Greetings.
My name is Joshua Binus and I am the Industry Foresight Lead within the Corporate Strategy
organization of the Bonneville Power Administration.
The following presentation is part one of a seven-part series focused
on exploring the long-term electric power industry landscape.
If you haven't already, please take a few minutes to view the
introduction to the series for some important context.
Hopefully you will find the time spent viewing the video to be very valuable.
Please feel free to send me an email with any feedback.
Enjoy.
City and state-level policies will continue driving markets to embrace clean energy technologies.
We've been seeing activity for many years in regard to clean energy technology that
has been happening internationally, nationally, regionally, even state-level, county-level,
city-level, just across the board.
Of course it is different in every state.
In the Northwest, we see a lot of activity happening especially in Oregon and Washington
- and in the West you especially have to include California in that - and other states as well.
And under the Obama administration, there was not a lot of federal leadership
in regard to federal energy policy.
What we saw was money getting sunk into clean tech R&D, we saw Congress passing and extending
subsidies for wind and solar, we saw about three dozen energy efficiency appliance standards
passed, and then we also saw efforts associated with the Clean Power Plan, but that was not
really the creation of any stretch goals, but really the locking down of market activity
that was already taking place.
And so what we have been seeing is that the states have filled that void of federal leadership already
and are continuing to do so.
They are stepping up.
They've looked at the number one emissions sector, which was the generation of electricity
and took some steps to start to address that while at the same time creating some business
or economic development opportunities in their states
through the development of renewable portfolio standards.
This is just a cutout of WECC states and you can see
what their existing renewable portfolio standards are.
You can also see that California and Oregon have recently increased their portfolio standards.
Washington tried in their last cycle but didn't quite get there.
Nevada actually passed a bill to increase their portfolio standard, but their governor
vetoed it because there's been an advancement of a whole bunch of energy policy and he wants
to see how it is all shakes out (and I'll come back to that in a later chapter).
Arizona is talking about increasing theirs, and is starting some discussion over that.
We're seeing some activity here, and I think we can expect to see those renewable portfolio
standards continue to advance, and it would not be that surprising to see them actually
modified to be a little more mature in the direction that they are giving the electric
power industry by potentially addressing capacity needs as well,
potentially also requiring storage as part of the requirement.
I think that there is still quite a lot of innovation that can happen within this policy
space, and we'll see that unfold over the next couple decades.
When you do look at some of the climate action plans that have been developed at the state
level in the Northwest, it becomes really clear when you look at the emissions sectors
within Washington, for example, that the biggest sector causing emissions that they want to
address are coming out of the transportation industry.
They have to go after that if they want to ratchet down their emissions.
Similarly, Oregon also has a similar part of their emissions pie
coming from the transportation sector.
And so no surprise in these climate action plans - whether they are state, city, or county
level - there is an important component of those that are addressing emissions associated
with transportation, the development of electric vehicle infrastructure.
The consumer adoption of electric vehicles is, of course, a big part of that,
but it is not the only part.
There are also efforts associated with creating walkable cities, enhancing mass transit, improving
fuel efficiency for liquid/fossil fuels, bike corridors - there's a whole slew of solutions,
a portfolio approach to addressing this.
From a utility perspective, we need to be paying close attention to the electric vehicle
space, so I just want to spend a few minutes on that.
When we look at what is going on in the electric vehicle space, there is a lot happening, and
this has been a really busy year - last couple years, actually, in this space.
A lot of media attention is really focused on the light car and truck market, and for
good reason; there is a lot of activity there, especially from companies like Tesla, who
have been pushing the envelope of innovation in regard to that vehicle space.
But, it's not the only one, so I want to spend a few minutes talking about some of the others.
In Europe, we see hybrid electric ferries showing up in the market place.
It would not be that surprising to see the ferries [owner] in the Puget Sound area start
to procure some of these hybrid or electric ferries as their fleet
turns over in the coming decades.
I don't know when their fleet starts turning over, but by the time it does, I can see them
bringing in some of these products.
In the metro bus area you have companies like Proterra and BYD and some others that are
creating some really efficient electric busses that can go over 300 miles on a single charge.
This is product that is well past its pilot and demonstration phase.
They can't build these bus factories fast enough.
The gas efficiency of a liquid fuels bus is running about three miles per gallon.
The comparison of some of these electric busses is somewhere up around
seventeen or eighteen miles per gallon equivalency.
There are also far fewer moving parts, so the O&M costs are a lot less, and they have
regenerative breaking systems for these types of vehicles that are in
a lot of stop-and-go traffic.
Every time they hit their breaks they are recharging their batteries.
They are also being sold with software for these metro areas so they can see which of
their routes should be electrified first, second, third, fourth, fifth - to help them
from the business side, integrate this new technology.
I would not be surprised if by 2025 every new metro bus being sold in this country is
an electric vehicle instead of an internal combustion engine, but we'll see.
They are selling really well right now.
Similar to those, we have the electric school busses that are starting to move into the
market, and here is a situation that I think utilities need to pay close attention to.
Here is a vehicle that has a pretty big battery system because it is such a large vehicle,
but it barely gets used during then day
and barely gets used during the course of an entire year.
They also tend to be co-parked, so they can share a charging infrastructure.
And, they offer really good opportunities for grid-tied applications for utilities because
they can proliferate an entire region, and the owners of these busses - different school
districts - are going to be looking for revenue streams
to help pay off investment into these busses.
There may be a lot of opportunities for collaboration between utilities and school districts to
get these electric busses out there and get them grid-tied to provide support to retail
utilities in their area and even wholesale grid operators like BPA.
In another vehicle space we've got these municipal trucks, like garbage trucks.
