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RETRANS2 – Final Report Univ.-Prof. Dr.-Ing. Armin Schnettler, Thomas Dederichs Ann-Kathrin Meinerzhagen, Eva Szczechowicz RWTH Aachen University, Germany.

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Presentation on theme: "RETRANS2 – Final Report Univ.-Prof. Dr.-Ing. Armin Schnettler, Thomas Dederichs Ann-Kathrin Meinerzhagen, Eva Szczechowicz RWTH Aachen University, Germany."— Presentation transcript:

1 RETRANS2 – Final Report Univ.-Prof. Dr.-Ing. Armin Schnettler, Thomas Dederichs Ann-Kathrin Meinerzhagen, Eva Szczechowicz RWTH Aachen University, Germany 12. July 2011

2 Background of the project  The transport sector is globally growing and has the strongest reliance on fossil fuels from all economic sectors  GHG emissions from transport increased by 26% from (in Europe)  Worldwide transport is responsible for 25% of energy-related CO2-Emissions  European Target – 80% CO 2 reduction by 2050 compared to 1990  thus oil consumption in the transport sector must drop by around 70% from today  Expected development (globally)  2009: 6,8 billion people, 700 million passenger vehicles  2050: 9 billion people, 3 billion passenger vehicles  Mitigation of fuel-dependency and CO 2 -Emissions possible with Electric Vehicles?  Co-Evolution of transport sector and energy sector provides opportunities for developing Electricity from Renewable Energy Sources and Electric Vehicles  Energy systems and transport characteristics differ around the world → need for regional perspectives 2 Introduction

3 Comparison of three world regions  Identify challenges and opportunities for the Co-Evolution of Electric Vehicles and Electricity from Renewable Energy Sources in three world regions (North America, Europe, China)  Similarities and differences in personal mobility  Infrastructure requirements for the integration of Electric Vehicles and Electricity from Renewable Energy Sources  Existing policy framework  Economical influences on the evolution of Electric Vehicles and Renewable Energy  Assist stakeholders of this Co-Evolution in better understanding the characteristics of each region  Examine whether the policy recommendations from the RETRANS project can be applied  Identification of those policy options that have to be adjusted to better fit the situation in one region 3 Scope of RETRANS2 Regions

4 Stakeholders for Co-Evolution Policies  OEMs  EVs can be counted as ZEVs if contribution to energy fund for new RES-E is paid  Lower overall fleet emissions  Utilities  Systems stabilizing bonus for connected EVs  DSOs  Smart metering required  Government  Hard coupling: increase RES-E portfolio share with growing EV market penetration  Tax exemption on RES-E traction current  Aggregator  Actor that bundles EVs in a certain region for offering their common capacity for ancillary services  System stabilizing bonus might offer additional potential for revenue 4 Background information from RETRANS

5 Consistent long term policy for Co-Evolution needed that involves a variety of actors  Preparation for EVs  Infrastructure and standardization (plugs, charging levels, smart grids)  Pilot fleets in niche markets  Learning effects for cost reductions  Long term perspective for Industry, security of investment  Increase RES-E production  Feed-in tariffs or premiums  Renewable portfolio shares or obligations  Cap and trade  Balanced grid development  Priority access for renewables (no coal based charging)  Coordinated technical and institutional efforts  Smart grids and active load management  Phase 2: Increase EV deployment for mass markets, increase system integration (V2G) 5 RETRANS Policy Recommendations

6 Methodology & approach  Literature survey and analysis of relevant studies and policy papers  Assessment of pilot projects  (In-House) Expert interviews on characteristics of regional electricity sector development  Analysis of statistical data  Analysis of regional policies until today and their continuation 6

7 7 Chapters  Context  Regional Economic and Transport-related Background  Electric Vehicles  RES-E and Grid  Opportunities & Challenges for Co-Evolution  Conclusions Table of Contents

8 The Chinese transport sector adapts slowly to Europe and North America North America Passenger transport relies mainly on passenger vehicles 30% of final energy consumption 20% of GHG-Emissions Europe Passenger transport relies mainly on passenger vehicles 30% of final energy consumption 20% of GHG-Emissions China Passenger transport relies on passenger vehicles and public transport Passenger vehicles become an increasingly important mode of transport 8% of final energy consumption 9% of GHG-Emissions 8 Transport sector has fastest growing energy use and strongest reliance on fossil fuels of all economic sectors worldwide. Context – Transport Sector Overview

9 Diverse Economic and Population Background - North America and Europe are comparable  GDP per capita (PPP)  North America and Europe have a GDP of 4 and 3 times the world average, respectively  China has a much lower GDP per capita (0,7 times the world average)  Population  342 million – North America  500 million – Europe (EU27)  Low population density in Nordic Countries  1.3 billion – China  High density only in southern and eastern China  Urbanization  High rates in North America (80%) and Europe (72%) & Northern Europe (79%)  Much lower urbanization (47%) in China Urban Chinese population surpasses both North America’s and Europe’s total 9 World Average Source: IfHT, values from World Monetary Fund Source: IfHT, values from CIA & Eurostat Source: IfHT, values from UN Context –Economic Situation 100% 1 billion

10 Differences in Vehicle ownership and Market development North AmericaEuropeChina Vehicles on Road 277 million210 million~55 million Passenger Vehicle Sales 12 million (2009)16 million (2009)10,3 million (2009) 13,7 million (2010) Vehicles per 1000 people Nordic: 500 Eastern: Beijing: 228 Overall Market situation today Stagnating, expected to increase as of 2012 StagnatingStrongly growing (doubling of sales within 3 years) 10 Context – Vehicles Market

11 Chinese market will be catching up on Western levels – further extreme growth expected  Highest global sales of passenger vehicles as of 2009  Sales more than doubled within 3 years  ~ 13.7 million new passenger vehicles in 2010  Further growth expected, especially for lower-margin subcompact and compact cars 11 Context – Chinese Vehicles Market Vehicle Sales ( Total/ Passenger Vehicles Commercial Vehicles)

12 Cars are most important for passenger traffic and will most likely stay so  Europe and North America rely mainly on private cars for passenger transport  Importance of vehicles is mirrored in available infrastructure (Annex A13)  Further increase in traffic expected for the European Union  Passenger traffic activity + 51%, 2005 – 2050  Reasons:  Immigration  Expansion of the Union (increase in labor mobility)  Economic growth  Increase in labor mobility 12 Context – Passenger traffic North AmericaEurope Share of passenger-km in private cars 93%83% Travelled km per person and year 15,000 – 20,000ca. 10,000 Nordic: 14,000 – 20,000

13 13 Chapters  Context  Regional Economic and Transport-related Background  Electric Vehicles  RES-E and Grid  Opportunities & Challenges for Co-Evolution  Conclusions Table of Contents

14 Analysis of Strengths and Weaknesses 14 Context – Electric Vehicles Strengths Economical driving Electric grid provides basic infrastructure Opportunities Integrating RES in transport sector Reducing local emissions (not only gaseous but also dust and noise) Threats Costs for infrastructure Battery lifetime Safety Advances in efficiency of conventional vehicles Weaknesses Battery limits Lack of Standardization Few models available Scarce infrastructure High investment costs

15 EVs are a niche market  EVs are close to the market  This will change with increased adoption and information to the general public. 15 Context – Transport Sector – Electric Vehicles North AmericaEuropeChina EV sales (2009) 1.1% of passenger vehicles JDPower: 2,8% sales 1% of passenger vehicles 0,4% of vehicles (distribution below) Only HEVs, BEVs sales negligible E-Bikes and E-Scooters included Less than 0,01% of vehicles on road are EVs 2020 Outlook 3-10% of passenger vehicles on the road ( ) 5% Target

