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RETRANS2 – Final Report Univ. -Prof. Dr. -Ing

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1 RETRANS2 – Final Report Univ. -Prof. Dr. -Ing
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
Introduction 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% CO2 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: billion people, billion passenger vehicles Mitigation of fuel-dependency and CO2-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 Source: International Energy Agency (2010): RETRANS – Opportunities for the Use of Renewable Energy in Road Transport – Policy Makers Report.

3 Comparison of three world regions
Scope of RETRANS2 Regions 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 Based on the findings of the RETRANS project which examined different options of using renewable energy in the transport sector, RETRANS2 Regions aims at identifying challenges and opportunities for the Co-Evolution of Electric Vehicles and Electricity from Renewable Energy Sources in three world regions (North America, Europe and China). The political and economical framework for Co-Evolution is expected to differ between the three regions.

4 Stakeholders for Co-Evolution Policies
Background information from RETRANS 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 Source: International Energy Agency (2010): RETRANS – Opportunities for the Use of Renewable Energy in Road Transport – Policy Makers Report. G4V (2010) : Parameter Manual.

5 RETRANS Policy Recommendations
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) Source: International Energy Agency (2010): RETRANS – Opportunities for the Use of Renewable Energy in Road Transport – Policy Makers Report.

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 Sources and references can be found in Annex A2. RETRANS2 Regions approaches this scope by an assessment of studies that are relevant to the field and of pilot projects that aim at gaining experience with the deployment of Electric Vehicles. Statistical data on the three regions and regional policies concerning vehicles and renewable energy are analyzed. Expert interviews provide an insight into the regional electricity sector development.

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

8 The Chinese transport sector adapts slowly to Europe and North America
Context – Transport Sector Overview 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 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 One aspect of the framework for Co-Evolution in which the three regions differ is the economic importance of the transport sector and the importance of passenger vehicles for personal transport. While Europe and North America (both regions basically make up the developed world) show similar characteristics for this aspect, the situation in China is very different. In China, personal transportation is a market that has immensely grown during the last few years. Transport sector has fastest growing energy use and strongest reliance on fossil fuels of all economic sectors worldwide.

9 Context –Economic Situation
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 World Average Source: IfHT, values from World Monetary Fund 1 billion Source: IfHT, values from CIA & Eurostat GDP = Gross Domestic Product; PPP = Purchase Power Parity The Gross Domestic Product expressed per capita in Purchase Power Parity values takes price differences between different countries into account. Thus, these values are better comparable than pure GDP values. The Urbanization rates of Europe and North America, again, are close. 75% of European population (77% (N) – 92% (IS) of Nordic) live in cities while 80% do so in North America (more in Canada than in US). Thus, especially Nordic Europe and North America are similar regarding their population levels. Sources: International Monetary Fund (for GDP per capita (ppp)) Eurostat, Statistics Canada, US Census Bureau, CIA – The World Factbook United Nations, Department of Economic and Social Affairs, Population Division: World Urbanization Prospects, The 2009 revision. Nordregio 2010 100% Source: IfHT, values from UN

10 Differences in Vehicle ownership and Market development
Context – Vehicles Market Differences in Vehicle ownership and Market development North America Europe China Vehicles on Road 277 million 210 million ~55 million Passenger Vehicle Sales 12 million (2009) 16 million (2009) 10,3 million (2009) 13,7 million (2010) Vehicles per 1000 people 830 473 Nordic: 500 Eastern: 380 54 Beijing: 228 Overall Market situation today Stagnating, expected to increase as of 2012 Stagnating Strongly growing (doubling of sales within 3 years) The road infrastructure differs between the three regions. Refer to Annex A13 for details. Vehicle ownership and market development for passenger vehicles again are similar for North America and Europe. However, North American vehicle ownership per person is unequalled by any other region. China‘s situation is especially interesting regarding the potential for Electric Vehicles and Co-Evolution. Low vehicle ownership and strong growth of vehicle sales may facilitate the market entrance of electric vehicles. Sources: US Census Bureau, State Motor Vehicle Registrations. Statistics Canada, Motor vehicle registrations. Eurostat

11 Context – Chinese Vehicles Market
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 20 10 Vehicle Sales (Total/  Passenger Vehicles  Commercial Vehicles) The booming market for passenger vehicles and the further expected growth especially for subcompact and compact cars opens opportunities for electric vehicles. At the right price electric vehicles could be preferred over conventional cars. Slide 32 presents detail concerning the requirements for this market entry. Sources: China Energy Statistical Yearbook iCET

12 Context – Passenger traffic
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 North America Europe Share of passenger-km in private cars 93% 83% Travelled km per person and year 15,000 – 20,000 ca. 10,000 Nordic: 14,000 – 20,000 Especially in North America and Europe, cars are most important for personal transport needs. While public transport networks in China and Europe take up most or some of the passenger-kilometers, in North America public transport is almost exclusively used in cities.

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

14 Analysis of Strengths and Weaknesses
Context – Electric Vehicles Analysis of Strengths and Weaknesses Strengths Economical driving Electric grid provides basic infrastructure Weaknesses Battery limits Lack of Standardization Few models available Scarce infrastructure High investment costs 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 The World Health Organization recently published their „Burden of disease from environmental noise. Quantification of healthy life years lost in Europe”- report which gives an estimate of 1 million disability adjusted life-years (sum of the potential years of life lost due to premature death and the equivalent years of “healthy” life lost by virtue of being in states of poor health or disability) that are due to environmental noise. A huge proportion of environmental noise is traffic-related, in cities especially to vehicle traffic. It is estimated that EVs production capacity (per model and year) will be needed for economies of scale. An estimate of the present value of investments required for developing the electric road transport infrastructure in the EU amounts to € billion.

