Friday, July 12, 2013

The Business Model for Solar-Powered Electric Car Charging

By David Herron
Tesla's Hawthorne Supercharger station.
Electric cars are often pictured in front of a solar array or wind turbine, when in reality most of our electricity comes non-renewable sources. Yet, there are three new projects that feature a close integration of solar power and electric car charging: the Tesla Supercharger network; the Fastned charging network in the Netherlands; and a collaboration between GM's OnStar and TimberRock.
The Tesla Supercharger network is the innovative company's proprietary fast charging technology, allowing a Model S to be completely recharged in less than an hour. The design combines high-voltage fast-charging, a solar-power carport, and a half-megawatt-hour stationary battery pack. Meanwhile, the Fastned network is planned for the Netherlands, and it will use a solar carport to generate some of the electricity required to charge cars. It will use charging stations manufactured by ABB that support both the CHADEMO and Combined Charging System standards for DC Fast Charging. There will be one fast charging station within 50 kilometers distance of nearly every Dutch citizen.
Clean Fuel for Clean Cars
Because most electricity comes from burning fossil fuels, it leaves electric car owners open to criticism that we're simply outsourcing the pollution to the power plant. It doesn't seem to matter how many studies show that the full emissions from the electric car is still cleaner than equivalent gasoline-powered cars, electric cars are tarnished with the "coal-fired" meme. But generating the electricity from solar panels erases that argument.
Elon Musk used that very argument as part of the rationale behind including solar power carports at Supercharger installations. They're working with Solar City to ensure the solar carports are big enough to generate more electricity over the course of a year than is consumed in charging the cars.
Business Model
Adding solar power to a charging station installation makes the charging stations more expensive. It might be nice for Tesla or the Fastned network in the Netherlands to combine solar power with electric car charging, but does it make financial sense to the business?
According to Musk, during the Supercharger announcement in May 2013, the capital cost per Supercharger station is about $150,000 without solar power. Adding solar power adds another $150,000 to the capital cost. He did not specify the cost of grid storage.
But if Tesla network grows to 250 stations across the U.S. and Canada, that would represent more than $37 million in capital cost just for the charging stations, and another $37 million to add solar power. During the May announcement, Musk said installation of the solar power and grid storage components of the supercharger stations would come after the stations are set up, lagging by more than a year. Nonetheless, the goal is for every supercharger installation to have solar power and grid storage.
How will Tesla make this work for its business? First of all, it helps sell cars, arming Tesla sales and marketing staff with an answer to any consumer questions about lack of range for road trips.
But the second facet of the model is just an important, even thought it's a bit wonky. It relates to the market for smart grid services. Musk said that Tesla is partnering with the utilities on grid energy storage, with Supercharger stations acting as a "grid buffer." Some utility rate structures impose large "demand charge" fees when there are large spikes in power usage. Plugging in a Model S causes about 90-120 kilowatts of electricity demand, which is a large demand spike. Placing a large battery pack, say a half-megawatt-hour next to the Supercharger station means the cars can be charged directly from that pack without the electricity grid seeing the spike.
Tesla may also be able to earn some revenue either from selling electricity to the grid, or from grid services like frequency stabilization. Musk didn't discuss this aspect of the business plan, but there are many companies working in this area.
GM's OnStar and TimberRock are developing solar-powered charging stations that will store energy.
In fact, General Motors announced on Wednesday a partnership with TimberRock for EV Solar Charging with many of the elements Tesla is using in the Supercharger stations. They are explicitly going after smart grid services that will scale electric car charging rate depending on capacity needs of the grid.
The system schematic for Fastned.
Fastned is planning to install about 200 stations in the Netherlands, each with chargers capable of a 50 kilowatt charging rate. Construction of the network begins in September 2013, and is expected to be completed in 2015. Each station will have a solar canopy, and all the company said its goal is to "reduce peak on the grid and provide energy for charging."
Very few people were thinking about this when electric cars started hitting the market a couple of year ago, but smart grid services—enabled by inter-connected EV charging, solar panels and stationary battery packs—might become the unexpected killer app of the electric car era.

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