In-demand industry consultant Philippe Dunsky shares his thoughts on why the current investment cycle in EVs means policy makers and utilities need to move faster on electrification, why ZEV mandates matter and more

Check the fine print supporting almost any provincial government report, municipal program or Canadian utility undertaking that has anything to do with electric vehicles, energy and mobility, renewable energy or energy efficiency, and you’ll often see the name Dunsky Energy Consulting. This Montreal-based consulting firm — led by president and founder Philippe Dunsky — is widely recognized by utilities and governments at all levels as the go-to source for research, expertise and strategic advice in these areas.

Electric Autonomy Canada recently sat down with Philippe Dunsky in a wide-ranging discussion and we’re delighted to share that feature interview here.

Our conversation touched on the state of Canada’s electric vehicle landscape, trends and opportunities in the industry, the role of government EV policies, his recent work as chair of the Quebec government’s Task Force on Electrification, and more. Dunsky, who is also co-chair of Efficiency Canada, has seen the EV industry grow from its inception to a point today where key players are making major investment decisions about its future daily — and, as often as not, calling him before they do.

Electric Autonomy Canada Can you start by recapping your recent work chairing the Quebec government’s electrification task force?

Philippe Dunsky Quebec has a rolling, multi-year climate change planning process that’s up for renewal. [In 2019,] a new government decided that when we’re talking about climate change, we need to also be talking about electrification. They view electrification as a historic economic opportunity for the province, as well as a climate change or emissions-reduction opportunity. So, they decided to rename the plan the Electrification and Climate Change Plan, whereas before it was the Climate Change Action Plan, or “PECC” in French.

The PECC is scheduled for early 2020 and will lay out the plan to achieve the province’s goal of reducing emissions by 37.5 per cent by 2030. They launched a process [last summer] to arrive at some consensus around what needs to be done. They created an Electrification Working Group that they asked me to chair. It is comprised of 21 members — leaders of large industry groups, business groups, economic clusters, as well as some academics and a large environmental organization. We ran a series of meetings over the course of four months.

Electric Autonomy What was your mandate?

Philippe Dunsky The big question, as it was put to us, is how can we electrify the energy needs of the economy as a whole, while also becoming more energy efficient? They want to electrify transportation, buildings and industry. We were tasked with coming up with not a comprehensive plan, not 150 measures and sub-measures, but [a short list of] the really critical and big and challenging measures that this government could consider.

Electric Autonomy When you say big things, can you give an example?

Philippe Dunsky I can’t say what’s in [the plan]. But, for example, Quebec currently has a ZEV [zero emission vehicle] mandate that seeks something on the order of 10 to 12 per cent of sales be EVs by 2025. So, one of our top measures is revising that and saying — without giving away the number — how much further and faster can we go?

Electric Autonomy That’s obviously a big lever.

Philippe Dunsky Exactly. We ended up with 13 big-ticket measures across the three sectors.

“A region that wants to move adoption more quickly almost by definition has to move toward something like a ZEV mandate to make sure that it’s attracting its share of vehicles”

Philippe Dunsky

Electric Autonomy So you have completed the process. Has it been submitted?

Philippe Dunsky Yes. Everything has been submitted. It’s in the government’s hands now. I believe their intent is to come out with the Electrification and Climate Change Plan before the spring.

Electric Autonomy Quebec is already fairly advanced in terms of electrification. Given this, where do you see things lagging, where is change needed the most?

Philippe Dunsky Good question. It really depends how you define lagging. Relative to the rest of Canada, we’re up there, second to B.C. in EV adoption. And that’s great. But nonetheless, we’re at 7 per cent market share. That means 19 times out of 20 we’re losing the sale to an ICE engine. That’s the perspective I take. Irrespective of how well we’re doing compared to others, there is so much more to do. We can always accelerate the speed at which we’re moving.

It’s clear to me that even though we have, you know, comparatively good fast-charging infrastructure, we need a lot more. We need to ramp that up. Also, we have great incentives for EVs right now. But, frankly, as EV sales grow, that’s going to become unsustainable financially. So, we need to be thinking about how to change the incentive structure so that is sustainable and continues to be effective for quite some time.

“We’re at 7 per cent market share. That means 19 times out of 20 we’re losing the sale to an ICE engine”

Philippe Dunsky

There are a number of other things. The ZEV mandate, I mentioned it before. To me, it is an area we absolutely need to revisit and revise upwards by quite a fair bit if we want the ZEV mandate to be pulling us forward.

Electric Autonomy Switching from the task force to your consulting company. Your Electric Vehicle Adoption model is intriguing. Can you explain what the model is and how you apply it in your work?

Philippe Dunsky We’ve developed a pretty sophisticated adoption model — called “EVA” — that forecasts EV adoption across all vehicle types, across all drivetrains. It forecasts that adoption under business-as-usual conditions, but it also allows us to play with different levers and see how EV adoption will change as a result. What if our clients increased vehicle purchase incentives? What if our clients invested more in fast-charging infrastructure? What if what if we adopted a ZEV mandate in this form or that? What if we applied regulations around charging infrastructure [in buildings]? Etc.

This allows us to work with our government and utility clients and answer their most pressing questions. Such as, a) what is possible? Or, b) what is possible within this budget? Or, c) I have a goal, how can I get to that goal in the least-cost way?

Electric Autonomy Do the results ever surprise you?

Philippe Dunsky We’ve used EVA now to support our work for governments and utilities in most provinces. What we’re finding is that while each province is different, very often the biggest bang for the buck is to be found in fast-charging infrastructure. The other big finding I’d say, especially [with] the last number of projects that we’ve done, is that the market can now be moved a lot further and faster than even our own forecasting was suggesting a year or two ago.

