- May 27, 2011
It's payback time from your "Cashback Car"
The problem with lithium-ion batteries is that they're just still too costly. And heavy. And large. When the electric vehicles (EVs) that those batteries are installed in are actually being driven, their operating cost is unbeatable – about two to three cents per mile. The problem is that the typical EV (like most vehicles) sits idle for about 95 percent of the time. Having an expensive asset sitting idle for so long is why EV's make no economic sense given today's battery prices, unless you buy your car using substantial government financial incentives.
Professor Willett Kempton of the University of Delaware wants to change that by using those big, heavy, expensive batteries to create value for the EV owner while the car is sitting in your garage, and thereby redefining the rules of the game for EV owners. So, are EVs economically viable without incentives? It might be closer than we think. Where we see a fun-to-drive, low-operating-cost electric vehicle, Kempton sees batteries on wheels; batteries that are stationary and close to an electrical socket more often than not. His mission is to capture the value of the energy storage and create a breakthrough for EV ownership economics.
The secret is to make that energy storage asset (i.e the battery) available to be a valuable part of the electric grid, and to do so in such a way that it's not just shipping energy in and out of the battery while parked, but is actually providing high-value regulatory services to the grid. As long as the EV is fully charged and ready to go in the morning, most owners won't really care what the charging profile looks like overnight. And, if you are going out in the evening, you can quickly and easily over-ride the system and charge at full speed. Instead of being a drain on the national grid, EVs have the potential to support and help strengthen it. Its technical name is Vehicle to Grid (V2G) technology, but it can be more appropriately referred to as the 'Cashback car.' Continue reading...
[Image: AP/Rick Bowmer]
To understand how it works, let's look at our national electric grid. Energy loads on the grid follow a fairly predictable pattern during the day, but many short term loads on the electric grid are unpredictable. The grid operator's job is to balance load and generation constantly to make sure everything stays matched. Within the U.S., this responsibility lies with a network of regional grid control companies. The unpredictable short term loads are caused by things like the weather, or a major industrial facility starting or stopping a high-energy process like an electric furnace. In order to keep the grid functioning correctly, the regional grid control operators require what is known as regulation service – either the short term addition of generation (or the deletion of load) and frequency regulation services.
Because these services require quick response to the demand signal, they are typically provided by relatively small scale natural gas turbines. The response time requirements are tight, so these services generally can't be provided by larger-scale generating facilities like coal or nuclear due to the response time requirements. Many grid operators, including PJM Interconnection, one of the largest grid operators, solve this problem by procuring regulation services in a market-based approach. For each hour of each day, PJM operates an on-line market to provide these high-value regulatory services. And, while the nationwide average retail cost of electricity is about 11 cents per kWh, the value of providing these regulatory services can be 3 times higher or more. The winning bidder for the hourly market has to have the services available for that entire hour.
So, how do EVs access this market? That's where Professor Kempton comes in. By bundling together a network of EVs, and optionally supplementing that with some stationary storage facilities, a 'virtual storage network' can provide these high-value regulatory services to the grid. Kempton estimates that in the high-value grid markets, an EV at a charging point with the capability to charge or discharge at 10kW can generate $2,000 or more each year. It's a very appealing proposition to go on vacation while leaving your car at home in the garage generating a paycheck for when you return. And, over a typical 5-10 year ownership period, it's enough to pay for the cost of the battery and still provide you the benefit of EV motoring at its spectacular two- to three-cents-per-mile operating cost.
The system devised by Professor Kempton has three elements – the Aggregator module, a Vehicle Smart Link that interfaces with the car's charging, and a smart EVSE (Electric Vehicle Supply Equipment) that can pass signals and handle variable rate charging and bi-directional energy flows. These ideas have been developed over the past 10 years with a team of about 15 at the University of Delaware, most recently with a $750,000 DOE grant that facilitated design, prototyping, and several patents for the technology. Licenses are presently being awarded to a number of players in the EV space for this system, with pilots likely to start during 2011 and moving to higher volume in 2012.
The Aggregator is the server and software system that interfaces with the grid operator and individual consumers. Individual drivers enter their recharging requirements into this system by choosing between different charge modes – essentially "charge me now," "charge me later" or "charge me free" where they can set in a target time by which the EV needs to be fully charged and ready to go. The Aggregator software looks at the location and charging requirements of the EVs, accumulates the requirements, and manages the bids and communications with the grid operator.
In response to a request for less load, the available EVs in the system may be asked to temporarily reduce their charging power, or to feed back into the grid. Because regulation will, on average, require more load as often as less, the available EVs in the network will sometimes be asked to increase their charging rate. And for much of the time, just being 'available' creates value, even if no adjustments are made to charging rate. As the U.S adds more solar and wind generating capacity to the national grid, the need for these regulatory services is expected to increase.
The Vehicle Smart Link is fitted to the vehicle and connects the EV to the EVSE equipment which regulates its charging rate in response to signals from the Aggregator. The technology is relatively simple to add to existing EV power electronics and costs less than a few hundred dollars per car at production scale. Lost your home power after a summer storm? No problem – just let the EV supply some juice until the power is restored.
So, why haven't we heard more from the large automakers on their plans to roll out V2G or cash-back car systems. Professor Kempton's told us:
Think about the traditional car buying and ownership experience. You go the dealership, haggle over the price, buy a $30,000 car that depreciates to $20,000 in the first year or two, while feeding it $200 - $400 per month of fuel and maintenance cost each month. Repeat the cycle a few times, and you can see why buying and driving a new car is a hugely value destructive decision for most consumers.
The major U.S. OEMs are so far just trying to perfect the simple electric or plug-in hybrid. Several of the smaller companies, and some larger non-U.S. companies, have development projects in this area. They're not making public statements yet.
Could your new EV give you a payback that changes this equation for the better? If Kempton's ideal prevail, it will change the economics of car ownership fundamentally. Two cents per mile to run, cashback checks in the mail for your storage asset and higher resale values. That's the kind of payback consumers would love to get.
Richard Canny is the former CEO of Norwegian electric vehicle developer Think. He joined Think in August 2008 and was CEO of Think Global and Think North America from October 2008 to October 2010, and was Vice Chairman of Think North America until January 2011. Prior to joining THINK, he accumulated a wealth of automotive experience to from a 25-year career at Ford Motor Company where he held key leadership roles in all the world's major automotive manufacturing regions.