EVs Charge Ahead with New Technologies and Business Models

Why EVs could be a grid’s best friend while freeing drivers from driving.

A recent report from RMI’s Electricity Innovation Lab (eLab) describes how the rise of electric vehicles (EVs) could happen much faster than most expect, driven by a host of incentives, targets, and trends. The rapid growth of EVs is driving innovation in numerous areas and has far-reaching implications. For one, it is critically important for utilities and regulators to structure electricity tariffs and incentives appropriately in order to accommodate those vehicles so that they provide a long list of benefits to the grid—and not a long list of headaches and cost increases. The new eLab report, EVs as Distributed Energy Resources, which was developed in conjunction with the Regulatory Assistance Project and San Diego Gas and Electric, identifies some of the best practices that utilities and regulators should follow.

THE PRIVATE SECTOR SURGES INTO EVS

And it’s not just EV sales that are rising. Numerous technology providers and business models are likewise springing up in the private sector to take advantage of this emerging EV opportunity.

Apple is outspending the major car manufacturers by twenty to one, and Tesla by more than ten to one, on its EV development program, according to a report from Morgan Stanley. In recent years, Apple has spent more on research and development for vehicles and related services than it did on the Apple Watch, iPad, and iPhone combined, the bank says.

NextEV, “the biggest EV startup you’ve never heard of,” has just raised an additional $500 million and promises to fund a $1.5 billion research and development program into electric drive trains and self-driving cars—more than Toyota spends on its equivalent program. The company plans to build an expensive electric “supercar” first, to demonstrate its technological prowess, and then develop a vehicle for the consumer market in late 2017. Bloomberg believes the company’s mass-market vehicle could deliver Tesla Model S-type performance at half the price.

General Motors recently bought San Francisco startup Cruise Automation for a reported $1 billion, as part of its pursuit of self-driving car technology. Although late to the sector, traditional car manufacturers like GM clearly understand that they need to get on board with the technology, lest they be left in the dust by the likes of Google and Apple. The company specifically stated that it is looking to position its self-driving cars for ride-sharing fleets.

MOBILITY AS A SERVICE

Ride-sharing fleets are one form of what is emerging as a broader growth sector for EVs: mobility as a service, which promises to upend the long-standing dominance of privately owned internal combustion vehicles.

Evercar (formerly VisionFleet) helps to reduce the cost and accelerate the adoption of EVs by renting electric vehicles to drivers on a short-term basis to provide mobility as a service. Aimed at entrepreneurial customers like Uber and Lyft drivers, Evercar provides EVs and fast-charging services (via a publicly available charging network) that drivers can use without actually owning the vehicles or being responsible for their maintenance and insurance. Using its own technology, data analytics, financing, and operational support, the company can make EVs a less expensive way of providing mobility services than conventional vehicles. Drivers can drive three to eight hours on a charge (depending on the specific vehicle and driving circumstances), then stop for a brief recharge—included in the vehicle rental fee—at a fast charging station, then continue on. Evercar members effectively work for these next-generation ride-hailing companies but don’t have to own the car. In October 2015, one Uber driver using a Nissan Leaf rented from Evercar clocked 387 miles over 26 hours around Los Angeles, charging the vehicle eight times via Evercar’s services.

As self-driving, or autonomous, vehicles from Google, Apple, Tesla, and other manufacturers become more prevalent, it is increasingly likely that they will be EVs using a suite of technologies and services like the ones Evercar provides. “Robotaxis” may come to deliver the same mobility as conventional taxis or Uber and Lyft drivers, but without the cost of a driver. And once such services reach the commercial deployment stage, they could expand quickly.

RMI is working on one such pilot project in Austin, Texas, where tech giant Alphabet (Google’s parent company) is within a year or two of deploying its electric fully autonomous vehicles to provide mobility as a service to the public. RMI is working with the City of Austin to site charging infrastructure strategically and otherwise support this effort.

The cheapest way to provide the charging infrastructure for fleets of EVs such as those offered by Evercar also turns out to be the easiest way to deliver the kind of benefits to the grid that we discuss in the report: centralized charging depots, which would ideally be situated near substation transformers on brownfield sites with low land-leasing costs. Charging depots could offer a way to manage the charging of a large number of EVs at a single location (and as a single customer), creating a substantial and low-cost source of demand response.

EVS AS GRID SERVICE PROVIDERS

2015 was called “the year of the battery” by numerous media outlets. Will 2016 be the year of “batteries on wheels?”

One of the main benefits that EVs can provide to the grid is in balancing and conditioning the flow of electricity. Generation plants have traditionally performed these functions, but a large and distributed fleet of EVs could provide the same services at far less cost by simply controlling when they recharge. Daimler Mercedes-Benz has already incorporated software in its electric vehicles to perform grid-balancing functions by controlling charging, but the technology has yet to be integrated by Germany’s utilities. Combined with stationary storage, which Daimler also provides, “electric vehicles would be a great way to respond to the increasing power fluctuation on Germany’s grid,” according to Daimler vice president Harald Kroger.

Another pilot program of a similar sort is being conducted in California, through a partnership of the utility PG&E and BMW. Nearly 100 drivers of BMW’s newer electric vehicles are participating in the project, and they allow BMW to control the charging of their vehicles, within certain parameters. By controlling the charging of these vehicles when they are connected to chargers, in combination with a stationary storage array of used batteries at one of its Silicon Valley buildings, BMW is able to react to demand response events posted by the utility to reduce the load on the electricity system during peak demand periods and earn a payment for providing that service.

SOLAR AND EVS

Residential solar could also become a major driver of EV sales. The nearly one million U.S. homes that now have rooftop solar systems could use them to power their own EVs at a lower cost than they could with either grid power or with a conventional gasoline vehicle today. And in the future, as vehicle-to-grid technology evolves and becomes viable, those EVs could potentially serve the same purposes as a dedicated battery backup system: allowing homeowners to keep the lights on when the grid goes down, and to do grid power price arbitrage, buying power from the grid when prices are low and selling it back to the grid when prices are high.

For all of these reasons and many more, as enumerated in the report, EVs are a potentially rapid source of power demand growth. Utilities, regulators, and other stakeholders would be wise to understand the implications that EVs hold for the future of their electricity grids, and to plan accordingly.

Image courtesy of iStock.