Navigant Research Blog

Will the Natural Gas Boom Help EVs?

— November 11, 2014

Natural gas is better used to generate electricity to power electric vehicles (EVs) than as a direct transportation fuel, according to a new study by Oak Ridge National Laboratory.  The study, entitled “Well-to-wheel analysis of direct and indirect use of natural gas in passenger vehicles,” rates EVs powered by electricity from natural gas as being more energy efficient, less polluting, and cheaper to fuel than natural gas vehicles.

A contributing factor in the analysis is that natural gas power plants, especially combined cycle power plants, are very efficient in creating electricity, and when that electricity is used for locomotion by an electric motor, the net efficiency is higher than that of a natural gas engine.  The study assesses losses and energy used throughout the system, including leaks during transportation (from pipelines etc.), and during compression and decompression of the gas in the case of compressed natural gas vehicles.  In the case of EVs, the study assesses power losses throughout the distribution grid, electric vehicle charging, and the power transfer to and from the battery.

As seen in the figure below, the study concludes that even a low-efficiency natural gas power plant would provide a more energy efficient source of electricity than using gasoline in a car.  The study used the Nissan LEAF and the natural gas Honda Civic GX as the baseline for the vehicle fuel efficiency.

Wheel to Wheel Energy Use

(Source: Oak Ridge National Laboratory)

Emissions of greenhouse gases, including CO2, are also lower in the case of EVs when either the current mix of generation sources or any type of natural gas power plant are used to create the electricity.  And as is well known, electricity is also cheaper as a transportation fuel: Oak Ridge estimated at time of the study that natural gas costs $1.65 per 25 miles for compressed natural gas vehicles, compared to $1.02 for electricity.

Pipeline Peril

It may seem counter intuitive that an extra step in fuel conversion (i.e., gas to electricity) would still be more efficient, but the greater efficiency of stationary gas turbines relative to small engines (as referenced here by Forbes) explains the math.

However, turning natural gas into electricity for EVs requires sufficient pipeline capacity, and a surge of EVs could overwhelm the regional grid if charging occurs at peak times.  Natural gas also has to compete with other forms of generation on price, and there’s no guarantee that the surplus of natural gas from shale would find its way into EVs, as it may simply replace coal.

The study makes the case for facilities that have combined heat and power to add EVs to the fleet instead of adding the significant cost of a natural gas refueling station.  Conversely, a significant argument for natural gas vehicles is their longer driving range and lower upfront cost.  If an EV’s driving range of 80 to 100 miles doesn’t match with the driving requirements, then the economics or efficiencies won’t matter.

 

Partnering Takes the Pain Out of Paying for EV Charging

— October 27, 2014

At the dawn of the modern electric vehicle (EV) era (way back in 2010), EV industry participants recognized that a simple way to pay for vehicle charging was critical to EV adoption.  In fact, I recall having conversations with at least one international payment processing company back then regarding the need for a central clearinghouse for EV charging payments.  I described this segment as a small niche that would grow into a major opportunity over time.  Neither that company nor others chose to start building the necessary relationships.  But today, after years of considerable talk and little action, progress is finally being made as charging networks are collaboration and payment clearinghouses are starting to emerge.

During the past half-decade there have been numerous tales of the frustrations of EV drivers who carry multiple cards to be able to access competing proprietary networks.  The Hubject consortium in Europe has been leading the charge to make charging more consistent by simplifying customer authorization, and the group recently announced a method that enables mobile phones to pay for EV charging.

The PayPal Factor

The intercharge direct system is powered by online payment system PayPal.  Drivers scan a QR code on the charging station with their phone, which connects to the intercharge website where PayPal and other payment options are offered.  Customers who have a contract with an EV services provider can pay their existing rates, and more importantly, EV drivers without a contract can still access any of the 3,000 charging stations that support intercharge.

Things have come full circle for PayPal, which was founded by EV maker Tesla Motor’s founder, Elon Musk.  (Note the irony that, since Tesla offers free charging at its charging website, PayPal largely won’t come into play for its customers.)  PayPal is an effective backend payment system, since it’s used globally for small payment amounts.  PayPal is currently being used in the United States for EV charging payments by General Electrics’s WattStation, and in October ChargePoint announced that it would begin accepting PayPal as well.

Reducing the cost and hassle of roaming between EV charging networks will increase the use of public charging stations, which will result in more charging stations being made available, and in turn higher levels of EV adoption.

Makers Make Progress

Efforts to expand EV charging in the United States are slowly paying off, thanks in part to the work of the EV manufacturers themselves.  Nissan is offering free public charging to buyers of the LEAF and convinced competitors ChargePoint, Car Charging Group, AeroVironment, and NRG to each support its EZ-Charge card.  BMW’s ChargeNow program offers a single card for paying at stations from ChargePoint and NRG’s eVgo network, as well as other partners internationally.

Not all partnerships in the area have worked out; ChargePoint launched an ill-fated joint venture with ECOtality in 2013 called Collaboratev that would have streamlined payment processes across both networks, had ECOtality not gone bankrupt only a few months later.

While proprietary payment systems make business sense for the charging networks, they hurt more than help EV owners and automakers.  If the expected millions of EVs are to rely on public charging, roaming between networks should be as simple as roaming between mobile phone networks or getting money from any ATM.  These recent developments provide hope that such interconnections are starting to emerge.

 

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.

 

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