Blog Post

How Grid Operators Will Survive the Crush of 1M Electric Cars

Stay on Top of Enterprise Technology Trends

Get updates impacting your industry from our GigaOm Research Community
Join the Community!

Power, pricing and electric vehicles, oh my. The group of U.S. and Canadian power grid operators who make up the ISO/RTO Council (IRC) and manage most of North America’s bulk electric grid, expect 1 million plug-in vehicles could be deployed on the continent within five years to a decade — and they aim to be prepared. This week the IRC has put out an extensive report on “the technical hurdles and tools needed to foster the potential benefits of widespread use,” of plug-in electric vehicles.

To model the development of the nascent electric vehicle market, the IRC turned to the sales records for one of the most popular green cars to date — the Toyota Prius — while also taking into account “public-sector and private-sector goals and population estimates.” Based on that model and other calculations, the IRC found that the rollout of 1 million plug-in vehicles — most of them clustering initially in urban areas of the West Coast and Northeast — could cause wholesale energy prices in the near term to increase by as much as 10 percent. But the size of that impact will depend on “the region, available resources and load,” with higher concentrations of vehicles charging during shorter periods leading to larger price increases.

The IRC sees a few possible solutions:

“It appears that exposing customers to some mechanism, such as dynamic pricing, special tariffs, or managed charging, that would reduce charging over a higher-demand, concentrated time period, might help self-regulate the potential problem of price impacts from PEV charging.”

As the number of vehicles on the grid grows beyond the initial 1 million estimate, these types of mechanisms “will likely become critical.” That’s not all. The IRC also anticipates that as more vehicles come onto the grid and “transform from reliability assets to market assets,” it will require more complex charging schedules, more frequent communications, forecasting of resources and validation of transactions.

What’s more, grid operators will need to work with new types of organizations as automakers, retailers and others “with little or no experience in interfacing with the bulk power grid” start to take on the role of aggregator (grouping together 800-1,000 plug-in vehicles to provide services like scheduling battery charging based on pricing information and total grid load, or stop charging and reduce load on a targeted basis).

In all, an electric vehicle boom will mean more data and increasingly sophisticated interactions between grid operators and aggregators. As a result, the IRC says grid operators will need to invest in “increased communications capacity” to handle it all. The group breaks out some specific cost estimates:

  • $480-$2,080: Monthly costs for secure communications
  • $600-$3,000: Annual labor costs per PEV aggregator
  • Up to $265,000: Onetime incremental cost for upgrading systems to support PEV aggregators
  • $70,000: Total investment per aggregator to support connectivity between the aggregator and grid operator (including servers, engineering, network infrastructure, software and project management)
  • $80,000: Onetime incremental cost to upgrade software and improve reliability

The IRC recommends several products and services for deployment in the near term, including what it calls emergency load curtailment, dynamic pricing and enhanced aggregation. Dynamic pricing established specifically for the load from plug-in vehicle charging might pave the way to a similar scheme for all of our energy use. As the IRC writes, “PEV-specific dynamic pricing may be one way to introduce dynamic pricing to customers while avoiding political sensitivities regarding dynamic pricing for existing retail loads.”

But the group isn’t entirely certain about the details, and calls for more research on consumer behavior, to understand how consumers will likely respond to price signals baked into retail electricity rates, especially when electric vehicles “result in significant fuel cost savings.”

Despite remaining questions, however, the IRC notes this isn’t entirely uncharted territory. The demand response products and services that are already “existing and evolving,” will offer, according to the report, “a good starting template for new rules and processes for PEV-related services.”

12 Responses to “How Grid Operators Will Survive the Crush of 1M Electric Cars”

  1. Thanks for the link to the IRC report. I think I’m with Paul on most of the issues here. As a side note is the possibility of using EV’s to push excess power out to the grid during peak daytime hours when the rates are higher and then recharging at nighttime when the rates are lower. Just a thought.

  2. EVs are clean. It’s the electricity that’s dirty. Your question should be, “How much cleaner than gas cars are EVs?” In every study that’s looked at the “well-to-wheels” pollution generated by a gas car vs. EV, the EV wins hands down. You have to have a grid mix of about 90-95% coal just to be even with the cleanest gas car, the Prius. Only a few states have that much coal on their grids. And that’s still not a good reason to not drive an EV since you have the added benefits of keeping all your money domestic, and even more importantly, there are no national security issues with electricity like you have with oil.

    With an EV, you have the choice to use 100% clean, renewable kWh. No matter how efficient your gas car is, it still pollutes.

    If you don’t like dirty grid power, you shouldn’t be running your house on it. Switch to solar or wind power at your home, then when you get your EV, you’ll be 100% clean for both the house and car. Several hundred of us have been doing this for the better part of the last decade. It works great, and you’ll feel no guilt when you drive.

  3. OrngCrush

    “The cost of electricity is going to go up way more than 10% for other reasons. To the extent a particular utility uses coal or natural gas, they’ll have to pay something for the pollution those dirty energy sources cause.”

    If that’s the case, how are electric vehicles “clean”?

  4. The cost of electricity is going to go up way more than 10% for other reasons. To the extent a particular utility uses coal or natural gas, they’ll have to pay something for the pollution those dirty energy sources cause.

    If anyone is concerned about the rising costs, they should take a look at how much they are wasting first, then see if they are a good candidate for solar second.

    Even with a small rise in electricity costs, EVs will still be a bargain compared gas. We’ll definitely see a much greater rise in gasoline and diesel over the coming few years, probably on the order of 30%-50%. No way around it, the dirty energy sources are going to cost more.

  5. Chad Schwitters

    The worst-case scenario assumes that electric cars charge at peak times. But existing electric cars (and there’s no reason to expect that future ones will be different) almost always charge at night, when there is excess capacity in the system.

    The calculations I’ve seen before indicate that we could add tens of millions of cars with no impact on pricing, as long as they charge at night.

  6. OrngCrush

    So if 1 million plug in cars “could cause wholesale energy prices in the near term to increase by as much as 10 percent,” what will happen if we change over the 250 million cars in the U.S. today?