Frankfurt's car show, one of the most important in the world, this September spotlighted electric vehicles (EVs). France and the United Kingdom have already decreed an end to sale of cars with internal combustion engines by 2040. Norway is looking to do the same by 2025. And China has begun the push to electrify its vehicle fleet. In the process putting pressure on foreign manufacturers to share technology if they want to gain entry to the potentially enormous Chinese market.
Politicians, eager to claim credit for factories and jobs, have begun to make decisions about EVs--even if customers and car markets have not. Auto manufacturers in Europe, Japan and China have taken to heart government dictates regarding the eventual phase out of internal combustion engines. Large auto manufacturers are global in scale. EVs manufactured abroad to U.S. specs will eventually be marketed here whether our environmentally recalcitrant federal government encourages them or not.
The prospect for a big shift in vehicular energy consumption from oil-based products to electricity could have enormous implications for the global electric utility industry.
EVs will increase power consumption and more importantly could raise power demand during peak periods when some systems may already be straining under existing load. Britain's National Grid, in its official report to the government, Future Energy Scenarios (2017), claimed that vehicle electrification could increase peak demand 7-14 percent by 2030 and 10-30 percent by 2050.
While we would take any 33-year forecast with a grain of salt and a dose of skepticism, we wouldn't disagree that the development of an EV load has investment implications, including one that does not seem to be getting much attention. That is, could it increase risk to incumbent utilities if all of these battery owners somehow unite and sell power to each other? Or even back to the local utility? After all, a large number of batteries synched together does resemble a power plant.
The numbers are high and the ranges are wide. Why? The higher estimated demand assumes that car owners plug in "without smart charging." In other words, they charge at the wrong times, when everyone else is using electricity for other purposes. If that happens, the new load could strain the grid.
On the other hand, assuming usage of smart meters, clever pricing strategies and deployment of off-peak charging locations, the problem goes from systemically stressful to minor nuisance. Or if the utilities play it right, a bonanza, producing new sales during periods when sales would normally be low.
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However, the utility (and ultimately its consumers) has to invest in the necessary infrastructure. One journalist claimed that the average British home's wiring could not handle an electric teapot and a vehicle recharge at the same time. (Interestingly, National Grid predicted kwh sales increases from EVs over 2017 levels of only 4-7 percent by 2030 and 12-15 percent by 2050. Having to increase grid capacity by 30 percent for a 15 percent sales increase is not good business, so it is important for the utilities to convince consumers to plug in at the right times. )
Lacking a National Grid to produce an official US projection, we have to rely on studies from industry, government and interested parties that may not have National Grid's resources or the same incentives to come up with an unbiased projection. But we can hazard an informed guess.
Demographic trends seem negative for the auto industry due to declining population growth, fewer miles driven and declining car ownership per capita. In a way, the automobile business is as stagnant as the electricity business. But the electric business has a far better regulatory scheme.
We believe kwh sales to EV owners will remain modest in the near term for three reasons: the initially slow rate at which electric vehicles are introduced into the overall car fleet, and the likelihood that heavy trucks will not have electric engines for years to come.
We estimate that EV owners will consume no more than 2 percent of electricity sold 2 percent by 2022 and 7 percent by 2027 - numbers the industry could easily manage.
But once EVs account for the bulk of the light vehicle fleet, sales to EV owners could equal r 30 percent of total current electricity sales. That incremental business, if it materialized over 25 years, would add 1.1 percent annually to industry sales, more than doubling sales expectations.
But what about demand added to peak load? The impact on electrical system usage depends not surprisingly on when EV owners recharge and the frequency of those recharges.
If every car owner were to recharge simultaneously during peak periods, peak load would more than double. With the rapid, significant investment this might imply, the electric industry might end up in worse shape than without the additional load. On the other hand, assuming that car charging behavior is spread through the week, that charging still could add 30 percent to peak demand. Utilities need to convince those recharging consumers to plug in the cars during periods of low usage, instead.
The key? Consumer education. Try to convince EV owners to recharge during off peak hours to reduce strain on the electric power generating and distribution system. But no matter when this battery re-charging occurs, the utility will have to invest in network upgrades in anticipation of not only increased usage, but also potentially changing local patterns of demand as well.
