Navigant Research Blog

Hawaii’s Smart Grid a Matter of Necessity

— October 1, 2013

Energy_webTake a disjointed cluster of island power grids, add a rapidly increasing portfolio of wind and solar generation, and combine it with the highest cost of electricity in the nation, and what you get is an ideal setting for introducing an efficient smart grid.  The islands of Hawaii are doing just that, adding technologies that can manage the variability of renewable power generation and eliminate energy waste.

In addition to support from the U.S. federal government through ARRA grants, the governments of South Korea and Japan both recognize the possibilities of Hawaii as smart grid test bed and have provided funding and technology.  Today, those efforts are bearing fruit in the form of smart grid pilot projects, including the Japanese-funded JUMPSmartMaui, a 5-year effort that makes electric vehicles (EVs) central to reaping the benefits of an efficient smart grid.

The program utilizes the smart charging of Nissan LEAFs and the deployment of home energy management systems to respond to grid conditions, including slowing or accelerating charging based on the amount of renewable power being produced.  I received a demonstration of smart charging courtesy of Tadahiro Togami of Hitachi.  The company’s direct current (DC) fast chargers are part of the program to collect vehicle charging data.

Hitachi’s smart chargers can respond to grid changes in frequency or voltage, as well as participate in demand response programs.  The public utilities commission of Hawaii has made DC fast chargers immune from paying demand charges, a potentially costly fee structure when high rates of power are delivered during times of peak demand.  In the future, Hitachi will implement bi-directional charging, in which Nissan LEAFs will provide power to the grid as part of a vehicle-to-grid demonstration.  Togami said that the power authority in Japan (TEPCO) is conservative in evaluating new technologies, so the Japanese government is paying to evaluate smart charging on Maui as part of the $500,000 smart charging project.

EVs are critical to Hawaii’s power grid because of the increasing amount of intermittent wind and solar power.  For example, the amount of photovoltaics in Maui has doubled in the past 2 years to 37 MW, and there is currently 72 MW of wind power.  All of that variability requires ample spinning reserves of diesel-powered generators, and much of the renewable power must be curtailed because the supply sometimes far exceeds demand.  Only 45% of the power produced by a recently installed wind farm on Maui is actually used, so the local utilities are considering an undersea grid interconnect with neighboring islands.  EVs are seen as another part of the solution, as their charging can be scheduled to partially align with renewable power production.

Hawaii pays a high price for the current inefficiency, as customers pay between $0.31 and $0.46 per kWh for electricity and 90% of the state’s energy is imported.  That’s approximately $5 billion leaving the local economy each year in the form of fossil fuels that negatively affect the environment of this environmentally conscious state.


What’s to Be Learned from ECOtality

— September 26, 2013


In a move that had been expected since the U.S. Department of Energy (DOE) suspended funding of the ECOtality-administered EV Project in mid-August, ECOtality filed for bankruptcy early last week.  The company’s collapse will serve as yet another talking point that media outlets will use to question the wisdom of federal government support for clean and renewable energy technologies.  While that debate is important, there is much to be learned from the wealth of information that ECOtality provided through its role in the EV Project to the national and global electric vehicle supply equipment (EVSE) industry.  Primary among these lessons is the currently weak business case for Level 2 alternating current (AC) public charging, an area in which ECOtality was a major player.

ECOtality made and installed charging units for residential and commercial (publicly available, workplace, fleet) applications.  Other companies in the same business have had success by partnering with plug-in electric vehicle (PEV) manufacturers to bundle EVSE costs with PEV purchases.  The first failing of ECOtality was its inability to gain a partnership with a PEV maker in the above manner, thus becoming dependent on the EV Project.

Additionally, ECOtality developed and managed the Blink Network, made up of more than 4,000 charging stations, including 87 direct current (DC) fast charging stations, most of which were in place because of the EV Project.  While other companies are also invested in this space – AeroVironment, NRG, Tesla, ChargePoint, etc. – it is currently not considered a significant revenue-generating enterprise (Tesla gives it away for free!).

As the 2Q 2013 report from the EV Project indicates, publicly accessible AC charge points were connected to a vehicle on an average of 4% of the time they were available.  During the course of the 91-day quarter, this amounted to 20 charging events per Level 2 EVSE, with the average connection being 4.5 hours.  At the Blink membership rate of $1 per hour, this equates to roughly $361 of annual revenue per installed unit.  Assuming an even split of charge events occurring at Blink member rates and guest rates ($2 per hour) and subtracting the cost of electricity taken at the average commercial electricity rate per the United States in July ($0.108 per kWh), any Blink Network site host could expect $430 per unit annually.  That is, of course, without network management fees, maintenance costs, and any profit-sharing agreement with the EVSE manufacturer.

Total installation costs of public Level 2 installations vary widely, as they depend on a number of variables.  Estimates fall between $3,000 and $11,000.  With those costs, it takes 7 to 25 years to pay back the investment.  At the lowest estimated installation cost, chargers need to be used more than twice as often to net a return on investment in 3 years.  Therefore, outside of government programs that pay for the station’s installation, there is not a strong case for property owners to install publicly accessible Level 2 AC EVSE based on direct revenue – especially not with the low number of PEVs on the road in 2013.  Instead, property owners must justify EVSE installations through the benefits of attracting more business to their locations and differentiating from competitors to attract EV drivers.  Additional value-adds are emerging in the form of utilizing the installed EVSE space for advertising.

