Saturday, February 21, 2015

Chevron relinquishes fracking in Romania, as part of broader pull-out from Eastern European fracking operations

A year ago I made several posts about Chevron's plans to begin fracking operations in Romania's portion of Moldova.  News surfaced on Friday that Chevron has relinquished interests in drilling frackable shale fields in Romania (and other countries), completely ending all of Chevron's work on shale gas fracking in Eastern Europe.  The news comes from no less than the Wall Street Journal, Bloomberg Business, and Chevron's yearly 10K filing with the SEC.

The town of Pungesti, in the heart of Romania's portion of Moldova, had learned enough about the side effects of fracking, after Chevron began work on a drilling pad just south of town, that they staged an intense months-long protest that eventually drew world-wide attention.  Despite the protests, Chevron was able to start drilling an exploratory well in April 2014, finishing the exploratory work in July 2014.

In November 2014, in the final weeks of Romania's national elections that saw Klaus Iohannis win over then-Prime Minister Victor Ponta, Ponta said during a national TV broadcast "It looks like we don't have shale gas, we fought very hard for something that we do not have. I cannot tell you more than this but I don't think we fought for something that existed." (original: "Oricum s-a amânat, pentru că se pare că nu avem gaze de şist, ne-am bătut foarte tare pe ceva ce nu avem. Nu pot să vă spun mult mai mult decât atât, dar nu cred că ne-am bătut pe ceva care exista.")  Ponta was running for President of Romania, but lost to Iohannis, and was able to retain his position as Prime Minister and has since been pushed out of the Prime Minister job .

At the time Chevron responded saying that their engineers were still studying samples.  But it was a clue that perhaps the results of the exploratory drilling were disappointing.

Indeed, a Chevron spokesperson told the Wall Street Journal on Friday, Feb 20, 2015, that they're "are in the process of relinquishing our concession interests" without explaining why.

The company's 10K yearly filing with the SEC, also filed on Friday, disclosed the following phase-outs of activity in Eastern Europe:
  • Lithuania: Chevron divested its 50 percent interest in an exploration and production company in mid-2014.
  • Poland: In first-half 2014, Chevron completed a 3-D seismic survey on the Grabowiec concession. The company also entered into a joint exploration agreement covering Chevron's Grabowiec and Zwierzyniec licenses and two adjacent licenses in early 2014. In fourth quarter 2014, Chevron relinquished two shale concessions (Frampol and Krasnik) in southeastern Poland. In early 2015, Chevron announced the discontinuation of exploration activities in Poland.
  • Romania: In 2014, drilling of the first exploration well in the Barlad Shale concession in northeast Romania was completed, as was a 2-D seismic survey across two of the three concessions in southeast Romania. Chevron intends to pursue relinquishment of its interest in these concessions in 2015.
  • Ukraine: In 2013, Chevron signed a PSC with the government of Ukraine for a 50 percent interest and operatorship of the Oleska Shale block in western Ukraine. In fourth quarter 2014, Chevron terminated the agreement.
The 10K filing also says Chevron is facing rising expenses on "dry holes" (drilling operations that end up empty handed) with 2012 dry hole expenses of $555 million, $683 million in 2013 and $875 million in 2014.  The Bloomberg news report says Chevron is shifting its focus to America, and that falling oil prices meant there wasn't as much cash available for exploratory drilling and other capital expenses related to starting new fields.

Since Chevron was tight-lipped as to the real reason for pulling out of Romania and other Eastern European countries, the above data is meant to inform a bit of speculation.  The possible reasons that come to mind are:
  • The protests in Pungesti was too severe, and Chevron decided to back off --- this seems very unlikely
  • There's a technical reason, that engineers weren't able to discern a way to make Fracking work in these shale fields.  If so, it would have to be something that affects all four of the countries named above.
  • Falling oil prices are apparently making fracking uneconomical, and that Chevron is cutting its losses.
  • Increasing tension in Ukraine, following the western-backed Coup of Ukraines government a year ago, makes business investment in that region very risky.  If the fighting over Ukraine were to break out into a full scale war, it might not be contained just to Ukraine.  Romania could become embroiled if Russia tries to take back Moldova and Romania tries to intercede, for example.  NATO, the EU and the US could escalate the fighting into a broad-scale war over Eastern Europe.
The latter two points seem most likely.