16 Benefits regarding GHG emissions strongly depend on the regional electricity mix  EVs considered as low- or no-emission-vehicles  Technically this depends on the electricity mix  EVs powered by coal-fired power plants emit >800gCO 2 / km  Nighttime charging can result in both increasing the share of RES-E and in increasing the share of fossil base-load electricity and thus in higher emissions  Emissions of EVs are 50% of ICEVs’ with current European electricity mix  Emissions of EVs are 89-74% of ICEVs’ with current USA electricity mix  GHG emissions lower in Canada (2006 data) because of higher proportion of RES-E (depending on province)  Using RES-E, GHG emissions could be reduced to 75%-38% of ICEVs’ to which the new CAFE standards of 35.5 mpg by 2016 apply. 16 Context –Electric Vehicles & GHG Mitigation ICE BC AB SK MB ON QC NB NS PEI NL GHG = Greenhouse gas – EV = Electric vehicle ICEV = Internal combustion engine vehicle RES-E = Electricity from Renewable Sources CAFE standards = US fuel efficiency standards

17  In China the high share of coal-based electricity in the grid increases EVs’ emissions above those from conventional ICEVs (2010 data)  The electricity mix in the more densely populated southern and eastern China decreases EVs’ emissions below conventional values  The northern regions that today have the highest emission values have large unconnected wind resources 17 GHG emissions from electric vehicles are beneficial only in some Chinese regions Context – Transport Sector – Emissions of EVs GHG = Greenhouse gas – EV = Electric vehicle ICEV = Internal combustion engine vehicle RES-E = Electricity from Renewable Sources N NE E C NW S Hai Av. ICE

18 18 Low gas prices in North America and China reduce interest in EV’s cost-benefits  Gas prices and gas tax are low in China, Canada and the USA relative to Europe Context – Electric Vehicles – Economic Influence Gas prices around the world (US $ per gallon, 2011) Source:

19 19 General transport sector emissions policies influence also the deployment of electric vehicles  GHG emissions are taken into account through taxation in many European countries (map) (Dark Blue: more than one taxation scheme, Light Blue: one kind of CO2-tax) and in China  Tax benefits from this taxation reduce impact of cost-difference compared with conventional cars  No taxation of GHG emissions of passenger vehicles in North America  Elevated electricity costs in Nordic countries  Influence the economical viability of EVs  Variety of policies regarding future of transport  Shift of commodities to rail and inland navigation  Increase of public transport  Holistic approach provides less secure framework for investments Context – Electric Vehicles – Economic Influence

20 20 Societal change drives the deployment of electric vehicles  Urbanization  Urban areas experience most traffic problems  High population density in urban areas warrants investments in infrastructure  Urban population tends to early adoption of new technologies  So far the number of EVs (per head) is biggest in cities But:  Charging infrastructure faces competition for space  Immigration and labor mobility  Increase mobility needs  Customer acceptance of new mobility patterns, of the look, space and performance of EVs Context – Electric Vehicles - Drivers

21 21 Technical and political development will have strongest influence on EV deployment  Political and regulatory support  Subsidies  Infrastructure development  Pilot projects  Recommendations from funding organizations  207 models recommended for subsidies in China only these models are eligible  Some European countries publish catalogues of vehicles that are entitled to benefits  Standardization  Secure framework for investments from stakeholders  Development of vehicle energy storage systems  Longer driving range  Lower battery costs Context – Electric Vehicles – Drivers The sustainability of the deployment of electric vehicles has to be taken into account for devising support policies!

22 22 The availability of charging infrastructure is a basic requirement for electric vehicle deployment  Security aspect for users  Necessary for widespread EV usage  Quick-charging is now being implemented in the Nordic European countries  April 12, 2011 Denmark's first quick charge station opened (max. 20 minutes for 80 % SOC)  2 stations have been build in the Oslo area in Norway  Battery swapping stations will be built in Denmark (Figure: Projection for 2012)  In China all three charging technologies are/ will be tested  Some pilot cities have already published standards  Slow charging and battery swapping are preferred by grid companies  No governmental preferences yet Context – Electric Vehicles – Drivers

23  Diverse climate conditions  All three regions encompass various climate zones with cold winters in the north and humid and hot summers in the south  These climatic differences will lead to different battery lifetime and vehicle availability  Landscape and road conditions vary  Areas with low population density increase infrastructural costs for widespread deployment  Midwestern America, western and northern China, northern Europe  For first usage in cities population density is not an issue  Ageing population in North America and Europe  Ageing people remain increasingly mobile and thus cause more traffic  An increasing share of governmental funds has to be dedicated to care  Funding for new technologies becomes more difficult Electric vehicles do not meet with favorable conditions everywhere 23 Context – Challenges for EVs

24 24 Complementary use rather than replacing conventional vehicles  Electric vehicles are typically second cars  Commuting  Germany: most commuting distances are 80 km or under  This is absolutely within EVs range  Inner-City-Traffic  Reduction of local emissions  Noise  Green House Gases and Particles  Short distances, stop and go  Integration into Car-Sharing programs  No individual perception of purchase costs  Public electric vehicles in China  Buses & Taxis – uniform fleets allow economies of scale and battery swapping  Sanitation vehicles, postal cars, other public services’ vehicles Context – Electric Vehicles – Markets

25 25 Usage models have different requirements on EVs and infrastructure  Inner-City traffic  Short distances, low requirements for speed  Slow charging, mostly at home  Commuting  Medium requirements for distances and speed  Slow charging, at home and at work  Car sharing  Short and medium distances, low and medium speed  Slow charging at stations, maybe battery swapping  Inter-City-Traffic  Long distances, high requirements for speed  Fast charging and battery swapping on road Context – Electric Vehicles – Markets

26 EVs should be offered in a package including additional transport and other services  Public transport ticket(s)  Rental car service  Combination with car-sharing programs?  Installation of home charging point  Access to charging stations/ reserved parking spots  Free charging on public charging stations  Flat rate for charging current from RES-E  Pay-per-mile battery leasing offers  Maintenance services  Guarantee on battery and vehicle parts  Insurance 26 Context – Electric Vehicles – Business Models

27 Pilot Projects are nuclei for EV deployment North America Funding from (regional) governments and OEMs Projects mostly in big cities Different usage models (Car- sharing, public transportation, postal vehicles) Europe Funding from governments and OEMs Projects concentrate on one city or region Focus on Usage experience for EVs and charging infrastructure Variety of scales (charging per EV, EVs per project…) Mostly, cars are leased China Funding from government and municipalities 25 pilot cities Mostly, only public vehicles are funded 27 Context – Electric Vehicles – Pilot Projects

28 28 European pilot projects surpass North Americans in numbers  Projects concentrate on cities or one peculiar region  Small scale co-operation of local authorities, Utilities and OEMs  Focus  Experience/ Usage  Private use, Commuting  Car sharing  Public transportation, Postal service  Charging infrastructure  Many big cities have pilot projects  Commercial/ public vehicles  Car sharing  Public transportation, Postal service  Charging infrastructure  One project encompasses several states (see Annex A4) Context – Electric Vehicles – Pilot Projects

29 29 Chinese “Ten Cities Thousand Vehicles” Program  There are three stages of 25 pilot cities in the “Ten Cities Thousand Vehicles” pilot program.  Currently, most EV in these pilot cities are public buses, taxis, official’s cars and services vehicles.  5 cities have subsidies for private EV customers Context – Electric Vehicles – Pilot Projects Details of five representative cities are listed in Annex A4.

