Here at CleanTechnica, we see the transition to electric vehicles as a certainty and indeed, consumers are voting with their wallets for electric vehicles in countries leading the charge into plug-in vehicles like China, the United States, and Norway. As the world transitions to connected, autonomous, shared and electric vehicles, the brand new internal combustion vehicles being sold to buyers around the world today will likely be retired before their useful life is over.
The interesting observation was written up in a blog post over on the Lucky Beanz blog where the author ponders the likelihood of this transpiring and some of the implications of millions of vehicles being left unused as the world moves on to cleaner forms of transit.
Inevitable Regulation
Allowing the continued production and sales of millions of gas and diesel vehicles each year that have a horizon that is already coming into sight in so many cities, states, and countries around the world seems quite backwards based on economics alone. Cities around the world are implementing or considering bans on the sale of new gas and diesel vehicles, which creates a compelling brick wall several years out in the future that begs the question: ‘why are automakers still building gas and diesel vehicles?’ or the very similar ‘why are people still buying gas and diesel vehicles?’
The Lucky Beanz blog lays it out nicely: “Governments continue to set dates for banning the sale of ICE vehicles, and while some call these targets ambitious, the truth is that they are all just remnants of a toxic relationship, one everyone knows they need to get out of but just can’t seem to pull ourselves away from.”
With the prospect of looming regulatory action on the horizon, it is not logical to
continue buying gas and diesel vehicles, though the reality is that these future regulations are only for a handful of cities around the world and are still many years out in most cases.
The Climate Crisis
If that’s not a compelling enough reason to make a change, climate change and the local air quality emissions people around the world suffer through is yet another compelling reason. Climate change is manifesting itself in more frequent, stronger storms, more frequent, more intense wildfires, more severe droughts, more intense rain, acidification of the earth’s oceans, more severe heat and more severe cold weather around the world, and we are really just beginning to scratch the surface of its effects.
Climate models are some of the most complicated computer simulations in the world and their inaccuracies are constantly being called out as reasons not to believe in climate change. For better or worse, we do not need to look at the future to see these effects. They are in the news everyday.
This week, we are reflecting on the damage done by Hurricane Michael in Florida and at the intense wildfires blazing across much of the state of California. Where I live in Southern California, nearly the entire northwestern half of my county and much of the next county to the west of us burned in the Thomas Fire. This year, the south and the east are burning.
Each additional ton of CO2 we pump into the air, anywhere in the world, adds another blanket onto the planet that traps just a bit more warmth, adding that much more energy to an already highly energized system.
The evidence we see manifesting the underlying condition is one thing, but we also have a body of scientific evidence to lean on. That evidence has been compiled by the leading scientific bodies of our time, resulting in a consensus agreement that climate change is real and it is happening. Denying that climate change is happening and that humans are causing it is now akin to denying that gravity exists or that the earth is round. It’s a scientific fact, for better or worse. The great (and terrible) thing about that is that it really doesn’t matter if you believe it or not, because it’s happening.
Quality Air
Combustion emissions don’t just add more insulation to our atmosphere, it also adds contaminants that affect our health in real, measurable ways. The World Health Organization estimates that outdoor air pollution causes 4.2 million deaths per year.
Air pollution is localized, but because we all share this same bubble of gas we call an atmosphere, the effects of pollution impact the global population. Awareness of just how drastic the impacts of air pollution are is growing as more and more data stacks up against it, but with numbers this large and the effects of air pollution being breathed in and absorbed into our bodies over decades, it is a difficult one for people to wrap their minds around.
It Makes Dollars And Sense
Regardless of your position on climate change, the connection between urban pollution stemming from transportation, or thoughts on future regulation of gas and diesel vehicles, customers are increasingly voting for electric vehicles with their wallets based on the cost savings alone.
The realization of the promise of an affordable, long range electric vehicle hit the US automotive market like a sledgehammer as Tesla built the road out of its production hell with the skeletons of one automaker after another, eventually emerging as the top selling car in the US by revenue.
For those that weren’t paying attention, the Model 3 was the top selling car in terms of revenue among ALL cars, not just electric vehicles. All told, Tesla delivered 55,840 Model 3s in the third quarter — and that’s just in North America, just for cash or loan (no leases yet), and it still isn’t available in the promised $35,000 version, with the most affordable option today being a Limited Edition Mid-Range (aka the LEMuR) version that comes at a base price of $47,000.