Enter public policy. As solidly investment grade corporations, the U.S.'s regulated electric utilities could easily raise capital to build this new infrastructure provided that public policy requires it. Regulators, however, are a skeptical lot. They are not likely to allow meaningful capital expenditures based merely on speculation that EV load will materialize.
The British, French, Norwegian and Chinese policymakers all have a leg up so to speak on their U.S. counterparts. The former have promised to eventually ban non-EVs. That alone will guarantee the regulators some certainty and would stimulate a market EV battery recharge.
In order to encourage comparable investment here, state governments would have to act. Getting the Trump administration to advocate for an end to internal combustion and diesel engines as a means to mitigate a climate challenge seems a stretch. Related: Trouble Is Brewing In Kurdistan
The other questions about EVs-whether miners can produce enough lithium for batteries, whether the industry needs to standardize plugs, whether the government should invest in particular technologies or policies, or even whether EVs are an optimal means to address CO2 pollution and climate change--are topics for subsequent discussion.
These are the key takeaways. The electric utility industry needs EV manufacturers to create a standard plug-in protocol (which might require government action) in order to be able to serve all customers. Also, the regulators must enunciate clear and supportive public policies that encourage EV usage and that assure utilities of the prudence of building the infrastructure.
Furthermore, to make the transition to EVs economical, regulators will need to approve electric rates that encourage car-battery charging at less stressful, off-peak times. Otherwise, vehicle electrification will either not materialize or create extraordinary and unnecessary disruption of our electricity networks.
By Leonard Hyman and Bill Tilles for Oilprice.com
More Top Reads From Oilprice.com:
Leonard S. Hyman is an economist and financial analyst specializing in the energy sector. He headed utility equity research at a major brokerage house and… More
Comments
On the flipside, the utilities will have competition. Other players will want in on this market and have the technology to sideline utilities.
Suppose your a Big Box store. You've got a massive solar array on your big flat roofs, and you can get solar and wind PPAs too. So now you've got power to run your store and warehouses. You've go power to charge your trucks at both warehouses and store as the truck load and unload. You've also go some extra power, some surplus that comes and goes with the trucks, wind and sun. What to do? Set up free charge loyalty program for your customers. Bargain hunters will flock in when they know they can get big charge as they do their weekly shopping. You also have your own grid batteries to defeat demand charges when you must use some grid power.
In this set up, the utility is simply a back up power supplier and transmission provider if you have a PPA. If this sort of business model takes off, a utility could even wind up with less energy demand than before the EV revolution. This is the risk if utilities are unwilling or unable to be more entrepreneurial.
It is not a given that utilities will gain much from this EV opportunity. They are going to have to compete for it. Hopefully, regulators will not stand in the way.
They are the latest perpetual motion machines. 99% of the USA don't give a shit about them. If we put 100% of them on the road tomorrow it would take 20 years to get rid of ICEs. People are worried about a lot of stuff and EVs ins't one of them.
The electric car is inevitable, and it is going to take over a lot quicker than people think.
WRONG- 1. Tesla Model 3 production will sell 10,000 per week by end 2018--https://electrek.co/2017/08/03/tesla-model-3-elon-musk-production-reservations/
Then there's GM's Bolt & other mainstream makers committing to EV's. China leads the world.
WRONG- 2. https://www.trucks.com/2017/05/05/trucking-industry-electric-heavy-duty-truck-growth/
Big Oil is still in denial. Wake up before it's too late!
Those who build will want assurance that the market will support their investment. That's why the government needs to set policy to get everything in place as rapidly as possible. Unless you assume that Tesla will build infrastructure as well as manufacturing facilities. Or that another Silicon Valley enterprise loaded with idle cash does the job. Or, even better, local businesses and distributed networks use renewables to produce the power and steal the business from the grid.
As for the estimates of demand, keep in mind that the auto industry sells 18 million new cars every year into an auto population of 260 million. If 5% of new cars were electric in the coming five years, in 2022 only 1.75% of the auto fleet would be electric. They would require less than 1% of the grid's output. We are not interested in getting into an argum ent about how fast electrification will take place
EV's are inevitable and so is the infrastructure to support it, it will just make financial sense.
