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26/11/2013

Electric Vehicles Development and Impact on Utility in Belgium

In September 2013, the top selling car in Norway was not the Mazda CX-5, like in August 2013, nor was it the VW Golf similarly to July. It was the Tesla Model S, a 100% electric vehicle (EV) with overall performances in the range of any luxury sedan combustion vehicle, and autonomy of between 350km and 500km depending on the model. Such significant sales are an important milestone in the EV development and can be explained by high fiscal incentives in the country. Though the numbers are smaller, the Californian carmaker is also experiencing booming sales in the US and in Europe. In Belgium, the first shop opened in August and the first European assembly plant was inaugurated in the Netherland in September.

In the meantime, Tesla is building a network of "supercharging" stations over Europe and the US, which allow free recharge for their customers at a speed 6 times higher than regular charging stations.
In Belgium, this radical step in the development of EV will impact not only the transportation sector, but also the energy sector.

The recharging cost in Belgium

In order to assess the impact of free recharge of EV for Belgian customers, Sia Partners estimated the cost of home recharge with the technologies of existing electric vehicles.

Source : Sia Partners

With an average of 3,1 c€/km, an electric car recharge is 50% cheaper than a regular car. The key element is obviously the electricity price and significant differences can be from one supplier to another.

Source : Sia Partners

Based on the comparing tool of the Energy regulator for Brussels, the recharge for 500km goes from 16.3€ to 28.4€, leading to a potential difference of 336€ per year.

Superchargers : fast recharge technology and marketing decision

With the networks that Tesla is currently building over Europe and the US, its model is to provide free fuel to their car, using the fastest charging technology.
Source : Sia Partners

Six of these stations have been opened in Europe, in Norway, and 24 in the US. By the end of 2014, the carmaker's objective is to have 100% of the population of Germany, the Netherlands, Switzerland, Belgium, Austria, Denmark and Luxembourg living in the range of 380 km of a station.
Additionally to providing fast and free recharge, Tesla is "going green" card by installing solar panels over their stations, hence escaping the critics that EV are as clean as their electricity is.
The vision disclosed goes even further as the company claims that all of their stations will soon be covered with solar panels, providing enough power to charge the cars and even sell extra electricity to the grid.
To do so, Tesla is partnering with #1 American Solar Provider Solarcity. The company, where Tesla's CEO is also Chairman, will be involved in the development of their superstations, and on a project to use Tesla batteries to store solar generated electricity.
The vision disclosed goes even further as the company claims that all of their stations will soon be covered with solar panels, providing enough power to charge the cars and even sell extra electricity to the grid.
However, at the moment, only a few of the Supercharging stations are installed with solar canopies. Furthermore, Sia Partners calculations show that a station can only generate enough electricity to fuel 3 cars per day, in sunny locations.
In order to recharge the cars on solar energy, and maybe sell extra power to the grid under the existing technologies, the carmaker is either aiming at low occupation rate of its stations, or will have to significantly increase their surface.
For now, the partnering solely appears as a first symbolic step. However, in the future, numerous opportunities can be foreseen.

A significant market in the future

Looking at a 2030 horizon in Belgium, a Sia Partners study calculated the additional electricity needs associated to the EV market. With a penetration rate of 12%, the additional electricity needs are estimated around 3500 GWh/yr, the equivalent half a nuclear power plant.
This amounts to a potential market of approximately 1 billion euro per year in Belgium, in case of home recharging.

Source : Sia Partners

To generate that quantity of electricity with solar panels would require the massive development supersized stations, combined with battery packs to store the solar produced power. Such storing system could be used as reserve for the transportation grid, to moderate network imbalance, or its power could be sold on the intraday spot market.
Should EV carmakers decide to provide power to their customers, the competition for these new customers will not only be between energy providers.

A technological breakthrough to lead to market evolutions

With Tesla vehicles, commercialized Electric vehicles are now not only available for short domestic travels. They can compete with "regular" cars in terms of performance and range. Therefore, its development on a large scale, once considered impossible, may now become a reality.
This next step in the vehicle evolution will increase the relations between transportation and energy sectors. On a 2030 horizon, the potential market for power for EV in Belgium is significant, and, as today's examples are showing, the carmakers' business model will likely evolve towards power production and storage.

Camille Jaudeau - Sia Partners

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