30 30 User Behavior  EV users are early adopters or members of public organizations  Early adopters are older, educated, interested in technology and enjoy being early adopters  Willingness to plug-in may depend on business models  Interest in earnings through delayed charging vs. concerns about availability of the EV  V2G services only of interest if a benefit is perceived  Preference for home charging (90% in Northern Europe, 70% in Western Europe)  Consumers value environmental performance, but they value other attributes more. Context – Electric Vehicles – Users

31 User concerns  High initial investment  Users today are more willing to take TCO into account for purchasing decisions  Price  EVs cost at least ¥ 20,000 more than ICEVs of same performance  40% of consumers that avoid purchasing a hybrid do so due to cost. Only 10% of non- hybrid consumers avoid a purchase due to cost.  Nordic countries: Prices on EVs (free from registration charge) coming close to those of conventional cars (including charge). EV family cars start at € 65,000 in Norway  Fuel economy (in $/km)/ Operating costs  Scarce infrastructure  Performance of EVs  14% of consumers that avoid purchasing a hybrid do so due to performance. Only 5% of non-hybrid consumers avoid a purchase due to performance.  Geographical differences  Weather/ climate In 2010 Danish EVs showed poor performance in cold weather  Landscape/ Roads  Driving range  Charge times  Battery life(span)  Relatively few models available/ lack of diversity  Dislike of the look/design  Safety 31 Context – Electric Vehicles – Users Global issuesManufacturing issues TCO = Total Cost of Ownership ICEV = Internal Combustion Engine Vehicle

32 Urban and rural backgrounds for EVs differ – also between the regions  80% of North American population, 75% of European population, 46% of Chinese population lives in cities  Traffic load in cities increases  Emissions from traffic increase (gaseous, dust, noise)  Increase of congestion  Commuters have high requirements on vehicle performance and reliability  Cities have highest need for holistic passenger transportation solution  Most deployment of EVs in cities  Spatial planning conflicts for charging infrastructure  Public transportation is not always conveniently available  Need for reliable private transportation solutions  Vehicle ownership rates are higher (Europe & North America)/ lower (China) than in cities  Demand for vehicles in rural and suburban areas increases  Focus: low-speed low-cost vehicles  70 km/h maximum, 40,000 – 50,000 ¥  Challenges: safety, environmental impacts (battery), traffic regulation conflicts 32 Context – Electric Vehicles – Urban vs. Rural UrbanRural

33 33 Standardization of infrastructure and vehicle characteristics is urgently needed  Some general vehicle standards for safety specifications, general design specifications and emission testing also apply to electric vehicles  Standardized Plug needed urgently  Wider harmonization needed, parallel systems exist today  Mennekes plug is harmonized between France and Germany  Scame plug is supported by French-Italian alliance  Yazaki is standard plug in the USA  Chinese pilot cities have started issuing their own standards for charging infrastructure  Need for standards on  Number of phases for charging (1 or 3)  National and cross-national compatibility  Safety requirements + technical approval body  Data protocols and protection of data  Charging cable reposit  Billing system  Liability Context – Electric Vehicles – Standardization

34 34 Safety standards are especially important  Differing vehicle standards between the USA and Canada (involving bumpers, seat belts, side door strength, metric indicators, etc.).  To be harmonized by 2012  There is a need for nation-wide harmonized standards for after-market ICE vehicle conversion.  Safety of plugs and the charging process is a concern besides design, number of phases & voltage level for charging  Pure electric vehicles from independent manufacturers may not be as equipped for safety as modern cars are (airbag, anti-lock brakes, electronic stability control etc.) Context – Electric Vehicles – Standardization

35 Targets for Electric Vehicles on the road North America USA: 1 million electric vehicles on the road by 2015 The EV project which encom- passes 18 urban areas in six states will install 14,000 chargers (residential and public) Canada: 0.5 million electric vehicles on the road by 2018 Europe Sum of national targets: 5 million electric vehicles on the road until 2020 Needed growth rates for these targets range from 20,000 – 250,000 EVs per year over a 2 – 20 year period Different pilot projects have targets for charging stations China 0.5 million electric vehicles on the road by million electric vehicles (5%) on the road by 2020 Most ambitious national target worldwide Each pilot city has targets for charging stations 35 Context – Electric Vehicles – Objectives

36 Targets for Reduction of GHG emissions  EU Targets  20% reduction of GHG emissions (relative to 1990)  20% of energy from renewables  10% share of renewables in transport  20% increase in energy efficiency  National targets are even stricter  Sweden & Denmark: 100% renewable fuels in transport by 2030  North America  Non-binding target of 17% reduction of GHG emissions by 2020 (relative to 2005) 36 Fuel distribution in European road transport 2009 Electricity includes inland waterway and air transport Source: Eurostat Context – Electric Vehicles – Objectives

37 37 The lack of standards makes long-term planning difficult for vehicle and infrastructure manufacturers  No coordinated effort between car-making markets in terms of regulation (regarding emissions standards which were agreed on in Europe & China or the type of technologies to support) yet.  Makes planning effectively for the long term difficult for auto-makers  Can be somewhat mitigated by technology-sharing agreements between companies  Hinders large-scale deployment (i.e. Chevrolet intends to produce only 10,000 units of the Volt in its first year of production in the United States).  No political will to implement high fuel taxes to stimulate the greatest advances in vehicle efficiency and alternative vehicles  Increasingly strict fuel efficiency standards are a good first step Context – Electric Vehicles – Regulatory Barriers

38 National or regional authorities provide a variety of incentives for Electric Vehicle users  Taxation reduction or exemption  Registration fee – One-time-benefit  Annual circulation or motor tax – annual benefit  Subsidies  At acquisition or later  Traffic privileges  Use of bus lanes, free parking  Exemption from ferry tolls or road charges  Exemption from car license plate lottery and traffic restrictions (Beijing)  Fuel subsidies  Reduced insurance rates for pilot fleets 38 Context – Electric Vehicles – Benefits & Incentives Details for Regions in Annex A3

39 39 Chapters  Context  Regional Economic and Transport-related Background  Electric Vehicles  RES-E and Grid  Opportunities & Challenges for Co-Evolution  Conclusions Table of Contents

40 Electricity from Renewable Energy Sources 40 Context – Electricity from Renewable Sources Strengths Reduction of GHG-emissions Using national energy sources Diversification of energy sources Promoting emerging industries Weaknesses Conventional power plants need to stay available for energy security Increased need for ancillary services Resources far away from demand Opportunities Increased energy security Climate change mitigation Transition towards sustainable energy systems Fast growth of production capacity Threats Volatile character of some RES Environmental integration of large RES-E power plants Technology not mature enough Higher costs

41 1/6th – 1/5th of Electricity is from Renewables North America 4580 TWh annual production 18% share of renewable energy (USA: 11%, CND: 58%) Hydro most important (base load) Europe 3600 TWh annual production 22% share of renewable energy Hydro, wind and biomass most important Country shares differ (4%-99%) China 3460 TWh annual production 17% share of renewable energy Hydro mostly used for peak manage-ment Mix based on government quota 41 Context – RES-E – Current status Renewable 0,5%

42 RES-E Targets and Scenarios North America No national targets Production from natural gas and wind will increase, Coal will decrease Nuclear decreases (CND) and increases (USA) First strong interconnections between grid areas Europe Target for 20% renewable primary energy in 2020 (2008: 17%) Production from natural gas and wind will increase Increase in distributed production expected Further expansion of interconnections to neighboring countries China Target for 15% renewable primary energy in 2020 (2008: 8,6%) Domestic coal stays most important Expansion of transmission capacity (Extra High Voltage, long distance) 42 Context – RES-E Details for North America in Annex

