This post is the sixth in a series of excerpts from the Advanced Energy Now 2021 Market Report, prepared for AEE by Guidehouse Insights.
Revenue from Advanced Fuel Delivery – defined as Fueling Stations serving electric, natural gas, and hydrogen vehicles – dropped slightly in 2020 to $9.3 billion globally. This followed a monumental year of 136% growth the previous year. In the United States, the market for Advanced Fuel Delivery also saw declines in 2019 (9%) and 2020 (21%), coming after three consecutive years of growth.
Grouping together fueling stations for all three advanced vehicle technologies – electric, natural gas, and hydrogen – reveals a dramatic shift in spending over the course of the period 2011 to 2020. In 2011, natural gas fueling stations accounted for 92% of Advanced Fuel Delivery revenue. By 2016, electric vehicle charging infrastructure had overtaken natural gas, and has since grown to 90% of total revenue in 2020. Spending on natural gas fueling stations has shrunk by more than half worldwide since 2011, and by over one-third in the United States. The Compound Annual Growth Rate (CAGR) for Advanced Fuel Delivery revenue was 17% from 2011 to 2020 globally and 9% in the United States, with most of that growth attributable to EV Charging Infrastructure.
EV Charging Infrastructure more than doubled its market size globally from 2018 to 2019 (179%), an increase driven almost entirely by a surge of charging station deployments (estimated at nearly 800,000 stations in China). This growth trajectory flattened in 2020 at 1%; as the balance of supply and demand in China corrects, growth is expected to remain slow.
Hydrogen Fueling Station investment surged in 2019 after a period of relative stagnation, growing 76% and 31% in 2019 and 2020, respectively, reaching $76.3 million globally. Investment in hydrogen refueling has been expected to increase, especially across Europe and the Asia Pacific region. In the U.S., where California remains the only state with a significant commitment to fuel-cell vehicles, revenue from hydrogen fueling stations peaked in 2012, at $27 million, and has not exceeded $10 million since 2017.
Investments in natural gas refueling equipment for larger vehicles dropped 28% last year worldwide, while infrastructure for light duty vehicles, which accounts for the bulk of segment revenue outside of EV Charging, decreased 18%, to $788 million. This decline is likely influenced by increasing interest in the electrification of medium- and heavy-duty trucks.
In the United States, Fuel Delivery revenue dropped 21% in 2020, to $540 million. Natural gas fueling station revenue for both light-duty and commercial vehicles fell to its lowest point in the 10-year period, $141 million. EV Charging Infrastructure revenue also fell from its 2018 peak of $579 million in each of the subsequent years, reaching $394 million in 2020. Given the generally upward trajectory of plug-in EV sales since 2016, with a small decline in 2019 but resurgence to $19.7 billion in 2020 sales (see Advanced Transportation), declining investment in charging infrastructure could result in an increasing lag between available charging capacity and a growing mass market of EV owners. But regulatory approval of large-scale EV charging programs in California and New York in 2020, as well as pilots in several other states, should spur growth in 2021 and beyond.
EV Charging Infrastructure Boom Spurs Innovation
EV Charging Infrastructure has witnessed a global boom, as the market grew by nearly 180% in a single year. The marked growth is primarily attributed to the roll-out of ultra-fast charging networks, heavily supported by automaker investments in major regions of the world. These investments are not expected to abate any time soon with PEV technologies spreading into new vehicle segments such as light trucks and heavy commercial vehicles. The latter requires specific charging infrastructure with capacities well over those used for light duty vehicles. The development of this infrastructure is expected to grow dramatically in the second half of the 2020s as electrification looks to take on long-haul trucking.
In China, market development is taking a unique turn, with potential ramifications for developed markets. Battery swapping, scoffed at after the failure of A Better Place in the early 2010s, has re-emerged, with multiple light-duty and heavy-duty commercial automakers introducing the technology and deploying it for commercial network services. The technology competes with conventional retail fuel pumps on speed, and poses opportunities for grid services, PEV financing, optimization of battery health, and battery supply for second life uses.
One second life use for batteries may be to support the development of charging infrastructure itself. Batteries deployed at charging sites help speed expansion of charging capacity, they buffer PEV charger demand allowing operators to optimize electricity prices, and they can help maintain charging station reliability. Many charging station manufacturers are even integrating batteries directly into electric vehicle service equipment (EVSE) enabling highly mobile and temporary EVSE deployments. Currently, this market is mostly supplied by new batteries, but that could shift to second-life PEV batteries, as evidenced by Volkswagen’s development of a 360 kWh battery-integrated charger using batteries designed for its PEV platform, M.E.B.
Beyond these developments in charging hardware, significant developments are also being made in networking. Access and authorization interoperability of EVSE for PEV drivers has been a complication in many markets. To date, this has been overcome through the use of e-roaming agreements between charging networks or through the establishment of interoperability platforms that act as clearinghouses for transactions made by PEV drivers out of network. The latter has been popular in Europe and has only recently made headway in China.
In North America, interoperability is primarily achieved through e-roaming agreements. A separate technology standard, known as Plug&Charge, is now coming to market with Ford, Porsche, and new PEV maker Lucid introducing it on 2021 model year vehicles. This standard provides a seamless experience for PEV drivers in that all access, authorization, and payment processes are automated when the physical connection between vehicle and EVSE is made.
Networking is also progressing for vehicle-grid integration. This type of network sends data streams on grid conditions to PEVs to modulate the rate at which PEVs are consuming power. PEVs sending power back to the grid, via vehicle-to-grid (V2G) technology, is also gaining traction in Europe and North America, with major commercialized deployments for residential PEV owners and fleets underway.
Potential of Hydrogen for Trucking Spurs Growth in Fueling Infrastructure
With automotive and transportation companies divided over hydrogen fuel cells versus batteries for long-range electrified driving, Hydrogen Fueling Stations have accounted for a relatively small but varying portion of Advanced Fuel Delivery throughout the past decade. While some hydrogen fueling infrastructure has existed for many years, growth has been much slower than for EV charging. At $33 million, global Hydrogen Fueling Infrastructure revenue was 32% lower in 2018 than it was in 2011. However, a resurgence of interest in hydrogen, particularly for trucking, and in commercializing “green” hydrogen produced by electrolysis powered by renewable energy, led to positive growth the past three years. Most notably, revenue grew by 76% in 2019 and 31% in 2020, reaching $76.3 million globally.
There are a growing number of global efforts aimed at expanding hydrogen infrastructure to help further refine the production process and narrow the cost gap between hydrogen and other transportation fuels. For example, China is currently developing its first national fuel-cell vehicle (FCV) policy. Under this model, Beijing would provide financial rewards to chosen demonstration regions, which are required to achieve a set of FCV market development targets. Similarly, Germany launched its National Innovation Program Hydrogen and Fuel Cell technology initiative in 2006 and has set FCV targets through 2030, and California has published a plan to have 1 million FCVs on the road by 2030.
Hydrogen faces the challenges of ensuring adequate infrastructure, namely pipelines and refueling stations. Solving this problem requires coordinated efforts from both emerging hydrogen production technology manufacturers, consumers, and government agencies involved with infrastructure development.
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