by Christina Davies Waldron and Peter Kobylarek, Science Applications International Corp. (SAIC)
Electric vehicles (EVs) intrigue us with promises of numerous and diverse benefits ranging from reduction in vehicle operating costs and greenhouse gas (GHG) emissions to energy arbitrage that supports electric utility peak-load reduction and auxiliary services.
Mass marketing of EVs to U.S. consumers has begun, starting with the limited availability of 2011 model year vehicles. Adoption rates of EVs, which include battery-only electric vehicles and plug-in hybrid vehicles (PHEVs), however, are projected to be somewhat less robust than analysts anticipated even a year ago. Given the opportunities EVs promise, proactive utilities might want to entice early adopters.
Market Penetration Projections
Before considering actual market conditions, consider how many vehicles the U.S. power sector can accommodate without any new generation or transmission and distribution (T&D) capacity. According to the Pacific Northwest National Laboratory’s (PNNL’s) “Impacts Assessment of PHEVs on Electric Utilities and Regional U.S. Power Grids,” the maximum technical upper limit of EV market penetration based on today’s existing underutilized electricity infrastructure–considering both generation and regional T&D congestion–is approximately 75 percent of the electricity needs of the light-duty fleet. Even if charging is limited to between 6 a.m. and 6 p.m., idle capacity can support 43 percent of existing light-duty auto stock.
A closer look uncovers significant regional differences in the ability to absorb transportation energy demand. For example, the Midwest has the highest technical potential to accommodate EVs’ electrical load with its significant coal-fired capacity, whereas much of the West with its high dependence on hydro is already near maximum sustainable generation levels. Under real-world market conditions, we might not see EV market penetration close to PNNL’s projected levels before 2030.
President Barack Obama set a goal of 1 million PHEVs on the road by 2015, or approximately 6 percent of new light-vehicle sales. Some academics and industry insiders have predicted that EVs could account for 10 percent of new car sales in the United States by 2015. By contrast, the Energy Information Administration (EIA) forecasted in its “2010 Annual Energy Outlook” (AEO) that EVs will represent less than 1 percent of sales in 2015 and will not reach 10 percent by 2035. The electric power and auto industries are prioritizing a smooth transition for consumers over expediency to market. Could prudence be the reason for the somewhat slower start than previously projected? SAIC research suggests a combination of economic factors and increasing numbers of green vehicle options such as standard hybrids are the reason for slightly lower expectations. Figure 1 illustrates the wide range of modeled EV adoption rates. Key model variables in market adoption forecasts include relative life cycle cost of vehicles, energy prices and degree of subsidy.
EVs offer many diverse benefits, opportunities and challenges for utilities, vehicle owners and society, as summarized in Table 1.
Immediate opportunities include new revenue streams, valley filling, increased operational efficiency and the use of fixed capital, and lower vehicle fuel costs. In an “Economic Assessment, Part 2 of the Impacts Assessment of Plug-In Hybrid Vehicles on Utilities and Regional U.S. Power Grids,” PNNL researchers found that utilities across the country might realize these significant benefits. Particularly, utilities with high fixed-unit costs and low variable-unit costs of generation could benefit greatly. In addition, those with excess off-peak capacity or access to low-cost purchased power may be well-positioned for these benefits.
|Battery research will improve overall EV and V2G economics.|
Vehicle-to-Grid Applications. Among the most promising EV opportunities for utilities are vehicle-to-grid (V2G) applications, including peak-power supply and ancillary services of frequency regulation and spinning reserves. University of Delaware research on V2G power fundamentals published in the Journal of Power Sources in 2005 explains a strong economic justification to employ EVs in these costly markets for ancillary services. These quick-response, high-value electric services account for 5 to 10 percent of electric cost in the United States, or $12 billion per year, according to the authors. Net revenue calculations demonstrate that the spinning reserves and frequency regulation markets would provide the highest value to vehicle owners; however, only a small number of electric vehicles would satisfy the ancillary service markets. Energy arbitrage to reduce peak loads is a larger market; however, the research found little economic justification given the battery degradation and replacement cost. Ongoing battery research will improve overall EV and V2G economics.
Secondary Uses of Batteries. Vehicle batteries degrade with use. After battery performance diminishes to capacity levels considered inadequate for automobile use, it still might be useful in stationary applications. Opportunities for re-using batteries after they have reached the end of their useful life in vehicles are numerous if they are found to be technically and economically feasible. The National Renewable Energy Laboratory (NREL) is conducting research on PHEV/EV Li-ion battery secondary uses to find the best fit and quantify the salvage value in the most suitable stationary applications. In addition to grid support, such as peak-load management and ancillary services, other potential applications include renewable energy storage, residential and light commercial building backup power, and off-road and marine equipment. Proponents expect higher battery resale prices in secondary-use markets to lower the EV cost of ownership and raise the EV adoption rate.
