Navigant Research Blog

EV Charging Companies Going Global

— April 5, 2017

Commercial EV charging companies are starting to go truly global, supported by major investments coming from the energy sector and automakers. These investments will see companies enter new markets with the potential to ramp up in volume. Since plug-in vehicle (PEV) sales started in 2010, the commercial charging market has been geographically compartmentalized, with few companies based in North America and Europe expanding outside their home region. This was especially true once the large multinationals like Siemens and Schneider Electric pulled back from the market, leaving it to the smaller startup companies that needed to tend carefully to their cash flow. However, large companies are returning to the charging market in anticipation of it being on the verge of a high growth period, and they are announcing their intention to become global players.

Gearing Up

Last year, RWE spun off and rebranded its renewables business, including EV charging, to innogy. It announced innogy would target the United States for its charging market, one of the biggest PEV markets with significant growth potential for infrastructure.

Then in March, ENGIE acquired EV-Box, which has one of the world’s largest charging networks. EV-Box ranked as a leader in the Navigant Research Leaderboard Report: EV Charging Network Companies last year on the strength of its market share, its multiple capabilities as a manufacturer and a software developer, and its relationships throughout key European markets.

The Navigant Research Leaderboard Grid

(Source: Navigant Research)

EV-Box has recently entered the competitive North American charging market with its charger offerings. Entering the North America market seemed ambitious, as the company was a startup with plenty of market to play in throughout Europe without crossing the ocean to tackle North America. However, having a global energy giant like ENGIE behind it could provide EV-Box with the support it needs to pursue its expansion efforts.

Developing New Products and Relationships

It still won’t be easy. Getting a foothold in a new market requires not only developing new products, but more importantly, also establishing the web of relationships needed to secure customers and installation sites. This is a time consuming and therefore expensive process, which is one reason the large multinationals—or companies backed by large multinationals—will have an advantage in this market over the smaller players in the long run. Multinationals looking to come back to the market as growth finally ramps up may find that the startups that have established significant market share and have very large public charging networks will be an easy route to establishing a beachhead. Even companies that have smaller installation bases but dominant market share in a particular country or subregion in Europe or North America could be attractive targets.

ENGIE and innogy may be the thin edge of the wedge in terms of energy companies wading into the charging market, but they are not the only companies with big pockets that are seeking charging company partners. ChargePoint, the leader in the North American charging market, secured $82 million in a funding round led by Daimler in March. The funding will support a stronger push into the European market for ChargePoint.

Maintaining a Long-Term Perspective

While all this activity is encouraging as a sign of confidence in the charging market, success in this market will still require a long-term perspective. There is significant growth, but it will still be years before charging is a well-established and high volume market. It is also a market that is still overly dependent on financial support for deployments, whether from interested stakeholders like the car companies or from governments, and growth will not be even across all the market segments of public, workplace, and private chargers. These dynamics do still favor the companies with sufficient funding to stay the course.

 

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.

 

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