Archive

Electrifying last-mile delivery: Total cost of ownership analysis (Webinar)

Comments Off on Electrifying last-mile delivery: Total cost of ownership analysis (Webinar)

Last-mile delivery vehicles are a prime candidate for electrification due to their predictable schedules and relatively short routes. But how does the total cost of ownership of electric delivery vehicles compare to their diesel counterparts? In some major European cities, cost parity is expected to be achieved this year, while others will see parity by the end of this decade.

This webinar presented new research by the International Council on Clean Transportation and RAP that uses comprehensive modeling to consider the different cost components fleet operators encounter during ownership, such as purchase costs, detailed energy costs, maintenance costs, taxes, and financing costs. The authors also discussed policy measures that could help to overcome the cost of ownership gap between battery-electric and diesel trucks in the near term and stimulate early market uptake of battery-electric last-mile delivery trucks.

Utilities Want to Provide EV Fleet “Advisory Services.” Should Regulators Approve?

Comments Off on Utilities Want to Provide EV Fleet “Advisory Services.” Should Regulators Approve?

As the electrification of vehicle fleets goes mainstream, fleet owners are facing a gauntlet of challenges, starting with engaging their electric service provider. The utility response of providing “advisory services” is both creative and presents new challenges for utility and air regulators.

Advisory services, whether offered by utilities or third parties, are designed to educate and enable fleet managers. The goal is to fill the gap between what fleet managers already know about transportation and what they need to know about electric transportation.

RAP recently facilitated a conversation on this topic, inviting a representative of a school district, a utility company, and several third-party transportation service providers to discuss their perspectives and better understand the challenges.

In our webinar, “So, How Does This Work Again? The Role of Advisory Services in Fleet Electrification,” Timothy Shannon, transportation director at the Twin Rivers, Calif., Unified School District; Matt Stanberry, managing director at Highland Electric Fleets; Ann Xu, founder and CEO of ElectroTempo; and Jason Peuquet, strategy and policy manager of clean transportation with Xcel Energy, shared their perspectives with RAP’s Camille Kadoch.

From my perspective as a former utility commissioner, I was asked to serve as the “respondent” and identify the pertinent regulatory issues.

Reviewing Advisory Services Proposals

At first glance, the expansion by utilities from offering a commodity to offering professional services may seem unprecedented. But actually, advisory services are a more visible form of what utilities used to refer to as “marketing key accounts,” a focus that utilities regularly had that helped them stay in touch with sizable commercial and industrial customer segments, and for which they were allowed to recover reasonable expenses.

The point here for regulators is not that this is different, but instead that this is more overt, and coming at regulators in a more robust and comprehensive manner. Advisory services also have a component of market development, a similar quality found in demand-side management programs. Note that third-party support to help utilities better serve fleets is not so different than the energy auditing support that contractors provide energy efficiency programs.

So what have we learned from those experiences, and how do we apply what we’ve learned in this context? This history can help regulators understand how to proceed when a utility says it wants to engage in these ways, that it will incur costs for which it wants recovery, and possibly even that it seeks earnings on those costs.

What is the right regulatory construct to apply here and what needs to change? The slide below provided by Xcel’s Jason Peuquet, does a good job of illustrating the range of comfort to discomfort of the regulatory process in this context. On the right-hand side, regulators are comfortable with rate design. We’ve had a 100-year history with that. Advisory services the new phenomenon over on the left about which we are less certain. The pieces in the middle come with a different levels of comfort.

Meeting Fleet Customers' EV Needs

Source: Xcel

Costs and Benefits

Electrification means that a utility is creating new load. But the regulator still has a key role to determine the answers to two questions: Is the utility proposal creating the kind of load that is appropriate? And is the load being managed effectively from a system benefit perspective? The regulator needs to ask:

  • What is the utility aspiring to do or become?
  • How does this new service change the utility’s current role as a public service?
  • Does investment in advisory services align with existing regulatory principles — i.e., are these investments just and reasonable? And are they least cost?
  • How should costs be allocated — i.e., who pays for them, and why?
  • Do today’s costs deliver future societal benefits, however difficult they may be to quantify?

A narrow interpretation would focus on who is the cost causer and what they should pay. That would put all the burden back on the fleet services. That is fine, and internally consistent in a narrow framework.

But recognizing that we are working in a broader arena, we acknowledge that we are not just making investment to help fleets. We are doing “demand creation.” This puts the regulator in a position to look at today’s costs that are known and knowable, and at future benefits that are speculative and uncertain — although we know they are out there. How do we get comfortable matching today’s costs with future benefits? Those benefits range from consumer savings, to lower-cost grid management, to the many societal benefits like reduced air emissions and improved health outcomes.