I believe all this is part of a larger geopolitical tussle between Russia and Western Europe, and earlier posts on this blog have laid out the reasoning.

The U.S. State Department, starting under Hillary Clinton's term as Secretary of State, launched an effort to export fracking technology to every country around the world with frackable shale deposits.   We don't know exactly why, but it's clear that Clinton is very pro-fossil-fuels.  Given that she's a front-runner for the next U.S. Presidential Election we need to be very very concerned about her stance on fossil fuels.

There is a broad worry among America's elite class about Europe's energy security.  The European Union, and the rest of Europe, doesn't have much indigenous fossil fuel supplies.  Europe has had to turn to other regions for those supplies, principle among them being Russia.  But dealing with Russia is tricky business because Russians like to exploit every weakness they can.  Having Europe under economic dominance of Russia would be bad for Europe.

As a result a Congressional Research Service report describes European energy security as in the U.S. National Interest.  That's a code phrase for "we are willing to go to war over this" because Europe's security is that important to the U.S.

And, by golly, what has the US done but to launch a skirmish in Ukraine by toppling the Ukranian government and putting the US/EU/NATO on a collision course with Russia that may blow up into a major fight.

The CRS report outlines all the ways the U.S. could help Europe out of energy dependency on Russian natural gas.  Part of the plan was fracking in the countries named above, because of the shale deposits shown on the map above.

What we've now learned from Chevron's actions is there's a high likelihood that the shale deposits on that map aren't worth fracking.  Chevron had to have spent a lot of money in those countries, and have pulled out of each.

The WSJ report linked above said
  • BP's annual "energy outlook" says it's unlikely to be any significant shale production in Europe over the next 20 years because conditions aren't as good as they were in the U.S.
  • ExxonMobil, France's Total SA and Marathon Oil, have all pulled out of projects in Poland.
These factoids make a technical reason for Chevron's pull-out seem likely.  If engineers weren't able to develop a fracking chemical cocktail that would work in these shale deposits, they might as well not waste their time and money because fracking won't release any natural gas.

Whatever the reason that Chevron and these other oil companies have pulled out of fracking Eastern Europe, this trend is dashing one of the big hopes to keep Europe safe from Russia's economic dominance over Europe.

In my mind it simply raises the importance of steering Europe strongly towards renewable energy, instead of continued reliance on fossil fuels.  One thing to take from this is that Europe is in a hard place, facing economic domination by Russia because of Europe's continued dependence on fossil fuels.  While Europe doesn't have much indigenous fossil fuel supplies, they do have wind and sun resources and can deploy wind turbines and solar panels.  The more investment Europe makes in renewable energy resources, the more resilient they will be to Russia's attempts at domination.

Update - For a good rundown of the sequence of events at Pungesti, see http://sarahinromania.canalblog.com/archives/2015/02/21/31574782.html

Thursday, February 19, 2015

Answer anti- electric car articles with truth and pride - truth outshines all distortions

Another anti-electric-vehicle article has made it into the mainstream press, so it's time for everyone to freak out and think the sky is falling.  I'm talking about an opinion piece in USA Today, Electric car benefits? Just myths, by well-known distorter of facts Bjørn Lomborg.  He has the ability to string together what looks like well reasoned fact filled arguments with citations at the bottom of the page and everything, but the stuff he presents is highly distorted.  According to ThinkProgress, Lomborg rakes in dough from the Koch network for his efforts.  There is even a whole website devoted to exposing Lomborg's Errors.

He should be proud the people behind that site have devoted so much energy to his work ;-)

Those were what I found with a quick yahoogle search on his name.  I don't want to focus on the topic of saying someone else is bad or wrong or anything.  It doesn't serve any of us to focus on such a negative attitude.  What I prefer is to focus on truth, the truths about electric vehicles we should all be proud of.

Unfortunately there are lots of people who share some of the opinions he wrote in that Op-Ed piece.  That makes it necessary to address those ideas with truth - because the truth about electric cars is being distorted out of recognition.

As a result, I've been spending quite a bit of time the last few weeks working on a set of articles that are meant to be an "EV Buyers Guide".  It seems important to me to focus on addressing the kind of ideas Lomborg wrote in his article, so of course those articles I've written already answer a lot of what he said.