15 EVs are a niche market Context – Transport Sector – Electric Vehicles
EVs are close to the market This will change with increased adoption and information to the general public. North America Europe China 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 Market share of 3-10% = 0,45-1,5 million EVs in Europe in 2025, seen as “realistic” As of end of 2010 there have been 7466 EVs (BEV, PHEV, HEV, FCEV) delivered in China. Graphic shows proportion of sales for Guangdong province as an example. Sources: J.D. Power and Associates, Drive Green 2020: More Hope Than Reality?, 2010. European Parliament, 2010: Challenges for a European market for Electric Vehicles Huang

16 Context –Electric Vehicles & GHG Mitigation
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 >800gCO2/ 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. ICE BC AB SK MB ON QC NB NS PEI NL 200 100 Electricity mixes for the three world regions can be found on slide 41. Sources: European Parliament, 2010: Challenges for a European market for Electric Vehicles European Environment Agency (2009): Towards a resource-efficient transport system. CANMET Energy, Electric Vehicle Technology Roadmap for Canada, 2009. GHG = Greenhouse gas – EV = Electric vehicle ICEV = Internal combustion engine vehicle RES-E = Electricity from Renewable Sources CAFE standards = US fuel efficiency standards

17 Context – Transport Sector – Emissions of EVs
GHG emissions from electric vehicles are beneficial only in some Chinese regions 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 N NE E C NW S Hai Av ICE Electricity mixes for the three world regions can be found on slide 41. Sources: Earley et al, 2011: Electric Vehicles in the Context of Sustainable Development in China GHG = Greenhouse gas – EV = Electric vehicle ICEV = Internal combustion engine vehicle RES-E = Electricity from Renewable Sources

18 Context – Electric Vehicles – Economic Influence
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 Gas prices around the world (US $ per gallon, 2011) Source: Since many potential electric vehicle users shrink back at the price, the total costs of ownership are the most important financial argument for electric vehicles. However, these costs can only compete with those from conventional vehicles if the price difference of the fuel types is high enough. Thus, low gas prices reduce the margin in which electric vehicles are cheaper than conventional ones (cumulated over the entire lifetime).

19 Context – Electric Vehicles – Economic Influence
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 An overview of policies that concern the deployment of electric vehicles can be found in Annex A5. Another aspect that influences the total costs of ownership of electric vehicles is the taxation these vehicles are subject to. This aspect can be varied according to governmental targets and is therefore an interesting policy instrument. In Europe, vehicle taxation is more and more based on GHG emissions. The map shows the distribution of GHG emissions-based taxes in Europe. Dark couloured countries have implemented more than one taxation scheme that takes CO2-emissions into account. Light couloured countries have implemented only one form of incentive. The measures include: registration tax, annual circulation tax, company car tax, deduction of vehicle use, incentives for purchase of an environmentally friendly car (sometimes bound to scrapping an old car first) Vehicle taxation in China is based on displacement and fuel consumption (proportional to CO2-Emissions) of the vehicle Sources: ACEA Finish Energy Industry ,2011: Energy taxation in Europe, Japan and the United States European Parliament, 2010: Challenges for a European market for Electric Vehicles European Commission, 2011: White Paper. Roadmap to a Single European Transport Area

20 Societal change drives the deployment of electric vehicles
Context – Electric Vehicles - Drivers 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 The main driver for the deployment of electric vehicles in cities is the increasing number of people living there. This increases traffic problems and local emissions and calls for new mobility solutions. Immigration – thus, an increase in population – and increasing labor mobility also increases traffic volumes. However, even the biggest need for alternative transport solutions will not lead to an increased deployment of electric vehicles unless the potential customers accept the look, space and performance of these new vehicles and are also willing to accept changes in their personal mobility patterns. Successful car-sharing and bike-rental projects show that people are accepting new mobility solutions. Sources: Eurostat European Parliament, 2010: Challenges for a European market for Electric Vehicles Sessa & Enei, 2009: EU transport demand: Trends and drivers

21 Context – Electric Vehicles – Drivers
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 A list of support policies for electric vehicles can be found in Annex A3. Framework policies that concern the deployment of electric vehicles can be found in Annex A5. Some drivers for the deployment of electric vehicles are universally the same. The importance of political and regulatory support, early standardization and advances in the development of vehicle energy storage systems are needed for opening markets for electric vehicles, for providing security for manufacturers and comfortable usage for customers. The sustainability of the deployment of electric vehicles has to be taken into account for devising support policies!

22 Context – Electric Vehicles – Drivers
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 First trials have shown that EV users prefer to charge their vehicle at home. However, widespread charging infrastructure is needed for giving users the security that they can charge their vehicle whenever they need. While everyday use is within the range of an electric vehicle, on-road charging will be needed for exceptional trips. The extend to which vehicles will be sufficiently standardized for enabling battery swapping remains unclear.

23 Electric vehicles do not meet with favorable conditions everywhere
Context – Challenges for EVs Electric vehicles do not meet with favorable conditions everywhere 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 Sources: European Parliament (2010): Challenges for a European market for electric vehicles

24 Complementary use rather than replacing conventional vehicles
Context – Electric Vehicles – Markets 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 A list of EV models that are available in the three regions is listed in Annex A6. Electric vehicles are and will be deployed first as second vehicles that are used mainly for commuting and inner-city traffic. These usage patterns are within the range electric vehicles can drive and their users keep their first cars for any other trips. The integration of electric vehicles into car-sharing programs is possible, too. In China the first deployment today is mostly made up of public vehicles – especially buses and taxis. The pilot cities thus can buy large numbers of identical vehicles which all have the same requirements on charging infrastructure and result in economies of scale for vehicle manufacturers. Private electric vehicles are only subsidized in five cities (see slide 29). In Montreal, car-sharing program Communauto will be adding 50 Nissan LEAF EVs to its fleet of 1000 vehicles by the end of The charging infrastructure will be provided by Hydro Quebec, the principal electrical utility. Sources: European Parliament, 2010: Challenges for a European market for Electric Vehicles

25 Usage models have different requirements on EVs and infrastructure
Context – Electric Vehicles – Markets 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 The requirements on electric vehicles from different usage patterns show why first deployments in cities are so attractive. Distances travelled while commuting or in inner-city-traffic are within the range of electric vehicles. Additionally, the requirements for speed are medium hight. Vehicles in car-sharing fleets have approximately the same requirements. Thus, slow charging “at home” (= at sharing station) and at work combined with the possibility to fast charge on the road will suffice. Only long distance traffic e.g. between cities that also requires high speed will need fast charging and/ or battery swapping possibilities “on the road”.

