Electric power expert talks about the changing business model of utilities

In this age of smart grids and electrified transportation, the role of electric utilities is going through widespread change. Two news stories on major utilities this month offer a look at the new landscape. Pacific Gas & Electric (PG&E) submitted a proposal to the California Public Utilities Commission asking for permission to build 25,000 new charging stations for electric vehicles in its Northern California territory. Duke Energy has made a $225 million investment in REC Solaelectric power generation at nightr for a majority stake in the commercial solar company.

What’s behind these moves? Green Auto Market spoke with utility expert Dr. Peter Fox-Penner, author of Smart Power: Climate Change, the Smart Grid, and the Future of Electric Utilities, for more perspectives on these issues. Dr. Fox-Penner, principal of The Brattle Group, has also served as a senior official in the U.S. Department of Energy and the White House Office of Science and Technology Policy.

Economic conditions are changing for utilities with much of it based on two market factors, Fox-Penner said. While electricity prices went up in recent years, utility bills are stabilizing. Supporting energy efficiency (and producing less electricity) is becoming common now for utilities as well. Investing in new segments such as charging stations and solar power would also offer additional revenue streams and profit centers for utilities. All of this means that utilities are looking at new channels for growth – and not all of it will be as tightly regulated by public utility commissions, he said.

Areas of growth for utilities include offering more energy efficiency services, demand response services, and development of smart grids, Fox-Penner said. “Grid resilience” is now a buzzword in the industry, he said, with demand response offering users more stability in pricing during periods of peak demand; or at other times when reliability of the grid is threatened – with Hurricane Sandy offering an example of how volatile conditions can become.

Smart grid systems allow end users to have more control of energy use in their homes and commercial properties. That can come through new technologies like measurement sensors, computing, micro-generation, and geothermal heat pumps, Fox-Penner said. Converting over to the smart grid will take quite a few years, he said. The Eastern US has quite a lot of decades-old copper wire that does need to be replaced. There are also several aging distribution systems in the US that will take decades to replace, he said.

Generating electricity through renewable energy sources like solar, wind, and hydro, is a big part of the environment shaping the future of utilities. California and other states have ambitious targets in place. Renewables do benefit from having access to energy storage through electric vehicle batteries and stationary storage units to address intermittent conditions – but they’re not necessary for renewables to succeed. “Certain standards can be met even without battery storage by integrating traditional energy with renewables,” Fox-Penner said. “Europe is doing it without much battery storage.”

Concern over climate change is helping renewable energy see growth, he said. “There’s been enormous growth in wind power, and coal has trended downward,” Fox-Penner said.  Not long ago, coal powered 55% of US electricity and lately it’s hovered around 45%. Natural gas is the other fastest growing source of power with wind.

Solar still doesn’t make up much of the total supply, but it is “growing at a healthy clip,” he said. Nuclear makes up about 20% of electricity produced in the US with that coming from aging plants. We could see nuclear go away in the next 10-to-20 years, Fox-Penner said.

    CFA study shows that gas prices will continue influencing vehicle acquisitions and next-generation engineering

    The per-gallon price of gasoline has a huge impact on the auto industry – sales of small cars, hybrids, and electric vehicles compared to trucks and SUVs; resale values of these segments; and capital expenditures by OEMs. Expectations of where oil prices will go in the next two years will play a big part in new vehicle purchases and what OEMs decide to place in their product pipelines. A new study says that US consumers don’t expect gas prices to fall as far down as they did in recent years – and that prices will be going up soon.

    The latest national survey on consumer attitudes by the Consumer Federation of America (CFA), reported that US consumers expect the national gasoline price average to rise by almost 50% in the next two years – from about $2.14 to $3.20 – and by over 80% in the next five years – to $3.90. While gas pricConsumer Federation of Americaes dropped dramatically in the second half of 2014, consumers are still building these price increases into their next vehicle purchase.

    The fuel price volatility experienced in 2008, and again in 2010, has made a lasting impact on consumer attitudes. More than four-fifths (86%) of survey respondents said that gas mileage will be “important” in their next purchase, while over half (57%) say it will be “very important” in determining what vehicle to purchase.

    Fleet acquisitions will likely be met with similar considerations. According to fleet industry coverage (such as articles in sibling publication Fleet Management Weekly), fuel prices and fuel efficiency are up there with telematics, vehicle safety, emissions, and functionality as key factors in making fleet vehicle acquisitions.

    Major automakers, including commercial truck manufacturers, are going to continue to invest in alternative fuel vehicles and advanced vehicle technologies. Their executives predict that global demand for fuel from fast-growing economies like China, India, and Brazil, will push gas prices higher in the next two years and beyond.