"Electric cars cost a fortune" ...  It is true that the MSRP of today's electric cars are quite a bit higher than the MSRP of equivalent gasoline cars.  But MSRP isn't the right comparison to make.  Total Cost of Ownership is, and on that measure electric cars make a lot of financial sense.  Fuel cost savings, maintenance savings, tax credits, and time savings are the main ways that electric car ownership pays for itself.

"Electric car global warming benefits are small" ... It is true that quite a lot of electricity comes from coal-fired power plants.  What's also true is that electric cars, on the U.S. electricity grid, are cleaner than equivalent gas cars even when the electricity comes from burning coal.  

Generally speaking, electricity is as clean as the electricity source.  In China or India where electricity predominantly comes from extra-dirty coal power plants, electric cars are indeed dirtier than equivalent gasoline cars.  But other forms of electricity production are lots cleaner.  Follow the link above and you'll see a chart showing just how much cleaner solar or wind power is than even natural gas.  In the U.S. electricity system, the states that predominantly get electricity from natural gas or hydro are lots cleaner than coal-fired states, and the electric cars in those states are lots cleaner than gassers.

It's quite possible for a typical home-owner to put enough solar panels on their roof to generate enough electricity to power both their home and their electric cars.  Can't do that with gasoline powered cars.  Even if you grew Corn to make Ethanol, it would take 2.75 acres of ground to produce enough Ethanol for the typical gasoline powered car, and you'd also need processing equipment and storage tanks to hold the fuel.  If the entire US vehicle fleet were to run on ethanol, it would take 370 million acres just for the corn fields.

"Electric cars shift emissions to electricity production plants" ... This idea ignores the long tail pipe of gasoline production.  It's fine and proper to complain about dirty electricity production methods.  But that also means you must complain about dirty toxic methods to produce gasoline, that consume huge amounts of resources.

The EPA labels on electric and gasoline cars measure emissions at the tailpipe for a reason.  Doing so greatly simplifies the debate.  EPA labels say electric cars emit 0 grams of CO2 or anything else, while gasoline cars emit quite a bit more than that.  This leaves the door open to the criticism about coal fired electricity, sure.  But the reality that gasoline production is highly toxic deserves lots of attention.

Those are the main three points in Lomborg's Op-Ed piece.  The rest of it simply rehashes one of those points.  For example he talks about the number of people "killed" by air pollution, saying that electric cars will kill more than gasoline cars.  But as we just discussed, he's using flawed reasoning in determining which kind of car is dirtier than the other.


Monday, February 16, 2015

Apple taking big risk on developing a car? Please, Apple, don't go there!

Who knows whether Apple is getting into the electric car business.  There's been lots of news articles over the past week claiming that to be the case, and that Apple has poached automotive industry talent from Tesla and other automakers.  That doesn't necessarily mean Apple wants to enter the business of building cars.  There's a big need for Apple to have a foothold in car dashboards so that Apple's mobile iOS devices play better in cars - and maybe that's the extent of the deal.  Who knows?

But, I'm reading a piece on Bloomberg Business by David Welch and Dana Hull, the latter being a long-time technology journalist here in Silicon Valley, and am suspicious over their reasoning.

For the record, they state as fact that Apple has a skunkworks project started on an electric vehicle resembling a minivan, named Project Titan.  Further, that if Apple gets to market it will automatically challenge not only Tesla Motors but the alphabet soup of incumbent automakers.

Which just makes me think of that scene in Revenge of the Electric Car where GM Chairman Bob Lutz is talking about how difficult the car industry is, and while he wishes Tesla Motors all the luck he doesn't think they'll make it very far.  That Tesla Motors took so long to get to market is itself a sign of the difficulty of breaking into the automotive manufacturing business.

Let's first look at the "reasoning" as to why Apple should make cars ... then discuss that reasoning.

First - Apple wasn't in the "phone business" but they succeeded at disrupting that industry with the iPhone.

They sure have, and I'm on my third iPhone and still sticking with the platform even though Android is growing in my mind as an alternative.

Second - Apple has gobs and gobs of cash burning a hole in its pocket.  Apple could fund 20 years of General Motors out of its spare change.

Yes, Apple could blow a lot of money in the car business and they surely have the bucks on hand to do so.  But does that mean Apple would be wise to try?

