12. July 2011

1. RETRANS2 – Final ReportUniv.-Prof. Dr.-Ing. Armin Schnettler, Thomas DederichsAnn-Kathrin Meinerzhagen, Eva SzczechowiczRWTH Aachen University, Germany 12. July 2011

2. 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 1990-2006 (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: 9 billion people, 3 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

3. 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

4. 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

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)

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

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

8. Context – Transport Sector Overview The Chinese transport sector adapts slowly to Europe and North America 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 Source: IfHT, values from World Monetary Fund World Average 1 billion Source: IfHT, values from CIA & Eurostat 100% Source: IfHT, values from UN • 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 ChinaUrban Chinese population surpasses both North America’s and Europe’s total

10. Context – Vehicles Market Differences in Vehicle ownership and Market development

11. Context – Chinese Vehicles Market Chinese market will be catching up on Western levels – further extreme growth expected 20 10 0 Vehicle Sales (Total/ Passenger Vehicles Commercial Vehicles) • 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

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

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

14. 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

15. Context – Transport Sector – Electric Vehicles EVs are a niche market • EVs are close to the market • This will change with increased adoption and information to the general public.

16. Context –Electric Vehicles & GHG Mitigation Benefits regarding GHG emissions strongly depend on the regional electricity mix 200 100 0 ICE BC AB SK MB ON QC NB NS PEI NL GHG = Greenhouse gas – EV = Electric vehicle ICEV = Internal combustion engine vehicleRES-E = Electricity from Renewable Sources CAFE standards = US fuel efficiency standards • 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.

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 GHG = Greenhouse gas – EV = Electric vehicle ICEV = Internal combustion engine vehicleRES-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: www.dailyfinance.com

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

20. 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

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 Chinaonly 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 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

23. 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

24. 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

25. 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

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

27. Context – Electric Vehicles – Pilot Projects Pilot Projects are nuclei for EV deployment

28. 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 • Car sharing • Public transportation, Postal service • Charging infrastructure • One project encompasses several states (see Annex A4)

29. 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 Details of five representative cities are listed in Annex A4.

30. Context – Electric Vehicles – Users User Behavior • 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.

31. Context – Electric Vehicles – Users User concerns 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/ climateIn 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. 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

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

34. 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. Context – Electric Vehicles – Objectives Targets for Electric Vehicles on the road

36. Context – Electric Vehicles – Objectives Targets for Reduction of GHG emissions Fuel distribution in European road transport 2009 Electricity includes inland waterway and air transport Source: Eurostat • EU 20-20-20-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 transportby 2030 • North America • Non-binding target of 17% reduction of GHG emissions by 2020 (relative to 2005)

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

38. Context – Electric Vehicles – Benefits & Incentives National or regional authorities provide a variety of incentives for Electric Vehicle users Details for Regions in Annex A3 • 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

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

40. Context – Electricity from Renewable Sources Electricity from Renewable Energy Sources

41. Context – RES-E – Current status 1/6th – 1/5th of Electricity is from Renewables Renewable0,5%

42. Context – RES-E 2020 RES-E Targets and Scenarios Details for North America in Annex

43. Context – RES-E – Incentives Production incentives for renewable electricity are most widely in force in Europe

44. Context – Electricity Sector – Structure Electricity markets differ – Vertical markets in North America and China

45. Context – Reserve market Reserve power feed-in from electric vehicles may be an income option for owners

46. Context – Grids Electricity grids are very different in the three regions

47. 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: IfHT, based on Entso-e Factsheet 2011

48. Context – RES-E – Grid organization North American grids are separated today The separation of the grid continues northwardsinto Canada. Source: IfHT, (based on) NPR 2009 • Interconnected Grids: • Western Interconnection • Eastern Interconnection • Texas • Alaska/ Hawaii • Links between these regions planned. • Planning in map: • Separation of grids will largely remain

49. Context – RES-E – Grid organization China’s grid is split in two • Two major grid companies • China State Grid (blue)26 Provinces2274.8 TWh • China Southern Grid (gold)5 Provinces628 TWh • Six major regional grids • Center, North/ NortheastEast, Northwest • South • Distributed power production is not encouraged Source: IfHT, based on Earley et al.

50. The densely populated demand centers are far away from renewable resources in China Context – RES-E – Regional Power Characteristics • 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. 50 Source: IfHT based on "Imbalance of Power Production and Consumption in China” and Earley et al.