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Capturing Value in the Transition blog series: Accelerating the Adoption of Bidirectional Charging Technology in Fleets

Summary

In this blog (the fourth in the Capturing Value in the Transition blog series) we demonstrate how fleet operators and other service providers can proactively adopt bidirectional charging and position themselves at the forefront of the industry's transformation.

The fleet industry stands on the brink of a transformational era driven by the dual imperatives of environmental sustainability and operational efficiency. Enter bidirectional charging—an innovative solution that promises to redefine how fleet operators leverage the potential of electric vehicle charging. As Europe intensifies its efforts to combat climate change, there is a palpable shift toward Battery Electric Trucks (BETs) and electric Light Commercial Vehicles (eLCVs). These vehicles don’t merely represent the future of transportation; they also hint at an evolving relationship with the energy grid, wherein they could help manage grid constraints and simultaneously add value.

A snapshot of Europe’s vehicular landscape in 2021, as reported by the European Automotive Manufacturers Association (ACEA), underscores the magnitude of the transition. The continent was home to over 35 million light commercial vehicles, including 29.5 million vans. Additionally, 6.4 million medium-to-heavy commercial cars were making their mark on European roads. By the first half of 2023, a notable resurgence in vehicle registration was observed across most EU markets, primarily driven by the easing of supply chain bottlenecks. Among these, electric vehicles—6.9% eLCVs (representing over 50,000 units) and 1.3% BETs (about 2,400 units)—carved out their niche.

Given the trajectory, it isn’t a stretch to envision a future—particularly by 2035—where BETs exceed 1 million units, with urban locales serving as their primary playground, as predicted by LCP Delta. With short-haul BETs gravitating toward depot-charging infrastructure due to its cost advantages and convenience, the appeal of transitioning assets becomes clear for fleet operators.

In this context, bidirectional charging emerges not as a mere option but as a revolutionary strategy, bridging the gap between fleet operations and sustainable energy solutions.

The implications of this technology extend far beyond mere support for the electrical grid. Bidirectional charging heralds’ new economic avenues, creating a lucrative nexus for technology OEMs, energy retailers, and providers of bidirectional charging solutions. This convergence doesn’t just promise operational efficiency; it also signifies a substantial monetisation opportunity from energy transactions.

Yet, the road to the widespread adoption of bidirectional charging is not without its hurdles. The pace of integration varies globally, influenced by factors such as the readiness of regulatory protocols, the availability of compatible vehicles, the maturity of supporting hardware, general awareness among fleet operators, and the solidity of business models anchored in consistent energy values. These challenges, however, are not insurmountable.

Interestingly, current trials predominantly explore bidirectional home charging, leveraging the extended parking times of passenger EVs. Nevertheless, fleet vehicles—thanks to their larger batteries and aggregate idle periods—hold immense potential for similar, if not greater, energy transactions. This capability is amplified for fleets with on-site renewable energy sources, like larger-scale solar photovoltaic systems, requiring storage solutions for generated power.

Proactive fleet operators are in a prime position to capitalise on this technological shift. By engaging with pioneers, customising strategies for their operational needs, and addressing prevalent adoption barriers, they stand to gain significantly. As they pivot, they’ll find themselves in a promising position, especially as research from LCP Delta suggests that by 2025, bidirectional charging will witness substantial growth, potentially becoming the norm by 2030. By preparing now, both service providers and fleet operators are poised to lead a charge that redefines energy norms and drives sustainable fleet management forward.

This article delves into how fleet operators and bidirectional service providers can accelerate the integration of bidirectional charging into their operations and shape fleet strategy ahead of 2025.

Understanding the market dynamics for the right partnership

As the shift towards bidirectional charging gains momentum, it becomes clear that forging the right partnerships for demonstration projects is essential primarily because the stakes of investment and expertise at this innovation frontier are notably high. This move transcends the mere adoption of technology; it’s about spearheading a comprehensive transformation.

Its implementation, therefore, requires a multistakeholder approach, each contributing expertise and resources. For instance, Denmark’s Parker project witnessed the confluence of various entities: Nissan and Mitsubishi provided the vehicle know-how, while ENDESA and NUVVE tackled the charging point, aggregation software, and more. Similarly, in the UK, regulatory body Ofgem orchestrated a project that saw software provider Kaluza collaborating with Nissan and consultancy firm Cenex to gauge the multifaceted value of home-based bidirectional charging. The commitment extends to financial backing, evidenced by Innovate UK earmarking £9.4 million to ignite the second phase of its Vehicle to Everything (V2X) innovation push. The programme is a sequel to an inaugural round that converges diverse minds to tackle challenges spanning bidirectional technology readiness to novel business models.

Yet, the narrative doesn’t end with project initiation; it evolves when fleet operators and bidirectional service providers engage in introspection to blueprint their investment strategies. This strategic approach involves a rigorous analysis of market drivers and barriers, forecasting the financial opportunity and opportunity costs tethered to various entry points, whether pioneering, promptly following, or later entering.

The driving forces behind bidirectional charging vary by market. In Germany and Japan, automotive OEMs dominate the bidirectional demonstration arena. Thus, aligning with them could be strategic for those aiming to make a mark early in these markets. Conversely, in the UK, energy retailers are at the forefront of bidirectional initiatives, as LCP Delta’s research indicates.