Unfortunately it will be the death of big oil, at least as a means of running cars, lorries , busses etc.
So the premise of this piece seems to be a little backwards as it will be ICE losing support as petrol stations close.
Wile e, you do realise even if electric cars were to run purely on coal power, it would still be more efficient than running an individual petrol cars? And of course you conveniently forget that an electric car get it's energy from many sources, like wind or Solar which is becoming a growing part of the worlds power supply.
With battery tech improving, electric cars will be outperforming ice cars in every way.
There are two things that would make this practical. The first is to have a meter on every car and the second is to have charging available at every parking space.
The alarmist position on CO2 is losing steam. Al Gore and his cronies have lost all credibility, as have many of the alarmists [Climate-gate I, Climate-gate II].
Finally, EV vehicles burn COAL in most of the markets where governments are pushing them hardest; i.e. China. 75% of China's electric power is generated from fossil fuels, thus switching to EV's actually increases CO2 emissions, and real pollution i.e. fly ash, SO2.
While you would like to deny global warming. scientists are proving otherwise, not to mention the THREE major hurricanes to hit America this year.
EV's do not burn coal, they run on electricity, which has many sources. Coal is always first to be bought up by people like you, who surprisingly never mention the growing renewable sector, which recently accounted for 52% UK's power needs, with days now when NON of the Uk's power comes from coal
It is ironic you bring up China, They are driving forward with massive investment in renewables, and are world leaders when it comes to green energy.
Finally, electric cars are unique, in the fact that the power needed to run them can be generated at home using solar, couple that with growing battery tech, your reliance on the power grid drops significantly..
There is no denying now, we are heading for a much cleaner, not to mention quieter world.
First, increases in CO2 have multiple benefits for plants, including increased growth, decreased water requirements and increased durability. Global forest cover has increased by more than 4 billion tons (carbon equivalent) since 2003, mostly due to increases in CO2 emissions (natural and anthropogenic). Furthermore, according to the FAO, food crop productivity ‘per capita’ has almost doubled in the past four decades, with almost half of this increase attributed to increases in CO2 (natural and anthropogenic). Conclusion, CO2 is a net benefit to plants, which is a net benefit to a growing human population.
Second, you are terribly behind the curve among alarmists. If you haven’t noticed, nobody, including the most fervent alarmists, speak of ‘global warming’ anymore. The preferred term is now ‘climate change’. This was changed by alarmists to avoid ridicule after 18 years of NO WARMING! If you’re going to post here, at least stay up to date (within a decade at least) with your fellow alarmists.
Third, EV’s most certainly do run on coal. The electric power grid is fluid, and when an EV owner charges their vehicle they do not choose where the power comes from, whether they support solar/wind power or not. As a whole, the US derives its electric power from the following sources: 32% Coal, 35% natural gas, 20% nuclear. That means that 32% of every EV charge comes from coal, whereas 0% of the fuel for my gasoline powered vehicle comes from coal. Don’t get me wrong, I’m not against the CO2 that coal emits (since CO2 is NOT pollution), but the fly ash and SO2 that are emitted.
Fourth, who cares HTH the UK generates power. The UK is inconsequential. What is consequential are China, India, the US and other growing economies like Russia and Africa. As you may or may not have noticed, China and India are full of people, so installing any meaningful number of wind turbine in these places is never going to happen, even if wind turbines were not the highly diffuse and intermittent sources of energy they are. India produces 59% of its power from coal. China produces 58% of its power from coal. That means that about 1,400,000,000 people in these two countries source their electric power from coal. That also means that about 60% of all EV vehicles in these countries runs on COAL.
Fifth, let’s not forget that wind turbines kill MILLIONS of bird and bats annually, according to ornithological societies in Spain, Germany, Sweden and the US. Some of these birds are endangered species. In any case, all life has the same moral value, whether a bald eagle or a pigeon.
The fact is that wind and solar have huge weaknesses in efficiency, cost and scalability. They also exact huge environmental costs. Thus, EV car owners will be powering their cars with FOSSIL FUELS for decades to come. There is no denying this. Are you a denier, Claire?
Co2 is growing, this is a proven FACT, Sea temperatures are growing another scientific FACT, plants enjoying Co2 is irrelevant.
