Estimating Cost Penalties for Limited Refueling Availability (And other related issues)

Dr. Marc W. Melaina

MIT/Ford/Shell Research Workshop

Dearborn, MIJune 9, 2009

Estimating Cost Penalties for Limited Refueling Availability (And other related issues)

National Renewable Energy Laboratory Innovation for Our Energy Future

Overview

• Hydrogen FCVs are a long-term low-cost carbon abatement opportunity– McKinsey Study results: FCVs in 2050

• Perceived Cost Penalties for Refueling Availability are High– Evolved out of HyDIVE model

– Penalty estimates for: urban, regional and national scales

– Stated preference survey results: higher costs than “rational” costs

• A diverse mix of transitory innovations may help to reconcile early transition challenges– This was the case with early gasoline infrastructure

– Economies of scale and range of station sizes reinforces trend

National Renewable Energy Laboratory Innovation for Our Energy Future2

Hydrogen FCVs are a long-term low-cost carbon abatement opportunity

McKinsey-Style Abatement Curve, with 2050 Potential for Hydrogen FCVs

• Hydrogen FCVs are shown as the most expensive abatement opportunity within the 2030 timeframe

• In the 2007 McKinsey report, gasoline hybrid electric LDVs were the most expensive opportunity

1.0 2.0 3.0 4.0 5.0 6.0 7.0 8.0

Additional 3.2 Gt/yr needed in 2050EERE/NREL High-Range 2030 Case Total: 4.8 Gt/yr

Cost$2005/ton CO2e

PotentialGt/year

2030 High-Range Abatement Curve (<$50/tCO2e) FCVs in 2050, Scenario 1 FCVs in 2050, Scenario 2

-200

-150

-100

-50

0

50

100

150

FCV Opportunity in 2030 (High-range)

High-Range, <$50/ton CO2e in 2030: 4.3 Gt/yr

FCVs in 2050,Scenario 2(1.0 Gt/yr)

Land-basedwind in 2030

Biofuels cellulosicin 2030


Draft

McKinsey-Style Abatement Curve, with 2050 Potential for Hydrogen FCVs

• The FCV opportunity in 2050 is a low-cost abatement opportunity that represents a significant share of total carbon emissions

1.0 2.0 3.0 4.0 5.0 6.0 7.0 8.0

Additional 3.2 Gt/yr needed in 2050EERE/NREL High-Range 2030 Case Total: 4.8 Gt/yr

Cost$2005/ton CO2e

PotentialGt/year

2030 High-Range Abatement Curve (<$50/tCO2e) FCVs in 2050, Scenario 1 FCVs in 2050, Scenario 2

-200

-150

-100

-50

0

50

100

150

FCV Opportunity in 2030 (High-range)

High-Range, <$50/ton CO2e in 2030: 4.3 Gt/yr


Land-basedwind in 2030

Biofuels cellulosicin 2030


Draft

Perceived Cost Penalties for Refueling Availability are High

Approach: Discrete Choice Methodology

• Discrete choice methods are commonly applied in decision analysis of preferences for products with similar attributes

Hypothetical Example:

• Respondents weigh their relative preferences for each attribute• The choice algorithm alters attributes level between choices to elicit

statistically relevant preference data from respondents • Hypothetical Choice: Conventional Vehicle vs. Alt Fuel Vehicle• Attributes included in the 2007 survey:

– Vehicle Purchase Price– Fuel Costs ($/mo)– Vehicle range (miles)

Attribute Product A Product BA - Color A1 B1B - Speed A2 B2C - Cost A3 B3Choice:

– Refueling availability • Metropolitan, Regional

and National/Interstate

7National Renewable Energy Laboratory Innovation for Our Energy Future

Approach: Survey Format

Metropolitan Coverage Regional Coverage

National Coverage

Fuel Costs, Other Attributes, and Vehicle Purchase Price

Choice Screen


Approach: Geographic Levels (1-4) in 2008 Survey are More Distinct from One Another

