By Doug Miller (Energy Web Foundation) & Mark Porter (Renewable Energy Buyers Alliance)

Electric vehicle (EV) adoption is growing rapidly. According to 2019 Bloomberg analysis, annual passenger EV sales surpassed 2 million in 2018, are expected to increase to 10 million by 2025, 28 million by 2030, and will comprise over half of all passenger vehicle sales by 2040, or 56 million vehicles annually.

We will probably see even faster near-term growth for electric buses and light-duty commercial vehicle fleets, especially among the companies and cities with existing renewable energy targets and/or greenhouse gas emissions-reduction targets. For example, the city of Seattle, WA, already had more than 200 plug-in EVs in its municipal fleet as of October 2018, and has committed to switch the entirety of its 4,000-plus vehicles to be electric and fossil fuel-free by 2030. Meanwhile, earlier this year parcel shipping giant UPS placed an order for 10,000 electric delivery trucks as the next big step in its electrification and sustainability strategy.

Even beyond climate-conscious circles, EVs are entering the popular mainstream: they took three of the eight total automobile advertisement spots during the recent annual marketing frenzy in the U.S. that is also known as the Super Bowl and served as the mode of transport for film festival stars at the recent Berlinale.

EVs + renewable energy = an opportunity too big to ignore

The EV industry has to-date focused its attention on continuing to improve the efficiency and reduce the costs of EVs, build out public charging infrastructure, and overall grow the market. While this is important and will remain an area of focus, industry has paid too little attention to the electricity sources used to power EVs. It’s a case of ‘electrify first, worry about the actual electricity later.’ But on the latter front, there’s low-hanging fruit to seize now.

There is a major opportunity to position EVs as one of the biggest buyers of renewable electricity in the world. For context, RE100 companies — a network of corporations across the globe with 100% renewable energy targets — purchase over 220 terawatt-hours (TWh) of renewable energy each year, making them in aggregate today’s largest global buyer of renewable energy. Yet by 2030, EVs will need nearly three times as much electricity — 640 TWh. (For sense of scale, that is equivalent to the annual electricity consumption of 58 million single family homes in the U.S.)

EVs cause less carbon dioxide, ozone, and particulate pollution compared to their internal combustion vehicle predecessors, according to research by the Union of Concerned Scientists, even when EVs draw from electric grids powered by coal. However, EVs aren’t 100% clean unless they are powered fully by renewable energy resources.

Today, too few EVs are powered by renewable energy and even fewer are 100% powered by renewables. We have an opportunity to change this.

Industry should develop solutions to ensure the delivery of 100% renewably-powered EV charging — starting with electric bus, government, and company fleets

The EV sector can learn from corporate procurement, which saw 9.33 gigawatts (GW) of announced transactions in the U.S. alone in 2019 and moved the cumulative announced transactions in the U.S. to over 25 GW by the end of last year. Corporate renewable energy buyers have created significant voluntary demand for new renewable energy projects across the globe. Furthermore, given that governments are falling behind their Paris Agreement targets, EVs could serve as voluntary buyers of renewable energy and stimulate an additional 105 GW of new onshore wind and 145 GW of new solar PV capacity.[1]

EV charge point operators (CPOs), electric mobility service providers (eMSPs), and EV original equipment manufacturers (OEMs) should develop a seamless 100% renewable energy solution for EV charging that, in turn, facilitates the development of new renewable energy projects. Why? A green EV charge solution will help CPOs, eMSPs, and OEMs win more contracts with today’s EV fleet owners and become a preferred partner for future EV fleet owners. It will also especially help electric utilities serving as CPOs to secure demand for more new renewable energy projects in their respective service territories.

Delivering clean EV charging at scale means linking every megawatt-hour (MWh) of electricity consumed by EV charge events with an equivalent purchase of an energy attribute certificate (EAC), where 1 MWh equals 1 EAC. This will help create more voluntary demand for renewables and create a new situation where there is more demand than supply to drive more new renewable energy projects. Ideally, CPOs, eMSPs, and OEMs would offer EV fleet owners the option to source their EV charging from new renewable energy projects. Offsite sourcing is required and already being used in a few cases today due to physical and economic constraints of on-site solar for EV charging infrastructure. EVgo provides an example of this approach through the traditional renewables procurement method of having a third-party buy EACs on EVgo’s behalf that is equal to the electricity consumption at EVgo charge points.

The EV sector should first target large centralized fleets to reach scale, such as electric bus and shuttle fleets owned by governments, cities, and companies currently making large EV fleet investments. These same early adopters are likely to have ambitious clean energy goals in place and will want to use their EVs to drive new renewable energy supply above the business as usual case. New research from The Climate Group’s EV100 initiative, which is a growing collection of organizations with 100% EV fleet adoption targets that today represents over 80,000 vehicles, also confirms growing corporate interest in zero-emissions EV charging given how over 40% of EV100’s current 67 members charge their EV fleets with 100% renewables.