    In the end, financial concerns are driving interest in fuel efficiency. “Buying an inefficient vehicle during periods of low gas prices condemns the consumer to wider swings in monthly costs, much higher monthly peaks and a whopping overall increase in lifetime gas costs,” said Dr. Mark Cooper, CFA’s Director of Research, about the CFA study.

      This Week’s Top 10: Tesla releases Q4 financials, the latest on former Propel Fuels CEO Matt Horton and other highlights from Green Auto Market – Extended Edition

      by Jon LeSage, editor and publisher, Green Auto Market 

      Here’s my take on the 10 most significant and interesting occurrences during the past week…….

      1. Elon Musk talking to crowdTesla Motors Q4 financial reporting showed sales growth and profit loss. Tesla Motors’ financial performance during 2014 hit both ends of the spectrum. Revenue soared 59% to $3.2 billion for the year while Tesla’s net loss increased to $294 versus a loss of $74 million in 2013. Fourth quarter revenue hit $957 million, up from $615 million from the fourth quarter of 2013. Using Tesla’s preferred non-GAAP accounting method, revenue rose 44% to $1.1 billion. Net losses widened to $108 million in the fourth quarter from $16 million. The company did meet its goal of producing 35,000 vehicles for the year, but did not meet its Model S P85D delivery target. Severe winter weather and shipping problems reduced its number – 1,400 vehicles shipped in December didn’t arrive until the next quarter. There had already been growing concerns about Tesla’s delivery problems based on the brand’s slower-than-expected launch in China, with the company last month confirming demand there was “unexpectedly weak.” Tesla said it ran into concern from potential buyers in China about the lack of charging infrastructure in the country. Tesla CEO Elon Musk has expressed frustration that problems in China have raised with investors, saying that the issue “is being blown way out of proportion.” The company has approached the final stages of development for its Model X crossover. Tesla expects to ship 55,000 Model S and X units in 2015, yielding more than a 70% year-over-year increase in deliveries. Forty percent of the deliveries are expected to take place in the first half of the year. Tesla entered 2015 with over 10,000 Model S orders and nearly 20,000 Model X reservations.
      2. This Month in Green Auto Market – Extended Edition: Former biofuels industry leader and Propel Fuels CEO Matt Horton takes on a new role with an electric vehicle manufacturer………. What the new Ford Interceptor Utility means for police departments – and what law enforcement thinks about alternative fuel vehicles………. Monthly figures for hybrid and plug-in sales, alternative fueling stations, and fuel prices……… All this and more for those interested in subscribing to the monthly edition of this newsletter.
      3. The Federal Transit Administration (FTA) has awarded 10 projects teams to deploy 55 low and zero emission fuel cell, battery electric, and electric hybrid buses across the US; 38 of them will be electric or fuel-cell powered. CALSTART will be working with three transit agencies to purchase and deploy 15 of these vehicles: Stark Area Regional Transit Authority (SARTA) will receive $8,877,405 for five hydrogen fuel cell buses from the Integrated Product Team of Ballard Power Systems, BAE Systems, and ElDorado National; SunLine Transit Agency will receive $9,803,860 to build and deploy five hydrogen electric hybrid fuel cell buses. BAE Systems, Ballard Power Systems and ElDorado National will team up to build the new zero-emission buses; and San Joaquin Regional Transit District (RTD) will receive $4,702,011 and purchase five Proterra battery-electric buses and a charging station. You can read all about it at the FTA site.
      4. Canadian company Ballard Power Systems has entered into an $80 million “technology solutions” transaction with Volkswagen that involves transfer of automotive fuel cell intellectual property and a two-year extension of an engineering services contract. Audi will acquire a package of patents from the fuel-cell company that will be applied across all VW Group brands. Along with cars, Ballard produces cells for use in forklifts, buses, and stationary used in distributed power generation.
      5. Solar-powered electric car Stella has won the TechCrunch award for biggest technology achievements during the 8th annual “Crunchies Awards.” Stella was up against an impressive list of contenders — Apple Pay, The Block Chain (Bitcoin), Rosetta Mission’s Comet Landing, and SpaceX Lateral Booster. Stella, created by Solar Team Eindhoven from the Eindhoven (Netherlands) University of Technology, has been widely recognized and is gaining support. Partners include National Drive Electric Week, Plug In America, and the Coast to Coast EV Connection project. Stella’s car uses a roof-mounted solar panel that can provide enough power to move the car 500 miles on a full charge of the battery.
      6. Agility Fuel Systems, a leading designer and producer of natural gas fuel storage and delivery systems for heavy duty trucks and buses, and Clean Energy Fuels announced a joint CNG fuel system sales program to reduce the incremental cost of heavy-duty natural gas trucks. Agility and Clean Energy will work with trucking customers and offer CNG fuel systems installed at a substantially reduced cost when there is a natural gas fueling agreement. Last year during ACT Expo 2014, Agility announced a joint venture with Hexagon Lincoln to manufacture both a new type of lightweight Type IV CNG fuel cylinder, and the assemblies needed to mount them on heavy duty vehicles.
      7. Volkswagen of America says it will invest $10 million to support electric vehicle infrastructure by 2016. During a presentation at the 2015 Electric Drive Congress in Washington, DC, Volkswagen’s Jörg Sommer, vice president, product marketing and strategy, made the announcement during a presentation about the automaker’s approach to e-mobility surrounding the launch of the electric 2015 e-Golf. The automaker would like to see federal financing support for setting up fast-charging networks in urban areas and interstate corridors.
      8. Technical support for those repairing hybrids and EVs. I-CAR®,the Inter-Industry Conference on Auto Collision Repair, launched the Hybrid and Electric Vehicle Disable Search on the I-CAR Repairability Technical Support (RTS) Portal to build a robust, centralized hub of valuable industry information to give collision repair professionals the answers they need as quickly as possible. Users can find information on how to identify where parts of the hybrid or electric system are located, how to disable the system before beginning a repair, welding best practices, and refinish precautions.
      9. UK testing autonomous vehicles. The United Kingdom government has launched a test program for autonomous vehicles in four cities across the country. No major automakers appear to be involved in the test program, and the projects include smaller vehicles such as a pod-like microcar and another test model that looks like an oversize golf cart. The project has the equivalent of about $30 million in government funding.
      10. Higher mileage Chevy Volt. Automotive News analyzed what’s behind General Motors increasing the battery-only range on a single charge of the 2016 Chevrolet Volt plug-in hybrid from 38 miles to 50 miles. Some of that improved fuel efficiency comes from reducing its weight 243 pounds from the prior model. Subscribers have access to a chart with popups explaining where those gains were made in the battery pack, engine, and electric transaxle.