26 Context – Electric Vehicles – Business Models
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 Electric vehicles are part of a transition in the transport sector. As such their deployment should be complemented by offering mobility solutions for the needs that are not easily fulfilled through electric vehicles (long-distance travel). The public acceptance of electric vehicles can be increased by offering services packages that include charging points and convenient accounting solutions.

27 Pilot Projects are nuclei for EV deployment
Context – Electric Vehicles – Pilot Projects 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 An overview of pilot projects in the three regions can be found in Annex A4. Funding of pilot projects in North America: US Department of Energy or Natural Resources Canada / CANMET in Canada).

28 European pilot projects surpass North Americans in numbers
Context – Electric Vehicles – Pilot Projects 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 One project encompasses several states (see Annex A4) An overview of pilot projects and more details can be found in Annex A4.

29 Chinese “Ten Cities Thousand Vehicles” Program
Context – Electric Vehicles – Pilot Projects 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 An overview of pilot projects and more details can be found in Annex A4. Largely due to the low capacity and short lifespan of batteries, many E-buses are no longer in use. Details of five representative cities are listed in Annex A4.

30 User Behavior Context – Electric Vehicles – Users
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. Source: European Parliament, 2010: Challenges for a European market for Electric Vehicles

31 User concerns Context – Electric Vehicles – Users Global issues
Manufacturing issues 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 TCO = Total Cost of Ownership ICEV = Internal Combustion Engine Vehicle

32 Urban and rural backgrounds for EVs differ – also between the regions
Context – Electric Vehicles – Urban vs. Rural Urban and rural backgrounds for EVs differ – also between the regions Urban Rural 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 Sources: US Department of Agriculture (2005): Rural Transportation at a Glance

33 Context – Electric Vehicles – Standardization
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 A list of EV related standards can be found in Annex A7. Sources: European Parliament, 2010: Challenges for a European market for Electric Vehicles "Report on charging stations" Danish Energy Authority Tommy Lindholm (2010): Vattenfall’s E-mobility program Standards are needed for: Charging interface (plug) ─ not to repeat the situation for LPG-fuelled vehicles Number of phases for charging ─ three- or one-phase-charging Cross national compatibility ─ Same charging infrastructure, interfaces, billing system across Europe Safety requirements + technical approval body ─ Electrical safety of charging stations, of vehicle and station while charging Data protocols and protection of data Charging cable reposit ─ at charging station/ in the car Liability ─ OEMs/ Utilities/ DSOs/ … Billing ─ ease of use (comparable to filling stations), Pre-Payed vs. included in electricity bill

34 Safety standards are especially important
Context – Electric Vehicles – Standardization 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.)

35 Targets for Electric Vehicles on the road
Context – Electric Vehicles – Objectives 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 2015 5 million electric vehicles (5%) on the road by 2020 Most ambitious national target worldwide Each pilot city has targets for charging stations National targets for infrastructure: - Portugal: 1300 slow charging stations and 50 fast until end of 2011 in Portugal. The European accumulated national targets amount to 5 million electric vehicles. This means a market share of 30% assuming that the overall number of vehicles remains constant. Thus, the European targets are most ambitious which is mirrored in the growth rates of 20,000 – 250,000 new electric vehicles per year. Whether these values will be achieved is highly uncertain.

36 Targets for Reduction of GHG emissions
Context – Electric Vehicles – Objectives 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) Fuel distribution in European road transport 2009 Electricity includes inland waterway and air transport Source: Eurostat Sources: European Parliament, 2009: Directive on the promotion of the use of energy from renewable sources Environment Canada, Canada lists emissions target under the Copenhagen accord. US Department of Energy, President Obama sets a target for cutting US GHG emissions.

37 Context – Electric Vehicles – Regulatory Barriers
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 An overview of EV related standards can be found in Annex A7.

38 Context – Electric Vehicles – Benefits & Incentives
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 An overview of subsidies and incentives for EVs can be found in Annex A3. The Beijing car license plate lottery started in January There is a quota of 20,000 license plates every month, 88% of which go to private cars. Traffic restrictions were introduced in April 2010: 20% private cars are taken out of the road every working day during peak hours according to their license plates’ last digit. Details for Regions in Annex A3

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

40 Electricity from Renewable Energy Sources
Context – Electricity from Renewable Sources Electricity from Renewable Energy 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
Context – RES-E – Current status 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 Sources: IEA country statistics electricity/ heat US Energy Information Administration (EIA), Electric Power Annual, Eurostat (2010): Yearly energy statistics 2008 Renewable 0,5%

42 2020 RES-E Targets and Scenarios
Context – RES-E 2020 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) Details on the expected growth in the regions‘ electricity sectors can be found in Annex A9. The expected increase in small-scale distributed generation in Europe reduces the distances between electricity production and demand and thus reduces the impact on transmission grids. However, distribution grids face increased stress because of the volatility of this generation and ist interaction with consumers. Details for North America in Annex

43 Context – RES-E – Incentives
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 Details on support policies for RES-E can be found in Annex A8. The map of Europe shows countries which have incentives for Renewable Electricity in force in dark blue. Source: US Department of Energy, Database of State Incentives for Renewables and Efficiency, European Commission (2011): Review of European and national financing of renewable energy

44 Context – Electricity Sector – Structure
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 Virtually no market entry for new producers RES-E plants belong to grid companies Vertical electricity markets make the deployment of Renewable Energy a matter of the big utilities. New, small producers cannot enter the market unless the utilities ask for it.

