Navigant Research Blog

Distribution Side: Grid Needs to Plan for Plug-in Vehicles

— January 29, 2010

Originally published January 28, 2010 on

Utilities have been testing the impact of electric vehicles and consumer charging patterns for several years with small test fleets so that they can prepare to handle the additional load. Many of the utilities I’ve spoken with say that if “smart charging” intelligence is available, vehicle charging is likely to only have a marginal impact on peak loads. Smart charging would enable vehicle charging to be delayed or temporarily interrupted or slowed depending on the condition of the grid.

Still at risk, even with smart charging, are the transformers located in residential areas that provide power to 3-5 homes. At faster charging speeds (level 2 and 3), even plugging in a few EVs simultaneously could cause a transformer to blow. The size and age of transformers varies widely between regions, meaning some EV-friendly neighborhoods might be faced with frustrated customers who temporarily lose power. Utilities are looking to track where electric vehicles are purchased to anticipate where older transformers might need to be upgraded to higher capacities.

‘Bottom Up and Localized’

However, regional energy planners don’t yet have a handle on how the added load of EVs should factor into their plans for upgrading their distribution infrastructure. Neither utilities nor automakers are making a concerted effort to share their projections of electric vehicle populations with regional grid operators and planners. “[EV planning] is completely bottom up and localized now,” according to Carl Imhoff, an engineer at the Pacific Northwest National Laboratory’s (PNNL) Energy Science and Technology Directorate.

Imhoff, who is participating in the Department of Energy’s Smart Grid research that will enable sharing of information about grid performance between regions, said that some regional energy commissioners “have no clue” on how to plan for EVs and are moving ahead with their existing roadmap until they hear differently.

EVs could also be an asset to the grid by absorbing surplus generation of renewable power and by slowing or speeding up charging in response to fluctuations in the grid frequency. PNNL’s Michael Kintner-Meyer has developed a prototype smart charger controller that automatically modulates the charge rate based on the needs of the grid. If deployed widely, the smart chargers could reduce utilities’ costly practice of spinning up and down reserves to match demand. The smart charger would communicate with onboard and stationary charging equipment, home energy monitoring devices, and smart meters, according to Kintner-Meyer, who is looking for utility and automotive partners to continue development

Cost Impacts Unclear

Regional grid regulators also don’t know how EV charging will impact the cost of electricity. The percentage of charging done off-peak versus peak will likely impact whether wholesale prices go up or down, according to Kintner-Meyer. PNNL is addressing this void by preparing a report due out in February that will estimate the impact of EV charging on a state-by-state basis.

Grid operators need to take the long view in how EVs will impact the grid. Imhoff suggests formulating a 20-year plan that considers the regional and national implications of charging. Without a clear strategy, the response to EV charging will be ad hoc and less efficient.

John Gartner is a senior analyst with Pike Research, a market research and consulting firm that provides in-depth assessment of global clean technology markets.

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The EV Conundrum: Uncertain Resale Value Complicates Li-ion Battery Market

— January 21, 2010

Originally published December 22, 2010 on

By 2011, thousands of new plug-in hybrid and all-electric vehicles such as the Chevrolet Volt will be filling garages. Lithium ion (Li-ion) battery systems are a major cost component of these vehicles, adding between $8,000 and $18,000 to the price of vehicles, depending on the size of the packs.

This high battery premium is expected to limit the appeal of the vehicles, which may be out of the reach of many consumers. Companies such as Nissan are looking to reduce the initial cost of the vehicles by offering financing for the batteries separate from the vehicles, and startup company Better Place is developing battery subscription services that would charge customers monthly flat fees or fees based on the amount of electricity that flows into the batteries.

The size of consumers’ monthly payments for batteries and electricity could be reduced if the financing companies incorporate the residual value of the batteries at the end of their useful life in vehicles. After repeated recharging, Li-ion batteries slowly lose their ability to store energy, and after 7 to 12 years (depending on how the vehicles are used), the batteries could be resold to utilities to store energy as part of the Smart Grid.