        EPA shows where biofuels production stands through RIN report

        RIN 2014 v2As you review this table with 2014 Renewable Identification Number (RIN) production data, you’ll notice a diversity of biofuels starting to enter the market. The US Environmental Protection Agency released this data last month to track whether production goals set in the Renewable Fuel Standard were met. It’s no longer all about ethanol, with biodiesel seeing growth and cellulosic starting a new phase.

         

        Cellulosic biofuel (such as cellulosic ethanol) nearly doubled that number with over 32 million gallons generated and biomass-derived diesel (such as biodiesel) surpassed the mandate by nearly 471 million gallons. Advanced biofuels (biodiesel and renewable diesel) were behind the mark. Corn ethanol fell behind by about a billion gallons, but it’s the biofuel category making up the lion’s share of the total reaching over 14.2 billion gallons in production last year. Without being lifted to the E15 level (15% of gasoline instead of the current E10 level) by the EPA, its volume has been lower than the original benchmark set in the mandate.

         

        RIN volumes and prices are followed closely by biofuel producers and oil companies. Under the Renewable Fuel Standard, oil companies can either buy a gallon of renewable fuel to comply with the RFS or buy a RIN credit on the open market. It’s been one of the targets of complaints by oil companies and oil refineries.

         

        Ethanol is used as the baseline for calculating RINs, with one RIN equaling one gallon of ethanol. Biodiesel accounts for 1.5 RINs per gallon, and other categories have their own RIN ratios. RINs are given monetary value on the market as an incentive for renewable fuel production and the EPA uses RINs to monitor biofuel trading and production volumes.

         

        Lux Research, which featured that table above in a report issued on Sunday, made the point that cellulosic biofuel has entered a new phase. For the first time since adoption of that category in 2010, the mandated volume was met by the commercialization of cellulosic ethanol. However, Lux Research warns investors and analysts to not overrate the performance of that segment. RIN data from December 2014 showed that only 89,327 gallons of cellulosic ethanol were generated; that signifies a much slower ramp up of the POET-DSM’s Abengoa facility that received much attention and acclaim when in started up operations in September. The biofuel industry has seen its share of commercial facilities open up and miss their targets with low production volumes.

          Electric vehicles have gone mainstream enough to draw Apple Inc. into the game

          Apple CarPlayApple Inc. has enough interest in vehicle technologies and electrification to fund an Apple-branded electric vehicle, according to sources familiar with the matter. Apple has a secret lab to test out a vehicle that looks like a minivan, sources told The Wall Street Journal. According to the article, several hundred employees are now at work on the project.

