Navigant Research Blog

Why Recargo’s EV Charging Payments Service Is Free

— October 11, 2013

If you want to flummox a pair of research analysts, tell them you are launching a new product that no one has to pay for.  At last week’s Plug-In 2013 conference in San Diego, electric vehicle (EV) software and services company Recargo announced a system to let users of its charging station finder app, PlugShare, pay for their charging sessions through the app itself.  As Forrest North, Recargo’s chief operating officer, explained to my colleague, John Gartner, and me, the company is offering this service for free – not only to EV drivers, but to any EV charging network operator that agrees to participate.  Its first partner is U.S. EV charging company SemaConnect, which has 300 public stations accessible through this app.

Why would Recargo offer this for free? One reason is that PlugShare’s customers are EV drivers, not charging equipment companies or site hosts.  The company says that a key part of its mission is to make EV driving as easy and seamless as possible, and this new service helps to do that.  Recargo gave a demonstration of the system, Pay With PlugShare, at the Plug-In show.   The interface is clean and simple.  Once drivers have entered credit card information, it remains available for any charger.  Drivers simply select the charger they wish to use and begin charging.  The app shows how much the station charges drivers, how long the car has charged, and the total fee.

Forget About It

If Recargo can sign on more network operators, this app has the potential to address the major barriers in the EV world: charging network accessibility and ease of use.  Today, drivers must carry a separate access token for each network of charging stations.  For non-members, many stations have a phone payment system or a phone number a driver calls to get an access code.  Even a slight inconvenience in accessing a station will turn off some drivers, and, as we have discussed, public stations really need to maximize usage to make any kind of business sense for the operators.

Some companies argue that the easiest solution to this problem is simply to equip public chargers with credit card readers.  Indeed, this is already happening, and the new Pay With PlugShare app will not replace that as an option.  But, there is an attractive simplicity to using the same app to find the station to pay for charging at it, as well.

Rich Data

The app is designed to work with the payment scheme configured by the network operator and the charging station host.  It is easy to see why participating in this payment app would be attractive for companies that are competing against the two giants in the U.S. EV charging market, ChargePoint and ECOtality (although the fate of ECOtality’s Blink network, in the wake of the company’s bankruptcy, is not clear).  Ironically, Pay With PlugShare will be competing with CollaboratEV, the venture launched by these two companies to establish cross-network access for EV drivers.

While Recargo is not charging for the Pay With PlugShare service, North was quick to note in our conversation that it aims to be a revenue-generating venture.  The company says PlugShare has more than 20,000 charging stations in the United States and Canada and 30,000 reviews from users.  This gives it a tremendous amount of data on EV charging habits, which should have real value to the industry.  Pay by PlugShare may drive more users to its app and add to this valuable data stream.


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.


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