Electrification is one of the most significant trends in transport today. Among many other benefits, lower maintenance costs, more efficient operation, and zero tailpipe emissions have led to an accelerating adoption of electric vehicles (EVs) for road transport needs. Now, companies are finding that electrified equipment can also bring operational benefits in heavy-duty, off-road use cases in the construction, agriculture, and mining (CAM) industries.
While their applications are very different, these companies can also benefit from operating in a cleaner manner; providing a safer work environment; and limiting their exposure to social pressure, regulation, and volatile diesel prices. This ARC Advisory Group Strategy Report discusses the budding adoption of electric vehicles for off-highway operations in the CAM industries.
Problems with Diesel in CAM Industries
Owing to higher energy density compared to gasoline, diesel is the standard for CAM equipment today. This creates problems for operators and society alike.
Electrification of the Construction Industry Decreases Air Pollution
Combusting diesel releases deleterious pollutants into the air that have been proven to impact respiratory, cardiovascular, and neurological systems, as well as causing various forms of cancer. Emissions from road vehicles alone are thought to cause about 50,000 premature deaths per year in the US.
Toxic emissions would be bad enough in a rural area, but emissions from urban construction sites impact many more people in their vicinity. In fact, researchers in London have estimated construction equipment is responsible for around 7 percent of NOx, 14 percent of particulate matter (PM) 2.5, and 8 percent of PM 10 pollution in that city. This is especially harmful near sensitive areas such as schools and hospitals, as well as in confined work sites. As the world continues to urbanize (UN predicts two-thirds of the world will live in cities by 2050), more construction projects will break ground in ever-denser population centers.
To maintain acceptable levels of air quality in an underground mining operation, companies install much larger ventilation systems than would otherwise be required. These can represent about 30 to 40 percent of their total energy operating costs. Beyond raising operating expenditure, those huge shafts and fans are expensive to purchase, install, and maintain.
In the agricultural sector, exhaust effects on the operator and atmosphere are a serious factor (as described in following sections), but these are compounded by the disconnect with farming’s desired image as environmental stewards, responsibly harvesting the land.
In all three industries, equipment operators are also exposed to uncomfortable vibration, noise, and heat, in addition to the dangerous exhaust as part of their work. This applies to operators of large agricultural machinery, but is especially acute in static construction sites, some in enclosed areas such as tunnels and within large buildings.
Worst of all may be the experience of underground mining operators. Though ventilation systems make mines workable, chronic exposure to even these reduced levels of air pollutants is known to be dangerous. Beyond the already trying conditions, the noise, vibration, and exhaust fumes, engine heat is a serious issue. Even more heat will need to be expelled from active mines as surface mineral deposits are depleted and operations continue to dig deeper in search of more.
Social Pressure, Regulations, and Climate Change
From a global perspective, the world faces severe challenges around climate change, which a growing body of scientific evidence indicates is caused (at least in part) by heavy use of fossil fuels, which releases tens of billions of tons of greenhouse gases into the atmosphere each year. As societal awareness of environmental realities grows, firms face ramping pressure from non-governmental organizations (NGOs), activist investors, and their communities at large. Pertinent for the construction industry, cities are taking their air quality (and noise level) seriously, with regulatory action in tow. London has instituted particle emission regulation that will impact construction equipment in the city and the trend is only likely to grow. California’s Air Resources Board (CARB) is introducing its own regulations to help curb pollution from agriculture.
Attracting and Retaining Talent
Lastly, the CAM industry workforce is aging. The increasingly needed younger workers may not be excited to join industries they see as polluting, harmful to their health, and rife with outdated technologies. Millennials and generation Z are proving particularly conscious of the environment and want to feel that their work is serving it responsibly. They also care more about their own occupational health than previous generations.
Electric Vehicles Could Help
Electric powertrains allow for zero-emission operation while providing instant low-speed torque. They convert energy to mechanical work more efficiently than internal combustion engines and don’t waste energy “idling” at the work site in between loads. Without having to deal with diesel exhaust, mines would need to install and operate significantly smaller and less energy-intensive ventilation and air-cooling systems - a potentially massive cost saver. In urban areas, quieter-operating, exhaust-free electric construction equipment would be a boon to local health.
Without the heat, noise, vibration, and noxious air that diesel brings; an electrified fleet would provide a far more comfortable and safer environment for equipment operators in all three industries. This would help CAM industries retain and attract new talent. Members of younger generations are far more likely to join a cleaner operation working on new, future-oriented technologies instead of those associated with the dark, dirty, and dangerous industries of the past.
Depending on relative prices of electricity and diesel, electric propulsion could lower an operator’s energy cost. Furthermore, as EVs are simpler and use far fewer moving parts than diesels, electric CAM vehicles should require less maintenance and downtime throughout their lifespans (more on this later).
Project economics aside, increasingly restrictive air and noise regulation will soon begin to pressure construction and agriculture firms towards cleaner equipment. All three industries will be affected by any of the greenhouse gas regulations that are and will necessarily continue to be implemented around the world. Furthermore, the improved public image that cleaner operations will bring can only help in a world of heightened scrutiny and environmentally conscious citizens, workers, and investors.
Just a few years ago, it would have been impossible to imagine heavy-duty electric equipment as part of the business conversation. For the past decade or so, the formerly prohibitive cost of lithium-ion batteries has fallen dramatically. This has enabled competitively priced EVs to enter the consumer market and, for the first time, now makes commercial/industrial use possible and worthy of consideration.
Going forward, battery suppliers have announced massive R&D expenditure to build out capacity and invest in further cell improvement. The industry is racing to increase energy density, lower costs, and improve thermal stability. Another priority is reducing reliance on cobalt, a serious ethics and supply chain liability; with Panasonic claiming to be developing a cell completely free of the problematic metal.
EVs have fewer moving parts than fossil-fuel powered ones and forgo liquid fuels entirely. EV operators do not need to replace or worry about:
- Oil changes, oil filters
- Spark plugs, wiring, ignition coils
- Muffler, timing belt, catalytic converter, air intake filters
- Fuel filters, fuel injector cleaning
- Engine sludge
- Emissions checks
In an industrial setting, this means experiencing less costly downtime and significantly reduced operating costs.
An EV operator does need to be mindful of their vehicle’s lithium-ion battery. Over time, these batteries will lose charging capacity and need to be replaced, which could cost thousands of dollars.
Fortunately, experience from the consumer sector has been positive in this regard. Data from Tesla Model S/X drivers point to significant battery resilience, with real-world capacity degradation of just 10 percent after 100,000 miles (see figure below). Heavy-duty performance is not measured in miles travelled, but this information suggests modern batteries are quite robust in the face of extended charge cycling. Going forward, improvements in battery design will further help mitigate this issue.
EVs are expected to last a long time thanks to their simplicity and lower number of moving parts. For this reason, a company may find that when a battery does eventually wear out, it may make sense to replace it instead of buying a new vehicle. Furthermore, since grid/building operators are making use of Li-ion batteries to improve power quality and better integrate renewables, the residual value of a lower-capacity EV battery is expected to be significant.
Table of Contents
- Executive Overview
- Problems with Diesel in CAM Industries
- Electric Vehicles Could Help
- Making It Practical: Charging and Financing
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