          Like Google Inc.’s move into self-driving cars, the Apple test project likely has more to do with providing advanced connected car technologies in upcoming model years. Apple plunged into the automotive space nearly a year ago, unveiling CarPlay that lets drivers access contacts on their iPhones, make calls, and listen to voice mails without taking their hands off the steering wheel. Google has acknowledged that it’s seeking partnerships with automakers and tier-one suppliers and won’t be entering the business of making cars. Apple will likely do the same, with electric vehicles offering an excellent opportunity to serve a wide range of vehicle technologies. The Apple rumor is stirring up a lot of buzz in tech journals, with speculation that Apple is getting ready to take on Tesla Motors.

          Chrysler has been on the sidelines with electric vehicles for several years, running a few test models in Michigan but not going much further. That is going to change, according to Al Gardner, president and CEO of the Chrysler brand within the recently named FCA. Chrysler’s new family of minivans will include a plug-in hybrid version, Gardner said. That will be part of an unveiling at next year’s Detroit Auto Show. The new minivan is another vehicle that FCA hopes can change the perception of Chrysler through the offering of sophisticated technology.

          Mitsubishi will be adding to its plug-in lineup with a concept car unveiled at the Chicago Auto Show. The automaker showed off its Grand Cruiser-Plug-in Hybrid Vehicle (GC-PHEV), built on an Outlander-style SUV. It will offer a wide range of digital technologies include an “augmented reality” windshield and an all-wheel drive system. Its electric motor uses a 12 kWh lithium-ion battery. The electric drive system shares many of its components with Mitsubishi’s battery-electric vehicle, formerly known as the i-MiEV.

          General Motors gained most of the media attention at the Detroit Auto Show unveiling its refreshed Chevrolet Volt – and also through surprising everyone with the announcement of its all-electric Chevrolet Bolt hatchback. Last week, GM confirmed that it will invest about $200 million in two suburban Detroit plants to build the Bolt. GM said it will spend $160 million on new tooling and equipment at its Orion assembly plant, and another $40 million for new dies at its Pontiac Metal Center plant.

          The automaker had been taking a fairly conservative approach in production volumes and marketing spend on its Volt and Cadillac ELR plug-in hybrids and Chevrolet Spark battery electric car. There’s hope the Bolt might take off with its 200 mile range on a single charge and costing about $30,000 after tax credits. That could give GM a competitive advantage in going after the buyer segment Nissan is reaching with its Leaf and that Tesla Motors will be going after when it releases its more affordable Model 3 electric car in 2017. “We are putting the Bolt EV concept on the fast track to production, because reaction to the concept was overwhelmingly positive,” Alan Batey, president of GM North America, said in a written statement. “It has the potential to quickly shake up the status quo for electric vehicles. It’s an EV aimed at everyday drivers.”

            This Week’s Top 10: Nissan sees Leaf sales slip, Bryant Gumbel and Katie Couric are perplexed by how the BMW i3 works

            by Jon LeSage, editor and publisher, Green Auto Market 

            Here’s my take on the 10 most significant and interesting occurrences during the past week…….

            1. Nissan Leaf sales successPlug-in sales: There’s been a wide range of estimates on Tesla Model S sales in the month of January, but they’re all ahead of what Nissan reported for the Leaf. Whether those Model S numbers might have been 1,100 units sold, 1,300, or 1,500, they’re all higher than 1,070 Nissan Leafs that were confirmed as being sold. The Leaf was down 14.5% from January 2014, ending a 23 month cycle of sales increases. The Chevrolet Volt was way down from a year ago – 41%. That likely had something to do with the refreshed model coming out later this year. com reported that plug-in hybrid sales were down 45.4% from December and down 28% from January 2014; battery electric vehicles were down 46.4% from December and were up 33.9% over January 2014.
            2. Boy, things have changed. A TV commercial for the BMW i3 shows NBC reporters Bryant Gumbel and Katie Couric in 1994 discussing this “newfangled” internet thing. Fast forward to 2015, Gumbel and Couric are now confused about riding in a car with no engine with its power somehow coming from a wind turbine. It was one of the TV ads shown during the Super Bowl game on Feb. 1.
            3. General Motors will begin building a production version of its Chevrolet Bolt battery-electric concept vehicle in October 2016, according to inside sources. That will put GM into direct competition with California EV start-up Tesla Motors, Nissan, and BMW. GM’s production target for the Bolt is about 25,000 to 30,000 cars a year.
            4. CALSTART hosted its annual Low-Carbon Fuel Summit in Sacramento on Feb. 3. More than 150 people attended, representing the state legislature, clean fuels producers, and consumers. Low gasoline prices held a lot of attention during discussions, along with the California Air Resources Board’s low-carbon fuel standard.
            5. Google may be going after Uber’s ridesharing market with its self-driving car technology. Uber executives have seen screenshots of what appears to be a Google ridesharing app that is currently being used by Google employees. Google’s venture capital division, Google Ventures, had invested $258 in Uber in August 2013.
            6. The Obama administration may turn the federal tax credit for electric vehicles into a rebate program as part of its proposed budget. That idea was first put out by the administration in 2011, but it’s taken a while to gain enough Congressional support. That $7,500 tax credit could be turned into a $10,000 rebate if enough support is gained.
            7. University of Michigan Transportation Research Institute reported that average fuel economy of light vehicles purchased in the U.S. improved last month for the first time since August, increasing 0.3 mpg and coming in at 25.4 mpg. January’s 0.5 jump from a year earlier marks the 12th consecutive month that average fuel economy has been above 25. Average fuel economy is up 5.3 mpg from October 2007, according to the report.
            8. Oklahoma-based organization Alternative Fuels Technology Center is now offering online courses for training on alternative fuel vehicles. The courses are self-paced and take between two to three weeks to complete. Available online courses include: CNG Vehicle Code; CNG Compressor Operator Safety and Code; LPG Vehicle Code; and Introduction to Hybrid Vehicles.
            9. Natural gas fuel-storage company Agility Fuel Systems and Clean Energy Fuels have announced a joint compressed natural gas (CNG) fuel system sales program to reduce the incremental cost of heavy-duty natural gas trucks. Under the program, Agility and Clean Energy will work with trucking customers and offer CNG fuel systems installed at a substantially reduced cost when there is a natural gas fueling agreement.
            10. The Mercedes-Benz C350e plug-in hybrid is launching in Germany this month with a price tag of $57,645, a fuel economy rating of 112 MPGe (though not by US EPA standards), and an optional wagon version.