45 Context – Reserve market
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 Details on revenue for EV owners can be found in Annex A10. Today, vehicles are banned from feeding energy into the grid. Vehicle to grid services are taken into account only in two North American pilot projects. However, vehicles taking up and feeding back renewable energy from and into the distribution grid might steady the feed-in from renewable sources and provide reserve power to the grid which could earn revenue for the owner. For offering significant amounts of reserve energy, vehicles should be aggregated into groups. Sources: "Kortlægning af strategier for lavenergibyggeri i EU Lande", COWI 2011, Report for the Danish Government. (Danish), Danish Commission on Climate Change 2010 Nordic Foresight Analysis, Renewable transport 2011

46 Electricity grids are very different in the three regions
Context – Grids 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 The North American grid has grown from regional grids. Investments during the last decade were low because the grid capacity sufficed. Today, investments have to increase to assure supply security. Since especially densely populated regions are likely to experience failures, a modernization of the grid is urgently needed. In China, the grid is straining to keep up with the increasing demand due to the economic growth. Here, both transmission and distribution grids have to be expanded for enabling an increased share of RES-E and EVs and still assuring supply security. European grids generally are in a good shape. They can take up a high share of electric vehicles. However, locally an increase in both distributed production and electric vehicles may result in overloads. Source: Jenny Gold (2009): A Modern Electric Grid: The New Highway System? For NPR: Power Hungry series.

47 „One common“ transmission grid for Europe
Context – RES-E – Grid organization „One common“ transmission grid for Europe 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: ENTSO-E Factsheet 2011 Source: IfHT, based on Entso-e Factsheet 2011

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

49 China’s grid is split in two
Context – RES-E – Grid organization 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 Source: Earley et al. Electric Vehicles in the Context of Sustainable Development in China. United Nations, 2011. Source: IfHT, based on Earley et al.

50 Context – RES-E – Regional Power Characteristics
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. Most pilot cities are located in those regions (south and east) where consumption exceeds production. Thus the electric vehicles in those cities are an additional strain on the transmission lines. Source: Imbalance of Power Production and Consumption in China, Interview Wen Earley et al Source: IfHT based on "Imbalance of Power Production and Consumption in China” and Earley et al. 50

51 Fossil fuel-based electricity dominates the electricity mix in China
Context – RES-E – Regional Power Characteristics 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 Sources: Interview Lai Earley et al. Electric Vehicles in the Context of Sustainable Development in China. United Nations, 2011. Thermal Hydro Nuclear Wind & other

52 V2G at the moment not legally possible in any region
Context – V2G 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 V2G services permitted in Delaware. EV-owners providing power to the grid are payed the same as RES-E producers. Details on pilot projects in annex. Sources: Kempton, W., Vehicle to Grid Power, Pacific Institute for Climate Solutions, Electrifying the BC Vehicle Fleet, 2009.

53 Ancillary services from electric vehicles
Context – RES-E – Business models 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 Details on ancillary services from EVs can be found in Annex A10.

54 Context – RES-E – Ancillary services
Revenues from grid-related services: Reserve capacity in the Nordic power market Details on ancillary services from EVs can be found in Annex A10. Source: and Energinet.dk

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

56 Co-Evolution Opportunities Threats Strengths Weaknesses Co-Evolution
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 – General Requirements 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 International cooperation between stakeholders of the Co-Evolution of electric vehicles and renewable electricity is crucial for this Co-Evolution. Especially the development of vehicle and infrastructure standards is needed for international compatibility issues and economies of scale. The range of standards that is needed also encompasses tariff structures for RES-E charging.

58 Both RES-E production and EV deployment rely on electricity grids
Co-Evolution – System Requirements 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 For a Co-Evolution of renewable electricity and electric vehicles the stability of the electricity network has to be guaranteed at all times. Both the integration of new production and new loads can increase the stress on the grid’s assets. Battery swapping stations and centralized RES-E production in big plants can simplify the management of load and production. Battery swapping stations can answer to demand side management with more capacity than single EVs (and vehicles do not have to be aggregated for offering a similar capacity). Today’s hope that a high penetration of electric vehicles will lead to an increased share of stable, “produced-on-demand” renewable electricity fed into the grid after having been stored in electric vehicles’ batteries will only be possible with a sophisticated communication infrastructure that links RES-E production and electric vehicles. PV = Photovoltaics RES-E = Electricity from Renewable Sources

59 The two European island states take different routes
Co-Evolution – Situation of Islands 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 The general situation of an island like Ireland can be compared to Texas – both states have few interconnections to neighbouring grids and produce their own renewable energy. However, Texas’ focus is on energy autonomy while Ireland relies on imports for fuelling its power plants. Sources: US Energy Information Administration (2009): International Energy Agency (2011): Statistics: Ireland

60 Co-Evolution – Impact on power generation
Targeted Numbers of EVs can be accommodated without major grid and/ or production expansion China Europe Canada Northern Europe 2020 – Target 2030 – Scenario 2018 5 million EVs (≤ 7%) 200 million EVs 5 million EVs (2%) 0,5 million EVs (≤1%) Need: 20 TWh Need: 800 TWh Need: 1,5 TWh 0,5% of electricity demand in 2008 20% of electricity demand in 2008 + 8% on projected demand 2050 0,2% of projected electricity demand in 2018 Details on the grid impact can be found in Annex A11. Sources: G4V (2010) : Parameter Manual Nordic Energy Research. "Foresight Analysis – Nordic Strategies for Renewable Transport", Final Report, March 2010. CANMET Energy, Electric Vehicle Technology Roadmap for Canada, 2009. own calculations 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 Co-Evolution – Impact on power generation
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 Details on the grid impact can be found in Annex A11.