EVSE manufacturers survive by selling their EVSE to service providers, property owners, and/or PEV drivers.  The commercial market is growing, but in most cases, publicly accessible Level 2 stations are used too rarely to make them financially viable for most property owners.  Installations at workplaces and for fleets make more sense, as the EV Project data shows these stations are used more than twice as often as publicly accessible stations.  While this market is growing, it is still a small market, and ECOtality was just one of many players.  ECOtality’s troubles may be a harbinger of things to come in the larger EVSE industry as it continues to mature.  However, PEV sales are just starting to take off and increasing densities of EVs per public charge point may significantly improve the business case for publicly accessible AC charging infrastructure.

Plug in Electric Vehicle Sales, World Markets: 2013-2020

Untitled (Source: Navigant Research)


On the Job, EV Drivers Say ‘Charge It’

— September 23, 2013

Both Siemens’ decision to cancel its public EV charging equipment program and electric vehicle (EV) charging station provider ECOtality’s bankruptcy filing highlight the challenges companies face in the public charging market.  However, while public EV charging receives an outsized share of attention in both the media and the EV charging industry, workplace charging is more likely to be the next forefront of charging deployment.

Most EV stakeholders believe that the workplace will be second to home as the place where most EV charging will occur.  One reason for this is the length of time spent at work.  Longer parking times translate into ideal opportunities to recharge a battery EV, or even a plug-in hybrid.  The U.S. Department of Energy (DOE) has made workplace charging the focus of its current efforts to promote electric vehicle supply equipment (EVSE) proliferation through its Workplace Challenge, which was launched in February 2013.

Within Range

Recent data on the habits of plug-in electric vehicle (PEV) drivers is confirming the importance of workplace charging deployments.  The EV Project’s 2Q 2013 report found that around 74% of Nissan LEAF drivers and 80% of Chevrolet Volt drivers charge their vehicles at home.  What’s more, according to the report, private charging units have almost twice as much utilization as public units.  This data confirms that the workplace is the second most likely place for charging after the home.

Another study, which examined the workplace charging habits of 40 LEAF drivers in North Carolina, provides additional confirmation.  The June 2013 report by Advanced Energy, Workplace Charging in the Real World, found that 52% of the participating drivers charged daily at their workplace – again demonstrating that real demand exists for workplace charging.

Of course, if you look at the glass as half empty, this study also shows that almost half of the participating drivers got through their daily commute without charging at the office.  But if workplace chargers become commonplace, consumers with daily commutes beyond the range of an EV will become potential EV buyers.

The Next Frontier

Indeed, the characteristics of the participants in the study confirmed this impression.  The study found drivers with only a Level 1 home charger, and no workplace charging, had the smallest commutes, less than 10 miles round trip.  Drivers with either a Level 1 home charger and a workplace charger, or a Level 2 home charger and no workplace charger, had commutes of 22 to 24 miles round trip.  Drivers with both a Level 2 home charger and a workplace charger had commutes of 32 miles round trip.  While the study had a very small sample size, it nevertheless suggests that more charging corresponds to more consumers with longer commutes who find that an EV meets their driving needs.

It appears that the DOE is right to be targeting the workplace as the next frontier for charging.  Unfortunately, the DOE is not able to provide offset funding, as it did for the public and residential units placed through the EV Project.  The reports mentioned here demonstrate to businesses that if they build charging stations, the drivers will come.


Why Utilities and EV Owners Need Demand Response

— September 9, 2013

As the electric vehicle (EV) market grows, so will the demands on the power grid.  According to the Navigant Research report, Electric Vehicle Market Forecasts, plug-in electric vehicles (PEVs), including plug-in hybrid electric vehicles (PHEVs) and battery electric vehicles (BEVs) – both of which use energy stored in the grid – will grow rapidly in many regions.  By 2020, 3 million PEVs are anticipated to be sold worldwide, resulting in a cumulative number of 13 million of such vehicles globally.

This robust growth is fueling concern among utilities about the additional demand for power when PEV owners plug in one or two cars at the end of the day, for overnight charging.  The extra need for electricity could be a huge strain on the grid when a large number of people charge their cars at the same time.  Therefore, utilities have begun to look into leveraging their demand response (DR) capability to manage the demand for power among these customers.

In or Out?

Austin Energy, for example, is testing an automated DR program for about 60 residential customers with PEVs to find out if it can effectively execute load curtailment in a fast, efficient, and reliable way.  The utility sends a message to the PEV owners to notify them of upcoming trials, so that they can decide whether to participate or to opt out. Relying on AutoGrid’s Demand Response Optimization and Management System (DROMS), with charging stations from ChargePoint, Austin Energy conducted multiple DR tests in July.  So far, the tests have been considered successful.  On July 12, for example, 90% of the utility’s DR customers with an ecobee thermostat and 100% of those with ChargePoint stations participated in the DR trial.

The Austin Energy trials highlight the power of DR in combination with electric vehicles.  All residential PEV charging will take place at rates from 1 kilowatt (kW) to 6.6 kW, as limited by both the PEV owner’s garage outlet and the PEV’s onboard charger.  Therefore, if 1,000 people in a given network decide to charge their PEV at the same time, rescheduling these charges can shed from 1 megawatt (MW) to 6.6 MW of power at a critical peak time.  Because of the concern about power disruptions, utilities will be more than willing to pay for the ability to monitor and manage electricity demand from PEVs on their grid.  They will reward customers for charging their PEVs on their own at off-peak hours as well.  Besides reducing peak loads, utilities will also be able to leverage PEVs in order to balance the grid when there is an excess supply of power from intermittent renewables like wind and solar power.  When a large number of PEV owners plug in their cars, they can dampen any major swings of electricity on the grid.

With the increasing adoption of PEVs, the deployment of DR to this market will become an essential strategy by utilities.


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