When AB 117, which created the “Community Choice Aggregation” (CCA), was passed in the California Legislature in 2002, the program was touted as a way to allow local governments to choose the environmental cleanliness of their power supply portfolios, but leave the business of delivering and billing for electricity to the incumbent distribution utility.

At the time, the distribution utilities couldn’t object because under utility restructuring laws passed in 1996, they were not going to be generating power anymore. In fact, PG&E publicly supported the CCA law and the efforts of Marin County to switch over to greater renewable energy content. But much has changed in the interim.

On February 2nd, the Marin Energy Authority (MEA), a new joint powers agency, approved a five-year contract with a subsidiary of Shell Oil to launch a program dubbed “Marin Clean Energy.” Among the benefits touted by MCE’s promoters for program participants are the following:

• Instantly boost renewable energy content from 12 to 25 percent, without any rate increases
• Shift ratepayer income derived from local citizens to local benefit instead of being distributed throughout the vast PG&E service territory
• All exit fees and transfer costs are picked up by MEA
• Ratepayer revenues create Marin County’s first enterprise district, allowing its local energy assistance programs to have a sustainable source of funding
• Allows Marin County to develop its own net metering policy to compensate excess power generated by roof-top solar and small wind systems

According to Marin County staff, the MCE program is the single biggest step the local government can take to meet California’s AB 32 greenhouse gas emission targets, and is the easiest and most cost effective way to respond to the global climate change threat.

MCE almost did not move forward due to concerns about loan guarantees. In a highly unusual move, four local wealthy citizens put up their own wealth as collateral to move the project forward when PG&E threatened to take the Marin Municipal Water District to court if it backed up any loan guarantee with MCE. PG&E has also allegedly refused to transmit electricity over its distribution lines to Marin County residents opting to purchase power through the MCE program.

The selection of Shell, an oil company with a checkered past on human rights and other CSR issues, has raised more than a few eyebrows. Can one really go local and global at the same time?

Some green energy advocates, particularly fans of solar PV technologies thriving under the current suite of state and federal subsidies, have been leery of the CCA model, since it is focused more on lowering the cost of wholesale renewable power than promoting local clean distributed generation. At least that is the case for MCE and its partner Shell during the first five years of operation. The track record of Shell Oil on the human rights of indigenous peoples living in communities in the developing world where oil or natural gas is extracted also emerged as an issue. While originally a pioneer on solar energy among oil companies, the firm, along with other major oil companies such as Chevron and ExxonMobil, has recently shifted to an emphasis on biofuels.

Today, political opposition to Marin Clean Energy is growing within Marin County itself. For example, Michael Smith, Marin County Treasurer, recently came out against the program and 11 former mayors of Mill Valley, a city that elected to join MCE, also signed a joint letter criticizing the plan.

Skeptics wonder whether these recent efforts within Marin County to oppose a program that is now already in place may be a result of PG&E’s aggressive advertising and PR plan to scuttle the program, a lobbying effort that could entail as much as $35 million to pass Proposition 16 on the upcoming June ballot. Prop. 16 requires two-thirds of voters to approve the financing of any new power plants to be developed by any city or county agency.

Prop. 16 would not only handcuff any CCA – such as the MCE — but also limit the abilities of existing municipal utilities and all other California local governments to finance renewable energy facilities that PG&E has itself repeatedly failed to bring on-line, despite a state RPS requiring 20% of its electricity to come from renewable energy in 2010. At present, PG&E obtains less than 13% of its electricity from renewable sources.

PG&E claims Prop. 16 simply gives the public a voice and choice. It was originally entitled the “Taxpayer Right to Vote Act,” a clever way to market this ballot measure in these times of lingering fears about our pocketbooks. That Orwellian title caught the attention of Attorney General Jerry Brown, who renamed the measure the “New Two-Thirds Requirement for Local Public Electricity Providers Act.”