43 Production incentives for renewable electricity are most widely in force in Europe North America Feed-In Tariff only in one province Renewable port- folio shares and financial incentives exist in many states Net metering and standard offer programs (some- times by utilities) as well as fiscal incentives are common Some federal incentives exist Europe Feed-In Tariffs most popular (below) Investment Grants, Tax Exemptions, other fiscal incentives and Quota obligations and Premiums also in force China Strong government support of new, large RES-E plants The electricity mix is determined via a governmental quota – thus, a renewable portfolio share could be im- plemented easily 43 Context – RES-E – Incentives

44 Electricity markets differ – Vertical markets in North America and China North America Vertically integrated sector Partly regulated market Market entry is difficult for new producers (e.g. of RES-E) Europe Unbundled internal market Many different TSOs and DSOs TSOs cooperate in ENTSO-E Stakeholder- situation varies between countries China Vertically integrated sector Virtually no market entry for new producers RES-E plants belong to grid companies 44 Context – Electricity Sector – Structure

45 Reserve power feed-in from electric vehicles may be an income option for owners North America Regulation depending on local grid companies Reserve power from vehicles is interesting in North America where reserve power is costly First trials for feed-in from vehicles in two pilot projects Europe Country specific regulation Possible revenue: up to 300 €/a Small scale of EVs makes participa-tion less interesting for TSOs Water and biomass resources offer buffer capacity for increasing share of RES-E (especially in Nordic countries) China Millions of electric vehicles are needed for an efficient smart grid Price differences between valley and peak electricity make V2G very interesting Grid expansion and making the grid smarter are premises for valuable services from electric vehicles 45 Context – Reserve market

46 Electricity grids are very different in the three regions North America Old and not always reliable Investments decreased over last years Grid structure is radial, meshed in regions with high population density Low overall population density makes expansion costly Integration of EVs possible in some regions Europe Stable and modern Grid structure: Transmission: meshed Distribution: meshed, loop or ray Integration of EVs possible for up to 40% penetration in most grids China Strong expansion of the transmission grid is going on Distribution grids are not always fit for integrating either RES-E or EVs 46 Context – Grids

47 „One common“ transmission grid for Europe 47 Context – RES-E – Grid organization  European Network of TSOs for Electricity  Continental Europe Synchronous Area  Nordic Synchronous Area  Baltic Synchronous Area  British Synchronous Area  Irish Synchronous Area  Isolated Systems of Cyprus and Iceland  Harmonization of Grid Codes  Common Network planning Source: IfHT, based on Entso-e Factsheet 2011

48 North American grids are separated today 48 Context – RES-E – Grid organization  Interconnected Grids:  Western Interconnection  Eastern Interconnection  Texas  Alaska/ Hawaii  Links between these regions planned.  Planning in map:  Separation of grids will largely remain Source: IfHT, (based on) NPR 2009 The separation of the grid continues northwards into Canada.

49 49 China’s grid is split in two  Two major grid companies  China State Grid (blue) 26 Provinces TWh  China Southern Grid (gold) 5 Provinces 628 TWh  Six major regional grids  Center, North/ Northeast East, Northwest  South  Distributed power production is not encouraged Context – RES-E – Grid organization Source: IfHT, based on Earley et al.

50 50 The densely populated demand centers are far away from renewable resources in China  Energy resources – and power production – are located far from the demand areas.  Wind and other renewable energies could directly charge EVs (or swapped batteries) in both northern China as well as in southwestern China where transport of liquid fuels is inconvenient  Given the low economic development status of these areas, it is likely that low-tech, low-speed, low-cost EVs will be more accepted there.  Low-cost EVs use lead-acid batteries which are increasingly causing pollution problems in rural China. 50 Source: IfHT based on "Imbalance of Power Production and Consumption in China” and Earley et al. Context – RES-E – Regional Power Characteristics

51 51 Thermal Hydro Nuclear Wind & other Fossil fuel-based electricity dominates the electricity mix in China  Northwest and Southwest China have some wind power installed  South and East China have hydro power available  This is used for peak load management  Regulated charging  Uses excess RES-E  Increases deployed share of RES-E Context – RES-E – Regional Power Characteristics

52 52 V2G at the moment not legally possible in any region  The bidirectionality of charging and providing ancillary services makes billing complicated  Two pilot projects that include V2G are underway in the USA (notably in Colorado)  US personal vehicles are used ~1 h/day  Expensive ancillary services (from coal or gas) in US  Inexpensive ancillary services (from hydro power) in Canada  Regulatory and Usage framework varies heavily in Europe  European cars are immobile most of the day (comparably to the US)  Parking situations vary between countries  Vehicles are parked on the street overnight in Italy  Availability of possibilities for plugging-in at work is unclear  Important sources for ancillary services are gas and hydro power Context – V2G

53 Ancillary services from electric vehicles  Further development of Communication infrastructure and bidirectional metering for controlled charging and feed-back needed  Participation in reserve markets is currently outlawed  Revenue depends on demand and the energy provided  Reserve from hydro power (in Canada and Norway) is cheap while natural gas based reserve power  Hope that EVs can result in less need for new or closing down existing fossil fuel based base load capacity on the long term 53 Context – RES-E – Business models

54 Revenues from grid-related services: Reserve capacity in the Nordic power market 54 Context – RES-E – Ancillary services

55 55 Chapters  Context  Regional Economic and Transport-related Background  Electric Vehicles  RES-E and Grid  Opportunities & Challenges for Co-Evolution  Conclusions Table of Contents

56 Co-Evolution 56 Co-Evolution Strengths Increasing stable share of RES-E Ability to include transport sector into emissions-mitigation schemes Weaknesses Need for smart grids, communication & new structures Standardization Business models Opportunities Increased energy security in transport sector Transition towards sustainable transport Electricity supply security from RES Development of smart grid technology Threats Combination of two so-far independent sectors Today ancillary services from EVs are outlawed Multiple stakeholders

57 Cooperation between stakeholders needed for Co- Evolution  Co-Evolution only possible if both EV deployment and RES-E production are encouraged  RES-E production needs to increase for Co-Evolution  Tariffs for charging with RES-E need to be developed  Cooperation between stakeholders  Vehicle and infrastructure standards  Facilitating RES-E integration  Provide possibilities for RES-E charging  Globally coordinated development of standards  Synergies can only emerge if technological development does not take different directions 57 Co-Evolution – General Requirements

58 Both RES-E production and EV deployment rely on electricity grids  Grids need to be sufficiently stable and/ or expanded for accommodating  New centralized (off-shore/ on-shore wind) and distributed (solar PV, micro-wind, etc.) production  Preference for centralized RES-E production means more attention on transmission grids. Security of supply is seen as more important than increasing the share of RES-E.  Additional distributed load  Battery swapping stations could stabilize and centralize demand  A preference for home charging means increased (distributed) household-load  Opportunities for high penetration of EVs  Regulated charging  For better capacity utilization  For taking stress off the distribution grid (assets)  Storage of RES-E  Increase share of RES-E  Provide reserve power for grid  Stabilize feed-in from volatile sources 58 Co-Evolution – System Requirements PV = Photovoltaics RES-E = Electricity from Renewable Sources

59 59 The two European island states take different routes  Iceland focuses on Hydrogen and Fuel cell vehicles  Co-Evolution of RES-E to H2 and FCEVs possible  Economic crises have decreased the number of initiatives  Ireland promotes EVs  Electricity market  Demand growth  Small difference between peak demand & installed reserve capacity  Few interconnections (2 more under construction)  High dependency on imported fuels  Opportunities for EVs  Security of transport energy supply  Nighttime charging with excess wind power  Aran islands pilot project: becoming self-sustainable with local energy  Security of supply is main difference to Texas Co-Evolution – Situation of Islands