“We still need government policy to get us through these coming years to that point where a market can be self-sustaining”

Philippe Dunsky

Electric Autonomy From a policy standpoint, there must be some factors that are a bit more elastic, and others that are less so? For example, we often hear that a lack of available models and vehicles is holding back EV adoption. How do you factor in that?

Philippe Dunsky You’re absolutely right. We can do all sorts of things to grow demand and ultimately supply will catch up. But right now, as you know, supplies are still tight, and not all automakers have fully come on board. And so, a region that wants to move adoption more quickly almost by definition has to move toward something like a ZEV mandate to make sure that it’s attracting its share of vehicles.

Electric Autonomy The new government in Ottawa is making initial sounds about increasing targets for EV sales and other infrastructure. How do you view what we’ve heard so far there?

Philippe Dunsky I need to be a bit careful because we do a fair bit work for the federal government on EVs. There are a couple of things I can say. You would have seen the [ministerial] mandate letters. I’m very impressed that the current government is so focused on EVs. I’m particularly happy that there’s a growing focus on medium- and heavy-duty vehicles. That’s an area where there’s so much opportunity ahead of us, including for Canadian manufacturing.

Electric Autonomy Can you elaborate on where you see those opportunities?

Philippe Dunsky I wouldn’t hang my hat on the idea that we’re going to suddenly become manufacturers of light-duty EVs [beyond] our share of overall production. But from a supply chain perspective, we’ve got a lot to offer, whether it ends up being assembled in Canada or going elsewhere to other assembly. In terms of batteries, we’ve got a lot of technology here and we’ve got a lot of raw material as well. So, I think from a logistics standpoint we stand to gain.

On the medium-duty and heavy-duty side, there we have real manufacturing capability that is very interested in moving over to the electric space. We see it with bus manufacturers. In Quebec, we have Lion, an electric bus manufacturer. They’re winning some big contracts now in New York and California. They started out with electric school buses, that’s going really well, and now they’re leveraging that to move into other types of medium- and heavy-duty vehicles, all on the electric side. That’s one example.

“The market can now be moved a lot further and faster than even our own forecasting was suggesting a year or two ago”

Philippe Dunsky

Electric Autonomy We’ve just seen Suncor, a private-sector company, complete the first phase of its “Electric Highway” charging network. Other private sector players are getting involved as well, albeit with government support. How do you see that side of the equation evolving?

Philippe Dunsky There’s not a solid business case for the private market to invest in fast-charging infrastructure. It’s a loss leader for some, and even the Suncor project is heavily subsidized by the federal government. I’m very glad that there are private companies that are ready to take on small investments at the outset to position themselves. But to count on that, at scale, would be folly right now. The market opportunity is just not there.

That said, I’m very hopeful that if we can get to levels of adoption and demand that are very different from what we have today — I’m looking six, seven, eight years out — we’re going to be at a point where there actually is a positive business case for private sector investment in fast-charging infrastructure. But we still need government policy to get us through these coming years to that point where a market can be self-sustaining.

So, again, seeing the federal government deciding to double down on its investment is very positive. And utilities are increasingly looking to invest. In Quebec, Hydro Québec is committed to installing a minimum of 1,600 fast chargers over the next several years, possibly more.

I look forward to the day when the private sector is going to take that up. Ultimately, you might have utilities or, you know, current publicly funded charging infrastructure being handed over to private sector.

Electric Autonomy A model similar to other public-private infrastructure investments, highways and things?

Philippe Dunsky That’s exactly it. This is the classic case of a role for government — or utilities. If you look at California, it has a ZEV mandate, but it also have a utility regulator that is actively encouraging utilities to invest in infrastructure. That is hugely important, utilities doing what they’re best at, which is access to cheap capital for infrastructure. And having them play an important role at the outset, recognizing that [for them] the business case is not on the revenue from those fast chargers, but is on the revenue from the home charging that the fast chargers enable. That sort of approach I think is very helpful.

Electric Autonomy You’re saying fast chargers spur EV sales which leads to home charger sales, which is ultimately their market?

Philippe Dunsky When we do the business case analysis for our utility clients, in terms of the revenue they get from an investment in a fast charger, the vast majority of the revenue — I don’t remember whether it’s 80/20 or 90/10 — comes from the home charging that is enabled because someone buys an EV because they see that public charging infrastructure.

“What we’re finding now more and more, is that it’s moving beyond the policy frame and into more significant investment decisions”

Phillipe Dunsky

Electric Autonomy Your company has been working in mobility and electrification since the industry began. Today, we’re seeing very rapid change. What are the most significant shifts that you’d highlight in terms the work you’re doing, the issues you’re tackling, the clients you’re serving?

Philippe Dunsky Our client base is primarily governments and utilities, and that hasn’t changed, although we are starting to have fleet owners reach out to us as well. But there are a few areas where we’re starting to see change.

When we started doing this work, we were retained a lot for forecasting “What is likely to happen?” And then, increasingly, that moved to the “What ifs?” and “What can we do to accelerate adoption?” What we’re finding now more and more, is that it’s moving beyond the policy frame and into more significant investment decisions. Increasingly we’re being called upon to build out full business cases and business strategies for utilities or others. And that to me is heartening. Because now it’s no longer a question of should we be doing something, but it’s the what, and let’s pencil it out. Let’s bring the hard-nosed number crunching to this and see if we can actually make a business stand.

Electric Autonomy That means it’s getting real.

Philippe Dunsky That’s exactly it. It’s getting real.