RETRANS2 Regions – Executive Summary

RETRANS2 Regions

Opportunities for the Use of Renewable Energy in Road Transport in North America, Europe and China

Executive Summary

12.07.2011

Authors

RWTH Aachen University
– Institute for High Voltage Technology

Univ.-Prof. Dr.-Ing. Armin Schnettler
Thomas Dederichs
Ann-Kathrin Meinerzhagen
Eva Szczechowicz

COWI A/S

HenrikDuer
Camilla Rosenhagen

ÉcoRessources Consultants

Natalie Lambert

Azure International

Emiel van Sambeek
Jenny Chu

Index

Executive Summary 2

Regional Details – North America 6

Regional Details – Europe 9

Regional Details – China 11

Executive Summary

In 2009/ 2010 IEA-RETD commissioned the project IEA-RETD “Renewable Energy in Road Transport (RETRANS)” (see which examined different options of using renewable electricity in electric vehicles which would result in a “Co-Evolution” of the energy and transport sector. Based on the findings of that report, the follow-up project RETRANS2 Regions aims at identifying challenges and opportunities for this Co-Evolution in three world regions: North America, Europe and China.

The framework for the Co-Evolution differs in the three regions with regard to the characteristics of personal mobility – modes of transport used, distances travelled, private vehicle ownership etc. Moreover, the infrastructures in the three regions have differing requirements concerning the integration of Electric Vehicles (EVs) and Electricity from Renewable Sources (RES-E). Third aspects under which the three regions differ are the policy framework and economical situation. An analysis of the characteristics of each region concerning the political, economical and infrastructural framework gives stakeholders an opportunity to understand the different roads the Co-Evolution of Renewable Electricity and Electric Vehicles has to take. The assessment of the different policy options from RETRANS highlights the regionally differing developments.

RETRANS2 Regions approaches this scope by an assessment of studies that are relevant to the field and of pilot projects that aim at gaining experience with the deployment of Electric Vehicles. Statistical data on the three regions and regional policies concerning vehicles and renewable energy are analyzed. Expert interviews provide an insight into the regional electricity sector development.

Background for Electric Vehicles

The economic and population background regarding GDP, economic growth, population and urbanization is similar for Europe and North America. Both are wealthy (3 and 4 times average world GDP), show slow but steady economic growth, the population is about the same (334 and 500 million) and urbanized (72-80%). The two regions differ in population density, however. The higher the population density is, the cheaper infrastructure investments are per user. China is poorer (75% of the average world GDP), its economy is booming, the population is thrice of North America (1.5 billion) and less urbanized (45%). However, that means still that the number of urban Chinese population is roughly equivalent to the total of all Europeans and North Americans. High levels of urbanization center the electric load and let population density peak in urban areas thus providing an environment in which pilot deployment of Electric Vehicles may be cheaper and more easily realized.

The characteristics of personal mobility clearly separate the three regions. While in North America personal mobility relies almost totally on private vehicles (only urban regions offer public transport solutions for inner-city-travel), public transport is much more common in Europe and especially in China where it is extremely important for long-distance travelling. This is mirrored in the vehicle ownership – in North America and Europe there are 227 and 210 million passenger vehicles on the road, respectively, while in China there are only 35 million. This will change as the Chinese vehicles market is growing extremely (tripling of sales within five years). Vehicle ownership in China is centered in urban areas while in Europe and North America vehicle ownership is slightly higher in rural areas. Traffic volumes are expected to increase in all three regions.

Electric Vehicles have only a marginal share in the market (maximum 1% of sales). In China mostly buses and taxis are sold. Electric two-wheelers have been in the market for a long time without ameliorating the traffic situation or helping battery technology progress. As they are mostly charged during the night, their impact on grids has been negligible.National targets for Electric Vehicles on the road by 2020 amount to 5million in Europe (33%) but only 3-10% market share are held to be a realistic development. In China the target amounts to 5% (1.75 million).

Pilot projects with first deployment of electric vehicles are an important tool for gaining experience both in the production and usage of electric vehicles.Also they can stimulate customer acceptance of the design and performance of electric vehicles of changes in personal mobility patterns which is one aspect whose influence will be considerable for the transition of the transport sector worldwide, but whose characteristic remains unclear.Overall, only small numbers of EVs are deployed in North America – European and Chinese projects are much more ambitious by numbers. Some pilot projects already concentrate not merely on electric vehicle deployment and experience but on offering a complete mobility packages.

System requirements and Electricity from Renewable Sources

In all three regions the share of electricity from renewable sources is similar (17-18%). However, regionally this share varies between 1% (North China) and 99% (Norway). Hydro power is the most important source in all regions and is used for base load power except for China, where it is most important for peak load power management. Expansion of other renewables’ capacity in China is centralized and thus concentrates on large wind or PV plants. In contrast, in Europe renewable electricity production is more and more distributed.