Third - the coming wave of cars are even more like electronics devices.  Autonomous driving means computerized everything, sensors out the wazoo, and so on.  Electric vehicle drive trains, computerized infotainment systems, 3G connectivity, fancy schmancy dashboards ... Apple has some indigenous talent that overlaps with many of those things.

In other words, since many think "cars" are becoming the next "consumer electronics device" and that Apple is now the king of consumer electronics devices, that Apple should be able to succeed at "cars".

Fourth - Just because Apple has gobs of cash they have to find a way to spend that cash therefore it's inevitable they enter the car business.

Really?

If it's not clear, I don't buy this line of reasoning.  I don't think Dana Hull nor David Welch understand what's happening in the EV market.

For example their article claims that Nissan lowered the price on the Leaf, and GM lowered the price on the Volt, because of falling gasoline prices.  WTF?  In both cases those lower prices came in 2013, well before gasoline prices fell.  In Nissan's case the Leaf price was lowered because the factory in Tennessee started production, letting Nissan finally ramp up the production rate, and not have to pay import duties to bring cars to the U.S.  In GM's case they just wanted to make the Volt have a more competitive price, in response to the lower Leaf price, and they found ways to squeeze cost out of the Volt.

Welch and Hull seem to think a big company can wave a magic wand and enter the car business.  While they did spend several paragraphs talking about the difficulty of doing so, they relate an idea from Eric Noble that Apple could just use their wizardry in human-machine interaction to make better drive controls or even self-driving car technology.  Hence, Apple wouldn't have to become a "true carmaker".

Sputter..sputter... WTF???  What kind of baloney reasoning is this?

It doesn't matter if it's a self-driving car or not ... it's still a car.  That makes it a hunk of metal parts that are going to be carrying you at 70+ miles/hr on the highway.  It's still an incredibly complex machine, a kind that Apple has zero in-house knowledge with anything even remotely similar.   Self-driving car algorithms are not that simple, and carry lots more risk than do other kinds of cars.

Consider - what happens when a self driving car gets into a collision?  Won't it be the automaker who will be responsible for the accident?  As it is, the automaker is rarely blamed for collisions because there's an obvious culprit behind the wheel.  But a self driving car is driven by algorithms designed by the automaker, and therefore the automaker has full responsibility over the result.

That doesn't mean Apple has to be the Automaker.  They could break into the market by designing control systems and components, letting other companies take care of designing the "car".  Apple's pattern-to-date however is to design and build products themselves, not make parts for others to design into products.

As an Apple customer since Mac OS X was first made available - I'm very worried to hear that Apple is thinking in this direction.  It could be extremely expensive for them and make the company fail, even with the gobs and gobs of cash in their back pocket.

Thursday, February 12, 2015

Toyota, Nissan, Honda working on Japanese fuel cell infrastructure for Japanese government

Maybe it's a fuel cell day?  In any case some of the Japanese automakers have announced a partnership on fuel cell refueling infrastructure in Japan.  If nothing else it demonstrates that not all fuel cell support comes from the California Air Resources Board, which is slanting the ZEV Credit playing field towards fuel cells.

Yes, "gaining popularity" for either fuel cell or electric vehicles means having the refueling infrastructure to support the vehicles.

The difference is that electric vehicles can be charged at home, while fuel cell vehicles cannot.  I don't know about you, but I've never lived in a house with a hydrogen supply at the house.  Hence, fuel cell vehicles have to be refueled at public stations, while electric vehicle owners can get away with home charging.

Here's the press release:

Toyota, Nissan, and Honda to Jointly Support Hydrogen Station
Infrastructure Development


Toyota Motor Corporation, Nissan Motor Co., Ltd., and Honda Motor Co., Ltd. have agreed to work together to help accelerate the development of hydrogen station infrastructure for fuel cell vehicles (FCVs). Specific measures to be undertaken by the three manufacturers will be determined at a later date.

For hydrogen-fueled FCVs to gain popularity, it is not only important that attractive products be launched―hydrogen station infrastructure must also be developed. At present, infrastructure companies are making every effort to build such an infrastructure, but they face difficulties in installing and operating hydrogen stations while FCVs are not common on the road.