The changing political dynamics in Washington, DC due to Democrats’ loss of a Senate seat in Massachusetts means that “cap and trade” climate legislation is given little chance of passing this year. The only hope for passing a bill in 2010 that would cut carbon emissions may be what most pundits have long thought as the least politically viable approach: a tax on carbon.

But if that’s going to happen, a strange bedfellows alliance will have to coalesce in short order, bringing together extremes on the left and right. The key players will be large oil companies such as ExxonMobil, which has long been viewed as the chief climate change skeptic, but which has also been publicly pushing a carbon tax under recent shifts in upper management. Radical environmental groups and leading economists also prefer this approach.

While the general media like to portray the issue of regulating carbon as a simple business versus environment dynamic, as always, the politics surrounding corporate policy includes many shades of grey. In fact, the business case for addressing global warming is apparently so compelling to some in the private sector that 80 U.S. corporate leaders — including CEOs from companies such as eBay, Virgin America and Pacific Gas & Electric — signed a joint letter in late January urging President Obama and Congress to pass comprehensive climate and energy legislation this year. The prime message in the letter is that unless the U.S. sets clear carbon reduction targets, it will fall behind in the current global race to develop new carbon-free renewable technologies.

But most of those companies hold little sway among conservatives in Congress. ExxonMobil and other energy companies not invested in coal do carry weight in Washington, DC. If they place a high priority on passing climate legislation in the form of a carbon tax, they could bring with them the prized 60th Senate vote environmentalists need to avoid a filibuster against climate legislation.

The Environmental Protection Agency (EPA) will soon be issuing its rules governing greenhouse gas emissions, including carbon. Once these rules are released, coal companies might be willing to come to the table and negotiate a better deal in Congress, and interest in climate legislation may increase, but action delayed until 2011, hampering the growth of renewable resources in the U.S. in the short term.

Over 400 groups comprising a loose coalition of environmental justice, low-income and faith-based organizations known as “Climate Reality Check” prefer the Cantwell-Collins “cap-and-dividend” approach, which seems to be gaining the most momentum in Congress right now, with companies such as the FPL Group, Calpine Iberdrola SA, Berkshire Hathaway and Chevron Corp. all registering to lobby on the bill.

“The architecture is far better,” said Daphne Wysham, a policy expert with Climate Justice Now!, an environmental justice coalition. “There are also no offsets, which are impossible to verify. But I think the dividend approach makes the Cantwell bill politically palatable. For example, ARRP has already endorsed it,” she said. Her main problem is that the targets are still too not aggressive enough, as they are similar to those in the House/Senate cap and trade bills. “But with Cantwell, maybe we can at least get the architecture right, and then ratchet up the targets over time. With the other two omnibus House and Senate cap and trade bills, polluters can get away with doing nothing until 2030 by using offsets and engaging in ‘paper reductions’ that are not real.”

Elaine Kamarck, with the Kennedy School at Harvard University, and co-chair of the U.S. Climate Task Force, thinks a separation of the most popular energy provisions– such as efficiency and renewable energy standards – have the best chance of passing on their own, absent a carbon cap. She thinks the political viability of a carbon tax and other approaches beyond cap and trade has actually increased over time, but that it is too early whether to determine whether anything solid will come out of Congress this year.

“If a consensus emerges that cap and trade is just not going anywhere – and that seems to be just sinking in – then they will go back to the drawing board and examine other options,” she said. “You have to realize that cap and trade was initially being pushed before the economy fell apart. Markets were God and Wall Street was still filled with heroes. In that kind of political environment, cap and trade had some ‘umph’ behind it. Now, Goldman Sachs and the rest of Wall Street are in the same category of bad guys as big polluters.”

It remains to be seen whether corporate support for climate regulations, including lobbying by the renewable energy sector, will be sufficient to pass significant legislation in Congress in 2010, but shifting priorities among a growing number of key players may signal a deepening split, with mainstream environmentalists, utilities, and coal companies on one side, and grassroots environmentalists, social justice groups, and non-coal energy companies such as ExxonMobil on the other.