Will a Viable Resale Market Exist?

However, it is an open question if a viable stationary energy resale market will exist once the batteries have served their purpose in vehicles. Li-ion battery makers want EV sales to grow rapidly, and that is unlikely unless the cost of the batteries drops precipitously. Pike Research estimates that – thanks to volume production and improvements in technology and manufacturing – the price of Li-ion batteries will fall from around $1,000 per kilowatt hour (kWh) today to $810 in 2011, and continue dropping to $470 in 2015. By the time the batteries inside the first Nissan Leafs and Chevrolet Volts are ready to be retired, the cost of new batteries could be less than $400 per kWh.


Will Consumers Balk?

So what would be an appropriate price for a grid services company to pay for a battery that has lost up to 30 percent of its storage capacity, and may only last another five to seven years? $200 per kWh? $100? This pricing uncertainty challenges organizations looking to extract that value so that battery financing can be priced attractively to consumers. If the residual value is ignored, consumers may balk. If an overly optimistic value is assumed, company revenues later on may be threatened.

Consumers looking to calculate the value of driving on electricity (including the cost of the batteries) face the same conundrum. According to Pike Research’s new report “Electric Vehicle Batteries,” even when assuming a generous resale value of batteries after seven years, the cost of electric power is at best on par with the cost of gasoline at $3 per gallon. If there is a relatively poor resale market for batteries, EV owners best economic decision would be to keep the batteries as long as they own the vehicle.

John Gartner is a senior analyst with Pike Research, a market research and consulting firm that provides in-depth assessment of global clean technology markets.

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Ford Focuses on Batteries for Innovation

— January 15, 2010

Ford’s goal of electrifying a portion of its fleet appears to be running on all cylinders. The company is creating battery electric versions of both of its recent award winners –the 2009 Car (Focus) and Truck (Transit Connect Van) of the Year. Because energy storage will make or break the arrival of electric vehicles, Ford has joined GM in bringing the battery pack assembly and management under its tent.

Ford is investing nearly $1 billion in manufacturing facilities in Michigan that will include producing hybrid, battery-electric, and plug-in vehicles as well as the lithium ion battery packs. Ford manager of global electrified fleets Greg Frenette explained that “there’s a strong tie-in marrying battery control… to the rest of propulsion, and we’re in the best position to manage that.”

He said that in addition to wanting to develop the software that controls battery performance and thermal management, the company also felt that managing pack assembly was also key to vehicle performance. “Packaging is a significant part of installed cost. Doing it ourselves will enable the quality of execution to be more consistent across battery packs.”

Ford, like GM, wants to control much of the intellectual property around its battery and propulsion systems. The company is using batteries from Johnson Controls-Saft for its current fleet of test plug-in hybrid Escapes, for the electric Transit Connect, and for a plug-in hybrid due out in 2012. But for the 2011 Focus BEV, Ford turned to another unnamed battery vendor. Frenette said the company will continue to look for more battery partners.

Spreading around the battery contracts is a smart strategy as it will force battery suppliers to compete aggressively on price, and safeguards against any supplier having production problems. The same goes for Ford considering multiple battery chemistries, which are evolving so quickly that any commitment to a single chemistry is likely to be premature. “Battery chemistries and development are fluid and dynamic, and [multi-sourcing] gives us the capability to go with cutting edge,” Frenette said.

Ford has not announced any target volumes for battery production when the facility goes online in 2012, but manufacturing the packs internally will enable the company to eliminate some of the margin that normally goes to battery manufacturers. Pike Research expects the installed cost of batteries to drop by about 10 percent during 2010 as manufacturing across the industry ramps up.

Ford is starting to live up to being the green company that Bill Ford (along with Kermit the Frog) promised several years ago. As another example, for the new “global platform Focus,” Ford is coming out with a new smaller turbocharged EcoBoost engine that is expected to improve fuel efficiency by 20 percent when compared to large engines with similar horsepower. Ford has shifted its turbocharger partner as well, having used Honeywell in the past, but now incorporating a Borg-Warner product.

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