60 Targeted Numbers of EVs can be accommodated without major grid and/ or production expansion 60 China Europe Canada Northern Europe 2020 – Target2030 – Scenario2020 – Target million EVs (≤ 7%) 200 million EVs5 million EVs (2%) 0,5 million EVs (≤1%) Need: 20 TWhNeed: 800 TWhNeed: 1,5 TWh 0,5% of electricity demand in % of electricity demand in ,5% of electricity demand in % on projected demand ,2% of projected electricity demand in 2018 Co-Evolution – Impact on power generation  This Assessment only considers global values. Results can differ for local grids.  Distribution grids in urban areas may experience overloads of assets first.  For average European grids up to 40% EV penetration does not create problems  For Beijing, 100% EV commuting could not be sustained Details in Annex A11

61 Chinese and North American grids may be first to have problems with rising EV penetration  Chinese grids are already now straining to keep up with the increased demand due to the rapid economic growth  Power shortages, especially in the densely populated areas, have to be expected  30-60% difference in electricity demand between peak times and base load leaves room for off-peak EV charging  Investments in North American grids have decreased over the years  Grid assets are old  Local distribution grids may not have the strength to supply EVs  Challenges increase with rising penetration  Quick-charge at peak hours has the highest possible impact on grids and power generation capacity  Daytime charging may require upgrades in local distribution systems in China and North America  Regulated charging is expected to prevent impact on base load power plants 61 Co-Evolution – Impact on power generation

62 62 Renewable electricity and electric vehicles affect the stability of transmission and distribution grids  Integration of distributed RES-E production and EVs influences stability of distribution grids  Communication infrastructure needed for controlled charging  Integration of large RES-E plants increases stress on transportation grids  Expected increase of off-shore wind power is a challenge  European and especially Nordic grids are well designed and prepared for transporting RES-E  Modernizing and increasing the strength and flexibility in the grid will take place also without the expected increase of EVs.  Chinese grids will be strengthened with building extra high voltage transmission capacity  Grid expansion in North America is costly – especially for transmission infrastructure  Distributed generation with local grid reinforcement is a good first step  Exploitation of resource-rich regions will be necessary for significant replacement of fossil fuels (northern Canada (wind), western US deserts (sun), offshore wind). Co-Evolution – Impact on grids

63 The impact on grids and power production depends on time and method of charging  Slow charging and Battery swapping are preferred by DSOs  Both methods spread the load over a longer period  The centralized storage capacity of battery swapping stations makes them interesting for ancillary services and demand response  Fast Charging has highest potential to destabilize the grid  Time of Charging impact  Daytime, especially peak time charging will most likely result in overload in assets, especially in urban regions (demand centers, high population and vehicle density)  Nighttime charging:  The grid has transmission and distribution capacity available  The use of “spinning reserve” on the grid may become more efficient  RES-E that otherwise would not be fed in can be used  increased use of base load power plants possible  greater coal consumption  increase in GHG-emissions  Charging strategies for smart grids may focus on using RES-E for charging 63 Co-Evolution – Impact on Infrastructure

64  Possible strategies:  Preference for charging with RES-E  EVs (+ smart charging) can increase uptake of RES-E  Smart charging makes volatile RES-E a better business case  Charging in load valleys (with RES-E)  Price difference of 0.6 ¥/ kWh  An accounting system and charging infrastructure are now being built in the Nordic Countries.  Smart meters are put up as part of the "Introduction package" offered by "Better Place".  Smart meters are already installed in large scale in Sweden and Norway 64 Regulated Charging is the first step to reduce the impact on grid stability and power generation Co-Evolution – Impact on power generation Transport District heating Other sectors

65 65 Conventional Grid Conventional Grid Unregulated Charging with RES-E Charging Infrastructure Accounting system Frequency stability Voltage stability Regulated Charging Smart Meter Smart Grids Regulated Charging (reducing overloads) ICT Communication with Local Network Stations Advanced ICT Area wide charging stations Reduced load during fault Additional spinning reserve Demand Side Management Negative spinning reserve Positive spinning reserve Active load management Ancillary services Bidirectional ancillary services Intermittent storage Feed-In of stored RES-E Feed-In during fault Bidirectional charging infrastructure Integration of RES-ESupporting RES-E with EVs Integration of EVs Technical requirements for grid support Technological Requirements for Co-Evolution

66 Today‘s Situation 66  A strong conventional grid can take up small penetrations of EVs and RES-E  EVs only charge unregulated  First trials with smart meters – not necessarily in combination with EVs  Italy  Sweden  Norway  Denmark  Germany  China  First V2G trials in North America  RES-E integration depends on national electricity market’s regulation Conventional Grid Unregulated Charging Technological Requirements for Co-Evolution

67  Technical requirements for grid support  Frequency stability  Voltage stability  Both are guaranteed by implementing simple charging control systems  Increased transmission efficiency and robustness  Stability and efficiency of grid needed for further development Next Steps have begun  Integration of RES-E  Implementation of distributed generation and local grid expansion in North America  Supporting RES-E with EVs  Charging with RES-E  Reduces EV emissions  Incentive for increasing RES-E share  Major RES-E bases will be constructed  Extra High Voltage long-distance transmission  Transporting power to demand centers  Integration of EVs  Charging infrastructure  First implementation in Pilot Projects  Accounting system  Is already being built in Nordic European Countries and in some Chinese pilot cities 67 Charging with RES-E Charging Infrastructure Accounting System Frequency & Voltage Stability Technological Requirements for Co-Evolution

68  Technical requirements for grid support  Regulated charging  Reducing overloads of assets  Lack of standard in China today  Automatic Power Distribution  Distributing power according to demand Near Future  Integration of RES-E  Smart Meter & Smart Grids  Enable more services for RES-E support  First trials in place in different regions  Extra High Voltage Transmission  For transporting RES-E to demand centers  Supporting RES-E with EVs  Regulated Charging  Higher penetration/ share without major impacts  Integration of EVs  Information and Communication Technology  For better vehicle control  Communication with local network stations  Information and Communication stations 68 Smart GridsRegulated Charging ICT Communication with local network stations Regulated Charging Smart Meter Technological Requirements for Co-Evolution

69  Technical requirements for grid support  Additional spinning reserve  Secure grid balance  Reduced load during fault  Stabilizing the grid  Not in place or allowed in China today  Strong smart grid  Managing impacts and optimizing demand satisfaction Phase 2 Development?  Integration of RES-E  Negative spinning reserve & Demand side management  Secure balance of RES-E production and consumption  Supporting RES-E with EVs  Active load management  Increase RES-E take-up in times of energy surplus  Ancillary services (unidirectional)  Stabilizing the grid  Integration of EVs  Advanced Information and Communication Technology  Enabling V2G services  Area wide charging stations  Infrastructure covering large – medium cities 69 Negative Spinning Reserve DSMActive load management Ancillary services Area wide charging stations Advanced ICT Additional spinning reserve Reduced load during fault Technological Requirements for Co-Evolution

70 Full Co-Implementation  Integration of RES-E  Feed-In of stored RES-E  For massive RES-E integration  Positive spinning reserve  Supporting RES-E with EVs  Intermittent storage  For high demand times  Bidirectional ancillary services  Integration of EVs  Bidirectional charging infrastructure  Enabling revenue for vehicle owners  Technical requirements for grid support  Feed-In during fault  Feed-In of stored Renewable Electricity  For benefits of EV development 70 Feed-In of stored RES-E Positive spinning reserve Intermittent storage Bidirectional ancillary service Bidirectional charging infrastructure Feed-In during fault Feed back to grid Technological Requirements for Co-Evolution

