Navigant Research Blog

Tackling the 2 in V2G

— January 16, 2018

EV adoption is speeding up around the world, and while electrification offers emissions reductions and other benefits, it creates new challenges and opportunities for grid operators. Navigant Research expects that EVs will make up 5% of the global market for personal vehicles by 2024, and that collective charging requirements will add 160 GW of demand to electricity systems as owners switch from filling up to plugging in.

Vehicle-to-grid (V2G) technologies seem an obvious and low cost alternative to ramping up generation in the face of new demand from EVs. Why not use EV batteries to shift and shave demand peaks during the 95% of the time they sit unused? But making V2G a reality requires significant infrastructure and software developments, and EV owners must also consent to allowing grid operators access to batteries for flexibility services.

Integrating EVs Requires New Technology

If EV batteries are to be called upon for V2G, they first need a physical connection to the grid that supports two-way charging infrastructure, which are not yet widely available. However, major automakers like Honda are already developing two-way charging stations with V2G in mind, and deployment is likely to increase as more EVs hit the road.

Once two-way charging infrastructure is in place, the vehicle-station pair needs a software solution for monitoring grid signals and managing power flows. IBM and TenneT are collaborating with sonnen and Vanderbron to pilot a blockchain-based V2G platform that can adapt to conditions on the grid, such as congestion or oversupply of wind power. The blockchain records the locations and identities of devices involved, exchange volume, and other details as a secure and verifiable basis for settlement with the EV owner.

Consumers Need to Be Compensated for V2G Risks and Services

Technology is only half of the equation—EV owners also need to participate. Owners that participate in V2G take on the risks of doing so, and should expect to be compensated for providing flexibility, services, and for potential wear and tear of the vehicle’s battery (though there are conflicting views on this). Owners will also require guarantees that integrating will not cost drivers the use of their vehicle in emergencies or other situations.

In the short term, compensation might provide enough incentive for owners to adopt V2G. One study estimated the value of flexibility services from £600 to £8,000 ($800 to $10,800) of income each year for vehicle owners. Whether the income is a sufficient counter to real or perceived risks will likely vary with a customer’s individual situation, which constrains the potential of V2G.

The Rise of Mobility as a Service (MaaS) Could Help Maximize V2G Potential

Evolving vehicle ownership models could have a huge effect on V2G. In a world where consumers access on-demand fleets of EVs owned and operated by an MaaS provider rather than owning vehicles, many barriers to V2G adoption disappear.

Since demand for MaaS vehicles is likely to be cyclical, with lower demand during midday when grid congestion demand is higher, a portion of the fleet can be parked and plugged in to act as a buffer for the grid. Utilities and grid operators could partner with fleet owners to ensure that some fraction of the electrified fleet is grid-connected at any given time, providing the grid with a reliable pool of flexible resources in exchange for a new source of revenue. The service provider pools customer demand, and any effects on vehicle battery performance become a straightforward business cost.

As is often the case, the challenge is getting from here to there. Navigant Research can help—check out our latest report on the future of MaaS.

 

Mountain West States Buy In on Regional EV Fast Charging Network

— December 14, 2017

To support the growth and adoption of EVs on their regions’ roadways, governors of eight Mountain West states signed a memorandum of understanding (MoU) to work collaboratively on a regional EV fast charging network spanning across 5,000 miles of freeway. They will also work on a plan for the EV charging infrastructure to link their states together. The states that have signed on so far are Arizona, Colorado, Idaho, Montana, Nevada, New Mexico, Utah, and Wyoming.

Anticipating EV Population Increases

These states have recognized the growth of EV populations and anticipate EVs will continue to penetrate the markets. As discussed in our Market Data: EV Geographic Forecasts report and illustrated in the following chart, Navigant Research expects sales of over 1.6 million plug-in EVs (PEVs) by 2026 in North America.

Historic and Projected Sales of PEVs, Base Scenario, North America: 2012-2026

Source: Navigant Research

Pursuing Goals

The goals of the MoU are to accomplish the following:

  • Coordinate station locations to maximize use and minimize inconsistency between charging infrastructure.
  • Develop practices and procedures to encourage the adoption of EVs and address range anxiety.
  • Develop operating standards for charging stations.
  • Incorporate EV charging stations in the planning and development process.
  • Encourage automotive OEMs to stock a variety of EVs in participating states.
  • Collaborate on funding and finding opportunities for the network.

Direct current (DC) fast charging stations will cost between $150,000 and $200,000 each. It would require 50 to 60 stations to electrify the key travel corridors in Colorado, according to officials.

Following in Their Footsteps

Unsurprisingly, West Coast states have already tackled a similar project. In 2013, California, Oregon, Washington, and British Columbia signed on to the Pacific Coast Action Plan on Climate and Energy. They committed to the creation of an electrified highway corridor connecting the three states and the province. In the years since, the governments have been able to install a network of DC fast chargers along Interstate 5, Highway 99, and other major roadways dubbed the West Coast Electric Highway.

Tackling the Funding Puzzle

The Mountain West states are looking for sources of funding as they move forward with their own plans for a regional highway. While the West Coast Electric Highway project was able to capitalize on federal grants and funding to capture investments, the current administration and majority party seem less keen on assisting the adoption of EVs, meaning the Mountain West states may have to look elsewhere. Colorado has identified and is already planning on using some of the funds received from the Volkswagen settlement, Electrify America, to drive interest in public-private partnerships to develop its electrified highway infrastructure. That being said, the MoU does not specify funding requirements or timeframes for the project or any of the states.

Absent the support of the federal government, the success of this regional project rests on the political will of the state governments and continued support from elected officials, automakers, utilities, and planners.