The best hope for the renewable energy sector may be to separate the federal Renewable Portfolio Standard, among the most popular of features of the current omnibus federal cap and trade bills. At least in that regard, a clear market would be created for solar, wind, geothermal and biomass projects. The downside to that approach is that Congress may then never get around to regulating carbon, which would hamper international efforts to create a sustainable market for renewables, since the rest of the world is still looking to the U.S. for leadership on the global climate change front.

In advance of this fall’s launch of plug-in hybrid and electric vehicles, lithium ion battery manufacturers are breaking ground on manufacturing plants nearly every month. Nearly $2 billion in stimulus funding has spurred the building of facilities in Michigan and Indiana that will start churning out battery packs by the end of the year, but the escalation in production has the potential to outstrip the demand for the batteries by as early as 2012.

As I said during yesterday’s interview on NPR’s “All Things Considered,” the battery companies have understandable but potentially misguided motivations to quickly ramp up production. For battery companies to receive the full amount of stimulus grants and loans, they must meet specified goals for production capacity. Their automaker customers are viewing consumer demand for the not inexpensive (starting at $35K) and unproven electrified vehicles with rose-colored glasses, with several companies expecting to individually sell more vehicles per year than Pike Research’s estimate of the size of the entire market.

During 2010 and 2011, consumers and fleet operators who are hell-bent on owning EVs will scoop up the first units that come off the line without much concern that it would take many years – or perhaps never – to recoup the additional cost of the vehicles in fuel savings. But that is likely to be a niche market, numbering in the thousands to tens of thousands (remember that only about 1,000 Tesla Roadsters have been sold so far). The market appeal of EVs will have to be broadened beginning in 2012-13 to attract a more cost-conscious consumer, and that adjustment period could impact battery manufacturers who are likely to then be in full production.

If gasoline stays under $4 per gallon for the next few years, the EV audience is unlikely to take off as quickly as the auto industry hopes. Other confounding factors for the battery market include possible delays in new vehicles, and a slower than expected rebound by the global economy. A slower than expected increase in the size of the EV market could hurt start-up battery companies more than their larger diversified competitors because they will feel pressure to lower the prices of the batteries (to make the vehicles more appealing to consumers), and to run plants at lower volumes, which would further reduce revenues.

In the following years, the potential for oversupply will continue. According to Forbes nearly $7 billion is being invested in lithium ion battery manufacturing, and the total capacity will surpass 36 million kWh of batteries in 2015. This is more than double the amount of batteries (16.9 kWh) needed by the automotive industry, according to our analysis here at Pike Research.

The good news for lithium ion battery manufacturers is that a secondary market is drafting just behind automotive. The stationary energy storage market to support the power grid is currently in the pilot project stage and will likewise be ramping up. Grid storage has similar requirements for power and energy density, so the same batteries can be used in conjunction with a custom battery management system. Although the lithium ion portion of the energy storage market is expected to be just 5 percent of the automotive market in 2012 (or 363,000 kWh) , it could be an important outlet for excess capacity, and grow even more rapidly if the cost of batteries comes down quickly.

If your company or organization is involved in the Smart Grid industry, Pike Research would like to invite you to participate in a new survey, which focuses on market participants’ plans and opinions regarding utility Smart Grid deployments.

Your responses will help advance the industry discussion about business models and technologies that are the best fit for different types of deployment scenarios. And the survey also includes questions about attitudes and opinions regarding important priorities that the industry should be tackling, the effectiveness of Smart Grid stimulus programs, and other key issues facing utilities, vendors, service providers, and others involved in Smart Grid deployments.

Qualified participants in the survey will receive a free Pike Research white paper with a detailed analysis of the results.

