TECHNOLOGY IN SYSTEMS
Technologies for Energy Intelligence
The Smart Grid Tipping Point for Electric Vehicles: Closer than You Think
With gas prices once again creeping toward $4/gallon in the United States, the industry is overcoming obstacles that have impeded widespread adoption of plug-in electric vehicles. This technology will become an integral part of the Smart Grid.
JIM ZYREN, QUALCOMM ATHEROS
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Will your next car be a plug-in electric vehicle (PEV)? For many American consumers, this is becoming a distinct possibility. At some point, the world will emerge from the global recession. When this occurs, many experts predict that gasoline prices will eclipse the $5/gallon threshold, a price that will catalyze tremendous interest in PEVs.
With price levels driven down by the possibility of a double-dip recession and a slow summer driving season, oil consumption actually hit an all-time high in, reaching 87.4 million barrels per day in 2010, according to the Worldwatch Institute. When the current recession ends (and it will), those aforementioned $5 per gallon gasoline prices in the U.S. will create a lot of electric vehicle enthusiasts (Figure 1).
The steady rise of gasoline prices, despite temporary fluctuations, is expected to continue. The point of five dollars per gallon is considered to be both an economic and psychological tipping point.
The Smart Grid, end-to-end involves intelligent devices and different levels of networking throughout.
Of course, many early adopters purchasing PEVs today, such as the Nissan Leaf, Tesla Roadster or Chevy Volt, are doing so for philosophical rather than economic reasons. These consumers are mainly interested in reducing their carbon footprint or reducing our national dependence on imported oil. However, even with today’s lower than expected gas prices, PEV owners are already saving money through government incentives and by inexpensively charging their vehicles at home rather than spending money at the pump.
Depending on the model of car being replaced by a PEV, consumers can save anywhere from $36/fill-up for a vehicle currently averaging 30 MPG to $45/fill-up for a model averaging 15 MPG. (These numbers were calculated for California.) The savings from replacing that gas-guzzling SUV adds up quickly.
As utilities modernize their infrastructures and with the build-out of the Smart Grid, time-of-day pricing programs will become available to PEV owners. Demand on the energy grid varies dramatically over the course of a day. Nationally, the average price for electricity is about 10 cents per kilowatt-hour. Time-of-day pricing will allow utilities to vary the price of electricity over the course of a day. This will create an economic incentive to shift existing demand from peak hours. It will also spur new demand (such as PEV charging) at off-peak hours (between midnight and 5:00 AM, for example). PEV owners stand to save a lot of money when they charge their vehicles during off-peak hours.
Tax Incentives Help PEVs Compete
Consumers tend to focus on up-front costs and often lose sight of longer-term recurring benefits when deciding on new vehicle purchases. Ask any behavioral economist, and they’ll tell you that consumers aren’t good at factoring in long-term consequences. Instead, the sticker price and variables such as horsepower, style and interior legroom get more attention when consumers step into showrooms.
Today, PEVs need incentives—typically in the form of tax credits from state and/or federal government—to be competitive at the time of purchase. In the U.S., California incentivized the first wave of early adopters. California consumers could defray the cost of a new PEV by adding a $5,000 state tax credit to a $7,500 tax credit from Uncle Sam. $12,500 in tax credits goes a long way toward making PEV purchase prices more competitive.
Unfortunately, California no longer offers its PEV tax credit, but as electric vehicles ship in greater volume, the sticker price is expected to fall significantly. As of July 2011, Nissan sold 4,134 Nissan Leafs, while General Motors sold 2,745 Chevy Volts (which is technically a PEV, since the gas assist doesn’t kick in unless the vehicle is driven beyond its initial 35-mile EV range). Those numbers are nowhere near the volumes needed to compete with gas vehicles, but manufacturers are aggressively ramping up production.