EV CPOs, eMSPs, and OEMs should provide a clean EV charge guarantee at no cost to the customer to win bids, accelerate EV adoption, and benefit from expected future regulations

A sustainably-powered EV fleet takes advantage of the rapidly increasing efficiencies of powering EVs from renewables and can create exponentially positive environmental impacts in combination with smart, time-sensitive charging. As mentioned, early EV fleet adopters are likely more inclined to want clean EV charging and can be the pilot customer group and ensure that renewable-powered EVs are the default option for late adopters. CPOs, eMSPs, and OEMs can act now and use the market’s scale to develop products that remove risk from customers while providing renewable power without a price premium.

To keep implementation costs to a minimum, we believe 100% renewable powered EV solutions should mitigate transaction costs and take advantage of fast-falling costs of renewables. This includes taking advantage of contractual arrangements like power purchase agreements (PPAs) to source the electricity for clean EV charging at the lowest price possible and boost demand for new renewables projects.

To help CPOs, eMSPs, and OEMs gauge the annual needs for EV fleets, consider an example for electric buses using assumptions from U.S. averages: Electric buses are covered by approximately 50 EACs per year based on the assumption that it takes about 145 kWh for an electric bus to travel 100 miles and U.S. buses travel an average of 34,000 miles per year, creating a 50 MWh annual demand from buses (or one EAC per 700 miles traveled by an electric bus).

We can extend this analysis to make an estimate of the needs of personal EVs to inform clean EV charge solutions developed after successful delivery to EV fleet owners: Personal EV usage can be covered by 4 EACs per year based on the assumption that about 30 kilowatt-hours (kWh) is needed for a personal EV to travel 100 miles and U.S. personal vehicles travel an average of 13,500 miles per year, creating a 4 MWh annual demand from personal EVs. Put another way, one EAC is needed to cover 3,300 miles traveled by a personal EV.

EAC prices range globally from a low of about US$0.05 to highs that surpass US$50 per EAC and a global average roughly US$1 per EAC cost of providing the renewable energy. This means the incremental cost to power an electric bus with renewables is about US$50 per year, with the global minimum and maximum ranging from US$2.50 to US$2,500 per year. For personal EVs, the average incremental cost is about US$4 per year, which could range from US$0.2 to US$200 per year.

Powering an EV with electricity is half the price based on U.S. averages of fueling up a new internal combustion engine (ICE) vehicle with gasoline. Using estimates from Columbia University research, electric buses would still save cities several thousand U.S. dollars per year — even in the highest-price EAC markets — after accounting for both the higher upfront price of electric buses compared to diesel buses of about $300,000 and annual fuel cost savings of electric buses of $39,000 over their average 12-year lifespan. For personal EVs, customers in the highest electricity price markets would also still reduce operational costs in the highest-price EAC scenario. In other words, even when both electricity and EAC prices are high, renewably-powered EVs are still cheaper to operate than ICE alternatives.

We think EV CPOs, eMSPs, and OEMs should absorb this modest incremental cost as part of their business model to increase the appeal of EVs as a transportation option, secure and retain more EV fleet customers, and capture the avoided carbon credits from expected widespread transportation-related carbon regulations like California’s Low Carbon Fuel Standard. However, even if these companies don’t absorb these costs and pass them on to their customers, customers will still reduce their overall operational costs of their EV compared to ICE vehicles.

To drive adoption of EVs and unlock their full economic value, industry should adopt common standards and interoperable solutions across EV business scenarios

EV customers expect their EVs to be plug-and-play ready for business scenarios across geographies beyond serving as a renewable energy buyer. To meet the needs of today’s and tomorrow’s EV customers, CPOs, eMSPs, and OEMs should — in addition to clean EV charging — also make it possible for EV customers to effortlessly:

Participate in energy markets and programs (ranging from wholesale market participation to locally managed dynamic pricing programs);

Charge their EV at any charge point owned by any market participant;

Transact across all charge points; and

Integrate with and contribute to transport sector-related decarbonization incentive schemes (like California’s Low Carbon Fuel Standard).

These different business scenarios depend on several common components, mainly in terms of identity management and multiparty access to trusted charging data sources. CPOs, eMSPs, and OEMs should adopt technical standards industry-wide that ensure streamlined interoperability and participation across different business applications. Put another way, the EV industry should use device-oriented and publicly accessible digital infrastructure so that any EV can participate seamlessly in any relevant business scenario. This will help make EVs even more attractive and ensure EVs deliver on their full potential, in large part by promoting solution architectures that remove data silos and resulting market inefficiencies.

There are various examples of standards and toolkits fast-becoming available to enable industry to develop and scale their own new EV customer solutions, including:

CPOs, eMSPs, and OEMs can use toolkits like these to make self-registering, grid interactive, and 100% renewably-powered EVs a practical reality for customers.

CPOs, eMSPs, and OEMs should capture this opportunity by bringing new solutions to the market today

The Renewable Energy Buyers Alliance (REBA) and Energy Web Foundation (EWF) are excited to inform and directly support the technical development of new solutions that unlock the full potential of EVs and boost demand for new renewable energy projects. REBA and EWF welcome feedback, questions, and inquiries about opportunities to develop new digital EV solutions.

Please contact Doug Miller (doug.miller@energyweb.org) and Mark Porter (MPorter@rebuyers.org) to learn more.

[1] Capacity for 2030 EV electricity demand of 640 TWh is assumed to be met through an equal share of onshore wind and solar PV generation sources producing at 2019 capacity factors (capacity factor source: EIA)