Following the formulation of its Strategic Road Map for Hydrogen and Fuel Cells in June 2014, the Japanese government has highlighted the importance of developing hydrogen station infrastructure as quickly as possible in order to popularize FCVs. Consequently, the government is not only supporting the installation of hydrogen stations by means of subsidies, but has also resolved to introduce a range of additional policies aimed at promoting activities that generate new demand for FCVs, including partially subsidizing the cost of operating hydrogen stations.

The three automobile manufacturers hope to both popularize FCVs and ensure that it will be easy to refuel them. Consequently, they have jointly recognized the need for automobile manufacturers to promote the development of hydrogen station infrastructure alongside the government and infrastructure companies, with the aim of working towards achieving the aims of the above mentioned Road Map, the source of the government's subsidy support. The three automobile manufacturers will give careful consideration to concrete initiatives, such as underwriting a portion of the expenses involved in the operation of hydrogen stations.

FCVs are expected to play a central role in the drive towards establishing a hydrogen society. Toyota, Nissan and Honda are aiming to contribute to bringing about such a society through ensuring the widespread use of FCVs.

VW buying out Ballard's automotive fuel cell business, Ballard to focus on bigger vehicles

Volkswagen has promised that by 2017 the company will be a (?the?) leader in electrified vehicles.  Apparently they mean the word "electrified" to include Fuel Cell Vehicles, because of a deal just announced between VW and Ballard.   The agreement has VW paying Ballard $50 million so VW will have exclusive use of Ballard fuel cell technology in automobiles, while Ballard will be limited to selling fuel cell systems for buses and trucks.

The word "electrified" is so vague as to be almost meaningless.  It does not mean the vehicle can be plugged in, it just means the vehicle has some electric something-or-other component in the drive train.  Fuel cell vehicles are, of course, electric vehicles, with an electric motor driving the wheels, but where a fuel cell stack and hydrogen storage tank replaces the battery pack for energy storage.  Hence, FCV's are electrified vehicles.

With the nomenclature out of the way, let's ponder the Ballard/VW press release.

In the deal, Ballard will "transfer" automotive-related Intellectual Property (IP - meaning patents, technical designs, etc) that were previously acquired from United Technologies Group.  Ballard will keep rights to use the IP, in the form of a royalty-free license.

The existing engineering services agreement between Ballard & VW is being extended through to March 2019.

The engineering services are described as involving "the design and manufacture of next-generation fuel cell stacks for use in the demonstration car program," and that "Ballard engineers are leading critical areas of fuel cell product design – including the membrane electrode assembly (MEA), plate and stack components – along with certain testing and integration work."

Reading between the lines it sounds like VW won't have a production Fuel Cell Vehicle for several years yet, since the target is described as their "demonstration car" program.

Whether or not that supposition is true, it indicates VW is reiterating a commitment to Fuel Cell Vehicles, and that VW will have an exclusive on automotive use of the Ballard/UTG fuel cell technology.   Ballard will no longer be able to make automotive use, but will be free to continue selling fuel cell systems for bigger vehicles.

In my opinion, the only rational use of fuel cells in vehicles is for larger ones that have the room to hold hydrogen tanks.

Monday, February 9, 2015

PG&E proposes controversial plan for 25,000+ electric car charging stations in Northern California, starting in 2017 -- DEEP DIVE

This morning, PG&E announced a massive new charging station network of over 25,000 charging stations in its service territory.  This is a departure for charging networks, in California, for direct ownership by the utility company, however PG&E says they will only own the infrastructure and will contract out the billing relationship to third party companies.  The plan was submitted to energy regulators in California this morning, and requires their approval before PG&E can start work.  It's expected drivers will be able to use the first of these charging stations in 2017.

This sounds cool - massive increase in charging station deployment - but a conference call this afternoon to discuss the plan with the press grew pretty rancorous, with tough questions being asked of PG&E, and not enough answers.

Let's start with the plan, then discuss the controversy.

The plan - PG&E to grab 25% market share by 2020

PG&E's projections are that in order to meet California's climate change goals -- 1.5 million zero-emission vehicles in California by 2025 to help meet the state’s greenhouse gas emissions reduction goal 80 percent below 1990 levels by 2050 -- that PG&E's territory must have over 100,000 public charging stations by 2020.  PG&E's plan is to take care of 25% of that market, or 25,000 charging stations.

