining EV charging with conventional parking fees, valet service at a hotel, or offering subscription services that combine home and public charging (a la the NRG eVgo network).  Startup Volta in Hawaii and Juice Bar have taken another approach by using advertising revenue to reduce the cost of a charging station, a growing trend that is likely to increase in popularity.

There will come a day soon, however, when EV penetration will be sufficient in some regions to make pay-as-you-go EV charging services profitable.  Gas prices will likely continue to rise (gasoline in the United States  is up $0.16 from last year at this time, according to AAA) and EV charging service providers will have more flexibility in pricing, since electricity as a fuel will increasingly be a better deal ‑ making profitability easier to attain.

 

Tesla’s Patent Giveaway Paves the EV Freeway

— June 26, 2014

Tesla’s move to open up its patent portfolio is undoubtedly risky, and it could erode Tesla’s competitive advantage.  But the potential rewards outweigh the risks.  The thinking behind Elon Musk’s move is that by allowing the major automakers to use Tesla’s technology, it will help lead to Tesla’s ultimate goal: a comprehensive network of cars, batteries, suppliers, components, and charging stations that utilizes electricity for transportation.  In other words, since Tesla is one of the top electric vehicle (EV) players currently in the market, the company stands to benefit from a vastly expanded network of EV infrastructure based on Tesla’s technology.  The more people that are connected to a network of vehicles relying on electricity, the better it is for Tesla.

Rivals and Collaborators

BMW and Nissan have already expressed interest in collaborating with Tesla on their supercharger technology to potentially create global vehicle charging standards.  BMW has also reportedly considered lending its expertise in carbon fiber technology in exchange for powertrain development and supporting infrastructure.  A partnership between BMW and Tesla could prove to be very powerful, bringing together the highly successful Model S with BMW’s electric city car, the i3, and its soon to be released i8 plug-in hybrid supercar.  Currently, Tesla, BMW, and Nissan account for roughly 80% of the world’s plug-in electric vehicle (PEV) sales.

Car charging companies are also looking to benefit from the technology transfer, with Car Charging Group, Inc. announcing its intention to integrate Tesla’s EV charging technology into its Blink EV charging stations.  Car Charging Group is one of the largest owners, operators, and providers of EV charging services in the United States and is also the owner of the Blink Network, one of the most extensive EV charging networks.

On the Sidelines

While the patent release by Tesla will surely increase collaboration with the major car manufacturers already producing EVs, it’s much less clear that open patents will move the dial on the major automakers that have largely steered clear of EVs in the past.  Toyota, GM, and several other major players are hedging their bets on EVs, and Tesla’s patent release is unlikely to change their position.

Navigant Research’s report, Electric Vehicle Charging Equipment forecasts that cumulative global sales of electric vehicle supply equipment (EVSE) will reach 25 million units by 2022.  Increased collaboration between the major EV players could lead to this figure being achieved ahead of schedule.

Cumulative EVSE Unit Sales by Region, World Markets: 2013-2022

(Source: Navigant Research)

 

Workers of the World Unite for EV Charging

— June 18, 2014

One of the keys to growing sales of plug-in electric vehicles (PEVs) is enabling more people to charge their cars at work.  Workplace charging gives employees a consistent location away from home that effectively doubles their electric driving range for commuting while encouraging employees to buy EVs.

“Workplace charging sells vehicles,” said Mark Duvall, director of Electric Transportation and Energy Storage at the Electric Power Research Institute (EPRI), in a recent phone interview.  Duvall said EPRI’s office in Palo Alto, California offers eight workplace chargers, and he often plugs in his Nissan LEAF there.

Companies such as Google, Coca-Cola, General Motors (GM), and others understand the benefits of offering workplace charging and are participating in the U.S. Department of Energy’s Workplace Charging Challenge, a program in which companies pledge to make charging available for their employees.  In May, GM said that the company has installed 401 chargers for their employees, and GM dealerships now have nearly 6,000 EV chargers in place.

Split the Charges

According to Navigant Research’s Electric Vehicle Charging Equipment report, more than 12,000 workplace chargers will be sold in the United States this year.  By the end of the decade, annual sales will surpass 63,000.

Workplace charging helps companies attract and retain employees who value corporate sustainability.  However, minimizing the cost to the employers while maximizing the utility of the charging stations has its challenges.

The employees who arrive earliest get to plug in first, and since in most cases charging can be completed in a few hours, companies need to establish policies that encourage employees to move their cars to enable others to be able to charge later in the day.  Another alternative is buying charging stations with two plugs, offered by some companies, including Eaton and ChargePoint.  Able to service two parking spots simultaneously, these systems can intelligently divide the available power between EVs.  EPRI is studying ways to increase the load factor (utilization) of chargers on a single circuit, which Duvall says in many cases could serve between four to six PEVs at work per day.

Aboveground Option

The lowest-cost options for employers are to either purchase a non-networked charger and absorb the expense of the equipment and electricity as a cost of doing business, or let an EV charging network operating company maintain the stations and collect the fees to eliminate ongoing costs, according to Duvall.

EV charging station installation can be a considerable expense if additional power has to be brought onsite or if trenching is required to bring power to the parking lot.  One alternative is Envision Solar’s EV ARC solar-powered charging station, which produces all of its energy and stores it in a battery pack, thereby eliminating the need for employers to break ground.  Google has reportedly added the EV ARC to its growing stable of workplace EV chargers.

Duvall will be discussing EPRI’s research into reducing the cost of workplace charging when EV industry participants gather to share their plans for increasing EV adoption at the Plug-In 2014 conference in San Jose, California from July 28 to July 30.

 

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