62 Co-Evolution – Impact on grids
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).

63 Co-Evolution – Impact on Infrastructure
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 Details on the grid impact can be found in Annex A11.

64 Co-Evolution – Impact on power generation
Regulated Charging is the first step to reduce the impact on grid stability and power generation 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 Transport District heating Other sectors Source: European Parliament, 2010: Challenges for a European market for Electric Vehicles

65 Supporting RES-E with EVs Technical requirements for grid support
Technological Requirements for Co-Evolution Integration of RES-E Supporting RES-E with EVs Feed-In of stored RES-E Intermittent storage Demand Side Management Active load management ancillary services Bidirectional Smart Meter Positive spinning reserve Regulated Charging spinning reserve Negative Charging with RES-E Ancillary services Smart Grids Conventional Grid Unregulated Charging Frequency stability Conventional Grid ICT Accounting system Advanced ICT spinning reserve Additional The golden ring shows today‘s situation: First charging infrastructure is being implemented and first trials with smart meters are in progress. Frequency and Voltage stability are guaranteed throughout the European grid but preferential charging with RES-E is not yet implemented and there are different accounting systems. Thus the second step is not yet achieved but today’s situation is still characterized by the transition. 4 aspects (colors) have to be considered because they require different steps for their development. Each circle represents one common level and the aspects on this circle can not be regarded separately. The next slides show first, the simultaneous development from each circle to the next. After those slides the four aspects are regarded separately. The linkages are obvious. Integration of renewable energy sources (green) 1. /2. If a good grid infrastructure is exists the grid can integrate a significant amount of renewable. No changes are needed. If the grid is weak, the requirements of the third circle have to be fulfilled early. 3. circle: When the grid is not strong enough to integrate the energy it has to be upgraded. Smart Meters and Smart grids allow to regulate the load  higher integration possible. 4. circle: Enlargement of demand side management  more load control  load in times of a surplus of energy. Higher need of negative spinning reserve to balance the grid. 5. Buffering of the surplus of energy and providing it back into the grid. Power plants with high emissions can be dismounted so that the power plant park will change with the time. To secure the energy support energy have to be stored. Technical requirements for grid support (yellow) 1. For low penetration and integration rate no changes are required. 2. With a higher integration of EV and RES the frequency and voltage stability have to be secured. Simple regulation can be integrated into RES power plants and EV working uncontrolled. 3. Charging of EVs can be regulated to reduce overloads. The alternative is to upgrade the grid e.g. transformers, cables. 4. High integration of RES leads to additional demand for spinning reserve. During a fault the grid can be supported with a load reduction of charging EV. 5. If the energy production is to low and some parts of the grids have to be switched off, EVs can feed in their energy into the grid and avoid a large fault situation.  complicated, has to be coordinated from a central station. Requirements from the grids point of view for a high integration of EV and PHEV (red). Necessary for an integration of EV into the grid. 2. To allow that vehicles can load anywhere a overall accounting system e.g. for Europe should be established. A charging infrastructure has to be provided that everyone has a charging possibility. 3. To coordinate the charging process for e.g. demand management, EV have to be able to communicate. 4. Providing a charging infrastructure everywhere also with fast charging stations to enlarge the driving range. To provide spinning reserve advanced ICT is required because the charging process have to be regulated through a central control unit. 5. A bidirectional connection to the grid is necessary to earn revenue for the vehicle/battery owner. Supporting RES with EV and PHEV (blue) A combination of all other points! 2. Connection of EV and RES to receive the highest benefit for the reduction of pollution. 3. A regulation of the charging unload the grid and a higher penetration of RES is possible. 4. EV provide ancillary services to support RES. If EV charge in times of a surplus of energy from RES, a higher integration of RES is possible and the emissions of the whole power production is reduced.. 5. EV can store the surplus of energy and provided it back in high demand times. Providing of ancillary services to support RES. Regulated Charging (reducing overloads) Voltage stability Charging Infrastructure Communication with Local Network Stations Reduced load during fault Area wide charging stations Technical requirements for grid support Bidirectional charging infrastructure Feed-In during fault Integration of EVs

66 Conventional Grid Unregulated Charging
Technological Requirements for Co-Evolution Today‘s Situation Conventional Grid Unregulated Charging 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 The golden ring shows today‘s situation: The transition towards the next step. No region has crossed that line fully, yet. Some pilot projects lead the way. First charging infrastructure is being implemented and first trials with smart meters are in progress. Frequency and Voltage stability are guaranteed throughout the European grid but preferential charging with RES-E is not yet implemented and there are different accounting systems.

67 Next Steps have begun Technological Requirements for Co-Evolution
Charging with RES-E Charging Infrastructure Accounting System Frequency & Voltage Stability 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 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 In the next step, tariff systems for preferential charging with RES-E have to be implemented in all three regions. An Accounting system for electric vehicles has to be developed. This development already has begun. Additional RES-E production has to be implemented and the stability of the grid has to be kept or ameliorated. Public charging infrastructure is needed for giving consumers a secure and comfortable mobility experience. The flags show pieces of information that are valid exclusively or especially for one region.

68 Communication with local network stations
Technological Requirements for Co-Evolution Near Future Smart Grids Regulated Charging 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 Smart Meter Regulated Charging ICT Communication with local network stations 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 In the near future the increasing integration of RES-E and electric vehicles requires „smart grid technologies“ that assure communication between the production and consumption of electricity. This communication enables first regulated charging. The flags show pieces of information that are valid exclusively or especially for one region.

69 Phase 2 Development? Technological Requirements for Co-Evolution
DSM Active load management 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 Negative Spinning Reserve Ancillary services Reduced load during fault Advanced ICT Additional spinning reserve Area wide charging stations 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 The flags show pieces of information that are valid exclusively or especially for one region.