In essence, a holistic strategy for embracing bidirectional charging in fleet operations is a multidimensional puzzle yet non-negotiable. Fleet operators and service providers must understand the internal and external factors, grasp the ecosystem’s nuances, and choose partners with aligned objectives and risk profiles.

Adopt propositions that overcome market complexities

Navigating the intricate landscape of bidirectional charging can be daunting for fleet operators due to the inherent market complexities. Recognising these challenges, several solution providers are pioneering propositions to simplify and streamline the entire process for fleet operators. A prime example is Dreev, an eMobility software firm offering a holistic bidirectional solution tailored for fleets. Their all-inclusive approach encompasses everything from evaluating suitable use cases for fleet managers to handling the intricacies of installing charging stations and even managing grant applications, such as subsidies.

Similarly, in a strategic move, Shell Recharge joined forces with automotive OEM BYD in early 2022. This collaboration was geared towards crafting specialised fleet solutions, encompassing depot charging services for BYD’s European customers, with a focus on integrating bidirectional charging. The partnership leveraged both companies’ previous successes in technology demonstration projects, standing on the strength of their extensive customer bases. This alliance allowed them to extend their comprehensive propositions to a broader audience, having repeatedly proven their expertise in managing diverse aspects of the EV charging value chain.

In essence, companies like Dreev and Shell Recharge are carving pathways through the market’s complexity. By offering all-encompassing, proven propositions, they’re uniquely equipped to assist fleet operators in seamlessly adopting bidirectional charging, sidestepping the common pitfalls and leveraging the opportunities inherent in this innovative technology.

Upskilling

To harness the potential of bidirectional charging in fleet operations, fleet operators and service providers must have a broad spectrum of skills. This ranges from installing, maintaining, and troubleshooting bidirectionally enabled equipment to an in-depth grasp of transactional platforms ensuring efficient and transparent charging processes.

Empowering employees with these competencies is paramount. While outsourcing specific functions to chargepoint operators or other service providers is an option, having an internal understanding of the technology and its nuances becomes a strategic advantage. This ensures optimal resource utilisation and guarantees the best value for investments made.

However, the learning curve continues beyond the management level. Ensuring bidirectional charging seamlessly integrates with fleet operations means that the technology operates subtly, complementing rather than disrupting fleet schedules. Therefore, fleet managers and drivers must also be well-acquainted with the system. They need to comprehend optimal discharge rates and the unique charging cycles of bidirectional fleets.

Investing in comprehensive training programmes isn’t just a checkbox exercise – it’s a proactive strategy to ensure smooth integration, efficiency, and maximum return on investment. So, for fleet operators and bidirectional service providers aiming to stay ahead of the curve, upskilling their teams is not just beneficial; it’s essential.

Embrace innovation with calculated risk

While the apprehensions of fleet operators regarding battery health and cost profitability are valid, it’s worth noting that these concerns can be mitigated with the proper measures. Studies suggest that battery health can be effectively preserved by employing scheduled charging and limited discharging. Moreover, maintaining the discharge rate at a mere 20% of the battery’s capacity can further minimize potential degradation. Gridcog’s research reinforces this perspective, highlighting that businesses, especially those leveraging on-site renewables, can achieve profitability within two years when these guidelines are adhered to. Thus, fleet operators should consider adopting a more experimental stance, but always with informed and calculated decisions.

Wider Communication

Creating awareness and understanding about the benefits of bidirectional charging among fleet operators is vital to managing the evolving landscape. Organisations with existing customer propositions have educated consumers on the benefits through demonstration projects and trials. This makes it easier for other players to utilise the progress made. Collaborating with organisations such as LCP Delta can provide valuable insights and guidance on adopting such technology.

Conclusion

Navigating the complexities of bidirectional charging integration requires foresight and a deep understanding of the technologies, market dynamics, and regulatory frameworks. With extensive research pointing towards a significant surge in bidirectional charging adoption by 2025, especially in fleet operations, the need for expert guidance has never been more critical.

LCP Delta stands at the forefront of this technological revolution, offering comprehensive insights and strategic expertise to stakeholders ready to pioneer this transition. Whether you’re a fleet operator seeking to optimise your assets and operations, an energy retailer aiming to unlock new revenue streams or a technology OEM looking to innovate within the e-mobility landscape, LCP Delta’s wealth of research and consultancy services are tailored to support your unique journey. Our team is equipped to assist you in understanding the intricacies of current market trends, identifying potential challenges, and strategising effective adoption pathways, ensuring that your venture into this growing market is successful and sustainable.

 

Other blogs in this series are:

Part 1: “Capturing Value in the Transition: Energy transition chess – why companies need to think strategical to win

Part 2: ” Capturing Value in the Transition: Unlocking New Revenues in the Evolving Landscape of Home Energy Management (HEM)

Part 3: “Capturing Value in the Transition: Bringing the heat, how will European heating companies make the most of the energy transition?

 

If you have any questions or require assistance in any of the areas outlined above, feel free to get in touch with us at peter.sarpong@lcp.com or andrew.conway@lcp.com. Discover more about our Consulting capabilities, and our Electric Vehicle (EV) Charging Research service.

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