1. Dr. Marc W. Melaina MIT/Ford/Shell Research Workshop Dearborn, MI June 9, 2009 Estimating Cost Penalties for Limited Refueling Availability (And other related issues) National Renewable Energy Laboratory Innovation for Our Energy Future

2. 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 Future 2

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

4. 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 Draft

5. 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 Draft

6. Perceived Cost Penalties for Refueling Availability are High

7. 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) –Refueling availability Metropolitan, Regional and National/Interstate 7 National Renewable Energy Laboratory Innovation for Our Energy Future

8. Approach: Survey Format Metropolitan Coverage Regional Coverage National Coverage Fuel Costs, Other Attributes, and Vehicle Purchase Price Choice Screen 8 National Renewable Energy Laboratory Innovation for Our Energy Future

9. 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 L4 L3L2 9 National Renewable Energy Laboratory Innovation for Our Energy Future

10. 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

11. 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 11 National Renewable Energy Laboratory Innovation for Our Energy Future Analytic studies of “rational” consumer behavior have tended to result in much lower cost penalties (HyTrans, M&B NHA08)

12. A diverse mix of transitory innovations may help to reconcile early transition challenges

13. 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 1906 National Renewable Energy Laboratory Innovation for Our Energy Future 13

14. Early Vehicles Types were Diverse National Renewable Energy Laboratory Innovation for Our Energy Future 14 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)

15. Early Station Types were also Diverse National Renewable Energy Laboratory Innovation for Our Energy Future 15 Barrels Home Pumps Garage Refueling Mobile Refuelers Curb Pumps Small-scale; geographically dispersed; temporary* *

16. National Renewable Energy Laboratory Innovation for Our Energy Future Station Rollout Simulations Suggest a Mix of Station Sizes will Prevail Clustered >2 miles Between stations Percent of Average Size Percent of Total Stations Data on the location and size 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 Station Size (1000s gal/mo) ~85 cities 16

17. National Renewable Energy Laboratory Innovation for Our Energy Future Relative Size Distributions do Not Vary with City Size or the Degree of Clustering > 3.0 million1.0 - 2.0 million0.5 - 1.0 million 0.25 - 0.5 million 0.1 - 0.25 million 17

18. 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?

19. Backup Slides

20. 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 20 National Renewable Energy Laboratory Innovation for Our Energy Future

21. 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 21 National Renewable Energy Laboratory Innovation for Our Energy Future

22. 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) 22 National Renewable Energy Laboratory Innovation for Our Energy Future