              West coast ports face labor union shutdown, congestion, and more air pollution

              west coast portsIf you live anywhere near the Ports of Long Beach or Los Angeles – or any of the 29 west coast ports – you might notice that the cargo ships appear to be backed up farther down the coastline than usual. While the global economy is getting better, that extension of ships has more to do with bitter contract negotiations over the past nine months. It was backed up even more this past weekend after a shutdown by port operators.

              The International Longshore and Warehouse Union (ILWU) says that employers are not managing the supply chain efficiently; the Pacific Maritime Association, which represents shippers and terminal operators, says that union works have intentionally been slowing their work speed by about 50% to put pressure on management to settle the contract. Pacific Maritime Association put out a “best offer” proposal on Feb. 4 and is waiting for the union to respond.

              Union members have been offered a 3% wage increase, 11% higher pension benefits and no pressure to make concessions on the contract. For workers in the region, it’s usually the highest paying job out there. Longshore workers are now approaching $150,000 in annual wages and pensions that average $80,000 a year. There is a price for living that life – injuries can be severe for ILWU members, air quality can cause respiratory health problems, and the traffic congestion in and around the ports has been getting worse.

              Port of Long Beach Chief Executive Jon Slangerup said during his State of the Port address on January 29 that congestion is becoming a serious problem at the port. It goes back to about 18 months ago when ocean carrier lines formed alliances combining their cargo ships. These ocean carriers got out of the truck trailer chassis side of the business; three local leasing companies took on the work but didn’t have large enough fleets to cope with increasing demand from these massive vessel carriers. Storing containers and getting them to trucks and trains became more complicated and dragged out as well.

              The Port of Long Beach has been in discussions with the unions and the Port of Los Angeles on finding solutions to these gridlock problems. Capital investments are underway such as the Middle Harbor Redevelopment Project and the Gerald Desmond Bridge Replacement Project have been underway, and Slangerup expects them to generate about 5,000 construction jobs over the next few years.

              The ports have been considering other capital investments in recent years, including one that would efficiently stack cargo containers and load them onto railroad cars that would deliver them to trucks near downtown Los Angeles. That proposal has been based on air pollution and traffic congestion building up on the I-710 and I-110 freeways. There’s also been the I-710 Corridor Project that’s expected to start up in the next five years. That 12-mile project is still seeking buy-in from cities along that stretch of the freeway and government agencies overseeing the region. The concept is to launch the corridor project in 2020 and complete it in 2030; it’s expected to create 500,000 project jobs and to help reduce harmful emissions.

              The Port of Long Beach last night celebrated the 10 year anniversary of its Green Port Policy – which has been embraced and replicated by other ports around the world; the board voted to continue supporting the Green Port Policy through its next phase. The Port of Long Beach has invested more than $500 million to reduce the port’s environmental impact and meet ambitious goals improving air, water, soil and sediments, wildlife, sustainability, and community engagement.  Slangerup emphasized the goal of making Long Beach the world’s first zero emission port. Much of that is coming through what the port calls “Energy Island,” a fully self-sustained energy grid powered by solar, wind, fuel cells, natural gas, and potentially with other technologies currently in development.

