Category Archives: INL

Which came first, the Chicken or the Egg? The Cars!

chicken or egg1Its hard to be dispassionate about the things we love, but to be successful we must constantly question and search for the truth.

It’s been an interesting week for two reasons.  ECOtality filed for Chap 11 Bankruptcy and GM released a story plans to create a PEV that travels 200 miles per charge and costs $30,000, to rival the success of Tesla.

Let’s discuss both developments.

ECOtality received over $110m from the US Dept of Energy to create the EV Project, designed to deploy private and public charging infrastructure in select U.S. markets in conjunction with sales efforts of Nissan and GM.  Providing Idaho National Lab with data from over 100m electric miles, that aspect of the project has been an unqualified success.  In addition, when the EV Project started, 17,000 PEVS were sold for the entire year (2011)!  By comparison, 10,800 PEVs were sold just during August 2013.  So the average consumer in 2011 didn’t see electric vehicles on the street and had no knowledge of chargers. With the EV Project, we now have regions of the country where charging is available, common and car sales are sturdy and increasing exponentially.  Can ECOtality get all the credit for promoting the technology?  Surely not. But they were an integral part in making charging conspicuous, and worked hard to streamline state regulatory structure, promote supportive policy and simplify  bureaucracy.

The real reason ECOtality’s business collapsed is that people were unwilling to pay for public charging (in Oregon, some of their level 2 chargers were used only 5x per month!), there are still too few cars and PEV owners do not rely on public charging routinely – they can charge at home, at night, daily. So in many ways the collapse of ECOtality is a message to charging station providers who are literally banking on creating large subscriber-based networks as a revenue stream that they best re-think their model. PEVs can be charged conveniently and cheaply at home or the workplace. Public charging needs to offer something competitive: better parking access, free electricity, advertising, features consumers and vendors are willing to support.

As cars improve, the need for a broad-based public charging will diminish. We need strategic DC fast chargers as insurance for those of us who forget to plug in the night before or who travel longer distances. But the longer we wait, the more strategic and appropriate our investments in charging technology will be, on the consumer and EVSE industry level.  The good news is – cars are NOT going away.  In fact, we’re seeing PEV sales at twice the rate of hybrids in their first 3 years.

Had ECOtality failed a year ago, we’d be in a different situation in terms of deployment – because a risk existed that consumers wouldn’t figure out that they really didn’t need public charging to fully use the vehicles. Now that they have,  I predict little impact on car sales as a result of any bad ECOtality press.  As a result we also may well have gotten full value from our meager public investment in the EV Project ($110m is frankly nothing in the scheme of government boondoggles and bailouts).

At the same time that we see the ECOtality business plan unraveling, we see GM brazenly step to the microphone to say it will create a 200 mile range BEV costing $30,000!  Besides the question of “when?,” my first thought was that the 200 mile number is apparently the Holy Grail of PEV range.  My wife and I debate the sweet spot of mileage range to accelerate a mass market for PEVs.  My thought is that a 150 mile range would be the threshold, provided all other costs are equal.  I now see 200 miles gets me to 99.9% of my annual destinations.  I don’t want to drive much more than 200 miles in a day if I can avoid it.  If I can drive 200 miles without needing to stop, the BEV’s usefulness dramatically increases.  This distance probably is sufficient to link most major metropolitan areas together, those sister cities where people commonly visit or commute to and from.  And the gas savings would be extreme.

Three years ago, here in Portland Oregon, we believed we needed the public infrastructure to jump start consumer demand.  Today, I believe we now see the cars are the place to put incentives and emphasis.  If cars arrive, infrastructure will follow organically to meet consumer demand.

ECOtality should be lauded for being first to test the public charging model. Now we are in the position to learn from this failure and push this technology to the next level.

 

 

 

The EV Project- It’s Time to Grow Up

We had lived in a world of petroleum-based energy for so long that we could not see the horizon through its particulate-laden fog- until President Obama diverted part of his ARRA-funding and solicited bids for overseeing the first national scale investment into electric vehicle charging infrastructure promising deployment and data collection- the EV Project.  Enter ECOtality, the winning grantee. What followed has been nothing short of the jumpstarting of a new transportation technology and the construction of a foundation for this technology–the beginning of this immense national transformation of our transportation/energy system.  And we must be grateful for ECOtality’s efforts to seed public infrastructure into various politically receptive ecosystems. This has been a tremendous start on the path to the future.

Now that the 2012 Presidential election has been held, and energy independence will NOT mean fracking, pipelines, and drilling, what is the best path forward for EV infrastructure?  Well, its time to grow up.

