As the world continues to face up to the urgent need to act decisively against climate change, the consensus among policymakers – and even senior executives in the auto industry – is increasingly coming to accept that electric vehicles (EVs) are the wave of the future. And evidence continues to mount that although it will be some years before the EV revolution begins in earnest, the momentum of this paradigm shift is now building towards critical mass.
How well do you really know your competitors?
Access the most comprehensive Company Profiles on the market, powered by GlobalData. Save hours of research. Gain competitive edge.
Thank you!
Your download email will arrive shortly
Not ready to buy yet? Download a free sample
We are confident about the unique quality of our Company Profiles. However, we want you to make the most beneficial decision for your business, so we offer a free sample that you can download by submitting the below form
By GlobalDataCounting both fully electric cars and plug-in hybrids, there were more than a million EVs on the world’s roads in 2015, according to data from the International Energy Agency (IEA). Highlighting EVs’ role in global decarbonisation efforts, the agency noted that to limit global warming to 2°C, 150 million EVs would need to be on the road by 2030 and a billion by 2050, which would require a compound annual growth rate of more than 20%.
EV integration: a challenge and an opportunity
In one sense, the rise of EVs represents a growing challenge for electric utilities that are trying to balance power supply and demand and operating within some pretty slim margins during peak hours. If hundreds of thousands of vehicles are all plugged in to charge at the same time in the evening, the strain on grid infrastructure could reach breaking point.
Back in 2013, when the EV market was significantly smaller than it is now, UK transmission network National Grid’s power demand manager Lauren Moody warned of the implications of not properly managing EVs’ added demand on power grids.
“The stakes are huge,” Moody wrote in a National Grid editorial. “If price incentives can’t influence how people charge their EVs, then by 2035 we could be looking at a peak demand increase by 30% from 67GW to 86GW [in the UK].”
In a June blog, Chris Nelder of US-based energy-efficiency research group the Rocky Mountain Institute further outlined the risks for grids caught unawares by the EV switch. “If utilities and their regulators are not prepared for such a rapid expansion of the EV fleet, it could have negative effects on the grid,” he wrote.
“The life of grid infrastructure components could be shortened and greater investment in peak capacity could be required, making the grid less efficient, increasing the unit costs of electricity for all consumers, inhibiting the integration of renewables, increasing grid power emissions, and making the grid less stable.”
On the other hand, the electrification of personal transport represents a huge opportunity for utilities and power generators – in the simplest terms, more electricity demand translates to a greater opportunity to sell it. As the public becomes more energy-efficient to the extent that sales are taking a hit – US retail electricity sales fell by 2% between 2007 and 2013 – and distributed renewables continue to reduce reliance on the grid, EVs represent a new frontier of demand that could become the lifeblood of the future utility industry.
“The bottom line is that the electric utility industry needs the electrification of the transportation sector to remain viable and sustainable in the long-term,” concluded US utility association the Edison Electric Institute in a June 2014 report.
What’s more, evidence suggests that by preparing in advance with the right technologies and incentive schemes, utilities should be able to take advantage of this projected demand growth without threatening the health and stability of grid infrastructure.
Big in Japan: are electric vehicles really a concern for the grid?
Japan has emerged as a leader in EV technology and deployment. Japanese car manufacturers such as Mitsubishi, Toyota and Nissan – manufacturer of the Nissan Leaf, the world’s best-selling highway-capable fully electric car – have invested heavily in EVs. So much so that the country has become the first in the world to have more EV charging points than petrol stations, with less than 35,000 petrol stations overtaken by more than 40,000 charge points.
This number admittedly includes private chargers installed in home garages, but it still demonstrates Japan’s commitment to overcoming the key issue with EVs – namely, insufficient charging infrastructure leaving drivers feeling tethered to their home charge points – and makes it a good case study for EV grid integration.
Japanese power companies have reported few problems managing the extra demand of the country’s growing plug-in electric fleet, which numbered around 150,000 vehicles as of March. Although the number of EVs currently deployed doesn’t amount to a true test of any nation’s grid infrastructure, Japan has made the right investments to help manage future growth.
