The benefits of electric vehicle adoption for electric power utilities and distributors

 In Electric Utility

Plug-in electric vehicles (PEVs) consume electricity. But when in a discharge mode, they can also export stored power back to the grid. The vehicle-to-grid (V2G) charging services can be used during peak times when demand for power is the greatest, saving the grid from overload. By using electric vehicles as mobile energy storage units, utilities can potentially avoid costly infrastructure upgrades, such as building new power plants. Electric vehicles can also improve grid’s stability when it is exposed to significant disturbances such as sudden large load changes, bus faults, or generator and branch tripping. They can act as safeguards, reducing the speed and voltage fluctuations and extend the critical clearing times by up to 40%. Electric cars can also store energy from renewable resources and release it back to the grid when needed. With the growing role of renewables in utilities’ portfolio, this prospect cannot be overlooked. The opportunities are numerous, but there are also challenges ahead. The first one is, how can utilities manage electric vehicles’ charging to their benefit?

How can utilities use managed EV charging?

At the moment, most electric cars are charged early in the evening when their owners return home after work. This is more or less the same time when household appliances, such as cookers, air conditioning, entertainment systems and others are being turned on. It is not difficult to imagine that such increased demand puts immense pressure on the already overloaded grid. In the United Kingdom, for example, peak demand could be as much as 8GW higher in 2030 if this charging pattern remains unchanged.

To capitalise on the electric vehicle revolution, utilities must find a way to encourage car owners to charge their cars when the demand for power is low and return power back to the grid during peak demand times. Such managed EV charging can reduce the peak load even by 90%, according to the Rocky Mountain Institute (RMI) study conducted across New York, Texas, California, Hawaii, and Minnesota.

Interestingly, studies show that EV owners must be influenced to charge during off-peak periods for the first three months of the car ownership; otherwise, they would develop a habit of charging their cars after returning home from work. The time is now for utilities to provide adequate charging infrastructure and off-peak tariffs in place to help EV owners adopt the best car charging routine before the market for electric vehicles takes off for good.

The potential for system savings and business efficiency

A recent study conducted by the M.J. Bradley & Associates shows that significant savings could be achieved if drivers wait to charge their cars after the peak demand period is over, such as late in the night. If PEVs reach a market penetration rate of between 17 and 25% by 2050, car owners, utility customers, and the society could save between $3 and $18 billion per state. With the market penetration between 80 and 97%, the savings can total 17 to 75 billion dollars.

Researchers from Carnegie Mellon University found that managed charging using cheaper ‘night’ plants could reduce the costs of integrating PEVs into an electrical system by up to 73%. Allowing grid operators to control electric vehicle charging speed could reduce these costs even further by an average of $70 per vehicle per year.

Utility-run electric vehicle charging stations

The investment of public utilities into EV charging infrastructure is not free from controversy. The opponents say as the prices of electric cars remain relatively steep, it will force all utility customers to subsidise the infrastructure that will be used by the wealthy few. Kansas, Michigan, and Missouri refused the utilities’ request to build EV charging stations for now, describing it as ‘speculative venture.’

But the good news is that many power companies across the United States, Europe and other markets are rolling out EV charging infrastructure programs. In California, for example, San Diego Gas, Southern California Edison, and Pacific Gas and Electric are to build 12,500 charging stations across public locations, apartment complexes, and workplaces.

It is true that such investment will initially be passed on to all utility consumers, but in the end, all consumers will benefit from reduced peak load, more reliable grid, and other advantages electric cars would generate.

Both Deloitte and MRI studies argue that proactive substantial investment in electric vehicles infrastructure would be so advantageous for the grid and consequently for all customers that utilities should be able to rate-base the infrastructure costs. The additional revenue generated from PEVs charging will complement utilities’ revenue, thus reducing the need for future electricity tariff rates hikes.