The regulatory framework for renewable electricity differs extremely between the three regions. While Europe has implemented support policies most widely across all countries, such policies exist only on state or province-level in North America and not at all in China. The mostly regulated and vertically integrated markets in North America and China impedethe market entry of new producers.

The integration of electric vehicles mostly affects distribution grids, especially in cities, since first deployment will be in urban areas. European grids can take up high penetrations (>50%) while grids in North America and China might experience overloads earlier. The increase in electricity production from renewable sources will expeditelocal grid development in North America and enhance transmission capacity in China. The current trend towards increasingly distributed renewable electricity production in Europe leads to a need for regional enforcements in distribution grids.

The three regions will need to follow different roadmaps for a Co-Evolution of electric vehicles and renewable electricity. All start at local integration of electric vehicles and charging them unregulated. Smart grid technologies will be first implemented parallel to local grid expansions in North America because their grids require investment for taking up electric vehicles and renewable energies. The integration of huge renewable energy plants in China makes expansion of transmission capacities important rather than increasing local capacities on the distribution level and smart grid technologies. Controlled charging will be quickly introduced as the number of electric vehicles rises. The modern European grids may permit active load management and ancillary services earlier than in other regions.

Policy Assessment

The policy suggestions from the RETRANS project envisioned a two-phase policy approach. During the first phase (until 2015) policies need to prepare a framework for electric vehicles, increase electricity production from renewable sources and ensure a balanced grid development. Thus, charging infrastructure and EV standards need to be introduced. It is important to provide a long-term perspective to industry from the very beginning. Pilot fleets will result in cost reductions due to learning effects. Renewable electricity can be supported by priority access for renewable s and known support policies like Feed-in tariffs, Renewable portfolio shares or cap and trade systems. A balanced grid development can be ensured by close coordination between regulatory and technical developments. Smart grid technologies may enable this balance, too, by enabling load management or bidirectionality.In Phase 2 the deployment of EVs needs to reach mass markets and increased system integration can enable real Co-Evolution and a higher use of both EVs and RES-E. For this, a legal and technological framework for load management and vehicle-to-grid (V2G) services needs to be in place.

Six policy options for supporting Co-Evolution were identified:

  • Hard Coupling electricity needs of electric vehicles to new renewable electricity is feasible in Europe but unlikely in North America and China because there support policies for renewable energy are lacking that back up this policy option.
  • EV manufacturers’ investments in renewable electricity per EV sold could make them count as Zero-Emission Vehicles. This policy option may be feasible in all regions. The vertically integrated electricity sectors in China and North America have to be opened to these new investors.
  • For enabling Tax Exemptions for charging electricity from Renewable Energy Sources, charging tariffs have to be established that guarantee renewable electricity for the charging process. Modifications to the electricity billing systems may be necessary, but overall this policy option is feasible in all regions.
  • The electricity tax from the charging current of EVs could be re-invested into new renewable electricity production plants. This option is feasible in all three regions (if electricity taxes exist). This option requires a charging tariff for electric vehicles for identifying the exact amount they charge.
  • A Cap and Trade system for vehicles emissions could couple emissions from the transport and the electricity sector. This option is feasible in Phase 2 if Phase 1 was used for preparatory policies.
  • Another Phase 2 policy option is a Grid Stabilization Bonus that Distribution System Operators pay for plugged-in vehicles that are available for ancillary services. This option is feasible in all regions if smart grid and bidirectional charging technology is available.

National and internationally harmonized standards for Electric Vehicles and charging infrastructure are the first requirement for globally successful Co-Evolution of the transport and the electricity sector. The system requirements and framework conditions lead to different roadmaps for this Co-Evolution.

  • In North America, policies will have to support local development – new RES-E production and the deployment of electric vehicles will drive local grid expansions. While EVs will first be deployed in urban areas, RES-E may be installed also in rural regions.
    The adoption of binding GHG emission reduction targets will ensure that significant and extensive renewable electricity and EV targets and support programs will be adopted, both at the national and the regional level. Binding targets for renewable electricity and EV are unlikely to be implemented on their own right. Indirect incentives (e.g. taxation benefits) for both EVs and RES-E will be most likely accepted publicly. Measures for facilitating the market entry of electric vehicles and renewable electricity are key for making Co-Evolution feasible, but the profitability of both vehicles and electricity production will decide whether they will be accepted.
  • In Europe support policies for Electric Vehicles should concentrate on incentives for charging infrastructure and increased deployment as well as standardization issues. The near-term focus will stay on urban areas as breeding ground for EVs. The variety of current local approaches in pilot projects across the continent permits an evaluation of criteria for the successful deployment of electric vehicles. It becomes apparent that solutions for traffic and grid problems will have to be localized. Coordinated action might not be possible for all countries because of the variety of economic and political backgrounds. Thus, pan-European policies will have to concentrate on standardization and common framework policies that provide a scope of action for the countries.
    Coupling current incentives for electric vehicles to charging renewable electricity might slow down the deployment of electric vehicles but may be a strong instrument to establish the connection of these two sectors.
  • In China as in North America, binding GHG emission reduction targets should be adopted for motivating targets for RES-E and EVs. Emission standards for manufacturers’ vehicles’ fleets have to be adopted for slowing down the rapid increase in emissions from transport that has to be expected. Since private, distributed RES-E will most likely not be encouraged for charging EVs, a tariff that guarantees RES-E charging should be developed. A potent measure for avoiding additional emissions from traffic altogether could be rural EVs which could be chosen instead of a conventional vehicle. This will only work if the quality is high enough to make EVs the same status symbols as conventional cars.
    The vertically integrated electricity sector that determines the electricity mix based on governmental decisions leaves little room for EV manufacturers’ financing new RES-E. However, the importance of governmental decisions makes hard coupling EV and RES-E targets an interesting option for RES-E expansion.

