Heavy electrification set to revolutionise the electric power sector


Electric bus and truck technologies have been scaling in China for the last decade, with sales of electric buses in the tens of thousands and electric trucks in the thousands. Outside of China, heavy electrification has been making gains through pilots and demonstrations, but volumes are slim. However, 2021 looks to be the year the rest of the world begins catching up, which will have a significant impact on the electric power sector.

The steady growth of passenger car and crossover electric vehicles (EVs) has sparked significant investments in battery and charging technologies, which enable EVs to enter heavy vehicle markets. Transit fleets across the globe are well on their way toward electrification, and other heavy vehicle fleets providing city services such as refuse are not far behind. Parcel delivery fleets are also leading adoption, as evidenced by huge orders announced by Amazon, UPS and FedEx. Even the once thought to be discarded StreetScooter operation of DHL may have new legs. Meanwhile, suppliers like Paccar, Volvo Trucks, Daimler, and Tesla among others, are deploying heavy rigid and tractor trucks to North America and Europe.

Guidehouse Insights forecasts a global fleet of heavy electrics over 5 million strong by 2030

Governments and corporations pushing transformation

The momentum follows escalating pressure on supply and demand for zero emissions solutions. Supply is being pressed by government regulations, which are accelerating as evidenced by California’s plans to implement a zero emissions mandate in 2024. Demand is being supported by government purchase subsidies and corporate adoption of climate action plans that promise to make fleet emissions characteristics a critical criterion for competitive assessment.

As discussed in the Market Data: Electric Trucks and Buses report, Guidehouse Insights expects the collective market push to result in massive growth across the heavy vehicle classes. By 2030, penetration rates in the global market are expected to be over 40% for electric buses and over 10% for electric trucks.

Penetration of EVs in Heavy Vehicle Markets, World Markets: 2020-2030 (Source: Guidehouse Insights)

New technologies support market demand

Guidehouse Insights forecasts a global fleet of heavy electrics over 5 million strong by 2030. To support this fleet, Guidehouse Insights anticipates that around 4.6 million dedicated charge points will be installed at fleet depots, bus stops, and retail charging sites. While many of these charge point technologies will be similar to those used for light duty EVs, the heavy EV market has nuanced power demands. These demands open up opportunities for other solutions like pantographs, wireless, and beyond ultra-fast charging (over 400 kW), including the ChaoJi standard and the Megawatt Charging System (MCS).

Pantographs and wireless have advantages for use at bus stops; they also solve complicated space constraints, vehicle ingress/egress problems, and cable handling issues. ChaoJi is looking to support charging at traditional retail fueling sites by taking current fast charging technologies up to 900 kW. MCS is looking further—its sights are set to 4.5 MW. However, the expected debut of MCS this year will likely have initial specifications around 1 MW.

While many of these charge point technologies will be similar to those used for light duty EVs, the heavy EV market has nuanced power demands

Huge growth for electric power spending ahead

The power these technologies are capable of delivering and what heavy electrics will demand likely require grid capacity upgrades. At the extreme, deployment of MCS charging sites may produce peak capacity demands that could take utilities years to plan and build. Considering grid vulnerability issues exposed by California’s yearly wildfires and Texas’ recent winter storm, Guidehouse Insights expects charging site operators to be keen to make additional or off-setting investments on their side of the meter.

Such investments include generation, storage, and power management technologies that can decrease the size of the grid capacity upgrade, improve power reliability, and keep electricity costs low—or at least predictable. As grids evolve to incorporate generation and storage assets from the customer side of the meter into grid management services, these assets could also collect revenue, decreasing net costs.

Demand for charging equipment, grid capacity upgrades, and energy assets on the customer side of the meter are going to be high. Guidehouse Insights estimates that investments in charging infrastructure currently account for around 10% of total investments in heavy vehicle electrification, but by 2030, these investments are likely to account for over 40%. The surge in the second half of the decade is expected to be driven by the development of dedicated retail charging services for regional and long-haul truckers.

Heavy Vehicle Electrification Market Revenue, World Markets: 2020-2030 (Source: Guidehouse Insights)

Relative to the vehicle spend, the infrastructure spend in this forecast is significant. In traditional retail fuel business models, most of these costs would ultimately be paid by truck operators. If the same held true for electricity, it would be quite limiting to heavy vehicle electrification. Fortunately, charging infrastructure investments have multiple value streams. Savvy companies able to tap these simultaneously will be well-positioned to capture large portions of this sizeable, emerging market.

About the author: Scott Shepard is Senior Research Analyst at Guidehouse Insights



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