21st Century Load Forecasting

At the same time regulators need to recognize that doing this work — letting utilities build load through advisory services — ushers in a new aspect of load forecasting. Fundamentally, the regulator-utility relationship will need to further evolve. Effective regulatory oversight of load forecasting requires greater engagement of the utility, with lines of inquiry such as:

  • Will advisory services requests be strategic and narrow, seeking only to develop certain types of load?
  • What kind(s) of load do you want?
  • Do you just want maximum growth, no matter where it comes from?
  • Where on your system do you want it?
  • At what time of day do you want it?

Requests for approval of advisory services will bring with them a new complexity about understanding load. So, this is not only an inquiry into costs and benefits (both short- and long-term); it is also a challenge into understanding how the utility is changing its relationship with certain customers — from the traditional provision of a commodity, a blended commodity and service-based relationship. The regulator is confronted with understanding that this service-based customer engagement is interwoven into utility decisions concerning capital asset investments in infrastructure. For it is through effective advisory services that these capital assets become viable and reasonable assets.

Finally, in this world where the utility has the onus to make and justify these proposals, it is the regulator’s role to ensure that the utility is clear in what it aspires to become. And this will require even more questions for regulators to raise:

  • How does this service fit in the utility’s portfolio?
  • What is the utility’s longer-term sense of itself as a commodity and service provider?
  • Is the regulatory called to assist them and nudge them on their way? Or on the contrary, is your task to “keep them in their lane?”
  • How am I going to manage the commission’s relationship with that utility into the future?

One way or another, transportation electrification represents a new set of evolutionary forces upon the utility-regulator relationship. Awareness and preparation will make the ride more enjoyable.

Electrifying last-mile delivery: A total cost of ownership comparison of battery-electric and diesel trucks in Europe

Comments Off on Electrifying last-mile delivery: A total cost of ownership comparison of battery-electric and diesel trucks in Europe

Europe’s increases in online shopping and delivery over the last two years show no signs of waning. Parcel delivery vehicles make up one of the most significant heavy-duty vehicle segments by volume in Europe, recording a market share of 11% in 2020. Fortunately, their predictable schedules and relatively short routes make last-mile delivery vehicles a prime candidate for electrification. In fact, electric delivery trucks will soon be cheaper to use than diesel trucks.  

The International Council on Clean Transportation and RAP break down the various vehicle costs for electric trucks, the energy and network expenses for charging them, and the availability of purchase premiums in six major European cities. In some scenarios, electric trucks reach cost parity with diesel vehicles yet this year. Without the support of these premiums, parity is delayed until 2025 or even 2030 in some cities. 

Based on this comprehensive analysis, the authors conclude that battery-electric trucks are economically viable today, given the currently availability of purchase premiums. Other important aspects to consider when electrifying last-mile delivery fleets include choosing the appropriate battery size and reducing operational costs through smart charging of the vehicles. 

Policymakers have the ability to advance electrification of electric delivery trucks by: 

  • Implementing a national bonus-malus tax scheme to finance purchase incentives for zero-emission trucks. 
  • Imposing emissions charges on all diesel vehicles entering low- and zero-emission zones in city centres. 
  • Deploying ‘smart’ charging infrastructure in urban logistics depots. 
  • Requiring Member States to implement time-varying electricity and network tariffs to ensure affordability for logistics operators electrifying their fleets. 

Electrifying last-mile delivery: Battery-electric delivery trucks soon cheaper to use than diesel trucks in Europe

Comments Off on Electrifying last-mile delivery: Battery-electric delivery trucks soon cheaper to use than diesel trucks in Europe

Decarbonisation of the heavy-duty vehicle segment in Europe is crucial to curb greenhouse gas and pollutant emissions from the transport sector. Last-mile delivery trucks for city logistics are a promising application for electrification given their low daily mileages and the opportunity to recharge at depots when not in use. However, it is still unclear how these electric delivery trucks compare to their diesel counterparts from an economic perspective, considering overall cost of usage. Moreover, the large-scale deployment of electric delivery vehicles raises questions about how this additional charging demand can be integrated into local power grids and what it will cost. 

A joint study from the International Council on Clean Transportation and RAP quantifies the total cost of ownership of battery-electric last-mile delivery trucks in six European cities and compares it to existing diesel truck fleets. The analysis considers the cost of the trucks, purchase premiums, and a detailed breakdown of charging expenses, including power and network tariffs. The study also provides policy recommendations to overcome the cost difference between these two vehicle types and to foster the use of electric delivery fleets. This fact sheet offers a brief overview of the report’s results.

Securing Benefits from Transportation Electrification

Comments Off on Securing Benefits from Transportation Electrification

​In a presentation for the New Mexico Public Regulation Commission’s Transportation Electrification Summit, David Farnsworth discussed the value of electrification as a flexible grid resource as well as the benefits from data tracking and use of advisory services.