That leaves a lot of levers for Tesla to pull to open up the veritable floodgates of demand for its Model 3 as it satisfies early demand and ramps up production. Stacking on that, it is expected to unveil the Model Y CUV in early 2019, which will be followed by an electric Truck, an electric Semi, and an upgraded version of its Roadster that will put literally every other supercar on the market today to shame.
That paints an insanely compelling picture for electric cars based solely on their own merit that has investors around the world both clamoring for Tesla’s stock and at the same time, abandoning legacy automakers as Tesla eats their breakfast, lunch, and dinner along the way.
Hold The ICE, Please
At the end of the day, there are plenty of compelling reasons to switch from clunky, dirty gas and diesel vehicles to electric vehicles. The transition is happening and the only questions outstanding relate to how the nuances of the revolution will play out. Amidst the transition, there is an opportunity to manage the sales of combustion vehicles as they start to give way to electric vehicles in an intentional way to minimize the amount of wasted resources go into the millions of assets produced over the next ten years.
Lucky Beanz postulates that the proliferation of internal combustion vehicles is a simple product of the capitalist model. Without a tax on carbon emissions, the real cost to the planet and to our health is not being taken into account with the purchase, thus making gas and diesel vehicles artificially competitive with electric vehicles. Subsidies, rebates, and incentive programs have helped electric vehicle manufacturers reach scale that allows them Tesla to compete on pricing, but these are being tapered off around the world.
Carbon Taxes
Leveraging an upfront tax on internal combustion vehicles based on their lifetime emissions would discourage the purchase of these assets as the transition to electrified transportation progresses and provide funds that could be directly used to incentivize the purchase of electric vehicles.
Alternately, a gradually increasing carbon tax on the primary fuels is another lever that can be pulled to encourage efficiency and discourage emissions with revenue generated feeding into low or zero carbon technologies.
Retrofits
The rework that comes with gasoline and diesel vehicles is not only the fact that they pollute, but that at a certain point, the world will not have the option to use vehicles that generate emissions, making the entire effort that went into manufacturing the vehicle in the first place a loss. VW’s dieselgate scandal is perhaps the first case of this happening, but similar degrading arcs could be drawn out for older diesel vehicles, diesel buses operating in cities, and even all commercial diesel vehicles looking to operate in city centers.
These categories present opportunities for new businesses to spring up around retrofits that would see kits developed that would allow for predefined classes of vehicles to be converted to electric. The vehicles retired and bought back by VW coming out of the dieselgate scandal could be triaged and re-powered with electric powertrains at a very low cost that would maximize the benefit of the resources that went into the initial manufacturing.
This concept scales up to larger vehicles as well and really starts to get exciting with the entire new passenger vehicle market. Vehicles could be built with powertrains that are more easily removable, with OEM electric conversions kits that could allow buyers to upgrade to an electric powertrain when it made sense for them. Markets for these will inevitably spring up, and indeed, already are in the EV enthusiast market and even from Jaguar directly, albeit, for its classic XK-E.
The transition to electric vehicles may be inevitable, but if the early shakes and bumps to the market are any indicator, it will not be a smooth transition. Companies with decades of history will cease to exist, new multi-billion dollar companies will charge in with new technologies to disrupt what we thought we knew and at the end of the day, we’re hoping that we still have a habitable planet to call home.
With every disruption, there is potential for direct or tangential new businesses to spring up to solve the big wicked problems as well as to define new niches of opportunity. Focusing on the solutions is more effective and exciting, not to mention a better way for us to use our energy, so that’s what we do here.
Source: Lucky Beanz
November 20th, 2018 by Carolyn Fortuna
What will it take to update electricity market rules so that consumers have access to the most recent technologies and best prices? A collaboration of wind and solar leaders has issued joint market recommendations to reflect the 500% renewable energy generating capacity increases that have occurred over the last 10 years.
Sweeping changes in the electricity generation mix are driving record low costs and consumer demand in US wind and solar energy, which are are leading sources of new electricity generation. A shift in generation types is affecting the whole electric industry — generation, system operations, transmission, and distribution.