Metropolitan Levels – Seattle Example

Regional Levels – Seattle Example

L1 L2 L3 L4

L1 L4L3L2


Stated Preference Survey Results Suggest a Significant Premium on Early Stations

Map 1

Urban cost penalties

Vary from $1000 to $4000 for ~2.5% existing stations

Regional penalties

$1500 to $3000 for 10-80 stations

Interstate penalties

~$5000 for 30% of trips not covered

$0

$1,000

$2,000

$3,000

$4,000

$5,000

0% 5% 10% 15% 20% 25% 30% 35% 40% 45% 50%

Percent of Existing Stations

Co

st P

en

alty

Los Angeles

Seattle

Atlanta

Minn-St. Paul

Los Angeles

Seattle

Atlanta

Minn-St. Paul

$0

$500

$1,000

$1,500

$2,000

$2,500

$3,000

0 10 20 30 40 50 60 70 80 90 100

Number of Regional Stations

Re

gio

na

l Co

st P

en

alty

Los Angeles Seattle

Atlanta Minn-St. Paul

Minn - St. Paul Los Angeles

Atlanta Seattle

$0

$1,000

$2,000

$3,000

$4,000

$5,000

$6,000

$7,000

$8,000

$9,000

$10,000

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

Percent of Long-Distance Trips Not Covered

Lo

ng

Dis

tan

ce C

ove

rag

e (

LD

C)

Pe

na

lty

Los Angeles Seattle

Atlanta Minn-St. Paul

Los Angeles Seattle

Atlanta Minn.-St. Paul

Stated Preference Penalties are Much Higher than Analytically Derived “Rational” Penalties

• Several discrete choice surveys have included questions on refueling availability (e.g. Tompkins 1999, Greene 2001)

Comparison of Metro Area Costs

$0

$1,000

$2,000

$3,000

$4,000

$5,000

$6,000

$7,000

$8,000

0% 5% 10% 15% 20% 25% 30% 35% 40%

Percent of Existing Urban Stations

PV

of L

imite

d R

efue

ling

Ava

ilabi

lity

Tompkins, 1999 (high)Tompkins, 1999 (low)M&B NHA2008HyTransGreene 2001NREL 2007

Analytic

Surveys


• Analytic studies of “rational” consumer behavior have tended to result in much lower cost penalties (HyTrans, M&B NHA08)

A diverse mix of transitory innovations may help to reconcile early

transition challenges

Stations for Early Hydrogen Vehicles

• A sufficient number of stations is needed to satisfy the refueling needs of early adopters

• ~160,000 gasoline stations the U.S. (National Petroleum News)• Studies suggest that approximately 5%-15% of these would need to

provide an alternative fuel to satisfy early adopters• At $2-$3 millions each, a sufficient number of early hydrogen

stations would require about $20-$70 billion in upfront capital

Research Questions

Would these stations look like today’s retail gasoline stations?

Do you really need this many?

How would they be distributed spatially?

How big would they be?

When would they become profitable?

First “Gas Station” Seattle, WA 1906National Renewable Energy Laboratory Innovation for Our Energy Future13

Early Vehicles Types were Diverse


Ford’s first gasoline vehicle 1896

(www.seriouswheels.com)

Early Electric Car 1900

(www.theautochannel.com)

First Steam Car

Fardier de Cugnot, 1770(www.trekearth.com)

Early Station Types were also Diverse


0

100,000

200,000

300,000

400,000

500,000

600,000

1900 1910 1920 1930 1940 1950 1960 1970 1980 1990 2000

Ret

ail G

asol

ine

Stat

ions

or

Out

lets

0

50,000

100,000

150,000

200,000

250,000

300,000

Reg

iste

red

Veh

icle

s (1

000s

)G

asol

ine

Con

sum

ptio

n (m

illon

s ga

llons

)

Census Stations Total Outlets

Census Interpolations Other Stations

Registered Vehicles Gasoline Consumed

Vieyra 1979, 4

Barrels

Bowser 1905

Home Pumps

Standard Oil Bulletin, Sept 1918, 5

Garage Refueling

Williamson et al. 1963, 220Williamson et al. 1963, 220

Mobile Refuelers

Curb PumpsSmall-scale; geographically dispersed; temporary*

*


Station Rollout Simulations Suggest a Mix of Station Sizes will Prevail

Clustered

>2 miles Betweenstations 0%

50%

100%

150%

200%

250%

300%

350%

400%

0% 20% 40% 60% 80% 100%

Percentage of Total City Stations

Perc

ent o

f Ave

rage S

tatio

n S

ize…

.

Atlanta

Phoenix

NashvilleSalt Lake City

Birmingham

Hartford

Gulfport-BiloxiHattiesburg

Owensboro

Per

cent

of A

vera

ge S

ize

Percent of Total Stations

Data on the location andsize of every station in

a given urban area

Normalize Y axis by average station size, and normalize

X axis by total number stations

Number of Stations

0

50

100

150

200

250

300

350

400

0 200 400 600 800 1,000 1,200 1,400 1,600 1,800 2,000

Number of Stations

Ave

rage

Sta

tion

Oup

ut (10

00 g

al/m

o)…

.

