Green urban freight: How to electrify our deliveries today
Using electric trucks for urban deliveries can reduce greenhouse gas emissions and improve air quality, but key to keeping costs down is knowing when to charge, says Julia Hildermeier from the Regulatory Assistance Project.
The good news is that these carriers can more easily electrify their urban fleets than companies focused on long-haul transport. Logistics companies supplying retail stores, supermarkets, restaurants, construction sites and office buildings are the easiest win for cutting transport emissions.
Truck makers have developed new battery-electric models that can cover the companies’ daily routes, which are usually less than 300km a day, allowing drivers to return to the same depot to charge every night.
With increasing volumes and declining technology costs, electric trucks are on the way to becoming competitive with the cost of conventional diesel trucks by 2025–30, but uncertainty remains around the costs of the refuelling and recharging infrastructure.
New research on charging costs suggests logistics operators could soon be saving money by charging electric vehicles (EVs), rather than filling lorries with diesel, provided companies manage charging strategically.
‘Smart’ truck charging is paramount
Transport operators can already electrify their fleets today and keep costs in check by deploying optimal charging strategies, shows a new study by the Regulatory Assistance Project (RAP) and the International Council for Clean Transportation (ICCT).
Companies risk incurring unexpected costs and missing out on considerable savings if they don’t consider the energy requirements of electric trucks and seek opportunities to charge them at lowest cost, in particular as the fleet size grows.
However, achieving this is not easy as guidance is hard to find and research into the energy requirements and the cost of grid integration at the depot is discouragingly scarce. The RAP and ICCT have attempted to fill this gap by studying charging strategies based on real data from operators already using electric trucks.
Logistics companies would pay between €80,000 ($97,250) and €95,000 a year to charge ten electric trucks at a typical depot in Germany, including electricity consumption from the depot, finds the analysis.
The costs differ depending on charging times – the scenarios feature either overnight charging only or overnight charging plus supplemental daytime charging when trucks are back from a delivery. Adding daytime charging can help an operator save up to €15,000 a year, or about 10% of total energy costs.
That charging trucks only at night may be more expensive is surprising because electricity use by consumers is generally low during night-time hours, power prices are cheaper and power grids can absorb excess renewable energy; from wind, for example.
However, as is so often the case, the devil is in the detail.
Timing is everything
What makes all the difference, conclude the researchers, is the balance of electricity prices and network fees in total charging costs.
When charging trucks at the depot, the logistics operator pays not only for the electricity it uses, but also for the use of power networks to deliver that electricity to the depot (taxes and levies aside). While electricity costs reflect prices on the wholesale market, network charges are set by national energy regulators to remunerate grid operators for managing the power system.
A typical logistics depot will pay for the peak demand that occurs when the company charges all ten trucks at the same time. If the operator charges them all overnight, this may require a higher power level to fully charge the trucks in the limited number of hours during which they are idle. As a result, charging the entire fleet overnight can create higher peaks in the depot’s overall consumption, leading to higher network fees due to the need for higher capacity. In such a case, operators may lose the savings they gained from cheap electricity prices.
The key question for companies is, therefore, how to harmonise their operations schedule with the cost-saving opportunities inherent to an electric fleet.
There are several options they can use to optimise charging at the depot. It may make sense to charge vehicles for longer hours but at lower capacity, to avoid creating unnecessary peaks. Or companies can shift EV charging to times with lower prices and more renewable energy on the grid – if they are rewarded for doing so. Here is where energy regulation comes into play.
Policymakers can accelerate fleet electrification
A broader lesson on the importance of tariff design in motivating fleet operators to electrify can be learned from the RAP/ICCT study – revising policies to better align network charges with actual grid costs, meaning power is cheaper when there is more capacity and more renewables available on the grid – is sorely overdue.
Once network fees are aligned with grid costs, fleet operators could expect to pay less for charging, as the study indicates. This change would also lower costs for all electricity consumers, as fewer overall grid costs would have to be socialised.
Requiring grid operators to introduce time-varying network fees that reflect conditions on the power network would provide operators and other consumers with effective price signals about the best time to charge trucks or consume electricity. Cost-reflective pricing aligns individual consumption with system benefits.
However, electrifying urban logistics operations is only the first, comparatively easy step to bring down emissions in the freight sector.
In the next five to ten years, Europe will need solutions to enable trucks with longer routes to charge at destination freight centres or charge while under way at a hub along the highway. To cut freight emissions further, governments will also need to build public truck charging infrastructure where it is cheapest – by tapping into existing mid-voltage lines or turning defunct but pre-wired industrial depots into logistic hubs.
Electrifying city logistics is a rare win for everyone. It is possible now and if policymakers implement cost-reflective pricing and more support infrastructure for smart truck charging, consumers, the grid and the environment will benefit.
Julia Hildermeier is an electro-mobility and transport expert at the Regulatory Assistance Project, an independent, global, non-governmental organisation advancing policy innovation and thought leadership within the energy community.
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