71  Distributed expansion of both RES-E and the grid will enable higher shares in North America  Smart Meter and Smart Grids enable the grid to provide more services to support RES. Extra-High Voltage (EHV) Transmission enhances electricity transmission from remote energy resources to demand centers  Demand side management and spinning reserve secure the balance between consumption and production of RES. Strong Smart Grid balances consumption and production of RES-E  The Feed-in of stored energy allows a massive integration of RES-E.  Today’s penetration of renewable energy sources can be handled with the conventional grid. The Nordic and the Canadian grids are prepared for large penetrations of renewable energy sources Feed-in of stored renewable energy Positive spinning reserve (bidirectional) Negative spinning reserve (unidirectional) Demand side management Smart Grids Smart Meter Integration of RES-E Conventional grid Growth in renewable energy sources Rising Penetration of EV and PHEV 71 Voltage/ frequency stability EHV transmission Strong Smart Grid Technological Requirements for Co-Evolution Distributed expansion

72  Increased robustness and transmission efficiency are needed for a rising penetration of RES-E and EVs. To guarantee the frequency and voltage stability of the grid some simple regulations can be implemented in EVs.  Regulated charging can avoid overloads of assets. Automatic power distribution is the foundation of distribution of power according to demand.  Additional spinning reserve guarantees the balance of the grid. Strong Smart Grid manages the impact of RES-E and EVs and optimizes the demand satisfaction  Special strategies during fault times support the fast stabilization of the grid. Feed-in during a fault Additional spinning reserve Reduce energy demand during a fault Regulated charging to reduce overloads Frequency stability Voltage stability Technical Requirements for grid support  To support the grid for a rising penetration of RES-E and EVs, changes in the operating behavior might be necessary. Growth in renewable energy sources Rising Penetration of EV and PHEV 72 Increased robustness Increased transmission efficiency Automatic power distribution Strong Smart Grid Feed back to grid Technological Requirements for Co-Evolution

73 Charging infrastructure - bidirectional Area-wide charging infrastructure Advanced ICT Communication with local network stations ICT Accounting system Pilot Charging infrastructure Requirements for a high integration of EVs  To integrate a significant amount of EV and PHEV, technical requirements have to be fulfilled. Growth in renewable energy sources Rising Penetration of EV and PHEV  An accounting system and charging infrastructure are obligated as soon as possible. Both are currently being built in Nordic Countries.  To control the vehicles a communication infrastructure has to be established.  To provide V2G services more communication signals are required. With rising penetration of EV and RES-E, more charging/swapping infrastructure is needed.  A bidirectional power connection is required to earn revenue for the vehicle owner. Conventional grid 73 Information and Com- munication Stations Charging infrastructure in large-medium cities Technological Requirements for Co-Evolution

74  Electrical vehicles profit not only from the collaboration with RES, they can support a high penetration of RES in the grid!  To reduce emissions in the transport sector, the highest benefit is generated if EVs and PHEVs charge RES-E. In China, large RES-E bases are constructed and EHV inter-grid transmission is needed to transmit the large amount of RES-E. In Europe and North America additional RES-E capacity will be distributed.  Regulated charging enables higher penetration rates.  Active load management and ancillary services can integrate energy from RES in times of an energy surplus  Intermittent storage of RES-E for high demand times! Intermittent storage of energy from RES Providing ancillary services (bidirectional) Active load management storing energy from RES Providing ancillary services (unidirectional) Regulated charging Charging with RES-E Supporting RES with EVs Growth in renewable energy sources Rising Penetration of EV and PHEV Unregulated charging 74 Major RE bases Long distance Transmission Technological Requirements for Co-Evolution

75 Policy frameworks are developing towards Co-Evolution North America Development most likely via individual projects Pilot or communal projects implement and test first charging infrastructure and V2G Accounting systems will be put in place by individual ISOs Public-private partner-ships are key to getting the ball rolling Initiatives most likely on State/ Province or local level Ontario: FIT, EV target, want to be coal-free by 2015 Europe Political framework for future of transportation promoting the use of RE for fuels Societal framework Emergent rethinking of vehicle ownership models Widespread availability of ICT infrastructure High share of RES-E Experience with EV deployment in Norway China The use of RES-E for EVs is a recognized concept in China Government policies support both EVs and RES-E Automotive Industry Restructuring and Revitalization Plan encompasses grid requirements and standards for charging stations and market regulation for EV producers China has set ambitious targets for increasing the installed power of all renewable sources (Annex A9) 75 Opportunities for Co-Evolution

76 Co-Evolution faces cultural and economic barriers North America High costs per capita of nation-wide infra- structure development Nation wide bi- directional smart grid development almost impossible. Federal initiatives unlikely, apart from funding for pilot projects Mandatory GHG emission reduction targets unlikely in the short/ medium term Premise for mandatory RES-E targets Without these targets, large scale integration of RES-E unlikely Europe Political framework for future of transportation Introducing new transportation patterns to cities Internalization of external costs Societal framework New concept of Transport Uncertainty of EV- acceptance RES-E storage in EVs not planned for near future Conventional reserve capacity preferred China China has traditionally opted for large scale, easily regulated and centralized systems, making regional/ local RE-EV interaction a difficult concept. Plans and data for implementing the use of RES-E for EVs from any involved parties are not reliable or public industry and policy are highly “siloed” Auto manufacturers, power companies, battery companies and the grid companies do not make up a traditional “community” Communication between these parties has not been simple 76 Challenges for Co-Evolution

77 77 Policies from one region might be interesting options for others Context – Needed Policies for Co-Evolution North America Mandatory national GHG emission reductions targets Encourage Targets for RES-E share and EVs Federal feed-in tariffs for RES-E More likely on State level Continue and expand Rebates and subsidies for EV’s Feed-in tariffs for RES-E V2G project development Harmonization of standards Information campaigns Europe Harmonization of Grid Codes for comparable conditions for new RES-E production across Europe Harmonization of vehicle and charging station characteristics Europe-wide EV support policies Trials for charging with RES-E in pilot projects China Percentage of OEM’s fleet having to be EVs Parallel: energy providers offering lower carbon fuel over time Charging incentives Lower price for nighttime charging Pricing scheme for feeding power back to the grid and compensation for additional battery cycles Infrastructure incentives Making charging and service options available Financing solutions for large scale deploy-ment

78 Increase deployment of EV to reach mass markets Increase system integration to enable higher use of EV and RES-E Prepare for EV’s Infrastructure and standardization Pilot fleets in niche markets for learning effects and cost reductions Provide long term perspective to industry Increase RES-E production Priority access for renewables Feed-in tariffs or premiums RPS or obligations Cap and trade Grid stability Ensure balanced grid development Coordinate technical and institutional efforts Smart grids and active load management/ regulated charging Long distance transmission Phase 2 Deployment Co-Evolution – Feasibility of policy options Two-phase long-term policy approach needed for large scale Co-Evolution of EVs and RES-E 78 Phase 1 Market Preparation

79 Regulatory framework  Emission targets for electricity production and vehicle fleets warrant other support policies  Targets for the deployment of electric vehicles are an incentive for first deployments  Standards for vehicles and infrastructure provide security for manufacturers  Consequence Legitimate base for further policies  Opposition from the people (North America)  Feasibility  Feasible in all regions  Emission targets are more easily implemented for electricity than for existing vehicle fleets  Standards have to be based on technological consideration and have to be implemented quickly 79 Co-Evolution – Feasibility of policy options Phase 1