One of the original founders of Tesla broke off years ago and started a company in California,
and their approach to electric vehicles is a bit different.
Rather than create these vehicles from the ground up, as completely new vehicle types,
they are looking to leverage as much of the existing manufacturing that is already there
for internal combustion engine municipal trucks
and then basically slap that on top of an electric drive train.
And that's actually been going really well in California, and now the company is expanding
into the mid-size commercial van space with that same basic approach.
And the mid-size commercial van is a space where a lot of companies are moving into as
well, so we're seeing those move into the market.
It has also been a really busy year (or couple years, actually) for electric flight, and
so there are companies like Siemens and Airbus that are moving aggressively into this space,
and what we're starting to hear from companies working on this track of R&D is that they
are shooting to have regional passenger flights available to the marketplace
within ten years from now.
There is a whole other sector of vertical take off and landing type of vehicles that
are also going through a pipeline right now, so we'll see if they start to emerge.
Essentially you can think of oversized drones - sometimes they are called air taxis -
that are running off of electric power trains, moving into the market place too.
It will be interesting to see how much of the market they are able to penetrate,
but that is happening as well.
When we look at this entire market, in general, there is a lot of opportunity for utilities.
Even if electric utilities can just take a bite out of the total pie of liquid fuels
use, it could go a long way toward balancing the books for these companies,
especially at times when loads have been fairly flat.
What we've been seeing since 2015 is that the transportation sector has overtaken the
electric generation sector as far as emissions are concerned.
This is not a policy area where you want to be number one, but now transportation is out
in front and they are getting a lot of attention for emissions reductions policies.
What has been interesting over the last year in particular is that
the forecasts for electric vehicle adoption continue to go upward.
Bloomberg New Energy Finance is one of the highest,
though they are not the highest I've seen.
They are expecting 50 percent of all new vehicle sales to be electric by 2040.
Exxon is at the other end of the spectrum, and they've been pretty reluctant to increase
their forecasts over the last couple years, but they have shown a little movement.
Even OPEC, which you see here in yellow, from 2015 to 2016 really increased their forecasts.
In 2017, they actually increased it again, just recently.
Everybody is seeing electric vehicle battery packs getting cheaper and more efficient.
These vehicles are getting a lot of attention by manufacturers.
We are likely to see some pretty good penetration from these vehicles.
They've got a pretty strong value proposition for consumers.
Think about the light car and truck area.
Most of the internal combustion engine vehicles have about 2,000 moving parts.
Compare that to roughly 20 in an electric vehicle,
and the operating costs to own one of those vehicles is much less over time.
Of course, if you get into a collision right now, the cost of repairing one of these electric
vehicles after a collision is much higher.
We are expecting some cost parity starting to hit these vehicles in the mid-2020s, when
Bloomberg is expecting new electric vehicles to cost, on average,
about the same as an internal combustion vehicle.
And that's the point where Bloomberg
and some others really start to see this market take off.
In the mid-2030s is when Bloomberg expects the sale of new electric vehicles
to surpass internal combustion engine vehicles, by 2038.
That's one end of the spectrum.
Of course, the other end of the spectrum is Exxon.
They are not seeing a terrible amount of penetration for electric vehicles all the way out to 2040.
Now this is before they increased their forecast, slightly,
but it is still a fairly modest increase in their forecast.
Both Bloomberg and Exxon are probably wrong, but we'll see which one ends up more accurate.
One of the things that Bloomberg is cautioning investors against
is this potential for a mid-twenties oil price crash as they deal with a glut,
which is something that folks have to watch out for.
Whenever people are looking at the emission reduction needs associated with transportation,
it is fairly well recognized that those targets will never get hit unless the large truck
market, the haulers, can get addressed.
California and Sweden are doing some efforts to test how viable it is to have some catenary
charging systems that they can include along stretches of highway for hybrid trucks
or full electric trucks.
Those pilots have yet to be reported out on their effectiveness,
but we're waiting on that.
Also in this space, we have autonomous vehicles that are already encroaching into this,
and there is already some crossover that is happening in regard to this, because basically what
we have seen in this space, first off, Google jumped out into this space several years ago
and announced that they were going to create autonomous vehicles, and it really lit a fire
under the rest of the car manufacturers out there.
I think the fear was that Google was ready to do to the electric vehicles, or to the
car space, what they did to the smart phone market.
A lot of these manufacturers did not want to have all the Google-patented technology
in their vehicles, and it started a bit of a race for all these car companies
to develop their own autonomous systems.
Tesla, of course, jumped way out in front of everybody, in a lot of ways, because they've
taken the approach of using mass-machine learning capabilities to enhance
and speed up their own capabilities in their fleets.
I think they have roughly 400,000 vehicles on the road, and the way that this is operating
is that every day these vehicles are watching how people drive, learning how people drive,
watching all these cars and pedestrians and everything out there in real life, and then
crunching some of that data in the supercomputer that is their car and then sending it back
to the Tesla mainframe where they aggregate all the learnings from all the supercomputers
out there on the road, pull together some key lessons learned,
and then push it back out to the fleet again.
So every day, the Tesla fleet is driving a little better than the day that it was prior.
There is some real advancements happening there.
The mass-machine learning approach is also bleeding over
into other spaces within the energy industry.
You can think of smart thermostats, like Google's Nest thermostat, as another example of how
a company is able to mine the data by aggregating thousands and thousands of these machines,
pulling in lessons learned and teaching them all how to do their management job more effectively.
So that's bleeding over.
We're seeing a lot of activity in this space.
How it is going to impact the total car ownership in the future is anyone's guess at this point.
There are a lot of folks trying to figure out how that is going to look,
but nothing has really been settled for sure.
Something to keep in mind.