How utilities can use electric vehicle adoption to generate revenue

The wider adoption of electric cars creates a massive and long-term growth opportunity for utilities suffering from recent declines in electricity sales. It is estimated that in the United States a typical electric car would use 261 kWh monthly, increasing the household demand for electricity by 25 to 40%. In Europe, the revenue opportunity for utilities is even greater. In Germany or Netherlands, an electric car driven 15,000km per annum would approximately double the household energy use. With thousands of electric cars on the roads, this new source of revenue could be critical for utilities to maintain their profitability and growth. In the most basic business model, the utility can sell energy for charging PEVs. Managing charging points represents another opportunity. Some utilities even consider providing electric cars to customers as a service, with the fees for energy and car rental combined into one bill.

Innovative business models to capture this opportunity

Progressive utilities do not wait, but they take action to make the most of this opportunity, achieve system savings and business efficiency.

Californian Pacific Gas & Electric, in cooperation with the car manufacturer, BMW, tested the opportunity to lower demand at peak times by asking BMW i3 EV drivers living in San Francisco area to delay charging their cars for one hour. During the 18-month trial, 100 participating vehicles contributed an average of 20 percent to the demand reduction target. With a 98% satisfaction rate among drivers, the utility is expecting 250,000 EVs enrolled for the program by 2030, with the potential of 77.6 MW load drop per event.

Under the San Diego Gas & Electric managed charging pilot program, EV drivers were offered favourable rates, encouraging them to charge cars at the times when the electricity supply is abundant and cheap. Via mobile app, the drivers were informed ahead about the planned change in the charging price throughout the day so that they could take advantage of the lower rates and help the utility to minimise peak demand. To attract new customers, some utilities such as ConEdison in New York have decided to provide EV-specific bonuses.

Distributed storage and sustainable energy

With the global trend towards decarbonisation, the role of renewable energy sources in utilities portfolio is growing. However, they present a significant problem to power companies. Solar farms produce most of the power during the day, while the demand peak starts after the Sun goes down in the evening. And this is where electric cars can help. Often described as ‘batteries on wheels’, electric vehicles can store produced solar energy and release it back to the grid when it is needed the most.

Similar to solar, EVs could support increasing wind power generation. The study conducted by researchers from National Laboratory for Sustainable Energy in Frederiksborgvej, Denmark investigated the impact of 500,000 electric vehicles on 8GW of wind power generation. The project demonstrated the potential of reducing the excess, or loss of wind power by 800MW. Such reduction can have a significant effect on the grid.

The fact is that electric vehicles are the future of energy storage. Using electric cars as mobile energy storage units rather than huge centralized aggregations of batteries can help utilities eliminate the need for extra high-voltage infrastructure.

A note of caution for utilities

Utilities must be careful, especially in those regions where the number of electric vehicles is increasing rapidly, such as the Silicon Valley, California, or Colorado. On average, an electric car with a daily travelling distance of 40km requires 6-8kWh to recharge, nearly as much as a small household. Some local distribution grids are simply not built to accommodate such extra demand. Big hikes in electricity demand may affect the stability and efficiency of the grid, with transformers being the most vulnerable. To give some example, the Sacramento Municipality District Utility has to replace about 17% of its transformers because of the damage caused by the EV overload. This is why managed charging is so important.

How to run an EV pilot project

Running an effective EV smart charging pilot program does not have to be complicated or expensive with the right technology in place. FleetCarma’s SmartCharge Manager™ and SmartCharge Rewards™ are scalable EV charging monitoring tools designed to help utilities manage localized grid load.

How do they work? The vehicle is equipped with a digital logger, designed to obtain the battery state of charge along with other vehicle side data in real time. This individual data is collected and made available to the program administrators so that they can instantly see the charging patterns in their service territory and make better decisions and efficient management of demand response programs. All this can be achieved at a fraction of the cost when compared with other solutions available on the market.

The technology has virtually no impact on the vehicle owners’ lifestyle, ensuring a high level of program participation and user engagement. It is a win-win situation for both sides.

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