The origin of these investments is rooted in tragedy. The Great East Japan Earthquake and subsequent tsunami in March 2011 caused a meltdown at the Fukushima Daiichi nuclear plant, souring public sentiment on nuclear power and leading to the total shutdown of the country’s extensive nuclear fleet, only a fraction of which has come back online.
The subsequent electricity supply shortages and reliance on expensive fossil fuel imports has forced resource-poor Japan to remould its energy system, investing heavily in smart grid technology and policies supporting a much higher level of demand-side management (DSM) to balance energy supply and carry out targeted blackouts when shortages occur.
Lessons in demand-side management
Investing heavily in battery storage and smart meters, providing subsidies for home and building energy management systems and full deregulation of the energy market has amounted to “a remarkable investment in demand-side management in a short period” in Japan, according to an October 2014 report by Bloomberg New Energy Finance.
These sorts of DSM measures are exactly what grids need to cope with the coming influx of EVs, and the lesson is being applied elsewhere in the developed world.
Forward-thinking utilities are beginning to offer financial incentives for EV users to charge their vehicles during off-peak overnight hours, and advanced EV charging hubs are integrating local solar power, energy storage and dynamic pricing to manage EV demand on the grid.
In the US, utility San Diego Gas & Electric has piloted fourth-generation charging systems with integrated solar and an app to give EV drivers information on the cheapest times to charge their cars. In 2015, the company’s senior vice-president of power supply told Greentech Media that under the pilot, more than 90% of charging took place at no impact to the grid.
For Dr Jim Scott, research associate at the UK’s European Bioenergy Research Institute (EBRI), demand-side measures effectively counteract the fears over EVs’ effects on the grid. “All you need is better control,” he says.
“You see some of these figures being bandied about for grid upgrades by 2025, and I’m pretty confident that huge amounts of those are just massively overestimated because you can solve that problem for nearly free by demand-side measures.”
The big opportunity: vehicle-to-grid
Looking further into the future, a developing technology called vehicle-to-grid (V2G) charging is offering an opportunity to not only manage the electricity demand of plug-in electric vehicles, but also to fully integrate EV charging infrastructure into a power network by allowing connected vehicles to sell electricity back into the grid rather than drawing from it.
The technology, initially developed in Japan after the problems caused by the Fukushima disaster and now being tested and trialled in various countries around the world, is still in a relatively immature stage of development.
Common V2G technical standards have not yet been agreed upon, the process involves efficiency losses, and at the moment the technology would not be economical in many scenarios as the capital cost of adding and maintaining the V2G capability to charging stations would likely outstrip the money made by selling power back into the grid.
As noted by Dr Scott of the EBRI – which has installed the UK’s first permanent V2G system at its campus in Birmingham – the most likely initial use of the tech would be as a further DSM measure, where EV users (or groups of users) make a contract with network operators to feed power into the grid during peak hours.
Despite the wrinkles that still need to be ironed out of V2G’s technical and business models, the concept is developing rapidly and there have been a number of major V2G projects launched this year, with Japanese companies once again playing a leading role. Nissan has been a particularly strong champion for the technology – in March the company announced that it would install 100 grid-integrated V2G chargers at its new regional office in France, and in May it announced the first large-scale V2G trial in the UK.
In April, the UK Government was urged by a new Institute of the Motor Industry report to invest quickly in more charging infrastructure to support the wider adoption of EVs, or else risk missing out on an industry that could be worth £51bn a year to the British economy.
With more charging points being built across Asia, the US and Europe, innovative companies such as Tesla turbocharging the EV sector, demand-side management efforts proceeding apace and V2G technology evolving rapidly, it seems that the barrier to entry for electric vehicles is gradually crumbling, both for consumers and for national energy systems. To realise the environmental, economic and energy benefits of the EV revolution, it may well be that the time to jump in is now.