 

Even If It Doesn’t Survive, the Tesla Vision Has Already Won

— December 14, 2017

Whatever the ultimate fate of Tesla as a business, the vision of its founders seems assured to come to fruition. They set out nearly 15 years ago to build an electric sports car that would show a skeptical public that EVs aren’t the car form of broccoli (good for you, but not much fun). The envisioned electric car would be a gateway to electrifying all transportation.

With every new job at an EV maker, we are moving closer to that goal. Sales of the Chevrolet Bolt EV climb steadily with each month, Nissan is about to launch the second-generation LEAF, and more options will arrive in the coming months. Perhaps most importantly, the future combination of automated driving and electrification will provide great synergy in making transportation clean and safe.

The Bolt and LEAF are examples of automakers taking inspiration from Tesla and mixing traditional expertise in mass manufacturing and support. These automakers and most others are now aggressively developing and planning deployment of automated EVs like the Chevy Bolts being tested in San Francisco, California by GM unit Cruise Automation.

Can Tesla Stay Afloat?

Sadly, Tesla’s own quarterly financial statements don’t bode well for the brand that kick-started this next era of mobility. The company has shown an inability to execute on the core task of profitably building consistently reliable, high quality products to customers. The 3Q 2017 report showed the company was spending more than $2,000 per year per vehicle providing service while only generating $1,000 in revenue. Given the reduced maintenance an EV should require compared to an ICE, this is a clear indicator of Tesla’s spending on honoring warranties. As the in-service vehicle fleet grows, this problem will grow rapidly unless the company can come to grips with the basics of mass manufacturing.

As Tesla attempts to ramp up production of the Model 3, it must first address these challenges—or the reputation the brand has built around Elon Musk’s cult of personality will be squandered.

The Quandary of Some Typical Tesla Customers

Take, for example, a Northern California couple that can afford to buy a Tesla, including the Model X they own. He loves technology and is the definitive early adopter, often buying the latest life-enhancing gadgets. His CEO wife is far more pragmatic, though she also appreciates what technology can do to make life easier and better. She wants to replace her current premium German performance car with an EV when the lease is up in the next month. On the surface, another Tesla would be the obvious choice, but they’ve had numerous issues with it that have taken multiple service trips to resolve. Some issues, like an Autopilot system that has a predilection for randomly shooting toward guardrails, remain unresolved.

They looked at the 2018 LEAF this week, and she is seriously considering it. While it lacks the performance of the Tesla, she expects it to be far more reliable, coming from a company that knows how to bend and weld steel. Despite the problems with the Tesla, her husband wants to stick with the brand to support the vision. Fortunately, he’s in a financial position where he can do that. Most of the car buying public can’t afford to be so tolerant.

If Musk wants Tesla to remain a viable business after he rockets off to Mars, he needs to start listening to frustrated Tesla owners like this pragmatic CEO rather than reveling in his adoring fans.

 

Can Solar Make an Impact on the Transportation Market? Part 2

— September 5, 2017

After a few conversations with Scott Shepard about PV systems in EVs, I began to come around to his view that solar is too expensive and the roof space too limited to make a solar-equipped EV work at the mass market scale. But then I read about another PV in transport project that made economic sense: Indian Railways’ newly launched solar diesel multiple unit (DEMU) trains. A total of 16 300W solar modules are installed on each coach on the train for ₹9 lakh ($13,950 or $2.9/W). The Indian Institute of Science estimates that the annual energy yield in a solar rail coach will be between 6,820 kWh and 7,452 kWh. This could displace 1,862 liters of diesel, saving around $1,650 per year at $0.88/liter diesel.

Lessons Learned

I see two key elements that make the project work. The first lesson from India is that solar in transport makes more sense when it is displacing liquid fuels rather than electrons. Going back to the Prius example from the first blog in this series, if the solar roof was available in Toyota’s non-plug-in version of the car, its economic effect would be significantly better. If a non-plug-in version of the Prius could run for 2,190 km per year on only solar, it could save about 150 liters per year, which would have a value of around $180 per year (using Japan’s gasoline price in July 2017). The investment in a solar roof could break even within the lifetime of the car, so the current cost of the add-on could be justified.

The second lesson is the use of off-the-shelf modules. In this way, the project benefits from the economies of scale that PV systems are famous for. It would be difficult to use off-the-shelf modules in cars, but if Toyota introduced the solar roof in all its Prius cars (for example), it could increase the production rate of solar roofs for the Prius from a couple of thousand per year to about 350,000 per year (global Prius sales in 2016). Modules with similar high efficiency cells in the wholesale market sell for about $0.50/W (i.e., $90 for the 180W used in the Prius).

Most of the costs arise from integrating the PV cells into the roof of the car. These costs could decline significantly due to economies of scale as well. If Toyota could cut costs to those of the train company ($540 for 180W already installed in the car, including inverters and other costs), the breakeven period would be about 2.5 years. Slashing costs would make a solar roof a no-brainer (especially for consumers like me who would be able to drive the car without ever using a charging point or stopping at a gas station).

Interesting Niche

This would open an interesting niche for solar companies. If all the EV and hybrid EV cars sold globally in 2017 (expected to be between 3 million and 4 million) had a 180W roof, an additional 840 MW (an extra 1%) could be added to global solar PV demand. But solar roofs need a champion to push them into the mass market in the same way Tesla pushed EVs away from the margins. My last blog discussed two startups that are exploring this niche. However, traditional manufacturers could do the same to differentiate their brand and cars from the competition. Toyota is an obvious choice given its brand association with hybrid cars, but other manufacturers could step in. For example, Volvo could be a great candidate since it is hybridizing all its models.

 

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