Surf’s Up: Catching the IIJA Wave

Comments Off on Surf’s Up: Catching the IIJA Wave

I’m learning how to surf. For my birthday, my kids got together and bought me a surfboard. One day last summer I spent about three hours in the waves off of Popham Beach in Maine trying to figure things out. After about 60 attempts — no kidding — trying to catch a wave, I finally caught one. But I had help. I got tips from my kids, and from other surfers about things, like when to paddle hard and where to place myself on the board. When I finally caught that wave, all that paddling and the soreness in my neck and shoulders faded away. I was lifted and carried forward at easily three times the speed while the others alongside me and I were effortlessly propelled forward toward the shore by the energy of that wave.

I was recently reminded of my first day surfing as I read an order from the North Carolina Utility Commission (NCUC) in which it recognized that it too could use a little help better understanding the implications of the wave of federal funding — $1.2 trillion over eight years) — that is about to reach the states.

The Infrastructure Investment and Jobs Act of 2021 (IIJA) makes available billions of dollars for investment in utility infrastructure, including support for electric vehicle charging, smart distribution grid improvements, energy storage, and water system resilience and security. Referring to the IIJA, the NCUC opened its order with a “preliminary conclusion”:

It is in the public interest for the public utilities of this State to fully and carefully consider taking advantage of these available federal grants and loans, in order to promote adequate, reliable, and economical utility service to the citizens and residents of the State.

The order poses basic questions like:

  • Which federal programs could assist utilities in meeting their obligations?
  • What actions does the NCUC need to take to facilitate access to the funds?
  • What other organizations will utilities need to coordinate with?
  • What actions are other state agencies taking or considering?

More than a dozen utilities and others provided comments to the NCUC in this docket. The order not only brought together these parties, encouraging their insights and testing their ideas, but it also created a larger public conversation about the best ways to spend federal dollars for utilities in North Carolina.  It is the Commission’s role to ensure that the power sector develops in a manner that promotes the public good, and the NCUC recognizes that responses to the questions posed in the three-page order will enhance its expertise to best promote that public good.

Other states should consider taking a page from the NCUC’s playbook. It will create the opportunity to be more informed and better positioned to make decisions you very likely will need to make. Why wait until you are constrained by limitations associated with having to review a filing in a contested case? After all, who would be better situated to render a decision: a commission that has reviewed diverse comments and participated in discussions regarding the best ways to use federal dollars for the benefit of its state prior to having to review an actual proposal, or a commission that hasn’t?

Riding a wave requires help. Adopting the North Carolina approach will better position your utility commission to ride the oncoming wave of federal funding for the benefit of your utility sector and state economy.

Cutting ties, forging alliances: how transport electrification and renewable electricity can reshape Europe’s economic landscape

Comments Off on Cutting ties, forging alliances: how transport electrification and renewable electricity can reshape Europe’s economic landscape

Along with the existing environmental and economic rationale for ending reliance on fossil fuels, the war in Ukraine has motivated many in the European Union to increase energy sovereignty. One of the larger fossil fuel consuming sectors is transportation, for which electrification is the alternative, accelerating the pace worldwide with Europe being the biggest market. Reducing direct transport emissions through electrification requires further rollout of renewable electricity production for the full climate impact mitigation and air quality impact. Transport electrification not only reduces the need for fossil fuels but also provides economic opportunities for Europe and European consumers.

By 2030, the continued increase in electrifying transport can cut spending on oil imports from outside the EU by at least 49 billion euros. Instead, this money could re-circulate within the EU and consumers will notice by saving money when switching to an electric car. A rapid electrification (for example, by European CO2 targets and energy savings obligations) of high-mileage vehicles, such as taxis, buses, delivery vehicles and fleets can accelerate this change – and feed the second-hand market over the years to come. The time is now to spotlight the wider economic opportunities in the electric vehicle (EV) lifecycle, as well as the need to accelerate both transport electrification and renewable energy buildout.

Vital to the whole lifecycle of these vehicles — from manufacturing to usage and recycling — is its alliance with renewable energy. There’s a strong synergy between transport electrification and power system decarbonisation: sector integration boosting the flexibility in charging that can match the variance in renewable production and zero tailpipe emissions matched by zero-emission energy.

Society and economy benefit from electrifying transport

Saving energy is amongst the top recommendations to reduce energy import dependency. Electric vehicles provide a significant two-thirds of energy savings over their diesel and petrol counterparts. Speeding up vehicle electrification and developing the regulatory and market ecosystem for charging flexibility is an important further contribution. Flexibility in charging will make the renewables-based energy system transition easier, cheaper and faster. Although electrified transport means additional electric demand, it can also help make the switch in the power system from gas and coal to renewables easier. Charging can be better managed and match available generation and network capacity.