To do so, PG&E will procure the hardware but work with host sites, 3rd party contractors, and existing charging station networks to deploy that hardware.  PG&E will own the hardware, and work with one or more charging network operators to manage the hardware.  The charging network operator will buy electricity from PG&E, and turn around to sell it to their customers for a fee.

PG&E see's their proposed effect as being to grow the market, building it up for everyone involved.  Throughout the conference call they reiterated claims that they don't want to crowd out other companies, but to create an effect like that adage of "a rising tide lifts all boats."

The vast majority of the stations will be level 2 charging stations (25 miles range per hour of charging) installed at workplaces, retail shopping centers, and multi-unit-dwellings.  All three of those are under-served segments of the electric car charging market.  PG&E is not interested in getting involved with home-based charging.

In addition, the plan includes a 100 station DC Fast Charging network (supporting both CHAdeMO and ComboCharging System) to support deployments along the West Coast Electric Highway.  I find that statement in PG&E's press release curious, because the West Coast Electric Highway in California is essentially dead.  Back in 2009 promises had been made that California would take part, but since then nothing has been done in California.  All the WCEH action is occuring in Oregon and Washington, where EV drivers can enjoyed much more freedom to travel using the existing WCEH infrastructure.

A couple weeks ago, BMW, VW and ChargePoint announced a plan to install DC Fast Charging infrastructure on the West Coast, with 100 stations between San Diego and Portland.  These two are unrelated.  The BMW/VW/CP stations cover a different territory, and should be installed by this summer where the PG&E stations cover just PG&E's territory in Northern California, and won't be available until 2017 (or so).

2017?

The start of deployment in 2017 is due to the fact that PG&E, as a regulated utility, has many more hoops to jump through than typical (less regulated) companies.

They have to spend a few months wrangling over the plan with the state regulators, and then they can start planning the network in earnest.  One thing or another will cause the first availability to occur in 2017.

The little bit of controversy that could be a big deal

What got the rancor going in the conference call was this line in the press release: "The cost of PG&E’s plan, if approved, would be shared by all electric customers as a contribution to helping the state meet its clean air and climate goals."

As a regulated utility company, PG&E has to be careful about the financial impact on ratepayers, and as an investor owned company they have a fiduciary duty to shareholders.  That quote, and PG&E's answers during the conference call, did not answer that concern except to say that PG&E's 10K filing with the SEC tomorrow will have a lot more information.  

As it stands approximately 1% of PG&E's ratepayers will benefit from this expenditure of ratepayer money.  Specifically, among PG&E's 5+ million customers there are about 60,000 electric cars registered within PG&E's service territory.  (By the way - that's 1/5th of the total plug-in vehicle registrations in the whole country)  Five million divided by 60,000 is a bit over 1%, meaning a small portion of Northern California ratepayers will benefit from this charging network, the expense for which will be spread among 100% of the ratepayers.

The question is whether this is fare to the ratepayers, or whether they will even know about the financial arrangement because it won't appear as a line item on the electrical bill.

PG&E won't earn direct revenue from these charging stations.  Instead the 3rd party management company/companies they contract with will buy electricity from PG&E, then turn around and charge drivers whatever fee they deem appropriate.  So, while PG&E won't see direct revenue, they will see revenue from selling kiloWatt-hours at a commercial rate to the charging station network operators.  

Will PG&E earn enough revenue to pay for the charging station hardware, installation and maintenance?  The hardware cost won't be passed through to the charging station network operator, but instead will be paid by PG&E ratepayers.

It's expected the cost, as amortized out over PG&E's customer base, will be 1/10th of a cent per kiloWatt-hour ($0.001 / kWh).  The total cost and other information is supposed to be in tomorrow's SEC 10K filing.

Will PG&E customers like having to pay for charging stations?

When PG&E was asked how ratepayers would feel about this, the majority of whom do not own electric vehicles, there was a very long pause.  PG&E hasn't surveyed their customers about this program.  Instead they have looked at studies around range anxiety issues and tuned the program to provide charging infrastructure to reduce barriers to EV adoption.  

They expressed a hope that, over the long term, owning charging station assets will help them better manage the electricity system and put a long-term downward pressure on electricity rates.   The theory is a little convoluted, but by putting more kiloWatt-hours through PG&E's system it spreads the fixed costs out over more kWh's, lowering the fixed cost per kWh.

