Utilities Push Toward Fleet Electrification

Despite the recent trend toward lower fuel prices, vehicle electrification is a hot topic right now among utility fleets, as highlighted at the recent Electric Utility Fleet Managers Conference (EUFMC) held in Williamsburg, Va. The Edison Electric Institute (EEI), an association of investor-owned utilities, is leading the electrification effort and, according to some fleet managers we spoke to at the conference, many public utilities are following suit.

The EUFMC general session opened with a keynote address delivered by Jim Piro, president and CEO of Portland General Electric, who said that from the utility CEO perspective, expanding the electric vehicle (EV) market is a strategic initiative to increase demand for a specific utility product – electricity.

Piro went on to say that the challenge for electric utilities is slow growth in retail loads. If this trend doesn’t change, utilities may be forced to ask regulators for a rate increase, and such requests usually don’t go over well with the public. So, how can utilities increase retail demand and keep rates affordable?

The solution, Piro said, is to promote transportation electrification.

EEI Electrification Initiative
EEI announced its transportation electrification initiative in November 2014, during a White House event with U.S. Energy Secretary Dr. Ernest Moniz and former Counselor to the President John Podesta. According to Piro, who also sits on the EEI transportation electrification committee, the initiative seeks to achieve these four objectives:

1. Increase commitment to fleet electrification.
To date, more than 70 investor-owned electric utilities have committed to devote at least 5 percent of their total annual fleet acquisition budgets to the purchase of plug-in EVs and technologies.

2. Support employee adoption programs.
Provide incentives for employees to own EVs – such as preferred parking spots and employee purchase programs – and they will become enthusiastic ambassadors for vehicle electrification to their friends, family and the public.

3. Expand customer outreach.
Be a resource to customers. For example, help them run load/cost analysis to determine whether EVs make financial sense for their applications.

4. Build an affordable plug-in hybrid electric pickup truck.
Pickup trucks represent the largest vehicle segment among utility fleets, but the cost of plug-in hybrid electric pickups trucks is still too high for widespread fleet adoption. To make a significant dent in utility fleet electrification, truck OEMs and EV technology providers must develop breakthroughs that make those vehicles more affordable.

Piro is a strong proponent of fleet electrification because he believes EVs can simply make good business sense for the utility industry, not to mention the EV market is quickly evolving. He said he personally owns a 2011 Chevrolet Volt that he estimates has saved him $1,200 in annual fuel and maintenance costs over the past four years.

The Data
During his EUFMC presentation titled “Fleet Electrification: Utilities Leading the Charge,” Kellen Schefter, manager of sustainable technology for EEI, provided some interesting data about the state of plug-in EVs in today’s utility fleets.

Following is the overall vehicle distribution by class for investor-owned fleets:
• Class 1-3 trucks: 48 percent
• Class 7-8 trucks: 18 percent
• General equipment: 16 percent
• Class 4-6 trucks: 14 percent
• Passenger cars: 5 percent

And here is the plug-in vehicle penetration to date for those investor-owned fleets:
• General equipment: 10 percent
• Passenger cars: 9.2 percent
• Class 4-6 trucks (ePTO): 4.5 percent
• Class 7-8 trucks: 2.8 percent
• Class 1-3 trucks: 0.3 percent

The total plug-in vehicle penetration rate across all vehicle segments in those utility fleets is 3.3 percent.

Analysis
Notice from these numbers that there is a mismatch of fleet allocation and plug-in penetration. For example, at 48 percent, Class 1-3 trucks – light-duty pickups and vans – represent the largest vehicle segment of the investor-owned utility fleet, but that segment also represents the smallest number of plug-in vehicles at 0.3 percent. Passenger cars are the smallest vehicle segment at 5 percent but have the second-highest plug-in penetration rate at 9.2 percent.

The bottom line is that while utility fleets are currently buying more Chevrolet Volts, Nissan Leafs and similar vehicles, those purchases don’t make as much of an impact on the overall plug-in penetration rate because cars make up such a small percentage of a utility’s fleet.

Medium- and Heavy-Duty Opportunities
Medium- and heavy-duty truck segments – Class 4-6 and 7-8, respectively – are areas of opportunity that have experienced recent growth. Combined, they make up 32 percent of investor-owned fleets, with a combined plug-in penetration rate of 7.3 percent.

The growth in electrified medium- and heavy-duty trucks is driven by the increased fleet adoption of hybrid-electric ePTO technologies. The key players serving this space are Odyne (www.odyne.com), Efficient Drivetrains Inc. (www.efficientdrivetrains.com) and Altec’s Jobsite Energy Management System, or JEMS (www.altec.com/products/green-fleet). Current generation systems enable operators to run booms on battery power for about six hours. This saves significant money in fuel and maintenance costs by eliminating idle.

However, battery cost, weight – which impacts payload capacity – and size – which limits bin space – are still concerns that constrain wider fleet adoption. According to EEI’s transportation electrification white paper (available at www.eei.org/issuesandpolicy/electrictransportation/fleetvehicles/documents/eei_utilityfleetsleadingthecharge.pdf), the incremental cost for Altec’s JEMS is $24,300 on a Class 5 first-responder vehicle and $65,000 on a Class 7 large crew truck. But the trend toward slimmer, higher-output battery technology will drive lower cost and higher fleet adoption.

Even with the current high incremental cost, the reduction of idle time offers a compelling business case for plug-in technologies in aerial truck applications.

The Holy Grail for Plug-In Growth
The light-duty pickup is the largest vehicle segment for utility fleets, so it offers the biggest opportunity for plug-in growth. However, limited availability of affordable plug-in technology has made this segment a hard nut to crack.

The key player in this market is VIA Motors (www.viamotors.com), which offers a Class 2 pickup plug-in hybrid system equipped with a GM 4.3-liter V-6 engine and four-wheel drive. It gets about 40 miles in all-electric mode before activating the gasoline engine. According to Mark Kosowski, technical executive for Electric Power Research Institute, in his EUFMC presentation titled “Plug-In Hybrid Medium-Duty Truck Demonstration and Evaluation Program,” the VIA pickup achieves a fuel economy equivalent – in terms of relative fuel cost versus charge cost – of 127 mpg.

But the VIA truck comes with a very steep price tag. The EEI white paper pegged the purchase price of a VIA pickup in 2014 at about $75,000. As a frame of reference, a comparable gas-only truck costs under $30,000.

The key question here is, what are the light-duty truck OEMs doing in this space? GM has built a hybrid truck but not with plug-in technology. Are the major automakers pursuing factory-equipped plug-in hybrid truck offerings?

There’s been talk of Tesla building a pickup truck, but the company’s limited distribution and service network may not adequately be able to serve the fleet market. If there is an OEM who can get the e-truck technology to market the quickest, however, you have to imagine it would be Tesla.

This will be an interesting space to watch in the near future.