by Adam James
This is the third article in a series exploring various issues within the evolution Smart Grid and provide some insight into the conditions shaping the debate. This article will discuss the impact of electric vehicles — particularly the chicken-or-egg problem of whether the infrastructure needs to be in place to support EVs before they can impact the market or whether significant market penetration should precede investment in structural changes.
Issue 3: “Infrastructure Build out vs. Market Penetration”
Consumer choice: or “why am I not charging my electric car right now?”
The consumer wants to know they can readily and easily use the product. If the hassle is too great (i.e. the charging infrastructure is not in place) they won’t bother. In fact, there are plenty of people who will pay more for a product to avoid any extra work.
The question of infrastructure vs. markets will be gauged by the cost and convenience to consumers. A lower total cost of the car combined with incentives and rising gas prices will encourage sales. Likewise, if consumers can just plug the car in at home or pull into the charging station on the way to work they may be willing to pay more.
So what’s the problem?
One side argues that it would be irresponsible to pour significant investment in infrastructure for a product that may not gain market velocity. On the other hand, some have pointed to the lack of infrastructure preventing EVs to penetrate the marketplace. Of course, it’s both. These forces need to work in tandem.
However, the scale does tip to the infrastructure issue when we consider that even in a very low market penetration scenario, our grid system may not be able to handle a massive increase in load.
Currently, the reliability of our grid is dictated by the tension between generation capacity, storage, and demand. Energy demand functions in peaks and troughs, with the peaks during midday and the troughs (generally) in the evening. EV charging, if done during peak hours, would add strain onto an already overloaded system and decrease reliability.
For example, if you pull into your garage after work and start charging your EV, this would correspond to neighborhood load peaks (as everyone arrives home and turns on the lights etc.) which would wear our transformer systems and pass along increased cost through the rate base to the community. Since reducing peak demand through demand response is already an issue, it may serve utilities well to update existing infrastructure in a way which can accommodate and encourage increased EV use.
Wait, if EVs are an additional burden, why encourage them?
The exciting part of EVs is the potential for bidirectional flow on the grid. Simply, the ability for EVs to act as storage units for offloading excess energy from the grid and sell their unused energy back onto the grid at needed times. Rather than being part of the problem, EV could be a revolutionary part of the solution. The trick is a combination of competitive rate structures, real time pricing, and enabling technology.
Competitive rate structures would function as a demand response mechanism by incentivizing use at off-peak hours and, by providing better rates at times when the grid is under less duress, utilities could encourage consumers to charge at different times. Also rate structures could provide consumers with good reason to sell energy back at peak hours and take some weight off generators. Real time pricing would enforce rate structures with pay-as-you-play energy purchases; tracking when you use and sell energy, and giving you the corresponding rate.
Enabling technology to do vehicle to grid operations needs to become commonplace and changes to batteries and transmission would have to be made. Additionally, mechanisms would need to be in place to ensure that when you agree to have your car float some energy back to the grid, utilities can access your EV. This requires automation across the system, which will be required of the Smart Grid moving forward with or without EV.
While studies vary as to the potential for EVs in the market, infrastructure changes must go full steam ahead. Hopefully, EVs will empower consumers and increase their energy independence. But in the medium-term it is much more likely — as a report published by MIT’s Energy Initiative concludes — that their impact will be highly localized and community specific. Because utilities, too, are community specific, there are likely to be some that need to take certain parts (rate structure, technology) more seriously. Other components like real time pricing are important not just for EVs, but also for efficiency and renewables — so this is a piece that could form the fastest.
Adam James is a special assistant for energy policy at the Center for American Progress
This post has been updated.