Site hosts will not have out-of-pocket costs.  Instead, PG&E will pay for building and maintaining the hardware, and the charging network operator will pay for the electricity while charging their fee to EV drivers.  This should reduce the barrier to getting site hosts on board.

Charging station deployment plans

The deployment plan cited by PG&E is not what I would like to have heard.  Instead of studying the infrastructure to determine where there are gaps, and building it to cover the gaps, they plan to work more closely with those cities that will help PG&E educate the public about the benefits of electric vehicles.  PG&E plans to provide educational literature to site hosts, and hold Ride&Drive events to raise public awareness.

The fast charging stations will be deployed to support inter-city travel.  As I said earlier, the California segment of the West Coast Electric Highway is dead as a door-nail.  Maybe this, and the BMW/VW/CP plan announced a couple weeks ago, will awaken that dormant idea?  One can only hope.

Why?  California state climate change goals?

Why should PG&E even do this when the 3rd party market is already spreading pretty quickly?   What PG&E answered was not a business/income/revenue purpose, but instead to say that while the EV Charging Infrastructure is growing it's not doing so quickly enough to meet California's electric car adoption target.  

In order for the State Government to meet that target, PG&E is acting to "expedite" the market.  By building infrastructure, prospective electric car buyers should ramp up the adoption rate.

However, reading between the lines I believe that PG&E has dollar signs in its eyes because they envision a future where it is they who are the transportation fuel providers and not the oil companies.

The size of the oil companies suggests just how big is the market for supplying transportation fuel.  PG&E and the other electric utilities could stand to make huge megabucks by ensuring they are the fuel provider of the future.

But that's not what PG&E said during the call.  Instead they kept discussing California's climate change goal.  To which I wonder, just why is it PG&E's business to achieve the State Government's goals?

ChargePoint responds

In another announcement a couple weeks ago, Kansas City Power and Light announced a deal with ChargePoint to deploy a thousand charging stations around the Kansas City region.  Clearly, ChargePoint is willing to work with electrical utility companies to deploy charging stations that are owned by the utility but managed by ChargePoint.

When PG&E said they plan to contract with a 3rd party to handle customer billing and customer interaction, ChargePoint would be (in my opinion) at the top of a very short list of potential partner companies.  

However, ChargePoint has some grave concerns about PG&E's plans.  I wasn't able to schedule a time to talk with them on the phone, but they did supply this statement.
PG&E’s program is needlessly expensive. They are going to spend hundreds of millions in ratepayer funds. We have seen private investment fuel national growth in EV charging infrastructure. ChargePoint alone has already sold nearly 25,000 charging ports, over 6,000 in PG&E’s territory alone for far less money than PG&E is looking to spend.
This creates a monopoly. Allowing one utility to choose the hardware and features will reduce competition and innovation. Because the utility will dictate the hardware, pricing and features, there will be little incentive to drive costs down or provide better services to consumers. This program will slow down the market. We know how important flexibility is in this industry – we’ve seen other companies fail at giving away free infrastructure because they’ve forced the hardware and set pricing.This hurts drivers: Ratepayers are stuck with the bill even if they don’t drive an EV. And PG&E didn’t even ask their ratepayers if they support this plan.ChargePoint believes that utilities should play an expanded role in the EV industry and the infrastructure that supports it. The right approach with utilities focused on installation and consumer education, similar to Southern California Edison’s filing, will:
  • Cut the cost of enabling a site with EV charging by reducing installation costs;
  •  Communicate the benefits of driving electric to rate payers to accelerate EV adoption;
  • Lower energy costs for all ratepayers by managing EV load in a way that limits the additional capital resources that need to be deployed; and
  • Provide for site owner choice of the ultimate charging solution, sustained innovation and spur competition and private investment.
PG&E isn't the only California electric utility to propose direct ownership of charging station assets.  A couple months ago, the California Public Utilities Commission made rule changes allowing utilities to directly own charging stations.  Since then, San Diego Gas & Electric and Southern California Edison both have proposed plans, and now so has PG&E, to directly own charging station networks.

CP's statement refers to the SCE plan as the preferred alternative.