Nissan is investing about $1.7 billion in an electric-car battery factory and other upgrades to its Smyrna, Tenn. complex. The company intends to start building batteries and PEVs in Smyrna by the end of 2012. Meanwhile, other automakers, including GM, Mitsubishi, Ford, Toyota and Honda, have either announced new PEV models or plans to scale up PEV manufacturing.
Standards Pave the Way toward Even Broader Adoption
For PEV adoption to spread quickly, standardization is a must. It is one thing if you need an adapter to charge your cell phone overseas, it is quite another if you can’t recharge your vehicle after you’ve crossed state lines. Fortunately, automotive standards bodies such as the Society of Automotive Engineers (SAE) in North America, ISO/IEC in Europe and the Japanese Society of Automotive Engineers, are making progress on developing uniform global standards for connectors and signaling over charging cables. The recently adopted SAE J1772 standard specifies a five-pin, conductive-coupling connector for AC charging (Figure 2). Having a standardized connector is essential with PEVs, since roaming isn’t possible without them. SAE J1772-compliant connectors support both AC and DC charging, meaning that plugs that work with slower-charging home AC stations will still maintain compatibility with fast-charging public DC stations. The J1772 connector also includes a safety interlock that immobilizes the vehicle while plugged in.
The SAE J1772 connector specification is expected to become standard for pluggable electric vehicles. It can handle charging from both AC and DC charging stations as well as the network signals for such things as billing and time-of-day pricing.
Key elements of a Smart Energy software stack.
Roaming in PEVs is far different than roaming in a traditional vehicle. Finding a charging station is just the first obstacle. Once found, how will you be billed for power usage? How will providers connect your vehicle to an existing home electric utility account? How will they handle roaming as you drive beyond your home utility’s coverage area?
If those questions sound like we’re talking about mobile phone coverage rather than vehicle charging issues, it may be because many of the roaming obstacles facing PEV manufacturers mirror those that telecom carriers struggled with twenty years ago. In the industry parlance, charging pedestals are referred to as Electric Vehicle Supply Equipment, or EVSE. Communications between PEVs and EVSEs are being worked out in parallel by the SAE J2931 committee in North America, ISO-IEC 15-118 in Europe and JSAE in Japan. It’s worth repeating that all of these groups have agreed to work together to create a single global standard for PEV/EVSE digital communications over the J1772 charging interface.
As a result of such efforts, the power delivery infrastructure that enables vehicles to charge at home, at work and in public locations such as restaurants and entertainment complexes is starting to be built out. By 2017, Pike Research, a market-research firm that studies clean-tech trends, forecasts that more than 1.5 million locations to charge vehicles will be available in the United States, with a total of 7.7 million locations worldwide.
With standards and infrastructure in place, the appeal of PEVs will spread beyond the consumer market to the business market. Another recent report from Pike Research predicts that between 2010 and 2015 more than 1.3 million PEVs will be purchased for use in fleet operations, with nearly 400,000 vehicles being sold annually by the end of the forecast period. Helped along by fleet purchases, Pike predicts that worldwide PEV sales will reach 5.2 million by 2017, up from 114,000 vehicles in 2011.
The $5/Gallon Tipping Point
As noted earlier, consumers often ignore long-term benefits (the price of gas, insurance rates, resale value, etc.) in favor of short-term, tangible factors, such as initial sticker price, horsepower and vehicle styling. When gas exceeds $5/gallon, which could happen sooner rather than later, the price of filling up the gas tank shifts from a long-term to a short-term consideration—because it’s really gonna hurt.
At $5/gallon, the cost of a typical 40-mile roundtrip commute in a car averaging 20 MPG hits $50 per work week, each and every week. That’s more than $200 per month—and that’s without factoring in various side trips, such as dropping the kids off at soccer practice or driving to the grocery store. At $5/gallon, each and every fill-up for a typical 14-gallon tank will cost at least $70.