Yet market rules designed with other assets in mind fail to take advantage of new energy sources and their reliability capabilities. The Wind Solar Alliance argues in a new report, “Customer-Focused and Clean: Power Markets for the Future,” that an outdated electricity market requires fundamental changes in the nation’s electricity grid.
“This report demonstrates some of the barriers that solar and other clean technologies face in markets designed for older resources and helps provide a roadmap for future reforms that can both attract and retain sources of flexibility that are beneficial for the grid and consumers,” says Sean Gallagher, Vice President of State Affairs at the Solar Energy Industries Association (SEIA). Gallagher, one of the report’s reviewers, was available at a November 19, 2018 press conference to unveil the new report and to which CleanTechnicawas invited.
Market rules can make or break the economics of an individual supply or demand resource as well as the reliability and affordability of electricity. The grid has been dominated since the mid-20th century by large and slow-moving fossil-fired, nuclear, and hydroelectric resources. There were few wind and solar generators, independent power producers, or non-utility electricity purchasers when the current grid gained ascendance.
What’s Changed in the Electricity Market?
Current power market designs reflect many tools and assumptions from when the grid was dominated by conventional resources. These market designs have not yet adapted to the capabilities and demands of newer technologies and fuels, and they have not taken advantage of the advances in computing and control innovations now available.
Most rules of regional transmission organizations (RTOs) were written before renewables made up a meaningful portion of the generation fleet. Typical energy generation descriptors such as “inertia” and “spinning reserve” reflect attributes of certain generators and are not actual reliability services, according to the Wind Solar Alliance.
During the press conference that introduced the “Customer-Focused and Clean: Power Markets for the Future” report, we at CleanTechnica posed the following question.
Question: The press release described changes in the electricity generation market, using jargon like “frequency stabilization and regulation, ramping, voltage regulation, disturbance ride-through, and 10- or 30-minute reserves [that] can be provided as well or better by modern wind, solar, storage, and demand response resources.” Grassroots advocacy can help to inspire market design changes among local and regional policy and stakeholders, so, would you please translate these concepts into terms of everyday language that advocates can embrace and articulate on the local level?
Rob Gramlich, another of the report’s authors and founder/ president of Grid Strategies, LLC, analogized wind, solar, and other renewable energy sources “as a digital player is to music –it’s electronically controlled as compared to a traditional record player spinning, like that of coal. Some services can by provided by wind and solar” that the market design does not currently invite. “These are digitally controlled, as opposed to much inertia — within fractions of a second they can stabilize grids.”
Gallagher from SEIA noted that “people don’t really notice the sources of their electricity as long as the lights stay on.”
John Kostyack, executive director of the Wind Solar Alliance, added, “Customer demand is a big part of the story. If states and major markets want to have the strongest electrical markets, new market designs are necessary.”
Low-Cost, Reliable Energy Ain’t Getting the Respect It Deserves
Major changes have taken place in electric fuel costs, technology capabilities, market structure, customer preferences, computing power, and communications technologies — all of which work together to provide healthier, more cost efficient, reliable, and renewable energy generation.
Kostyack says that the “Customer-Focused and Clean: Power Markets for the Future” report demonstrates the numerous ways that existing market structures are biased in favor of “older, large, slow-to-react resources.” He maintains that, although wind and solar power are beating all other sources on cost in many regions, “grid operators limit their deployment by failing to utilize them for reliability services such as ramping and frequency regulation. It’s time for market operators to ensure these clean, low-cost technologies are appropriately recognized and rewarded for the reliability services they can provide.”
What Market Reforms Need to Take Place for Optimal Wind and Solar Generation?
Today’s market design should favor the lowest cost resources with the most flexible capabilities, according to the Wind Solar Alliance. This is because the speed of shifts in the technology and economics of different resources have outpaced the speed of policy and market evolution.
Given that these newer technologies often outcompete conventional resources on cost and environmental performance, market design changes will be needed to accommodate them. For example, energy storage and automated demand response need to be deployed sufficiently to absorb and mitigate excess solar and wind generation.
