1. Consumer Preferences for Refueling Availability: Results of a Household Survey Marc W. Melaina, National Renewable Energy Laboratory Cory Welch, Blue Summit Consulting, LLC Eric Rambo and Bob Baumgartner, PA Consulting Group Presented at the NHA Annual Hydrogen Conference March 30 th to April 3 rd, 2008. Sacramento, California

2. 2NHA Annual Confernce 4-08Consumer Preferences - Melaina Presentation Overview Consumer costs of limited refueling availability The online survey Survey results Results expressed as equivalent cost penalties Example of early adopter market share implications Summary

3. 3NHA Annual Confernce 4-08Consumer Preferences - Melaina Limited Refueling Availability General Research Question: How many early hydrogen stations are needed to commercialize hydrogen vehicles? Percent of existing stations –Availability as retail market share –National Petroleum News: ~164,300 gasoline stations in 2007 –Past surveys of diesel and natural gas vehicle owners suggest that availability at ~10 percent of existing stations is necessary Absolute number of necessary stations –Availability as geographic coverage –Availability as travel time to nearest station –Can be expressed as station density (stations per square mile)

4. 4NHA Annual Confernce 4-08Consumer Preferences - Melaina Consumer Cost Penalties as a Result of Limited Refueling Availability Penalties based upon responses to surveys Penalties based upon analytic derivations –Value of time calculations assuming rational behavior –Cost derived from distance to station, average urban speed, and assumption of cost per time (e.g. $25/hour) Greene, D.L. (1998). “Fuel Availability and Alternative Fuel Vehicles,” Energy Studies Review, vol.8, no. 3, pp. 215-231. Greene 1998

5. 5NHA Annual Confernce 4-08Consumer Preferences - Melaina Online Survey was Conducted in Three Major Urban Areas Novel Approach –Use of maps as visual representations –Included three geographic scales (metro, regional, national) Response Rate: 1486 surveys were completed in representative households in: –Los Angeles, CA –Houston, TX –New York, NY (including the Newark, NJ, urban area) What we Asked –Respondents were asked to choose between two vehicles: Conventional Vehicle Alternative Fuel Vehicle –Both vehicles were described as being identical to the respondent’s most recently purchased vehicle (with 3-4 years)

6. 6NHA Annual Confernce 4-08Consumer Preferences - Melaina Alternative Fuel Vehicle Attributes The Alternative Fuel Vehicle (AFV) Described as identical to the Conventional Vehicle (CV) in all respects, except two: 1) Social and Environmental Benefits Virtually no oil use, no smog-forming pollutants, and reduction in greenhouse gas emissions by 30%-70% 2) Limited refueling availability Metropolitan Area Coverage (“city”) Metropolitan Region Coverage (within 150 mi) Interstate Highway Coverage (national scale) Other vehicle attributes that were varied: –Vehicle purchase price ($/vehicle) –Fuel costs ($/month) –Vehicle Range (miles per tank)

7. 7NHA Annual Confernce 4-08Consumer Preferences - Melaina Discrete Choice Survey Format (L.A. example) Each refueling availability attribute has 4 levels

8. 8NHA Annual Confernce 4-08Consumer Preferences - Melaina Metropolitan Area Maps (L.A.) Level 1 Level 2 Level 3 Level 4

9. 9NHA Annual Confernce 4-08Consumer Preferences - Melaina Metropolitan Region Maps (L.A.) Level 1 Level 2 (39 stations) Level 3 (106 stations) Level 4

10. 10NHA Annual Confernce 4-08Consumer Preferences - Melaina Interstate Highway Maps (L.A.) Level 1 Level 2Level 3Level 4

11. 11NHA Annual Confernce 4-08Consumer Preferences - Melaina Each attribute is expressed in a utility function, and parameters fitting the function to the survey responses Utility functions include the units of the attribute (X) and the corresponding coefficient (β): Values for i represent geographic levels 1-4 The value of any attribute level can be expressed in terms of equivalent dollars values using the vehicle purchase price coefficient as a basis: Equivalent Dollar Values

12. 12NHA Annual Confernce 4-08Consumer Preferences - Melaina Cost Penalty Trends for Metro Area Coverage follow an Exponential Function Basis is percent of sufficient stations (less than existing stations). Population density pattern: LA > NY > HOU

13. 13NHA Annual Confernce 4-08Consumer Preferences - Melaina Metro Regional Penalty Trends Follow Exponential (L.A.) and Power Functions Basis is stations per 100 square miles. LA has low regional population density.

14. 14NHA Annual Confernce 4-08Consumer Preferences - Melaina Significant cost penalties ($1000-$2000) are found for even very long & infrequent trips Note the inverted basis: long distance trips NOT covered

15. 15NHA Annual Confernce 4-08Consumer Preferences - Melaina Metro cost penalties are relatively high At 10% of existing stations, cost penalty is $3000 - $4000 Analytic Surveys

16. 16NHA Annual Confernce 4-08Consumer Preferences - Melaina Market Share Example Hypothetical Market Share Question: “How would a typical Early Adopter behave when faced with the choice of an AFV of equivalent purchase price, fuel costs, and range, but limited refueling availability?” About 1 in 10 respondents self-classified as early adopters Early adopters would choose the AFV when all else is equal When refueling availability is limited, the early adopter’s probability of purchasing the AFV will go down But by how much?

17. 17NHA Annual Confernce 4-08Consumer Preferences - Melaina Early adopter market share and perceived AFV value relative to CV

18. 18NHA Annual Confernce 4-08Consumer Preferences - Melaina Summary Consumer cost penalties for limited refueling availability are higher than those reported in most other studies  $3000-$4000 for 10% coverage of existing urban stations The penalties for limited coverage at regional and interstate/national scales are comparable to those at the metropolitan area scale Significant reductions in market share result from limited refueling availability, even among early adopters Cost penalties are probably exaggerated because they are based upon stated preference survey results Additional research is required to reconcile penalties based upon stated preferences and analytic derivations