Other economic factors will also tip the scales in the favor of PEVs. Utilities scale their generating capacity to meet peak demand, which occurs at about 3 p.m. on a typical workday. During post-peak hours, much capacity sits idle. Expect utilities to roll out preferred pricing plans for off-peak PEV charging.
The economics behind producing a kilowatt-hour (kW-hr) of electricity on the North American grid have a major influence on the overall case for electric vehicles. Power plants represent huge investments of capital for utilities. They are extremely efficient when run at full capacity. However, when demand is minimal between the hours of midnight and 5 a.m., large scale natural gas or coal fired plants are grossly underutilized. The average price for a KW-hr in the United States is about 10 cents. However, at periods of minimal demand, utilities could sell power profitably for as little as 3 cents per KW-hr.
One of the main features of the emerging Smart Grid will be “time-of-day” pricing programs. Utilities will be able to charge different rates based on the time of day. The idea is to incentivize consumers to shift existing demand from 3 p.m. to 3 a.m. wherever possible to realize the lowest possible energy cost. Utilities are also interested in creating new demand that can exploit unused capacity at off-peak periods.
Consumers with EVSEs installed at home will be able to qualify for time-of-day pricing incentives. EVSEs will be able to recognize and respond to pricing signals sent by utilities and automatically commence charging when the price is right. By charging between midnight and 5 a.m. for example, PEV owners will be able to recharge those high capacity batteries for as little as 3 cents per KW-hr. It’s been estimated that charging a PEV at 3 cents/KW-hr is roughly equivalent to buying unleaded gasoline at 75 cents per gallon. When compared to filling up for $4 or $5 per gallon, charging a PEV at 3 a.m. for a few pennies per KW-hr starts to look pretty attractive (Figure 3).
The home area network (HAN) will partly act as an extension of the wide area network (WAN) portion of the Smart Grid. In addition to smart metering, it will allow intelligent interaction with major appliances as well as electric vehicles.
Most utilities are also under pressure to expand use of renewable energy. In California, former governor Arnold Schwarzenegger launched an ambitious plan requiring that utilities generate 20 percent of their electricity from renewable energy sources. Current governor Jerry Brown has increased that target to 33 percent. Renewable energy incentives and mandates will apply further downward pressure on the cost of a mile driven in PEVs.
As renewable energy replaces energy sources such as oil, nuclear and coal, the problem of matching output and demand becomes an even larger concern. With conventional sources of energy, output is completely controlled by the utility. This is obviously not the case with power generated by wind-turbines. Peak generation from windmills and peak demand are completely uncorrelated. One of the main drawbacks of renewable energy from wind-turbines or solar arrays is that they are use-it-or-lose-it resources. You can’t get back yesterday’s wind or sun. This means that either expensive electricity storage must be added to the grid, or utilities need to figure out ways to align peak output with peak demand.
Once again, innovative approaches to pricing can help by aligning demand with capacity. Time-of-day pricing is straightforward. You’re charged more during peak demand, and less in off-peak hours. What’s needed to get the most out of renewable energy is an additional pricing variable: opportunistic pricing. In other words, if the Santa Ana winds create a surplus of electricity, California utilities should have a way to artificially inflate demand through things like price-drop alerts, power sharing with other states, and even free PEV charging offered as means of matching supply and demand.
A case in point is Germany, a country that has aggressively built out wind farms. Wind power currently accounts for approximately 7 percent of Germany’s total electrical power (compared to 2.3 percent in the U.S.). Germany has plans to build more wind farms and other forms of renewable energy, and has a goal of attaining a 100 percent renewable energy supply by 2050.
In a country like Germany, where renewable energy has strong public support, PEV owners will almost certainly benefit from ultra-low-cost or possibly even free charging when wind-generated capacity exceeds demand. As wind farms get built out, those “free” charging times will be more and more frequent. Who wouldn’t trade a $70 fill-up with a traditional gasoline-powered vehicle for a $10 charging session, with the occasional freebie thrown in?
San Jose, CA.