              Trucking has been a big part of the Green Port Policy for the second largest source of air pollution after cargo ships. The Ports of Long Beach and Los Angeles enacted their Clean Trucks programs that have brought the trucking fleets up to newer, cleaner diesel engines and reduced air pollution 80% compared to older truck models. Both ports are supporting test projects for port drayage trucks and other vehicles – such as battery electric trucks.

              There’s much hope out there for peaceful settlement of the union contracts, and relief from congestion in the ports and nearby areas. The next 20 years will see several ambitious projects enacted to deal with these challenges and the health risks from increasing air pollution. The opportunities are there for all port stakeholders willing to take them on.

                Greenest of the green cars by fuel economy, emissions, sales, and overall value

                Last week, the American Council for an Energy-Efficient Economy (ACEEE) released its 18th annual comprehensive environmental ratings for vehicles. As you can view in this list of the 12 Greenest cars in 2015, battery electric vehicles did the best, taking the top three spots. Greenest cars of the year for 2015The Smart ForTwo Electric Drive took No. 1 for the second year in a row, this year taking the highest Green Score ever. Plug-in electric vehicles took six out of 12 places on this year’s list. The Toyota Prius did well this year with its Prius C taking 4th place and the Prius liftback, and Prius Plug-in jointly took No. 6. The Nissan Leaf finished in fifth place.

                ACEEE assigns each vehicle a Green Score that incorporates lifecycle greenhouse gas and criteria pollutant emissions. The announcement of this year’s winner coincides with the release of ACEEE’s brand new greenercars.org website that will now offer subscription-free access to all vehicle scores from model year 2000 and later. Another new feature this year is analysis of where the electricity powering the electric vehicle comes from. “A car that is charged using electricity generated from natural gas or renewables is going to have significantly less impact on the environment than one charged on a coal-heavy grid,” said ACEEE lead vehicle analyst Shruti Vaidyanathan.

                ACEEE also looks at the other end of the spectrum – acknowledging vehicles that are the least friendly to the environment. Number one on this year’s list is the Dodge Ram 2500 (Class 2b), followed by the Chevrolet/GMC G2500 Express/Savana cargo conversion vans.

                Looking at the selection of “greenest of the green car” awards released around this time of the year begs the questions: What is a green car? What makes it the best? Overall, the BMW i3, Nissan Leaf, and Volkswagen models performed very well in the rankings.

                Fuel economy is one that always comes up in consumer polls, fleet acquisitions, and government rating systems. Take a look here at Fueleconomy.gov top vehicle ratingFueleconomy.gov’s Top Ten EPA-Rated Fuel Sippers (2015); these are based on fuel economy measured in miles per gallon equivalent (MPGe) for electric vehicles where 33.7 kilowatt hours is equal to one gallon of gasoline. The combined rating is weighted at 55% city and 45% highway driving.

                The 2015 BMW i3 is having a very good year – taking the top spot in the Fueleconomy.gov rating, Kelley Blue Book’s (KBB) Green Car of the Year for 2014, and winning the 2015 Green Car of the Year award at the LA Auto Show.

                Volkswagen has seen positive results as well, with the Golf product lineup taking Green Car Reports’ Best Car to Buy for 2015. The compact five-door Golf, now in its seventh generation, is both lighter and more spacious inside. The Volkswagen e-Golf, the German automaker’s first-ever all-electric car and zero-emission vehicle, also helped bump it up on the list. The Volkswagen Jetta Diesel and Passat Diesel were among the top 10 best-selling green vehicles in the US last year.

                The Nissan Leaf didn’t take any of the top spots this year, but finished well in the top 10 on several lists. It was the top-selling electric car in the Top 10 selling green cars for 2014US during 2014, whether or not the Tesla Model S started stealing the thunder. As you can see on this top 10 list of 2014’s best-selling hybrids, electric vehicles, and clean diesel cars, the Leaf isn’t selling anywhere near the volume of the Toyota Prius liftback (the non-plug-in hybrid version of the Prius), but it is far ahead of the second highest-selling plug-in model from last year, the Chevrolet Volt.

                  This Week’s Top 10: Keystone XL pipeline may see a clear decision this month, Hyundai reducing price of Tucson fuel cell vehicle in South Korea

                  by Jon LeSage, editor and publisher, Green Auto Market 

                  Here’s my take on the 10 most significant and interesting occurrences during the past week…….