Atlanta

Phoenix

Nashville

Salt Lake City

Birmingham

Hartford

Gulfport-Biloxi

Hattiesburg

Owensboro

Sta

tion

Siz

e (1

000s

gal

/mo)

~85 cities

16


Relative Size Distributions do Not Vary with City Size or the Degree of Clustering

0%

50%

100%

150%

200%

250%

300%

350%

400%

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

Percent of Total Stations

Per

cent

of A

vera

ge S

tatio

n S

ize

Los Angeles, CA 2000

Atlanta, GA

S.F. Bay Area, CA 2002

All Stations

> 3.0 million

0%

50%

100%

150%

200%

250%

300%

350%

400%

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

Percent of All Stations

Pe

rce

nt o

f A

vera

ge

Sta

tion

Siz

e

Phoenix, AZ

San Diego, CA 2000

Minneapolis St. Paul, MN 1999

Denver, CO 2000

Kansas City, MO 2000

San Jose, CA 2002

All Stations

1.0 - 2.0 million

0%

50%

100%

150%

200%

250%

300%

350%

400%

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

Percent of Stations

Pe

rce

nt

of

Ave

rag

e S

tatio

n S

ize

Austin, TX

Nashville, TN 2003

Salt Lake City, UT

Concord-Livermore, CA

Hartford, CT

Birmingham, AL 1999

All Stations

0.5 - 1.0 million

0%

50%

100%

150%

200%

250%

300%

350%

400%

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

Percent of Stations

Pe

rce

nt

of

Ave

rag

e S

tatio

n S

ize

Colorado Springs, CO 2000

Vallejo-Fairfield, CA 2002

Wichita, KS 1999

Bakersfield, CA, 2001

Santa Rosa, CA 2002

Chattanooga, TN 1999

Gulfport-Biloxi, MS 2003

All Stations

0.25 - 0.5 million

0%

50%

100%

150%

200%

250%

300%

350%

400%

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

Percent of Stations

Pe

rcen

t o

f A

ve

rage

Sta

tio

n S

ize

Marin, CA 2002

Gainesville, FL 2000

Santa Cruz, CA 2002

Salinas, CA

Olympia, WA 1999

Fort Collins, CO 2000

Bloomington, IL 2000

All Stations

0.1 - 0.25 million

Population< 0.25 m0.25 – 0.5 m0.5 – 1.0 m

1.0 – 3.0 m

> 3.0 m

17

Summary

• Hydrogen FCVs are a long-term low-cost carbon abatement opportunity– Additional long-term cost/benefit comparisons are needed

• Perceived Cost Penalties for Refueling Availability are High– Onboard information systems may alleviate– Vehicle-to-infrastructure interactions and feedback

• A diverse mix of transitory innovations may help to reconcile early transition challenges– Technology-forcing policies may stifle unforeseen innovations– Applications suited to transition period may prove transitory,

complicating identification of appropriate policy support mechanisms– Can some of these be transformed into enduring systems?

Backup Slides

Approach: Vehicle Choice Survey

Hypothetical New Vehicle Purchase:– Respondents were asked to choose between two vehicles:

• Conventional Vehicle• Alternative Fuel Vehicle

– Both vehicles were described as being identical to the respondent’s most recently purchased vehicle

The Alternative Fuel Vehicle (AFV)Described as identical to the Conventional Vehicle (CV) in all respects, except two:1) Social and Environmental Benefits

• Virtually no oil use, no smog-forming pollutants, and reduction in greenhouse gas emissions by 50%

2) Limited refueling availability• Metropolitan, Regional, and National geographic scales


Approach: Ensuring Clarity of Interpretation and Consistent Responses

A series of preliminary questions are used to familiarize the respondents with:– Concepts used in the survey (e.g., AFV; regional stations)– Maps used for each geographic scale

• e.g., asked them if they could locate their homes on map– Types of choices they would be making in the discrete choice

portion of the survey

After a beta test, follow-up questions and one-on-one interviews inquired about the difficulty of the survey– Only a small fraction of respondents found the survey very difficult– Minor survey adjustments were made in response to beta test

feedback


Approach: 2008 Survey Modifications

Removed vehicle range attribute and made fuel costs equivalent– These attributes were not directly related to the issue of refueling

availability, and tended to distract respondents– Other studies have estimated value of vehicle range

Increased range and number of vehicle purchase price levels– From 3 levels (equal, +/-15%) to 5 levels (equal, +/-15%, +/-35%)

Improved clarity and readability of maps and survey screen layout– New maps are larger and more closely resemble commercial maps

Atlanta Region

Previous format(left) and new format (right)


Documents

Estimating Cost Penalties for Limited Refueling Availability (And other related issues)