Take the Smart Grid Industry Survey Now

Topics Covered:

• Smart Grid Deployment Plans
• Smart Grid Communications
• Opinions on Key Industry Priorities
• View on the Current State of the Grid
• Opinions on Smart Grid Stimulus Programs

Originally published January 28, 2010 on SmartGridNews.com

Utilities have been testing the impact of electric vehicles and consumer charging patterns for several years with small test fleets so that they can prepare to handle the additional load. Many of the utilities I’ve spoken with say that if “smart charging” intelligence is available, vehicle charging is likely to only have a marginal impact on peak loads. Smart charging would enable vehicle charging to be delayed or temporarily interrupted or slowed depending on the condition of the grid.

Still at risk, even with smart charging, are the transformers located in residential areas that provide power to 3-5 homes. At faster charging speeds (level 2 and 3), even plugging in a few EVs simultaneously could cause a transformer to blow. The size and age of transformers varies widely between regions, meaning some EV-friendly neighborhoods might be faced with frustrated customers who temporarily lose power. Utilities are looking to track where electric vehicles are purchased to anticipate where older transformers might need to be upgraded to higher capacities.

‘Bottom Up and Localized’

However, regional energy planners don’t yet have a handle on how the added load of EVs should factor into their plans for upgrading their distribution infrastructure. Neither utilities nor automakers are making a concerted effort to share their projections of electric vehicle populations with regional grid operators and planners. “[EV planning] is completely bottom up and localized now,” according to Carl Imhoff, an engineer at the Pacific Northwest National Laboratory’s (PNNL) Energy Science and Technology Directorate.

Imhoff, who is participating in the Department of Energy’s Smart Grid research that will enable sharing of information about grid performance between regions, said that some regional energy commissioners “have no clue” on how to plan for EVs and are moving ahead with their existing roadmap until they hear differently.

EVs could also be an asset to the grid by absorbing surplus generation of renewable power and by slowing or speeding up charging in response to fluctuations in the grid frequency. PNNL’s Michael Kintner-Meyer has developed a prototype smart charger controller that automatically modulates the charge rate based on the needs of the grid. If deployed widely, the smart chargers could reduce utilities’ costly practice of spinning up and down reserves to match demand. The smart charger would communicate with onboard and stationary charging equipment, home energy monitoring devices, and smart meters, according to Kintner-Meyer, who is looking for utility and automotive partners to continue development

Cost Impacts Unclear

Regional grid regulators also don’t know how EV charging will impact the cost of electricity. The percentage of charging done off-peak versus peak will likely impact whether wholesale prices go up or down, according to Kintner-Meyer. PNNL is addressing this void by preparing a report due out in February that will estimate the impact of EV charging on a state-by-state basis.

Grid operators need to take the long view in how EVs will impact the grid. Imhoff suggests formulating a 20-year plan that considers the regional and national implications of charging. Without a clear strategy, the response to EV charging will be ad hoc and less efficient.

John Gartner is a senior analyst with Pike Research, a market research and consulting firm that provides in-depth assessment of global clean technology markets.

Originally published January 6, 2010 on SmartGridNews.com

Energy storage technologies will have a large role to play in the electricity grid of the future, with demand being driven by the growth of intermittent renewable energy sources such as wind and solar, the development of the Smart Grid and a shift to plug-in hybrid and electric vehicles.

In a recent Pike Research study on the stationary energy storage market, we concluded that:

• The adoption process for energy storage technologies will be long and uncertain, a reflection of utilities trying to figure out how to pay for the technologies and incorporate them into the grid infrastructure. Energy storage technologies’ key value is potentially supplanting expensive peaking generation.
• The stimulus bill signed by President Obama, together with significant venture capital investment, will both direct or indirectly benefit a variety of energy storage technologies, including lithium ion battery technologies.
• Lithium ion battery technology developers will leverage a versatile platform to reduce cost and develop specialized applications with varying energy and power requirements.