                  1. Keystone pipelineThe Keystone XL pipeline could see a clear decision made this month in Washington. The US Senate last week passed a bill approving the Keystone pipeline, 62 to 36. House Republican leadership would like to vote next week on the Senate’s bill which would allow for a pipeline between Alberta and Houston that would transport refined tar sands oil back to refineries in Canada. It’s been nearly six years that the Canadian government and its oil industry have been pushing to get this through. President Obama may veto the bill while waiting for feedback from the State Department and other federal agencies on the pipeline; the State Department had asked agencies to turn in their feedback comments by the end of yesterday. The final decision from the State Department may be released this month, along with a decision by the White House on whether to support or reject the $8 billion pipeline project.
                  2. Hyundai will be reducing the price of its Tucson fuel cell vehicle in the home market of South Korea by 43% — bringing it down to the equivalent of $77,189. The challenges are there – besides the high price, there’s only one hydrogen station in South Korea with a second one scheduled to open within the first six months of 2015. The government has set a goal to increase that that number to 200 by 2025. In the US, the Tucson fuel cell model is currently available on a 36-month lease for $499 a month with $2,999 as the down payment. More details on pricing and delivery in global markets is expected to be revealed at the Geneva Motor Show next month.
                  3. Green Fleet Conference & Expo, which has been in operation since 2008, will change its name to Fleet Technology Expo on Aug. 24-26 of this year in Long Beach, Calif. It’s sponsored by Bobit Business Media’s Automotive Fleet, Green Fleet, and Heavy Duty Trucking The perspective will be wider on fleet operations than the Green Fleet Conference had been focused on. There will be a special track designated for converting to and maintaining an alternative-fuel fleet. Two additional tracks, Fleet Analytics and Heavy Duty, will expand the available education and expo floor offerings.
                  4. The Propane Education & Research Council (PERC) debuted its first-ever logo and brand identify for propane autogas with the phrase, PROPANE AUTOGAS Clean American Energy™. Leaders in the propane industry commissioned PERC to develop a single symbol and identity to solidify propane autogas as the official name of the popular alternative fuel. PERC President and CEO Roy Willis also thinks it will support building a brand that advances propane as an increasingly abundant, American-made energy source.
                  5. Ford Motor Co. has released its 2015 Alternative Fuel Buyers Guide featuring compressed natural gas, propane autogas, biodiesel, ethanol, hybrid, plug-in hybrid, and all-electric vehicles. Beyond the available vehicles and their configurations, you can see a list of qualified vehicle modifiers, fleet testimonials, available infrastructure, and incentives.
                  6. Vincentric worked with Business Fleet magazine on a cost analysis model for fleets deploying electric vehicles. The Smart fortwo Electric had the lowest cost per month at $455 at the three year, 12,250 mile (delivery service – local) and $535 for three year, 16,680 mile (sales driver) intervals. The Chevrolet Spark EV had the lowest cost at $651 per month in the three year, 22,175 mile (delivery service – longer distance) segment. The cost models look at total depreciation, total fuel cost (electric and gasoline), total cost to own, cents per mile, and cost per month.
                  7. Two car enthusiasts separately caught on camera what appears to be a camouflaged Tesla Model X driving down a test track at the Alameda Airport, near the Oakland Airport, in California. What they thought was the Tesla Model 3 that will be released in 2017 was likely the Model X crossover model that will be coming out later this year. See the video here. One thing is certain – the all-wheel drive dual-motor Model S is now in production, according to Tesla Motors. “Unlike conventional all-wheel drive vehicles that sacrifice fuel efficiency for increased traction, the All-Wheel Drive, Dual Motor Model S provides superior control while actually improving both range and acceleration, even in tough winter conditions,” the company said.
                  8. “Electric Vehicles and the Grid: Business Opportunities for Vehicle-to-Grid Integration Technologies” is a webinar taking place on Tuesday, Feb. 10 at 2:00 EST. Navigant Research analyst Scott Shepard, Scott Fisher, director for alternative energy at NRG Energy, and Greenlots CEO Brett Hauser, will discuss the market forces and challenges driving the vehicle-grid integration (VGI) sector. Topics for discussion will include the range of V2G business opportunities, stakeholder incentives for technology development and adoption, and regulatory requirements to enable VGI.
                  9. If you’re bored and looking for something interesting to watch, check out the “insane” button on the Tesla Model S P85D. A Tesla driver shows the passenger what happens when you push the button and both the rear and front engines are engaged at the same time. The Model S shoots off 0 to 60 in three seconds, and you get to see passengers express every type of emotion you can imagine. The video is titled, “Tesla P85D Insane Mode Launch Reactions Compilation – Explicit Version.”
                  10. A police department in Illinois is saving about $0.61 per gallon equivalent with propane autogas instead of gasoline. Most of these 10 patrol cars being tested on propane drive about 250,000 a year, meaning a significant savings; and the department will be applying for a state rebate program, says Police Chief David Brey of Lake in the Hills, a village in Illinois. The department is working with ICOM North America to convert 10 Chevy Tahoes that range from the 2012 to 2014 model years with ICOM’s bi-fuel system that runs on propane autogas and gasoline.