Reduction in Foreign Oil Dependence. Large-scale transportation electrification will provide dramatic national energy security benefits through reduced foreign oil dependence. By maximizing idle electricity infrastructure without adding new generation or transmission capacity, as described in Part 1 of the PNNL’s “Impacts Assessment of PHEVs,” PHEVs could reduce U.S. foreign oil dependence by half. This equates to a maximum gasoline displacement potential of 6.5 million barrels of oil equivalent per day. On a per-vehicle basis, an NREL study found that PHEVs can reduce petroleum consumption by more than 45 percent compared with conventional gasoline vehicles, which is only a modest improvement of 15 percent better than NREL projected for hybrid electric vehicles.
Environmental Benefits. A large body of research, which includes an in-depth, two-volume 2007 study by the Electric Power Research Institute (EPRI) and the Natural Resources Defense Council (NRDC) has demonstrated that the petroleum-to-electricity shift enabled by EVs would provide significant air quality and associated health benefits and GHG reductions. Specific impacts would vary by region. For example, certain electric power sector emissions would increase within the limits of existing regulations but at point sources away from highly populated areas. Urban areas would experience reductions in most vehicle emissions. Studies, including volume one of the EPRI-NRDC study have concluded that widespread adoption of EVs would reduce net GHG emissions, even in regions dominated by coal-fired generation. If a future climate policy allows the power sector to receive credit for transportation sector GHG reductions from EVs, utilities could realize a tradable carbon value for EV use in their service area. The EPRI Journal from Spring 2008 quantifies this potential value as 20 cents per gallon avoided by fuel switching to electricity within the context of California’s Low Carbon Fuel Standard, an executive order targeting GHGs from transportation fuels.
The success of electric vehicles in the marketplace depends heavily on creative solutions to a handful of key challenges. Life cycle cost reduction and customer experience are paramount for EV success.
Cost. Many ongoing research efforts will reduce costs, which are significantly greater for plug-in vehicles than their conventional counterparts. Battery research and development will reduce cost and improve range. The EIA in its 2009 AEO predicted that successful research and development will reduce the total incremental cost of PHEVs relative to conventional vehicles to less than $1,500 at volume production. Furthermore, PNNL’s “Economic Assessment” found that under some electricity and gasoline price scenarios, new-car buyers could justify up to a few-thousand-dollar EV premium and still break even on the life cycle cost of ownership even without off-peak incentive pricing.
Range Anxiety. Another threat to EV market penetration is range anxiety. Fast charging, battery swapping and increased battery capacity are the subject of ongoing research to alleviate this concern. Utilities will share public EV charging infrastructure costs, such as for fast-charging equipment intended to perform comparably to a commercial gasoline station. A 2007-8 study by the Tokyo Electric Power Co. demonstrated that public-access fast chargers reduce range anxiety but receive little use. In the U.S., the Chevy Volt will incorporate a range-extending (to approximately 400 miles) internal combustion engine-powered generator, and the Nissan Leaf will include a battery with a greater range (of roughly 100 miles) on grid-charged battery power.
Complexity. Although cost and range anxiety are the most cited barriers, the potentially burdensome multistep process is a deterrent to mainstream consumers. Patience may be a lot to ask of a car buyer expecting a sign-and-drive deal. The extra steps of permitting, installing and inspecting the EV supply system might take a month or two and increase the costs to the EV owner. Streamlining efforts to reduce permit costs and expedite the permitting process might mute the bureaucratic hassle and costs, as in: New York City; Raleigh, N.C.; Portland, Ore.; and the state of Oregon.
Utility and Grid Challenges. Key challenges from the load-serving entity perspective include managing EV loads to avoid peak recharging and neighborhood clustering impacts on transformers. Anticipating the keeping-up-with-the-Joneses peer pressure that has proven to be real and strong among green urbanites eager for alternative transportation options, utilities must prepare for EV purchases that cluster geographically within neighborhoods and threaten to impose unsustainable loads on existing transformers. This could impact equipment life and accelerate replacements.
Industry groups, government and academic research organizations and regulatory agencies are supporting utilities and grid organizations to rapidly prepare to integrate EVs and manage the impact of EV loads. If recharging is not managed, EVs could increase peak-load profiles or even create new peak periods. A combination of smart grid direct timing control technologies and effective time-of-day rate incentives will emerge soon.
Whether EVs overtake the internal combustion engine’s market share in the next 20 years or the second half of the century remains to be seen.
The multifaceted benefits appear to justify the significant research and development being expended to reduce technical, economic and societal barriers and accelerate this transformation. Authors
Christina Davies Waldron is a senior analyst with SAIC. She has a master’s degree in civil, environmental and infrastructure engineering and focuses on energy, electricity, transportation and climate change research and strategic planning projects. Reach her at firstname.lastname@example.org.
Peter Kobylarek is an energy and climate change analyst with SAIC. He has worked in the auto industry researching the grid-home-vehicle interface and neighborhoodMore Electric Light & Power Articles
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