The anticipated proliferation of electric vehicles will effectively double the amount of storage on electricity grids – at effectively zero incremental cost.
That’s the proposition put forward by the global energy team at investment bank UBS, who predict that electric vehicles will reach “true cost parity” before 2020.
This, combined with rooftop solar at grid parity and the falling costs of batteries, will fundamentally change the nature of electricity networks.
More importantly, they say, it will effectively deliver large amounts of battery storage for zero incremental cost, allowing critical infrastructure to support the increase in variable renewasble energy generation to be incorporated for free.
“Nobody will buy an EV or a hybrid car because it offers storage capacity to the grid,” the UBS analysts write in their report, Will solar, batteries and electric cars re-shape the electricity system?
“It is just a nice, yet very relevant side-effect.”
(See our other stories from that report – Why EVs will make solar viable without subsidies, and another story predicting that coal generators could be all but extinct within a decade, UBS says it’s time to join the solar EV storage revolution.
The UBS analysts note that the Tesla’s S model, in its highest-range configuration, has an 85kWh battery. However, for their assumptions, the UBS analysts have assumed that an average, medium-sized EV will have a 40kWh battery. Plug-in hybrids will have storage of just 5-10kWh.
“If only 10% of the European car fleet were EVs and plug-in hybrids (assume a 3:1 split between the two types), there would be 23m batteries or 731GWh of storage capacity hooked to the European power grid per day,” the analysts write.
This is equivalent to five times the existing European pumped hydro storage capacity today.
“Even if only a certain proportion of that battery capacity would be available (some batteries may be full and cars will not be connected to the grid all the time), EV penetration would still be a game-changer, as it would amount to 4% of daily electricity demand. And, in combination with stationary batteries (which are not included in the chart below), the storage capacity is likely to be even greater.”
The analysts also suggest that incorporating the extra demand from charging EVs will not be an issue. Even with a “blue-sky” 20 per cent EV penetration in Europe by 2025, the incremental electricity demand would be 5%, or just 0.5 per cent per annum.
This is likely to be more than offset by increased focus on energy efficiency.
The UBS report points to some fascinating possibilities in the way that EVs are managed.
One idea, is that EV could have a personalised ‘ID’ for charging and discharging, no matter where it is hooked up to the grid.
That means it could be charged at a company parking lot with solar power from the owner’s rooftop panels at home while the owner is at work during the day.
The utilities would charge the customer for the grid use and the metering/billing services. This would reduce the amount of stationary battery capacity required at home.
UBS argues that the proliferation of EVs and storage will mean that electricity demand will be much better aligned with the available supply, and this will minimise cost to electricity users and the entire system. Storage and demand-side response – helped by smart technology – will greatly reduce peak demand and th need for back-up power stations.
“We estimate that smart demand could save the EU-28 economy several billion euros a year through avoiding the need for capex into back-up power stations and through lower power prices (as there would be fewer hours during which high- marginal-cost plants set the wholesale power price). “
It also suggests that irrespective of the economics, the push for a sustainable, local supply chain by both consumers and corporates will spur investments in a clean, de-centralised electricity system.
“Not just consumers, but companies, too, are likely to jump on the bandwagon,” they say. As an example, the UBS analysts point to Wal-Mart plans to switch its stores to 100 per cent renewable power by 2020, up from around 20 per cent today. “They may be doing that to appeal to consumers, but probably also to save money,” the analysts say.