70 Full Co-Implementation
Technological Requirements for Co-Evolution Full Co-Implementation Positive spinning reserve Feed-In of stored RES-E Intermittent storage 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 Bidirectional ancillary service Feed-In during fault Feed back to grid Bidirectional charging infrastructure The flags show pieces of information that are valid exclusively or especially for one region.

71 Growth in renewable energy sources
Technological Requirements for Co-Evolution 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) 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. Negative spinning reserve (unidirectional) Demand side management Smart Grids Smart Meter Growth in renewable energy sources The roadmap for the integration of RES-E is different for North American, European and Chinese electricity systems. While expansion of the production capacity in North America and Europe will be a distributed development, China will expand its capacity in large, centralized plants. Thus, “Western” grids will need communication and “intelligence” first, while Chinese grids will first be reinforced with added transmission capacity. Integration of renewable energy sources 1. /2. If a good grid infrastructure is exists the grid can integrate a significant amount of renewable. No changes are needed. If the grid is weak, the requirements of the third circle have to be fulfilled early. 3. circle: When the grid is not strong enough to integrate the energy it has to be upgraded. Smart Meters and Smart grids allow to regulate the load  higher integration possible. 4. circle: Enlargement of demand side management  more load control  load in times of a surplus of energy. Higher need of negative spinning reserve to balance the grid. 5. Buffering of the surplus of energy and providing it back into the grid. Power plants with high emissions can be dismounted so that the power plant park will change with the time. To secure the energy support energy have to be stored. Distributed expansion EHV transmission Strong Smart Grid Conventional grid Voltage/ frequency stability Rising Penetration of EV and PHEV 71

72 Technical Requirements for grid support
Technological Requirements for Co-Evolution 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. 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 Growth in renewable energy sources Frequency stability Voltage stability The changes in the operating behavior of electric vehicles that are required for supporting the grid as EV and RES-E penetration increase will begin with a simple regulation of the charging process for guaranteeing the frequency and voltage stability of the grid. Further communication infrastructure in the grid will enable increasingly sophisticated regulation mechanisms which coordinate RES-E production and EV charging. Technical requirements for grid support (yellow) 1. For low penetration and integration rate no changes are required. 2. With a higher integration of EV and RES the frequency and voltage stability have to be secured. Simple regulation can be integrated into RES power plants and EV working uncontrolled. 3. Charging of EVs can be regulated to reduce overloads. The alternative is to upgrade the grid e.g. transformers, cables. 4. High integration of RES leads to additional demand for spinning reserve. During a fault the grid can be supported with a load reduction of charging EV. 5. If the energy production is to low and some parts of the grids have to be switched off, EVs can feed in their energy into the grid and avoid a large fault situation.  complicated, has to be coordinated from a central station. Feed back to grid Increased robustness Automatic power distribution Strong Smart Grid Increased transmission efficiency Rising Penetration of EV and PHEV 72

73 Requirements for a high integration of EVs
Technological Requirements for Co-Evolution Requirements for a high integration of EVs To integrate a significant amount of EV and PHEV, technical requirements have to be fulfilled. Charging infrastructure - bidirectional 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. Area-wide charging infrastructure Advanced ICT Communication with local network stations ICT Growth in renewable energy sources Accounting system Pilot Charging infrastructure An accounting system and charging infrastructure are the first requirements for integrating electric vehicles. Both are build up in pilot projects in all regions. With an increasing penetration of both RES-E and EVs, communication infrastructure for production and demand is needed. Today it remains unclear where in the grid this infrastructure will be controlled. The penetration of charging infrastructure and communication technology and the availability of bi-directional charging points will increase as EV numbers increase. Requirements from the grids point of view for a high integration of EV and PHEV (blue). Necessary for an integration of EV into the grid. 2. To allow that vehicles can load anywhere a overall accounting system e.g. for Europe should be established. A charging infrastructure has to be provided that everyone has a charging possibility. 3. To coordinate the charging process for e.g. demand management, EV have to be able to communicate. 4. Providing a charging infrastructure everywhere also with fast charging stations to enlarge the driving range. To provide spinning reserve advanced ICT is required because the charging process have to be regulated through a central control unit. 5. A bidirectional connection to the grid is necessary to earn revenue for the vehicle/battery owner. Charging infrastructure in large-medium cities Information and Com- munication Stations Conventional grid Rising Penetration of EV and PHEV 73

74 Supporting RES with EVs
Technological Requirements for Co-Evolution Supporting RES with EVs 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 Growth in renewable energy sources Charging with RES-E The Co-Evolution of electric vehicles and renewable electricity will first be enabled by guaranteeing that EVs can be charged with renewable electricity. Thus, a sufficient amount of RES-E production needs to be constructed. Regulated charging could adapt the charging of electric vehicles to those times when there is an energy surplus from renewable sources. As this method becomes more sophisticated RES-E can be stored and fed back to the grid as demanded. Supporting RES with EV and PHEV (blue) A combination of all other points! 2. Connection of EV and RES to receive the highest benefit for the reduction of pollution. 3. A regulation of the charging unload the grid and a higher penetration of RES is possible. 4. EV provide ancillary services to support RES. If EV charge in times of a surplus of energy from RES, a higher integration of RES is possible and the emissions of the whole power production is reduced.. 5. EV can store the surplus of energy and provided it back in high demand times. Providing of ancillary services to support RES. Major RE bases Long distance Transmission Unregulated charging Rising Penetration of EV and PHEV 74

75 Policy frameworks are developing towards Co-Evolution
Opportunities for Co-Evolution 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)

76 Co-Evolution faces cultural and economic barriers
Challenges for Co-Evolution 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 GHG emission reduction or RES-E targets will only be discussed in North America if economic situation improves.