The energy storage market made huge strides during the course of 2009. Of $185 million granted from the DOE for 16 projects, $83.1 million went to 11 battery technologies. Also:

• AES Energy Storage and A123 Systems recently announced a 12 MW frequency regulation and spinning reserve project at an AES Gener substation in Chile.
• Southern California Edison (SCE) has received a $25 million grant to build the world’s biggest lithium-ion grid storage battery with technology from A123 Systems.
• Altair Nanotechnologies has deployed a 1 MW, 250 kilowatt-hour battery storage system at the PJM Regional Transmission Organization (RTO) as part of a joint development agreement with AES Energy Storage.
• American Electric Power (AEP) has informally announced plans for community energy storage (CES) or energy storage distributed at the neighborhood level, and based on lithium battery technology.
• Seeo won a $6.2 million grant for a 25 kWh prototype battery for the power grid using its nano-structured polymer electrolyte developed at Lawrence Berkeley National Labs and with backing from Khosla Ventures.

We forecast a significant increase in the demand of lithium ion battery technology for stationary energy storage applications. Advanced lithium ion batteries will be a technology, cost and volume leader in their focused applications. The technology has potentially dramatic growth potential.

David Link is a senior analyst with Pike Research, a market research and consulting firm that provides in-depth assessment of global clean technology markets.

Stationary Utility Battery Storage Technologies, World Markets: 2008-2015

Originally published December 22, 2010 on SmartGridNews.com

By 2011, thousands of new plug-in hybrid and all-electric vehicles such as the Chevrolet Volt will be filling garages. Lithium ion (Li-ion) battery systems are a major cost component of these vehicles, adding between $8,000 and $18,000 to the price of vehicles, depending on the size of the packs.

This high battery premium is expected to limit the appeal of the vehicles, which may be out of the reach of many consumers. Companies such as Nissan are looking to reduce the initial cost of the vehicles by offering financing for the batteries separate from the vehicles, and startup company Better Place is developing battery subscription services that would charge customers monthly flat fees or fees based on the amount of electricity that flows into the batteries.

The size of consumers’ monthly payments for batteries and electricity could be reduced if the financing companies incorporate the residual value of the batteries at the end of their useful life in vehicles. After repeated recharging, Li-ion batteries slowly lose their ability to store energy, and after 7 to 12 years (depending on how the vehicles are used), the batteries could be resold to utilities to store energy as part of the Smart Grid.

Will a Viable Resale Market Exist?

However, it is an open question if a viable stationary energy resale market will exist once the batteries have served their purpose in vehicles. Li-ion battery makers want EV sales to grow rapidly, and that is unlikely unless the cost of the batteries drops precipitously. Pike Research estimates that – thanks to volume production and improvements in technology and manufacturing – the price of Li-ion batteries will fall from around $1,000 per kilowatt hour (kWh) today to $810 in 2011, and continue dropping to $470 in 2015. By the time the batteries inside the first Nissan Leafs and Chevrolet Volts are ready to be retired, the cost of new batteries could be less than $400 per kWh.

Will Consumers Balk?

So what would be an appropriate price for a grid services company to pay for a battery that has lost up to 30 percent of its storage capacity, and may only last another five to seven years? $200 per kWh? $100? This pricing uncertainty challenges organizations looking to extract that value so that battery financing can be priced attractively to consumers. If the residual value is ignored, consumers may balk. If an overly optimistic value is assumed, company revenues later on may be threatened.

Consumers looking to calculate the value of driving on electricity (including the cost of the batteries) face the same conundrum. According to Pike Research’s new report “Electric Vehicle Batteries,” even when assuming a generous resale value of batteries after seven years, the cost of electric power is at best on par with the cost of gasoline at $3 per gallon. If there is a relatively poor resale market for batteries, EV owners best economic decision would be to keep the batteries as long as they own the vehicle.

John Gartner is a senior analyst with Pike Research, a market research and consulting firm that provides in-depth assessment of global clean technology markets.