80 Build-up of infrastructure  Governments support Electric Vehicles by building up charging infrastructure  Consequence Good network possible also for rural areas  Costs for society  Feasibility  May be feasible in China  Highly unlikely in Europe and North America However, subsidies for the construction of new charging infrastructure are feasible 80 Co-Evolution – Feasibility of policy options Phase 1

81 Coupling Renewable Energy and Electric Vehicles  Hard Coupling  Electricity for charging electric vehicles is coupled to the absolute additional RES-E share in the electricity mix  Cap and Trade  Electricity production or the deployment of vehicles have to fulfill emission targets (cap)  Any additional demand for electricity or additional deployment of vehicles has to be provided from carbon-neutral sources or has to be compensated by GHG emissions reduction measures applied to other emitters that are part of the system (trade)  Manufacturers’ investments in RES-E  Vehicle manufacturers can count their electric vehicles as zero-emission vehicles if they finance new RES-E production  Grid Stabilization Bonus  System Operators pay this bonus for plugged-in electric vehicles that can either provide demand side management or ancillary services  Tax Exemptions for Charging RES-E  Electric vehicles are only eligible for tax exemptions if they charge RES-E  Re-Investing electricity tax from charging current 81 Co-Evolution – Feasibility of policy options

82 Tax Exemptions for Charging RES-E  Vehicles are eligible for tax exemptions if they charge RES-E  Exemptions from annual vehicle/ motor/ circulation taxes  Consequence Additional RES-E Cost benefits for EV owners as an incentive Increased willingness to plug in?  Costs  Advanced billing system and separate metering needed  Feasibility  Feasible for low penetrations of EVs.  Phase-out for higher penetrations  EV owners have to be able to exclusively charge RES-E  Feasible in all regions 82 Co-Evolution – Feasibility of policy options Phase 1

83 Re-Investing Electricity Tax  The electricity tax from the traction current is invested in additional RES-E  Consequence Additional RES-E  Special electricity tariff/ separate metering for EVs needed  Market distortion in deregulated markets  Feasibility  Feasible in all regions  In North America this option might be possible only within one interconnection-area 83 Co-Evolution – Feasibility of policy options Phase 1

84 Hard Coupling  Coupling electricity for EVs and absolute RES-E Targets  Additional EVs have to be met with additional RES-E capacity  Consequence EVs powered by pure additional RES-E  Costs (user & society)  Feasibility  Unlikely for North America, because profitability is key for public acceptance of both EVs and RES-E  Feasible for Europe but concerns exist that this option may slow down EV or RES-E deployment  In China – based on policies until today – this option is unlikely. However, if RES-E production is increased significantly and charging business models are set up, Hard Coupling may become feasible 84 Co-Evolution – Feasibility of policy options Phase 1

85 Manufacturers‘ investments in RES-E  EVs are considered Zero Emission Vehicles (ZEV) in return for investments in renewable electricity  OEMs invest in additional renewable electricity production (depending on MJ/km per sold EV)  DSOs invest energy tax for traction current in additional RES-E  Consequence Additional RES-E  Can lead to more emissions from ICEVs – Coupling to fleet emission standards!  Conflicts of interests possible  Feasibility  Feasible in Europe, has to be introduced for all countries  The vertically integrated electricity markets in China and North America may impede implementation (if OEMs are new players in the market) 85 Co-Evolution – Feasibility of policy options Phase 1

86 Cap and Trade  A Cap and Trade system for fleet emissions per vehicle manufacturer  Comparable to the ETS and other C&T systems, emission targets will be adjusted over time  Earnings from the emission certificates trading can be invested into new RES-E  Consequence Additional RES-E / CCS  Needs strong regulatory framework  Takes effect only on new vehicles  Feasibility  Feasible in all countries  Less likely in North America and China because national Cap and Trade systems for GHG emissions do not exist yet. 86 Co-Evolution – Feasibility of policy options Phase 2

87 Grid Stabilization Bonus  EVs receive a bonus payment for plugging in and thus being available for storage and feed-in of volatile RES-E  Consequence Better RES-E utilization Stable grids  Advanced metering and implementation (billing!) needed  Feasibility  This option is only feasible, if advanced metering (bidirectional!) is already installed on a large scale  Profitability is key for successful implementation  First Countries: Italy, Sweden, Norway ? 87 Co-Evolution – Feasibility of policy options Phase 2

88 88 A policy framework for the transition towards a sustainable transport sector is in process in Europe  Today – Current directives  Increase of RE-share in Primary Energy mix  10% share of RE in land-based transport by 2020  Future – White Paper on future transport  Focus on Cities  New Concept of mobility – Systems’ approach  Long term objectives, legal & regulatory framework, open standards, interoperability  Revision of the Directive on Energy Taxation  Internalize externalities & eliminate distortionary subsidies  Replacing CO 2 -standards with energy efficiency standards  Speed limits  Revision of driving license directive Co-Evolution – Feasibility of policy options

89 Urban EV deployment Further RES-E integration Transmission grid expansion Controlled charging Load management for swapping stations Ancillary services Unregulated charging Controlled charging Further RES-E integration Active load management Ancillary services Charging with RES-E Storage of RES-E Ancillary services (bidirectional) Local integration of EVs and RES-E First Smart Grids Local grid expansion Controlled charging Ancillary services (bidirec- tional)? 89 Co-Evolution – Technology Roadmap

90 Two Phase Development for Co-Evolution  Phase 1 (Today – 2015):  Market preparation  Pilot projects and other incentives for RES-E and EVs  Cost reduction and quality improvement  Standardization  Phase 2 (Future):  Measures aiming at increased deployment and system integration  Cooperation between all actors is key  This two phase development and its stakeholders are presented for each region on the following slides. 90 Co-Evolution – Two Phase Roadmap

91 North America – Consumer demand drives Co-Evolution  Actors  Government/ Regulators – federal support unlikely  Electricity sector – nationwide bidirectional smart grid highly unlikely  Vehicle manufacturers – production capacity from conventional manufacturers needed  Phase 1:  Local change  Implementation of RES-E and EV support policies  Deployment targets for RES-E and EVs  Pilot projects in public-private-partnerships  Increasingly strict national and local fuel efficiency standards and consumer demand drive EV production  Grid reinforcement and charging infrastructure develop alongside EV deployment  Public information campaigns  Phase 2:  Increasing demand drives EV deployment and infrastructure change  Unbundling of the electricity sector is promoted for easier market penetration  V2G pilot projects  Consumer demand for V2G and FIT 91 Co-Evolution – Two Phase Roadmap

92 Actors for Co-Evolution OEMs Marketing and information campaigns Increasing production Government/ Regulators Unbundling of electricity market Mandatory targets for GHG reduction Electricity sector Facilitate RES-E and EV connection to the grid 92 Co-Evolution – Actors

93 Europe – Adaptation of existing policies leads to Co-Evolution  Actors  Governments/ European institutions  Vehicle Manufacturers  System Operators  Utilities  Phase 1:  Vehicle charges and taxes are revised (external costs and environmental performance criteria)  Further growth of RES-E production – Continuation and revision of RES-E support policies  Harmonization of standards across Europe  Coordinated network development and system integration  V2G pilot projects  Information campaigns  Phase 2:  Full internalization of external costs  Further GHG emission reduction policies  Europe-wide charging infrastructure 93 Co-Evolution – Two Phase Roadmap

94 Actors for Co-Evolution OEMs EVs lowering total fleet emissions Politics Fiscal/ financial incentives Hard coupling DSOs Smart metering EV earnings for new RES? Utilities System stabilizing bonus for plugged EVs 94 Co-Evolution – Actors