We need to stop providing unilaterally allocated federal subsidies benefitting a narrow slice of the industry (i.e. ECOtality, Coulombe, AV).  Infrastructure should expand beyond the heavily weighted models favoring public charging, with expensive telecomm networked fees and consumer subscription based business models, with level 3 chargers hosting TV screens that can cost a hundred thousand dollars to install, risking unsustainable demand charges to the host sites if electricity consumption exceeds a certain level.  EV drivers do not need to be taught to associate public charging with rummaging around their glove box for the proper key fob only to find they failed to pre-register and create an account!  We have made it all seem so complicated, costly, and inconvenient.  Infrastructure should mean you charge primarily at home or work.  It should mean you can pay at any public station with a credit card.  If you need more energy during a particularly hectic week, you find it in the public forum and you pay for what you need and move on.  It may mean the host site uses a simple keypad or RFID  reader to activate the charger at your hotel or apartment complex.  It doesn’t have to be touchscreens, key fobs, hassle and headaches.

Companies such as ECOtality and Coulombe have been banking on laying the framework for what they see as a self-sustaining public infrastructure revenue stream- even before the ramifications of their data on consumer behavior  becomes clear.  One ostensible value of the EV Project was to get Idaho National Lab to parse out the actual numbers to begin to answer fundamental questions about charging infrastructure- how to incentivize off-peak charging? When do most consumers charge?  Where do they charge?  What is the proper ratio of public chargers to vehicles? How much will people pay? Building a networked infrastructure model before the data analysis was completed was a calculated business decision made by ECOtality and Coulombe- that model now needs to be tested in the marketplace and improved upon.

None of these questions are simple. Indeed the process itself can skew the results.  For example, Don Karner, then-President of ECOtality, reported to the DOE  that the initial residential installation subsidy of $1250 was causing most installation bids to come in at…$1250.  Accordingly, there was no clear data on the actual installation costs and they would be gradually phasing out the subsidy.  My experience shows that is twice the actual cost for the average home install.  We did need to invest in the technology- and make mistakes.  And now we need to start learning from them in order to reach escape velocity.

Giving away residential charging stations to customers of two auto manufacturers (Chevy and Nissan) may have made sense to get the data collection points in the field immediately, and now we have them.  That has been done and we should not extend the EV Project further. We did need to get chargers out in the field and afford utilities the opportunity to learn about linkage to their distribution system.  We did need to educate public utility commissions and the energy community about time of use rates for EVs and their grid-based benefits.  We did need to help auto dealers sell the vehicles by having the infrastructure come pre-packaged and added in for no extra cost.  However, we now see the Chevy Volt selling over 2500 units per month- and increasing- with a current annual sales of over 19,000 units domestically.  We now have added  Ford, Honda, Toyota, ThinkCity, Fisker, Tesla, Audi, Coda, Mitsubishi and all the other major automakers offering vehicle models with a plug. We even have electric motorcycles- Brammo, Zero, Motorczysz.  None of them currently qualify for of any the EV Project subsidies.   If we are to get to the next level of deployment, we now need to level the playing field, to embrace the notion of competitive neutrality (a term which ECOtality ironically embraced in its comments before the Oregon Public Utility Commission when seeking to prevent electric utilities from having a role in supplying their own charging infrastructure).  This will decrease costs, simplify installation, provide consumers with options, and benefit the total industry.

Quite simply, no one can compete with free.

Free is now inhibiting the evolution of the charging station industry, stifling competition, and preventing consumer choice.   It’s time to end the EV Project subsidies and extensions and let the market provide the full range of infrastructure solutions available.  Infrastructure needs to be unchained, especially in those markets where ECOtality has had a dominant presence because those regions are poised to become self-sustaining and offer the model for the rest of the country.  Consumers need to see that infrastructure can be simple, cost-effective, and scaled at a variety of levels to meet a variety of needs.  Its time to let us grow up.  And reach for the sun.

 

 

What Price Too High? NRG Settlement Highlights Industry Tension

 

Despite the need to remain starry-eyed and romantic about the potential of electrified transportation, it is in the end a business that will either succeed or fail based on profitability.  ECOtality‘s involvement in the EV project allowed the consumer to benefit not only through installation of government subsidized infrastructure but also, and most importantly, as a result of Idaho National Labs access to the data about consumer behavior that will better inform the entire industry.  ECOtality’s interest in sharing is strategic.  It wants to use its early market penetration to give it first mover advantage and capture a larger share of charging station business going forward.  Data is the price it has to pay.

ECOtality’s advantage has now been directly challenged in the largest, and most profitable short- and long-term market: California.

