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

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.”