“Customer-Focused and Clean: Power Markets for the Future” outlines that, as a whole, wholesale market rules need to become more closely aligned, keeping several considerations in mind:
- the growing demand for clean, low-cost renewable generation, energy efficiency and distributed generation
- the need for reliable, affordable electricity necessitated by a challenging global economy
- federal and state mandates requiring fair, non-discriminatory opportunities for all providers, technologies and customers
Market Reforms for Electricity Generation
The Wind Solar Alliance recommends 4 reforms so markets are flexible, fair, far, and free.
- “Flexibility” refers to both the market and the power system. A flexible power system should be able to respond and adapt to changes in uncontrollable or non-dispatchable factors such as consumption (load), wind speed, solar insolation, other generator output deviations, forced generation outages, and transmission disruptions. Modern grid response capabilities need to be faster and cover more megawatts than in the past. Fortunately, modern computing, communications, and control technology, including the fast controls of inverter-based resources, allow much faster response than was previously possible. The market design must also be flexible enough to serve a variety of alternate resource and load scenarios effectively without the need for drastic redesign.
- A “fair” market will treat all customers and resources evenly and allow all the opportunity to succeed. Such a market will be designed around service requirements and performance capabilities and be fuel-neutral and technology-agnostic, without inappropriately advantaging or penalizing particular customers or resources. It will compensate based on objectively metered services delivered, rather than subjectively determined resource capabilities or attributes.
• A market should have a “far” and broad geographic span to maximize the efficiency benefits of supply and demand diversity and reduce variability of resources by netting them out against each other. It will expand deliverability options between resources and customers. System operator borders will operate seamlessly and RTOs will expand in their geographic scope.
• A “free” market facilitates customer choice and does not raise barriers to market entry and exit. It should also support customers’, states’, and local authorities’ ability to act on choices about how to balance between goals such as least- cost, distributed versus centralized, environmental impact, local and in-state development, and other priorities.
“Power markets benefit customers most when all resources are allowed in,” said Gramlich. “The key to operating reliably and efficiently through the resource shift taking place is to make sure market design appropriately compensates flexibility and eliminates undue compensation for inflexible resources.”
Policies at the Local and State Levels
During the November 19, 2018 press conference that introduced the “Customer-Focused and Clean: Power Markets for the Future” report, we at CleanTechnica posed other questions about energy certificates, tax credits, and RTOs, wondering how these feed into the impetus for electricity market design reform. Gallagher responded initially that “RTO market rules are not part of today’s talk,” but journalists that followed CleanTechnica in the queue repeated the desire to learn more about on-the-ground governmental advocacy.
Gramlich allowed that “interventions at the state level (do exist), but this report didn’t get into those options. It’s outside the scope of what we’re doing here.” After more prodding about the stakeholder process, Kostyack noted, “RTO rules are significantly determined and driven by stakeholders and governing structures. In this report, we’re trying to appeal to whatever stakeholders are interested in these reforms, as well as RTOs and the Federal Energy Regulatory Commission (FERC), which has intervened in storage rules.”
Amy Farrell, senior vice president, government & public affairs at the American Wind Energy Association, added, “Obviously, we see this report as a useful education piece. As industry trade associations and organizations, there is a significant effort to move along market designs, keeping in mind the need to procure the services that customers want.”
The desire on the part of journalists in the press conference queue to learn more about translating the report into policies at the local and regional stakeholder level did catch the report’s authors off-guard but also gave them a sense of what next steps could be taken to continue to continue to push for electricity market design reforms.
Final Thoughts
An effective power system should provide customers and regulators with reliable and affordable power. Erik Heinle, assistant People’s Counsel, DC Office of the People’s Counsel, affirms the findings of the report. “The Wind Solar Alliance has developed an important and well thought-out roadmap to achieve these goals by harnessing new low-cost, high-performing wind and solar technologies and successfully integrating them into the grid, while reducing consumers bills and improving reliability.”
Knowing that market rules can make or break the economics of an individual supply or demand resource and the reliability and affordability of electricity, isn’t it time to reform archaic electricity generation market designs to reflect the needs and technologies of the US today? The Wind Solar Alliance has a good start in its new report and will likely expand its target audience to include more grassroots efforts toward market design evolution as progress is made.
Source: Customer- Focused and Clean: Power Markets for the Future