NRG, a Texas-based investor owned utility with an aggressive gameplan for its “Freedom Station” charging network, negotiated a settlement with the California Public Utility Commission that could provide it with an exclusive franchise like entry into one of ECOtality’s most profitable territories.  The seed for this network, bizarrely enough, stems from NRG’s acquisition of Dynegy, Inc., a company rooted in the Enron scandal and found liable for over a billion dollars of overcharges to California consumers.  Rather than having the settlement money be returned pro rata to those consumers, the CPUC negotiated an agreement with NRG. Under the agreement, the company will spend $50 million to build 200 DC fast charging stations, $40 million for electrical infrastructure to support 10,000 level 2 charging stations, $5 million for research into EV charging services, and $4 million to develop EV car-sharing programs.  Here are the specifics:

NRG will also install infrastructure for plug-in units, or “make-readies”, at multi-family housing, workplaces, and public interest sites, which will over time support the installation of Level 1 and Level 2 chargers from all charging companies. Further, to meet the CPUC’s goal of ensuring that the electric vehicle charging infrastructure is available to Californians of all income levels, NRG will ensure that mixed-income housing locations are identified, evaluated, and pursued for the make-readies.

Other provisions of the settlement intended to support the roll out of electric vehicles and expand their availability include:

·        In consultation with The Greenlining Institute, NRG will pay an additional $4 million to support low income car-sharing, workforce training, and related programs;

·        NRG is required to spend $5 million to collaborate with researchers and stakeholders on technical demonstration projects that will test new charging and related technologies;

·        NRG will solicit competitive bids for third-party services and equipment, and will provide preferences for employees that are graduates of pre-apprenticeship training programs applicable to the trade or trades to be performed, as well as provide preferences for hiring and retaining employees from the historically disadvantaged or underrepresented classes, including women, minorities, and disabled veterans; and,

·        The fast-charging stations will be compatible with electric vehicles on the market today as well as new models to be introduced beginning next year. Initially they will all have a CHAdeMO charger and a SAE Level II unit; they will be upgraded to accommodate the forthcoming SAE (Combo) DC standard within six months of when chargers using that standard become commercially available.

“The lack of recharging infrastructure and the concern about the range of electric cars have been identified as a barrier for the proliferation of electric vehicles.  This settlement creates that needed infrastructure, which will open the market to many electric vehicle stakeholders,” said CPUC President Michael R. Peevey.  “Devoting one-quarter of the total settlement value to electric vehicle charging infrastructure is a strong, creative idea that will bring California incalculable public benefits.”

Said Commissioner Mark J. Ferron, “The settlement, in combination with the earlier settlement Dynegy reached with the state in 2004, brings closure to our case against Dynegy for its role in the energy crisis of 2000-2001.  In total, Dynegy together with NRG will have returned to the people of California more than $400 million in consideration.  Of this total amount, three-fourths, or $300 million, will be paid in the form of cash to offset the electric bills of customers in California. The remainder, more than $100 million, will be paid by NRG in the form of electric vehicle charging equipment. This will bring cleaner air, local jobs, and a much needed jump-start on what we expect will be an industry of the future.”

“This settlement captures significant value for California under circumstances where contentious and expensive litigation would otherwise have continued for many years and with uncertain results,” said CPUC Commissioner Mike Florio.  “The CPUC is committed to ensuring that the settlement not only makes electric vehicle infrastructure available to Californians of all income levels, but that it also creates job opportunities for California’s diverse communities.”

The fast charging stations will be owned by NRG’s subsidiary eVgo, which already operates a charging network in Texas. The stations will be compatible with the CHAdeMO charging standard, and will add equipment compatible with the new SAE standard when it becomes official. They will be located in retail areas near highways around the state’s four largest metro areas. Users will pay with a credit card, and the company envisions getting between seven and 15 bucks for a charge.

The network will also include 10,000 level 2 charging station locations, or “Make Readies,” as the settlement calls them. NRG will install the necessary wiring for these sites, then turn them over to property owners. NRG’s eVgo will have the exclusive right to install charging stations for 18 months, after which the sites will be open to competitors.

After trying, unsuccessfully, to get the CPUC to re-open its decision and provide public comment, ECOtality has now filed a lawsuit in Federal District Court alleging  that the PUC made an illegal agreement with NRG  that gives it  18 months of exclusive rights to operate charging stations in certain locations.

“This so-called ‘punishment’ is like a restaurant failing a health inspection then being given an exclusive franchise to open and operate every restaurant in the city, subsidized by public funds,” said ECOtality CEO Jonathan Read. “This is an illegal giveaway, negotiated without public input, that will not only impede the development of the electric vehicle market in California and ultimately cost consumers more — but it also denies California rate-payers any refunds from the nearly $1 billion in overcharging that occurred during the energy crisis.”

NRG spokesman, David Knox, maintains that the settlement benefits California’s entire EV industry. “NRG is making a private investment to build an electric vehicle infrastructure that will encourage electric vehicle adoption across the state to benefit the state of California, the people of California and all the businesses that support the electric vehicle industry.”

Is the NRG’s settlement too high a price for California rate payers?  Is ECOtality’s filing a misstep in the direction of enriching its own business  prospects at the expense of vehicle electrification?  Is the CPUC’s apparent disregard for its avowed policy favoring competitive neutrality instead a “creative solution” to jumpstart infrastructure and in the public’s best interests? Stay tuned.