95 China – Rapid production increases drive Co-Evolution  Actors  Government  Vehicle Manufacturers  Electricity Sector  Phase 1:  Nationwide standardization  Development of low-speed low-cost EVs for the mass market  Construction of major RES-E bases for a 25% share in the electricity mix  Increase long-distance transmission capacity and develop smart grid technology  Provide incentives to both manufacturers and private consumers, and attract investment from private equity  Phase 2:  Long-distance transmission of electricity from remote resources  Improved batteries make EVs competitive with conventional cars  Nationwide availability of charging infrastructure and V2G 95 Co-Evolution – Two Phase Roadmap

96 Actors for Co-Evolution Manufacturers Increase product quality Government Standardization Incentives for Manufacturers, consumers and system operators Electricity Sector Higher RES-E share Enhance transmission and distribution capability 96 Co-Evolution – Actors

97 97 Chapters  Context  Regional Economic and Transport-related Background  Electric Vehicles  RES-E and Grid  Opportunities & Challenges for Co-Evolution  Conclusions Table of Contents

98 Consistent long term policy is required for stimulating large scale introduction of EVs and Co-Evolution with RES-E  Provide security of investment for car industry and infrastructure providers (Security of the existing tax exemptions )  Mandatory targets for EV-numbers and RES-E share  Standards development  Investments in infrastructure  Involve a variety of actors  Coordinate network development and system integration to allow high penetrations of EV and RES-E  This is already taking place in the national Nordic TSO's and in the context of ENTSO-E  Grid reinforcement and upgrade  RET integration  Coordinate system integration among grids and vehicle/battery manufacturers 98 Conclusions

99 Actions for Co-Evolution‘s stakeholders  Government and regulators  Determine regulatory and market solutions that can mobilize private sector investments  Determine regulatory solutions that link EV deployment and RES-E  Infrastructure strategy should reflect regional needs and conditions  Plan for evolution in regulation along with technology development  Invest in research, development and demonstration (RD&D) that address system- wide and broad-range sectoral issues, and that provide insights into behavioral aspects of EV use and RES-E charging.  Lead education on the value of EVs with respect to environmental benefits and lessening fear of performance restrictions  International governmental organizations  Co-ordinate international standardization issues for cross-national compatibility  Support the RD&D of EV system solutions for developing countries through targeted analysis, roadmapping exercises and capacity building.  Support international collaboration on and dissemination of RD&D on EVs and infrastructure, including business and regulatory experiences. 99 Conclusions

100 Actions for Co-Evolution’s stakeholders  TSOs/ DSOs  Help develop business models that ensure all stakeholders and customers share risks, costs and benefits.  Promote adoption of real-time energy-usage information and pricing  Co-operate with OEMs for interoperability standards and post-installation support  Utilities  System stabilizing bonus for plugged EVs that provide flexibility to increase use of variable generation?  Co-operation with regulators to facilitate implementation of RES-E and EV connection to the grid  OEMs  International strategy and standards for interoperability of system components thus reducing risk of technology obsolescence  Address concerns with technology system integration, long-term post-installation support and security and reliability  Aggressive marketing and information campaigns for EVs 100 Conclusions

101 101 North America & Europe  Cities and urban areas will be breeding grounds for EV deployment and charging infrastructure  EV expansion to rural areas is highly unlikely in the medium term due to infrastructure and social acceptance issues  In Phase 1 EVs will not feed back power to the grid outside of pilot projects  No problems arise in European grids for the projected low shares of EVs  Measures for increased deployment:  Support policies (subsidies, tax benefits and other support policies)  Battery cost reduction / improved performance  Public information campaigns  Measures for system integration  Get ISO’s involved in pilot projects or local development projects  Grid upgrades and smart grid development to allow for bi-directionality and regulation  Regulate grid expansion as a part of a feed-in tariff program (eg. suggested for Province of Ontario) Conclusions

102 102 China – Co-Evolution requires changes in renewable electricity and electric vehicles deployment  Both grid and battery technology require technological innovation in China in order to support the integration of EV and RE  Charging models must be matched with RE grid interaction models in order to take advantage of clean energy in EVs, and suitable business models need to be developed  Emphasis should be on increasing overall RE on the grid  At this time, China is focusing on large-scale RE including wind and solar projects, with little attention paid to distributed RE generation.  Private power plants are not approved in China at this time. All power must enter the grid and be downloaded from the grid.  There should also be an emphasis on increasing population of EVs – to the scale of millions of vehicles.  It is unlikely that smart grid will be economically viable or technologically useful without such large numbers.  Incentives are needed for both vehicles and grid companies in order to attain a critical mass of vehicles and smart grid participants. Conclusions

103 Comparison of regions Characteristics North America Low population density: Grid expansion costly Few instruments for furthering RES-E expansion EV deployment may stay marginal for longer: Focus on cities! Europe Increasingly distrib- uted generation (RES-E) and load (EVs) challenge grid Communication technology needed for higher penetra- tion of EVs and RES-E Nordic Countries may achieve Co- Evolution more easily (most RES-E and EVs) China Distributed genera- tion not encouraged New RES-E in large facilities require transmission! EV deployment concentrated on public institutions and load centers Market for low- performance EVs in rural areas Experience with electric scooters has shown that passenger vehicles remain important status symbols in rural areas 103 Conclusions

104 Policy Recommendations by Region 104 Conclusion North America Incentives and Policies on State/ Province level most likely Fiscal (indirect) incentives likely to be publicly accepted Facilitating market entrance of EVs and RES-E is key to Co- Evolution Profitability is most important accept-ance factor Targets are a premise Europe National & European policies have to be coordinated Standardization is an important issue for providing security for manufacturers All discussed policy options are feasible on European or National level China Centralized state can more easily implement regulatory policy options Premise for many options is the development of emission reduction and RES-E targets

105 105 Comparison of regions Lessons learned so far  Outcome of pilot projects:  EVs alone cannot solve traffic problems – an integrated approach and a new concept of transport are necessary  User acceptance:  EVs for a set purpose are well accepted  Business cases:  Car-sharing/ Mobility Partnerships for commuting  Usage patterns:  Local solutions for traffic problems and personal mobility  Influence of RES-E deployment and potential  Potential for RES-E not fully exhausted yet  Sustainability of RES-E for EVs absolutely vital for ecological benefits  Electricity tariffs that guarantee RES-E for charging EVs are needed Conclusions

106 106 Comparison of regions Lessons learned so far  Policy options & public acceptance  An uninformed public does not accept EV promotion “from above”  Information campaigns on the benefits of EVs needed  Including financial, fiscal and non-monetary benefits for users  Policies furthering EVs and RES-E have to be adapted to regional characteristics  Important regional differences between policies in Phase 1  Possible synergies between regions in Phase 2  Skepticism regarding Co-Evolution  Low RES-E shares reduce benefits  Technological and regulatory hindrances in foreground Conclusions

107 107 Follow-up work  Analysis of the outcome of the different pilot projects  Which co-operations were fruitful and why  What makes EVs successful  Experience with Co-Evolution  Appraisal of technical / grid-related boundaries and barriers to Co-Evolution  Impact Assessment of policy options Conclusions

108 Table of Annexes  A1 – Acronyms  A2 – References  A3 – List of subsidies and incentives for EVs  A4 – Pilot projects in the three regions  A5 – Policies concerning EV deployment  A6 – List of available EV models  A7 – Standards  A8 – Renewable Energy policies  A9 – Expected growth in electricity sector  A10 – Revenue from Ancillary services for EVs  A11 – Impact of EVs on grids and production  A12 – Two phase development of Co-Evolution  A13 – Road infrastructure 108

109 THANK YOU! For additional information on RETD Online: Contact:


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