                    ALG’s Eric Lyman on what’s next in green car sales and residual values

                    Lyman_Eric_ALGWith gasoline prices expected to stay low for the near-term future, new vehicle sales figures for plug-in electric vehicles (EVs) and hybrids are expected to stay stagnant for now along with softening residual values. What might it take for these numbers to see an increase? Green Auto Market spoke with an expert on the subject – Eric Lyman, VP, industry insights at ALG – to gain insight on key market indicators to follow.

                    The phone conversation with Lyman came out of a meeting with John Krafcik, president of TrueCar at NADA 2015 in San Francisco. There’s been a strong correlation between full-size pickups doing much better in sales and the Toyota Prius seeing a decline in the hybrid’s sales numbers with gas prices dropping since last summer. When asked what it might take to reach interested consumers beyond the issue of gas prices, Krafcik thought it would make sense to check in with Lyman for more perspective from ALG (a TrueCar company).

                    Beyond the early adopters and new-technology first-in-line buyers, ALG finds the interest is there for EVs and hybrids, but car shoppers today are not that willing to pay for it. For now, consumers are responding best to two themes, it’s an environmental statement and it’s a statement of affluence, Lyman said. ALG surveys have shown that for the overall consumer market, the “efficiency is great and less time is spent at gas stations,” Lyman said. “But they’re still not willing to pay for it.”

                    Car shoppers in affluent communities have been willing to switch from driving a Mercedes S Class to a $125,000 Tesla Model S out of fascination with the new technology. It also appeals to their statement of success and affluence, and making a positive difference in the environment, according to Lyman.

                    Beyond that niche market, incentives and gaining access to carpool lanes in states like California have helped gain consumer interest in EVs. The $7,500 federal tax credit is applied to lease payments by captive finance companies like Nissan Motor Acceptance Corp. on the all-electric Nissan Leaf. State rebates are built into the lease just like the federal tax credit, he said. For those purchasing their own Leafs or other EVs, the federal tax credit adds to the complexity of the car buying experience, Lyman said, as the consumer decides how to add the credit into their tax payment by April 15.

                    ALG conducted a three-year study on the perceived quality of alternative powertrains, with the third edition being released in late 2012. At the time, there were several new automaker brands out there vying for attention and credibility on the market. “There were several brands emerging at the time, such as Zenn, ZAP, Coda, Fisker, and BYD, but they had no history in the marketplace,” Lyman said. “Consumers were almost indifferent to the brands – interest in innovative, new technology was a bigger issue.”

                    Much has changed since that time – with some of those brands gone from the market or put on hold. Mainstream brands had a substantial advantage in perceived quality at that time, though alternative powertrain manufacturers were improving in the study. Tesla was the most highly rated alternative powertrain brand. For several major automakers, EVs were perceived as a “side project,” Lyman said.

                    For residual values, Tesla has been the only solid EV performer so far. “They’ve done an amazing job of building the brand with early adopters, achieving a cult status,” he said. Tesla Motors took a non-traditional path in funding. For the original Tesla lease program on the Model S, no federal tax credit could be applied, according to Lyman. Now the agreement with US Bank has made that incentive available for the Model S.

                    For consumers, the “breakeven point” is a bit long in this period of low gasoline prices, Lyman said. “It can take five-to-six years for hybrids to break even” with comparable non-hybrid models, he said. “Diesel can take 10 years.” Lyman has seen diesel up about 70 cents a gallon over gasoline in some markets, making it a tougher sell for US consumers.

                    Here are some other points Lyman made to keep in mind:

                    • Maintenance is a strong selling point for EVs compared to internal combustion engine vehicles. “It’s a real opportunity – they don’t have the same maintenance components such as oil changes and moving parts,” he said.
                    • Fleets are still very new to EV drivetrains. “EV technology doesn’t really apply to daily rental,” he said. “Commercial and government fleets amortize vehicles down to zero, which could take 10 years.”
                    • Consumers are “extremely well informed” and have done their research on the green car technology they’re shopping for. It creates a “situation” for dealers when consumers know more.
                    • Green cars still make up a small percentage of new vehicle sales – about 5% for hybrids, EVs, and diesel passenger cars. It’s going to take a while to gain confidence in new technologies by consumers, he said.
                    • It will take a few years for EVs to see more strength in residual values. A good example of how this happens comes from the first years of the Toyota Prius, Lyman said. “The first generation Prius appreciated about $4,000 over the first six months after introduction of the second-gen Prius.”