To echo one of the points ChargePoint makes, the PG&E plan explicitly says "level 2 charging (25 miles of range per hour of charging)".  That's an excruciatingly slow charging rate, made palatable only because it's faster than the 3.3 kiloWatt charging rate that gave 12 miles of range per hour of charging.

I expect that by 2017 or so the electric car makers might be selling EV's with higher power on-board AC charging units.  If so, these cars are going to be hobbled by public infrastructure running at a measly 6 kiloWatt charging rate.  In other words, in my opinion, the charging network operators need to bite the bullet and install higher powered charging stations, in preparation for future EV's that can utilize higher powered charging.  Instead, PG&E is planning to engrave the 6 kiloWatt charging rate in stone.

We already have 4 such vehicles on the market - BMW i3, Tesla Model S, Mercedes-Benz B-Class, and Toyota RAV4 EV (gen2) all support a higher charging rate on level 2 AC charging.  There could well be more of them by 2017.

The 800 pound Gorilla effect

Back in 2012, NRG and the California Public Utility Commission negotiated a deal which brought eVgo to California.  Since then eVgo has been building electric car charging infrastructure, including their Freedom Stations.

In 2012 at least one of the charging network operators, ECOTality, then the owner of the Blink Network, filed suit to block the deal between NRG and the CPUC.  A large part of ECOTality's complaint was the 800 pound gorilla effect.  

Namely, NRG as a huge company, has a lot more resources in its back pocket than ECOTality, ChargePoint, and the other startups in this space.  When a big company yawns, sometimes the little companies fail to survive the change.

PG&E is also a huge company.  Will they cause problems for the fledgling electric vehicle charging network market?

For their part, PG&E's representatives repeatedly said during the conference call they're working hard to support the whole of the market rather than take over the market.  However the truth is that they're plunking down a large chunk of money (CP said "hundreds of millions of dollars") to take a 25% market share.

That they're structuring the plan to work with 3rd party companies helps, but a 25% market share is significant.

Summary

Despite all the concerns cited above, this (and other announcements from other electric utilities) are a validation that the electric car market is becoming real.  The big players are starting to horn in on the territory, in other words.

It's the electric utilities that stand to gain the most from electric car adoption.  Becoming a transportation fuel provider opens a whole new market niche for them.

Where do you think it will go?  Do you think PG&E's proposal is fair?

Monday, February 2, 2015

Public charging infrastructure seen as primary EV purchase hurdle, not the electric car price premium

Is the primary hurdle to buying electric cars the purchase price, or the lack of public charging infrastructure?  A couple weeks ago I referred to research saying it's the purchase price, that prospective electric car buyers don't want to pay a price premium for electric cars.  New research by a pair of researchers at Cornell University suggests that, instead, it's the lack of public charging infrastructure.

The electric car price premium is an important factor, and the NSF press release describing the Cornell research also quotes a Dept of Energy spokesperson saying "While the market is growing quickly, additional cost reduction of electric vehicle technology is required to directly compete on a cost basis with conventional vehicles," says DOE's Deputy Assistant Secretary for Transportation Rueben Sarkar.

The Cornell researchers note that in cities with more electric cars there are more charging stations. They suggest a 10% increase in the number of charging stations per million people in a city would result in a 10.8 percent increase in the market share of electric vehicles in that city.

While I agree that more charging stations would make EV purchases more likely -- the buyers want to know they can drive around and rely on charging infrastructure -- I'm not sure I buy their reasoning.

If A and B are both true does that mean A caused B?  That's what their claim is, that more charging stations cause people to buy more electric cars.  Is that true?

It is also true that some regions are more amenable to electric cars than other regions, e.g. us Californians want our clean energy gizmos, and that charging station network operators saw strong EV sales in a region as a sign they should build more charging stations.

In any case, as the press release notes it's not just a matter of throwing dollars at building more charging stations.  We, the EV drivers of the world, need charging stations in convenient useful locations, not scattered willy-nilly.  The latter has been tried, throwing government grant dollars at anyone willing to install charging stations, and the result wasn't satisfactory.

The researchers are additionally looking into methods to reduce the cost of the charging station infrastructure, so that more infrastructure can be built with the same investment dollars.  This includes solar panels in conjunction with charging stations, as well as an Intelligent Energy Management System to manage the charge rates of multiple charging stations at a given location.

More info is on the NSF website ...