How EVs could save the grid – and lower energy bills

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There will be a good way and a bad way to manage the roll out of electric vehicles. The latter could lead to uncontrolled rises in energy costs, the former could help reduce energy costs, and save some energy infrastructure from becoming redundant.

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The world’s electricity grids are facing a dramatic makeover in coming decades as the rapid expansion of renewable energy, distributed generation, battery storage and smart technology takes hold. It’s going to be a challenge to the energy industry’s operations and to their business models – as big as the challenge that hit the world’s telecom networks more than a decade ago with the success of the mobile phone.

It may be, however, that the introduction of the electric vehicle in great quantities could be a saviour to much of the established infrastructure, protecting assets that could otherwise be stranded and leading to an overall reduction in electricity costs.

The Australian Energy Markets Commission, which is responsible for setting the electricity market rules, released an issues paper this month to help prepare for the sort of changes that might need to be implemented if the uptake of EVs takes off.

It came to two initial conclusions: Badly managed, the rollout of EVs could have a severe impact on electricity costs if battery charging times were not controlled and this resulted in large addition to peak demand.

However, if managed properly, the rollout of EVS could lead to a noticeable reduction in energy costs because it would increase load factors at night time and spread the fixed cost of the network over a larger consumer base. And its storage capacity has the potential to put energy back into the grid at times of peak demand and help reduce wild fluctuations in pricing.

The paper includes work done by the consultancy group AECOM, which finds that the difference in costs to the grid between controlled and uncontrolled charging could be as much as $12 billion if the take up of EVs is high, described as 47 per cent of new vehicles sales by 2020 and 54 per cent by 2030.

In the central scenario, where EVs account for 20 per cent of sales by 2020 and 45 per cent by 2030, AECOM says the additional cost to the grid to meet peak demand on uncontrolled charging out to 2030 is $8.9 billion. But if time of use charging is introduced, this cost is reduced to just $550 million. With smart meter charging, it is reduced to $270 million, and with controlled charging, the cost is reduced to zero (although some rural areas may need upgrades).

It should be noted that even in the high scenario, the additional load on the National Electricity Market will be 14.2 million megawatt hours, or just 3.7 per cent of the market. If this is required in the early evening when commuters return home and plug in their car, that will cause problems for peak demand, and for prices. But if the load can be distributed, it should be easily absorbed – and help reduce the occasions when excess capacity and weak demand causes “negative prices” during the night, a situation sometimes exacerbated by the rollout of wind energy.

The AECOM research estimates a wide range of consumption depending on the size of the vehicle and its use, just like with petrol cars. On average, a small car will consume 19kWh per 100kms, a little over $4 in energy costs. Those same vehicles may pay between $8 and $10 for fuel. A large car will consume 21.kWh.

On average it is expected that a small car on average kms (15,000) will consume around 2.7 MWh of electricity a year. A large car on high kilometers (45,000kms) will consumer nearly 10MWh. A taxi might consume 25MWh.

The AECOM research notes EVs may in fact help manage transmission and distribution networks, because their storage capacity can reduce system stress at times of peak demand, as well as during planned outages and in the event of asset failures.

EVs may be used to manage wholesale price risk faced by retailers. This could occur under smart charging where EV users may respond to the current retail price, thus lowering average prices for EV users and reducing price risk for retailers. And EVs may also be used to manage price risk through the controlled charging option.

Another aspect is that the rollout of the EV is likely to stimulate the introduction of smart meters and associated infrastructure to other appliances in the house. Indeed, the paper canvasses the possibility that EVs will be used to provide power to household appliances rather than relying on the grid. It says some utilities believe VsH, as it is called, will have all of the benefits of and none of the problems on distribution networks that can be anticipated with supplying EV storage to the grid(V2G) on distribution networks.

EVs may be used to recharge at times that coincide with the availability of renewable generation, meaning that EV charging could benefit from lower prices at that time.

One of the big questions, however, is how all this is managed. Which is the purpose of the AEMC issue paper. It will likely lead to a range of regulatory reform, some of which has been pushed for by utilities and some of it not. This includes the potential of time of use pricing, managing smart meters and increasing demand side participation (where energy users such as EVs put energy back into the grid, or in the case of large contracted users, sell back excess capacity).

The AECOM is broadly consistent with other studies on the rollout of EVs, including those by AGL Energy, and the Australian Energy Market Operator, although these analyses do inevitably differ on predicting the extent of the uptake of the EV – and in the case of AEMO, the impact on peak demand. The study by AGL, which has a commitment to provide renewable energy to support the rollout of the Better Place network due to begin in Canberra this year, also found that a broad uptake of EVs would have a relatively minimal impact on the nation’s electricity market.

It did conclude, however, that “the correct mix of pricing, policy and regulatory settings should ensure a smooth transition to the decarbonisation of the transport fleet.” And key amongst this is the issue of time of use pricing, among others, which the utility says is essential if the country is to take advantage of smart meters, EVs and distributed generation.

AGL agreed with AECOM in concluding that there should be more than sufficient existing generation, transmission and distribution network capacity to manage the demands of the EV, “provided that the combination of smart meters and critical peak pricing form part of the energy market policy fabric for EV owners.”

It also says that the combination of EVs and time of use pricing could maximize the use of network and generation infrastructure, and this in turn could lower unit costs for all consumers.

 

Giles Parkinson is founder and editor of RenewEconomy.com.au, and is also the founder of OneStepOffTheGrid.com.au and founder/editor of www.TheDriven.io. Giles has been a journalist for 35 years and is a former business and deputy editor of the Australian Financial Review.

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6 Comments
  1. Steve 7 years ago

    Giles,

    What does VsH stand for ?
    Vehicle something something

    Did the report look at the impact of EV fast-charging, vs normal(slow)-charging on the ability to meet peak evening demands ?
    I could imagine that occasionally, it might be useful to use fast-charging or faster-charging, for example on a very hot night where EV charging might commence later than usual, but still be fully charged by 6am the next morning.

    • Giles Parkinson 7 years ago

      Hi Steve
      Should be V2G, or V2H. First is vehicle to grid (putting electricity straight back into the grid at peak times), and the second is vehicle to home (using the electric car battery to power home appliances).
      Giles

  2. David 7 years ago

    Giles
    Interesting article. Without a copy of the AECOM report I was unable to confirm was the “3.7%” the total growth for the high adoption rate of EVs or the maximum annual growth.
    Assuming the former and if spread over several years the effects on the grid would seem to be quite limited??

    Regards
    David

  3. Julia Thornton 7 years ago

    It may not take a whole vehicle to level out demand. The electric car company EDay has a business plan to recycle their electric car batteries after two years and install the old batteries in home garages. Loads for batteries in cars apparently cause a lot more deterioration to batteries than loads in regular household use. The garage battery is intended to act as storage a bit like a water tank does. It can be recharged using off peak supply or solar photovoltaic electricity. A large storage battery in every home would also level electricity demand.

  4. Chris Fraser 7 years ago

    It seems this happy situation of V2G at peak times and controlled load charging will have the effect of increasing consumer demand for higher capacity EV batteries. Meaning, you may need batteries to hold 75-80 kWh to allow them to go for a decent commute (without charging during the day) and still have some left in reserve for V2G back at home. There are no retailers i know of with a pricing regime attractive for those few who have PHEV – by making the V2G tariff much higher than controlled EV charging. I wonder if retailers have any incentive at all to fuel growth in take up of PHEV and this will have to be driven by green government.

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