77 Policies from one region might be interesting options for others
Context – Needed Policies for Co-Evolution Policies from one region might be interesting options for others 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 Charging and service infrastructure is expensive but absolutely vital for EVs. One charging post requires ¥ 100k, an 8-vehicle charging station requires investments of about ¥ 10 million. Sources: Wen

78 Co-Evolution – Feasibility of policy options
Two-phase long-term policy approach needed for large scale Co-Evolution of EVs 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 1 Market Preparation Details on two-phase roadmaps for the three regions can be found in Annex A12. In the following different policy options are presented with their strengths and weaknesses. Phase 1 should be aimed at gaining experience. Learning effects which are mainly influenced by accumulated production numbers enable vehicle OEM’s to produce vehicles at lower costs. Also in phase 1, the different needed standards should be defined AND IMPLEMENTED. The shape of the plugs used for charging EV’s for instance as well as the voltage level / frequency should be defined. Also, the standard to which the “smart grid” should comply, as well as appliances (chargers) that are attached to this smart grid. Since in phase 1 (roughly between now and 2015) EV’s will not be on the road in significant numbers, the advanced V2G (vehicle to grid) services mentioned earlier are not needed yet. 3rd column: Priority access to prevent night charging of EV with coal-based baseload power Phase 2 is aimed at using the increased number of EV’s to achieve not only co-evolution / co-existence, but also additional benefit. For this, the advanced V2G services should be in place. This is what “ increase system integration” means in this context. [Martine: suggest to change latter sentence to: with active load management (Phase IV in Ch 4 of report, several benefits can already be gained without V2G] Optional information: An interesting parallel might be to briefly mention the abundance of adapters needed to fuel LPG powered vehicles in Europe. This has come about since different countries started using different gas connections without first defining a standard connection. The end result is that LPG cars from the Netherlands are incompatible with the filling nozzles in Belgium for instance. And since all the necessary investments have already been made, nobody (car drivers, OEM’s and fuel station operators) is willing to change anything about this. Increase deployment of EV to reach mass markets Increase system integration to enable higher use of EV and RES-E Phase 2 Deployment 78

79 Regulatory framework Phase 1
Co-Evolution – Feasibility of policy options Regulatory framework Phase 1 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 Details on two-phase roadmaps for the three regions can be found in Annex A12.

80 Build-up of infrastructure
Co-Evolution – Feasibility of policy options Build-up of infrastructure Phase 1 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 Details on two-phase roadmaps for the three regions can be found in Annex A12.

81 Coupling Renewable Energy and Electric Vehicles
Co-Evolution – Feasibility of policy options 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 Details on two-phase roadmaps for the three regions can be found in Annex A12. Six policy options for promoting the Co-Evolution of electric vehicles and electricity from renewable sources were suggested in the RETRANS project.

82 Tax Exemptions for Charging RES-E
Co-Evolution – Feasibility of policy options Tax Exemptions for Charging RES-E Phase 1 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 Tax Exemptions for Charging Electricity from Renewable Energy Sources are granted only for those vehicles which are indeed powered by renewable electricity. This condition can be added to the sets of criteria that are in place for choosing those vehicles that are eligible for benefits today. Tax Exemptions are a policy option that is feasible in all three regions. However, this option needs a special RES-E charging tariff for identifying the amounts charged. Especially in North America, such indirect fiscal incentives are likely to be publicly accepted.

83 Re-Investing Electricity Tax
Co-Evolution – Feasibility of policy options Re-Investing Electricity Tax Phase 1 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 Re-Investing the Electricity Tax from the Charging Current into new renewable electricity production plants is only feasible if electricity taxes exist and amount to a significant contribution for new renewable electricity. As with tax exemptions for charging renewable electricity, this option requires a special charging tariff for electric vehicles. It is feasible in all three regions. Deregulated electricity markets in North America and Europe may be distorted. In North America this option may first be restricted to single interconnection areas.

84 Hard Coupling Phase 1 Co-Evolution – Feasibility of policy options
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 Hard Coupling means that the electricity which is needed for charging new electric vehicles has to be generated from new renewable energy sources. Thus, the amount of electricity that is produced from these sources increases according to the increase in electric vehicle deployment. In Europe this measure is feasible but raises concerns that the development of renewable electricity or electric vehicles may be slowed down. Increased costs for the society are expected. In North America and China this option is unlikely because both regions have not even implemented Renewable electricity targets. In North America profitability is key for public acceptance of EVs and RES-E which also is a barrier for this option. The regulated Chinese electricity market would facilitate the implementation of this option.

85 Manufacturers‘ investments in RES-E
Co-Evolution – Feasibility of policy options Manufacturers‘ investments in RES-E Phase 1 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) For more information see Annex slides section A14. Vehicle manufacturers invest in new renewable electricity (equalling the amount their EVs are going to use) and can then consider their electric vehicles as zero-emission vehicles. However, emission targets for manufacturers’ fleets have to be in force first. Else, this option might result in higher emissions from remaining conventional vehicles. This option might be feasible in all regions. The vertically integrated electricity sectors in China and North America impede the market entry for OEMs as RES-E producers. Cooperation with the grid companies may be possible. In China, private investments in RES-E are not encouraged. A political change would be needed. Since the electricity mix in China depends on governmental decisions, it has to be ensured that the new renewable capacity is used. In Europe, this option is feasible but has to be implemented on the European level.

86 Cap and Trade Phase 2 Co-Evolution – Feasibility of policy options
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. A Cap and Trade system that couples electric vehicles and electricity from renewable sources sets emission targets for the electricity sector (as in the European Trading Scheme) and the transport sector. As this emission target becomes stricter, the rights to emit have to be traded between the stakeholders. This option may be feasible as a Phase 2 policy option. National or international emission mitigation targets are a premise for Cap and Trade systems. If these are introduced in Phase 1, Cap and Trade schemes that encompass the electricity and the transportation sector are feasible in all regions. In North America emission mitigation targets have to be enforced. In Europe, emissions from electricity production are already included in a Cap and Trade scheme. The integration of the transport sector into that scheme may be possible, the details of the implementation remain unclear. In China this option is feasible, it is feared that such a scheme may slow down the economic development of vehicle manufacturers.

