GreenBiz

Enter the electrification of everything

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The following is adapted from State of Green Business 2018, published by GreenBiz in partnership with Trucost.

The expert consensus is broad: The most direct path toward a clean energy future is to replace technologies that still run on combustion — including gasoline vehicles and natural gas heating and cooling — with alternatives that run on electricity, such as electric vehicles and heat pumps, all tapping into renewable or low-carbon power sources. 

Call it the First Law of Decarbonization: Everything that can be electrified, will be.

The challenges are vast but not insurmountable. How do we upgrade the power grid and make electric vehicle charging systems ubiquitous? How do we ensure affordable energy across the full range of social demographics and geographies? How do we develop local and regional strategies that transcend existing policy frameworks and business models? And how do we do all this in short order?

The good news is that we're seeing great technological progress. By 2040, $1 will buy 2.3 times as much solar energy as it does today, according to Bloomberg New Energy Finance (BNEF), and offshore wind prices will decrease by 71 percent. Since 2010, the price of lithium-ion batteries dropped by 73 percent. Within the next eight years, electric vehicles (EVs) will be as cheap as gasoline vehicles, with sales projected to surpass those of internal combustion engines by 2038. At the same time, says BNEF, the global energy storage market will double six times by 2030. Add in the internet of things, cloud computing and artificial intelligence, and we're on a path to widespread electrification and decarbonization that could happen faster than most people realize.

On wheels

What will it take? Let's start with transportation.

Currently, just 2 million EVs are on the road globally (out of just over a billion cars globally), and barriers to growth still remain, such as long charging times and low gas prices providing less incentive for both consumers and automakers to switch.

Still, China has moved to ban cars that run on fossil fuels. The world's largest car market is also the leader in EV production and demand. That's motivating automakers such as Volkswagen and General Motors to invest heavily in EVs in China and elsewhere.

The momentum is building across corporate fleets as well with the launch last year of EV100 — a global initiative by major multinational corporations to leverage their buying power to "make electric transport the new normal by 2030." EV100 members, including IKEA, Unilever and HP, are committed to integrating EVs into their owned or leased fleets and installing charging stations for customers and employees. By setting out their future EV purchasing requirements on an ambitious timescale, these companies can drive manufacturers to make electric cars more rapidly affordable.

This shift also has paved the way to pair EVs with autonomous capabilities. With few moving parts to operate, it's relatively easy to make EVs drive themselves, and the cost for the underlying LiDAR technology has plunged — from $150,000 per car in 2012 to $250 in 2016 — enhancing the value proposition for automated fleet investments as well.

Meanwhile, there is a renewed focus on electrifying commercially viable transportation — buses, trucks, trains, even airplanes.

Transit agencies around the world are transitioning to electric buses. In 2017, mayors of 12 major cities — from London to Los Angeles, Mexico City to Milan — signed the C40 Fossil-Fuel-Free Streets Declaration, pledging to add only fully electric buses to their public transportation by 2025. Electric bus manufacturers, including BYD and Proterra, and even Local Motors' electric and autonomous people mover Olli, are ramping up to fulfill this demand. 

Medium- and heavy-duty electric trucks are another growing market. The delivery and logistics sector that provides "last-mile" transportation of goods and services in and around cities is becoming electrified. With U.S. urban delivery routes averaging 70 miles a day, medium-duty trucks are seen as a potentially quicker, more scalable clean transportation solution than getting more consumer EVs on the road. Some of these eventually will become autonomous.

Heavy-duty truck electrification is yet another growing area. Almost every truck manufacturer — including Peterbilt, Kenworth and Volvo — is developing battery, fuel-cell electric or hybrid vehicles. Tesla created significant buzz late last year around its Semi electric tractor-trailer, and big buyers such as Walmart and J.B. Hunt Transport Services climbed on board to place preorders, even though production won't start until at least 2019.

On track

What about planes and trains? A campaign called Solutionary Rail is gathering unlikely allies from urban and rural communities to electrify America's railroads and open corridors. And a more nascent effort aims to electrify air travel for short distances, perhaps within a decade. Last fall, U.K.-based easyJet said it had linked up with U.S. firm Wright Electric to build battery-powered aircraft for flights of under two hours. That would cover the journeys of about a fifth of passengers flown by the airline. Meanwhile, in December, Airbus, Rolls Royce and Siemens said they were collaborating on hybrid-electric planes, with a lift-off expected by 2020.

Also looking up: the decarbonization of residential and commercial buildings. With natural-gas furnaces and water heaters no longer thought to provide a cheaper and cleaner alternative to electrically heated sources, the concept of all-electric buildings is surging, promising new value streams to building occupants, owners and communities.

Imagine a fleet of buildings — say, at a corporate campus or university — dynamically connected to the grid. The electric heating system is up to four times more efficient than natural gas heating. Dirty diesel generators are replaced with fast-responding energy storage and the system’s advanced controls optimize when to use onsite solar and when to tap into the grid. This technology exists today though its viability depends on building usage, local utility rates, weather and other factors.

Retrofitting existing buildings will take more than technology alone; there are huge legacy systems and equipment to replace. Fuel-based heating and cooling systems vary greatly, including legacy district steam systems across Europe and older North American cities that capture and recycle thermal energy generated by power plants or waste treatment facilities. In homes, electric heat pumps have limitations in more extreme weather across the Midwest and East Coast.

The electric transition will require new policies at the local and state and provincial levels. Two forward-thinking California policymakers wrote that electrifying central heating and water heating systems across the state could cut the price of all-electric homes by $4,500.

So, what will it take to get from here to ubiquitous electrification? As Hank Paulson, a co-author of the latest "Risky Business" report, states, "We can reduce climate risks with existing clean technologies. We don't need an energy miracle." The technologies that enable electrification will continue to improve in price and performance, as we've seen with batteries and EVs, while business and policy leaders will continue to see the ongoing benefits of decarbonization.

But getting there requires an integrated way of planning, developing and connecting existing building and transportation systems to a clean power grid.