Originally published January 20, 2010 on SmartGridNews.com

There are a number of significant Demand Response (DR) market growth drivers, the most significant of which is the growing demand for electricity amid increasing energy costs, especially during periods of peak demand. Pike Research forecasts that the DR market, driven by these key factors, will expand to comprise 62,500 megawatts (MW) under management by 2015. The potential for megawatts under contract to grow at a faster rate depends on how the fragmented DR market evolves.

Market leaders EnerNOC, Comverge and CPower are well positioned to penetrate vertical markets including the larger, more predictable loads in the commercial market. But Pike Research believes the real opportunity is for energy service companies (ESCOs).

ESCOs are naturally attracted to DR because it is an energy efficiency measure they can provide in their turnkey building efficiency plan. The realization of the commercial DR market potential will be driven by economies of scale, which will make larger projects more attractive. Successful ESCOs already have deep vertical industry expertise in relevant commercial segments. We believe that ultimately DR will be seen as an application or a portion of a service portfolio offering. Long term, we expect that this application-oriented approach will make DR less of a standalone business, and it will therefore be included within ESCOs’ end-to-end energy efficiency solutions.

Many ESCOs provide energy management and automation systems with an IT interface that enables DR. However, most ESCOs do not have the algorithms, software and hardware in-house to provide DR. This will change due to factors such as the adoption of open standards, the leading contender of which is OpenADR, which Pike Research believes will in turn drive consolidation in the DR market. OpenADR, the Lawrence Berkeley National Laboratory open IP standard, will enable all electricity-consuming devices to be connected over an open network. This will enable a manageable and scalable network for DR to realize its potential. Currently, major ESCOs provide clients with in-house solutions for most smart components of a building, as defined by American Solar Energy Society and Management Information Services, Inc:

1. Building Automation Systems and Energy Management Systems

2. Demand Response

3. Internet-enabled HVAC controllers and other electronics

4. Web-based energy management software

5. Electronic lighting management systems and sensors

6. Internet-based facilities management

7. Energy Information Software

8. Software for life-cycle analysis, modeling, accounting

Notably, ESCOs do not directly provide DR, instead only providing enabling systems. We believe that the growing demand for DR will present opportunities for ESCOs to acquire what is sure to be an increasing number of regional and national aggregators.

Of the total potential commercial DR market, Pike Research believes that approximately 14% is currently under contract, leaving a significant growth opportunity for existing players and new market entrants.

Jevan Fox is a research analyst with Pike Research, a market research and consulting firm that provides in-depth assessment of global clean technology markets.

Ford’s goal of electrifying a portion of its fleet appears to be running on all cylinders. The company is creating battery electric versions of both of its recent award winners –the 2009 Car (Focus) and Truck (Transit Connect Van) of the Year. Because energy storage will make or break the arrival of electric vehicles, Ford has joined GM in bringing the battery pack assembly and management under its tent.

Ford is investing nearly $1 billion in manufacturing facilities in Michigan that will include producing hybrid, battery-electric, and plug-in vehicles as well as the lithium ion battery packs. Ford manager of global electrified fleets Greg Frenette explained that “there’s a strong tie-in marrying battery control… to the rest of propulsion, and we’re in the best position to manage that.”

He said that in addition to wanting to develop the software that controls battery performance and thermal management, the company also felt that managing pack assembly was also key to vehicle performance. “Packaging is a significant part of installed cost. Doing it ourselves will enable the quality of execution to be more consistent across battery packs.”

Ford, like GM, wants to control much of the intellectual property around its battery and propulsion systems. The company is using batteries from Johnson Controls-Saft for its current fleet of test plug-in hybrid Escapes, for the electric Transit Connect, and for a plug-in hybrid due out in 2012. But for the 2011 Focus BEV, Ford turned to another unnamed battery vendor. Frenette said the company will continue to look for more battery partners.