87 Grid Stabilization Bonus
Co-Evolution – Feasibility of policy options Grid Stabilization Bonus Phase 2 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 ? The Grid Stabilization Bonus is paid for by DSOs who reward owners of electric vehicles for plugging-in and making their vehicles available for ancillary services. This option is only feasible if smart grid and bidirectional charging technology is available. Depending on the regional development, this option may become feasible in Phase 2 in all regions. This option is a good incentive for encouraging EV owners to plug-in.

88 Co-Evolution – Feasibility of policy options
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 CO2-standards with energy efficiency standards Speed limits Revision of driving license directive Sources: European Commission, 2009: Climate and Renewable Energy Package European Commission, 2009: Directive on the promotion of the use of energy from renewable sources European Commission, 2011: White Paper. Roadmap to a Single European Transport Area

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

90 Two Phase Development for Co-Evolution
Co-Evolution – Two Phase Roadmap 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. Details on two-phase roadmaps for the three regions can be found in Annex A12.

91 North America – Consumer demand drives Co-Evolution
Co-Evolution – Two Phase Roadmap 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 Details on two-phase roadmaps for the three regions can be found in Annex A12. Today consumer demand for electric vehicles already surpasses manufacturers‘ production capacities. Thus, a market driven development for an increase in EV deployment is most likely. Both electric vehicles and renewable electricity will be first implemented regionally. Thus, renewable sources will not necessarily be available for local EVs but have to fuel EVs that are deployed elsewhere. However, the local implementations will drive grid reinforcements there. Public information campaigns can help changing opinions about renewable electricity and electric vehicles. In Phase 2 market entry for new renewable electricity producers may become easier. Consumer demand for Vehicle to Grid services and Feed-In Tariffs may lead to new legislation.

92 Actors for Co-Evolution
Co-Evolution – Actors 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 The North American electricity market is still quite vertically integrated so there is still little distinction between utilities, TSO’s and DSO’s. Thus, the electricity sector represents one group of stakeholders that have similar and different interests depending on their business.

93 Europe – Adaptation of existing policies leads to Co-Evolution
Co-Evolution – Two Phase Roadmap 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 Details on two-phase roadmaps for the three regions can be found in Annex A12. The most important steps in Phase 1 will be the harmonization of standards across Europe and the coordination of support policies and regulation for system integration. The full internalization of external costs is an ambitious goal for Phase 2 as well as Europe-wide harmonized charging infrastructure.

94 Actors for Co-Evolution
Co-Evolution – Actors 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

95 China – Rapid production increases drive Co-Evolution
Co-Evolution – Two Phase Roadmap 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 Details on two-phase roadmaps for the three regions can be found in Annex A12. In China, nationwide standardization is most important for further EV development. The electricity sector has to quickly catch up on RES-E production and ist transmission. In Phase 2 bidirectional charging infrastructure for vehicles-to-grid services becomes increasingly important for managing both increasing production and increasing demand.

96 Actors for Co-Evolution
Co-Evolution – Actors 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 The Chinese electricity market is vertically integrated thus there is little distinction between utilities, TSO’s and DSO’s. Thus, the electricity sector represents one group of stakeholders that have similar interests and who have to cope with governmental requirements.

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

98 Conclusions 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

99 Actions for Co-Evolution‘s stakeholders
Conclusions 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.

100 Actions for Co-Evolution’s stakeholders
Conclusions 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 OEMs = Vehicle manufacturers and charging stations manufacturers

101 North America & Europe Conclusions
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) Support policies for electric vehicles include: subsidies for acquisition (might be combined with scrappage incentives), tax benefits (on registration fee or annual taxes), traffic privileges, insurance benefits, access to transport services. Support policies for renewable electricity might continue or be expanded. However, if technologies reach market parity, support policies might only take effect on their interaction with electric vehicles (e.g. benefits for participating in smart grids).

102 Conclusions 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.

103 Comparison of regions Characteristics
Conclusions 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

104 Policy Recommendations by Region
Conclusion Policy Recommendations by Region 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 More information on policies that concern the deployment of electric vehicles can be found in Annex A5.

105 Comparison of regions Lessons learned so far
Conclusions 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 More information about pilot projects in the three regions can be found in Annex A4. Mobility Partnerships are Packages where the acquisition or leasing of an electric vehicle makes the owner eligible for reduced fares on public transport, rental cars, parking spaces and other – locally defined – benefits. Plug-and-Ride offers from railway companies for electric vehicles are one example of a Mobility Partnership with two stakeholders. Finding local solutions for traffic problems and personal mobility goes hand in hand with the mentioned mobility partnerships. Depending on local circumstances (urban/rural, size of the city, availability of public transportation ...) usage patterns (distances, usage frequency etc.) differ and different bundles will be needed. Depending on the usage patterns different EV models may be necessary.

106 Comparison of regions Lessons learned so far
Conclusions 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

107 Follow-up work Conclusions
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 As more and more pilot projects worldwide advance an analysis of the success factors of electric vehicles will be necessary. Why were EVs accepted and used? Were the users satisfied? Which companies and organizations worked together and what were the success factors in this cooperation? What business models and tariff structures were introduced? Which experiences were made regarding the Co-Evolution with renewable electricity? In what scales were smart grids or V2G involved? From this analysis best practices can be derived which again can help promoting EVs, RES-E and their Co-Evolution. Technical and grid- or system-related boundaries and barriers for Co-Evolution have to be appraised per region or even on smaller scales. This appraisal is needed for developing feed-in and charging strategies that help stabilizing the grid. An impact assessment of the suggested policy options is needed for giving policy makers a help for prioritizing these options.

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

109 THANK YOU! For additional information on RETD Online: www.iea-retd.org
Contact: 109


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