Consistent long term policy is needed for Co-Evolution. The policy frameworks have to ensure that system operators can react quickly to changing demand and supply characteristics in electricity grids.
First experience from pilot projects has shown that people begin to identify mobility not only with private vehicles but more and more as a service. Thus, integrated local approaches for traffic problems are needed. Business cases that link electric vehicles to other transport solutions and guarantee RES-E charging are needed.

Information and marketing campaigns have to be realized ensuring that demand barriers for EVs are broken down. Policies have to be adapted to regional characteristics – especially in Phase 1 when differences between the regions are most eminent.

Follow up work should include an Impact Assessment of the suggested policy options. The success factors for EV deployment and Co-Evolution have to be identified from pilot projects. Boundaries for Co-Evolution have to be identified.

In the following more information on each of the three regions is given. The detailed report is available in power point format under

North America

There are approximately 250 million passenger vehicles on the road in the United States and 30 million in Canada, with an average of about 850 vehicles per 1000 people in both countries. 93% of passenger-km are travelled in private cars. 20,000 km are travelled per person per year in the US (15,000 km in Canada). 80% of the US and Canada population live in cities and on average a car is used for one hour per day to travel approximately 55 km.

In 2008, the number of battery-electric vehicles (BEVs) or plug-in hybrid electric vehicles (PHEVs) on the road in both the USA and Canada was in the low thousands. There were no BEVs or PHEVs for sale in the USA and Canada in 2008, therefore most of these vehicles were imported (apart from the Tesla Roadster, a relatively expensive ($129,000 approximately) niche BEV that appeared on the market in 2008). In 2008, 515,000 hybrid electric vehicles (HEVs) were sold in the USA, accounting for 1.1% of total passenger vehicle sales. In Canada in 2008 there were 100,000 HEVs on the road, accounting for 0.5% of the total passenger vehicle population.

The first entry-level BEVs and PHEV’s were available in the USA and Canadian market at the end of 2010. Predicted production figures were increased twice due to demand. Receiving 20,000 pre-orders in 2010, Nissan stopped taking orders and announced in March 2011 that it would double production at its Japanese plant in order to meet these orders.

The Chevrolet Volt and the Nissan Leafare the two BEV and PHEV models with the largest-scale deployment foreseen for the near future in the USA and Canada. Nevertheless, there are about a dozen other BEV and PHEV models that are expected to come on the market in the next two years, both by existing large automobile manufacturers and dedicated BEV or PHEV manufacturers. Encouraging large automobile manufacturers, who can use existing infrastructure for economies of scale, to produce electric vehicles will be essential to the success of the co-evolution of electric vehicles with electricity from renewable sources, since large-scale deployment will be impossible without their cooperation.

There are some issues with regards to different vehicle standards between the US and Canada (there are no issues related to electrical standards) that can delay or prevent certain BEV and PHEVs from entering the Canadian market (both US and international models). The discrepancies in vehicle standards between Canada and the US are expected to be resolved in the next two years.

Dozens of smaller-scale pilot projects on battery electric and plug-in hybrid electric vehicles are currently underway in both the US and Canada. The US has begun a large-scale electric vehicle deployment initiative called “The EV Project.” The US Department of Energy (DOE) and corporate partners (Nissan and GM/Chevrolet among others) awarded a total $230 million for the three-year project. Launched in summer 2010, the EV project is the largest deployment of EVs and charge infrastructure to date: 8300 EVs and 15,000 charging stations in 18 cities in 6 states (Oregon, Washington, California, Arizona, Tennessee and Texas) and Washington DC. The Volt and the Leaf are the two models that will make up the 8300 vehicles deployed for this project. Buyers of the Volt or the Leaf receive a residential charger for free with free installation. Data collection on technology performance and potential business models is an important part of the project. Mobility solutions could include solutions for longer-distance travelling, e.g. preferential access to rental cars that can be used on short notice.