Spreading around the battery contracts is a smart strategy as it will force battery suppliers to compete aggressively on price, and safeguards against any supplier having production problems. The same goes for Ford considering multiple battery chemistries, which are evolving so quickly that any commitment to a single chemistry is likely to be premature. “Battery chemistries and development are fluid and dynamic, and [multi-sourcing] gives us the capability to go with cutting edge,” Frenette said.

Ford has not announced any target volumes for battery production when the facility goes online in 2012, but manufacturing the packs internally will enable the company to eliminate some of the margin that normally goes to battery manufacturers. Pike Research expects the installed cost of batteries to drop by about 10 percent during 2010 as manufacturing across the industry ramps up.

Ford is starting to live up to being the green company that Bill Ford (along with Kermit the Frog) promised several years ago. As another example, for the new “global platform Focus,” Ford is coming out with a new smaller turbocharged EcoBoost engine that is expected to improve fuel efficiency by 20 percent when compared to large engines with similar horsepower. Ford has shifted its turbocharger partner as well, having used Honeywell in the past, but now incorporating a Borg-Warner product.

Nissan is on tour promoting its upcoming electric vehicle, the Leaf, in select cities across the U.S. The 5-passenger EV will become available in December 2010, and faces many challenges in fostering a supporting vehicle charging infrastructure and creating consumer-friendly financing options, but thus far they seem to have a well-conceived plan. During an event in Portland this week I spoke with Nissan senior manager for corporate planning Brian Verprauskus about the Leaf launch plans.

Ensuring that consumers will be ready to charge on the day that they bring the vehicle home is a new challenge for Nissan and the other EV manufacturers. Nissan plans to partner with a nationally known company to provide the wall box for plugging in the vehicle and to manage matching vehicle owners with electricians. Nissan will choose a company that has experience going into consumers’ homes, and will likely announce the partner in early 2010. Consumers will need to connect the box to a dedicated circuit for EV charging, which requires carefully managing the process to reduce risk of a customer improperly plugging in a vehicle and causing damage to the vehicle or property. Nissan’s plan is smart because many consumers will need hand holding to understand the issues of EV charging, and a company with adept at customer relations will be key.

Nissan is putting the majority of the intelligence in the vehicle charging equipment, which enables them to monitor and manage charging. This includes delayed charging, a critical feature for utilities who fear EVs adding to peak demand. This is also necessary because today there are few standards for managing charging and for hardware and communications standards, so Nissan had to create its own technology until the rest of the industry catches up.

Nissan has elected to use cellular networks to send data between the vehicle and the company. This will also enable Nissan to send text messages to consumers to alert them if the vehicle is not plugged in when it is supposed to be. Consumers will also be able to pre-heat and pre-cool their vehicles through messages sent from their cell phones.

These features address a fundamental challenge with electric vehicles – they not only have to be emissions free to satisfy environmentally-conscious customers, but they also need to be the most geeked-out vehicles that most consumers have ever driven. The EV experience must be clearly differentiated from driving a gasoline car because consumers won’t save money driving EVs until the price of gasoline rises significantly.

Down the road Nissan will have to deal with contention between equipment as smart meters and smart wall boxes will also have features for managing charging. As new standards are passed, it will be a bit messy as auto manufacturers will have to upgrade equipment and react to potential hardware incompatibilities.

Another challenge for Nissan and other EV manufacturers is pricing the vehicles and the batteries. The company will lease the vehicles and batteries, sell the vehicles and lease the batteries, or sell the vehicles with the batteries. If Nissan attractively prices the batteries assuming that I can resell them after 5 years but cannot find a market, the company may have to write them off at a sizable loss.

Nissan has picked select markets including Portland, Seattle, San Francisco and Los Angeles to launch the Leaf, which will enable the company to work the kinks out before a nationwide launch. The support of business, civic, and political leaders for a charging infrastructure is critical for EV success. So far Nissan appears to be forming all of the right partnerships to make that possible.