By charging at the right time EVs can help integrate renewable energy and prevent additional draw on fossil fuel power plants while reducing costs for their owners. By shifting and shaping demand and, with bidirectional charging, feeding power back into the grid, EVs can reduce the need for additional generation capacities and help the electrical grid run more efficiently. These benefits of EV charging require a regulatory framework that recognises the contribution that demand-side flexibility can bring to the power system, such as what’s shaping up in Poland. Next to that, new flexibility services are needed to align EV owners with these system benefits.

The planning, rollout and operation of renewable energy, grid and EV charging infrastructure is made easier, more timely and more profitable with a data-driven approach. There’s a new industry emerging at the intersection of data and energy. This digital energy industry needs new skills for the new jobs, connecting academic, energy and policy perspectives. It’s not just grids and flexible loads that need to interact, but also sectors and organisations. Vice versa, new alliances create mutual benefits for the joint EV and renewables transition.

Decarbonising as the competitive edge in manufacturing

There’s another field where sectors – manufacturing and energy industries – should build strong ties to seize economic opportunities.

In the past, vital elements of electric vehicles, such as the battery, have been sourced from outside Europe. Increasingly, vehicle manufacturers looking to secure supply chains, as well as reduce the lifecycle greenhouse gas emissions of their vehicles, brings crucial manufacturing closer to the European market and its renewable energy. The renewable energy to power these manufacturing plants will provide lower long-term predictable costs, with power purchasing agreements providing the investment certainty helping the further expansion of renewable energy production.

In the same week that Tesla’s first European plant opened in eastern Germany, battery producer Northvolt announced a new production facility in northern Germany – close to offshore wind and grid interconnections. Germany’s federal minister for Economic Affairs, Robert Habeck, stressed the locational advantage of Germany with its Energiewende, the multi-decade plan to decarbonise the energy system. Investors recognise the clear path laid out towards a renewables-based power system. Other European regions can learn from this: having a strategy for the decarbonisation of the energy system and industry and making significant steps towards full decarbonisation within the next two decades, will send the right signals to investors in new battery capacity or other crucial manufacturing plants, as well as provide long-term viability for existing ones. An industrial policy fit for the European market requires a decarbonisation strategy.

The upcoming European battery regulation (as well as consumer demand) will require decreasing the carbon footprint of the materials mined, processed and manufactured into EV batteries. Recycling and material recovery targets will require growth in the industrial scale circular industry around the battery. Related industries in the EV ecosystem — such as EV charge points manufacturing, charger and car parts production and vehicle assembly — will also need to address the energy sources in their production process. For some heavy industries, amongst them steel, it’s not as easy as adding rooftop solar or signing a long-term power purchasing agreement, but there’s an accelerated movement in Europe to reduce carbon emissions in steel production. Now is the time to think and plan to end the dependency on fossil energies for all these sectors to secure their role in Europe’s economy of the future. The EV ecosystem will need to forge an alliance with renewable energy and accelerate its rollout to remain competitive and economic policies require a focus on decarbonisation.

The electrification of transport in all aspects of its lifecycle shows the importance of building new ties to double down on decarbonisation. Reducing dependency on fossil fuel imports provides an opportunity for those Member States that accelerate the transition to renewable energy and electric vehicles. Cutting ties with fossil fuels might give the needed push to accelerate electrification of transport now, but it is new alliances for renewable energy that will deliver the economic benefits. It’s time to forge them.

This article previously appeared in CEEnergy News.

The time is now: smart charging of electric vehicles (Webinar)

Comments Off on The time is now: smart charging of electric vehicles (Webinar)

If the video is not visible, please accept all cookies to enable the player.

European policymakers and car manufacturers are increasingly committing to the phaseout of internal combustion engine vehicles. With this shift to electric transport, tariffs and services for so-called smart charging of EVs bring significant value to consumers and the power sector. Now is the time to build a robust regulatory framework to expand the markets for these offerings consistently across the entire continent. 

On 25 May, the Electrification Academy welcomed Jaap Burger and Julia Hildermeier of the Regulatory Assistance Project (RAP) to share the findings of their study The time is now: smart charging of electric vehicles. The authors, who analysed 139 smart charging tariffs and services across Europe, shared: 

  • A brief overview of the benefits of smart charging for users and the power system. 
  • Innovative approaches and best practice examples of dedicated EV tariffs and services. 
  • Recommendations to accelerate the use of smart charging.

For an introduction to smart charging, check out our earlier Electrification Academy webinar with Frank Geerts and Michael Hogan, Smart charging puts the pedal to the metal on emobility.