You can call it what you want, climate change if you prefer, is real.
Now as for coal, even if. and you already know it isn't, but even if all electric was produced from coal, a coal station is far more efficient at creating energy than an ice car, so an electric car would still be cleaner.
But again you choose to ignore the growing renewable sector, one of the fastest growing and lucrative sectors out there, China's drive to clean energy is leading the world, and more and more of theirs and the worlds electricity is clean energy.
As for their accepted intermitance, You must have missed the largest battery storage system just installed in Australia, which stores energy and evens out the grid.
No they don't kill millions of birds, far more are killed by windows and cats, but far more will die if the planet does, that we can agree on.
Renewables are now on par and better in many cases, then the cheapest energy options, the world is getting greener, and electric cars will take over a lot quicker than you think.
1. Nobody is claiming that CO2 levels have not risen (are not rising). However, your insistence that 'plants don't matter' is concerning. Real environmentalists give great moral value to plant life, even if only in self-interest (food source). Your attribution of any warming (which has not occurred for the past 18 years) to CO2 levels is a complete distortion of the truth. Please explain how, during the greatest period of human CO2 emissions (past 18 years), there has been no warming. Please also explain how during the Medieval Warm Period, when humans emitted next to no CO2, global temperatures rose as fast and to a higher peak than in the 20th Century.
2. (a) Gasoline contains about TWICE the energy density of coal per unit (kg). (b) Coal emits greater amounts of SO2, NOx and particulate matter (real pollution) than gasoline. (c) The energy required to mine, process, and manufacture EV batteries make EV's 30% more energy intensive to manufacture than conventional ICE vehicles. (d) All EV's continue to suffer from 'vampire losses' of up to 17% of energy sucked at the plug. Batteries naturally discharge when sitting. Gasoline powered vehicles retain all the energy in the tank - indefinitely.
3. Renewables lucrative? Perhaps, if you are a subsidy sucking entity like Tesla, or an alarmist propagandist like Gore (who recently purchased a seaside mansion no less). Renewables are diffuse and intermittent, and always will be. They require conventional power back up - always.
4. FYI, Chinese companies are leading the world in the construction and planning of more than 700 new coal-fired power plants, in China and around the world (New York Times, July 2017).
Why is China also interested in promoting EV cars? Could it be perhaps that IT CONTAINS MORE THAN 50% OF THE WORLD'S LITHIUM SUPPLY?
BTW, I was recently in Chengdu and Beijing. I made a point to pass by the Tesla showrooms in those cities several times while there. I never once saw a customer inside - just bored salesmen. In over a month in China I saw perhaps 2 Teslas on the road (2017).
Rich Chinese who arrive in Vancouver, Toronto or Seattle don't typically buy Teslas - they buy gasoline powered German products!
Forbes (June 2017) recently confirmed that more than 6000 Teslas are sitting on Chinese storage lots - unsold!
Denmark recently ended its generous subsidy for EV purchases, and Tesla sales there cratered from 2738 in 2015, to 176 in 2016! EV's are simply NOT competitive. Maybe 20 years down the road they will be, but they are not now. And let's remember that the electric motor was invented long before the ICE!
NOTE: Lithium is neither renewable or recyclable, and, importantly, rare. There is not enough known deposits of Lithium in the world to convert even 5% of vehicles to battery power.
5. Ornithological societies in many Western democracies say that millions of birds and bats are killing globally by wind turbines. That does not mean additional birds are not also killed by cats and skyscrapers windows. Your logic is a bit fuzzy here.
6. You are right - the world IS getting greener. And this is partly due to higher CO2 levels, which I mentioned in my last post. You've contradicted yourself here. Less CO2 means, without a doubt, a browner world (less green). I see you do value plant life after all!
Ultimately, the only way that EV's make any sense, is if the world embraces NUCLEAR energy, and starts to deploy it globally. The energy density of Uranium 235 for example, is thousands times greater than fossil fuels, dammed waterways, wind or solar. It is so powerful in fact that it erases any and all inefficiencies inherent in the production and operation of EV's, and the transmission of power over distance. And currently that prospect appears about as remote as a human walking on Mars.