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Can EVs Save Electric Utilities?

Electric Vehicle Charging
Electric cars hold the potential to destroy the oil business and save the electricity business. The big question now is when this will happen. Last year the world consumed about 93 million barrels of crude oil per day. About 42 percent of that, or 39.5 mmbpd, was used for transportation.

In its recent price swoon, oil prices went from over $100 per barrel to under $30 per barrel with a production surplus of 2 mmbpd worldwide. How would the industry fare with a surplus that was seven times greater?

Related: Oklahoma Oil Industry About To Lose Tax Rebates

The central question here is the rate at which electric vehicles are able to penetrate the worldwide transportation fleet. Navigant Consulting has done some of the heavy lifting here and we use some of their data. They assume EVs displace a modest 0.3 mmbpd of crude by 2020, 3.4 mmbpd by 2030 and 13.8 mmbpd by 2040. This assumes 7 million EVs on the road by 2020, 97 million by 2030 and 319 million by 2040.

It makes sense that electric utility executives are rooting for EVs. The industry's sales picture has been dismal. With increasing energy efficiency, customers do more with less. Renewable interlopers, aided by all sorts of subsidies, have taken business from the legacy electricity providers. What’s more, some big consumers want renewables, despite their cost, because they want to reduce their carbon footprints.

Third, new technologies make it easier for customers to reduce their dependence on the grid. Clearly the electric industry needs a big, new customer base to goose up its prospects. Electric car owners look like the best prospects around, a potential game changer for the electric industry. Every time Tesla or GM release a new model, electricity executives must salivate in anticipation of the new sales.

Let’s start with the potential. No econometric projections. Just simple arithmetic. Roughly speaking, a car travels 100 miles on 34 kwh. Vehicles in the USA travel about 3.15 trillion miles per year. If all cars drove on electricity, they would require 1.07 trillion kwh, or 29 percent of current electricity sales. So electric cars would be a big deal if all cars went electric.

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But last year, electric cars accounted for less than 1 percent of new car sales. Nobody really knows how to predict sales of a new product. Some, like the iPod, iPad and iPhone take off quickly. Others take a long time, and so far the electric car appears to be in the latter category. It needs infrastructure that not many entities seem in a hurry to build.

So, let’s make a few generous projections: electric market share averages 2.5 percent over the next five years, and 10 percent thereafter. Based on those calculations, electric cars will comprise 6 percent of the vehicle count and will add less than 2 percent to the current level of electricity sales.

Now we run into a complication, another technology out there, making major inroads into the market: LED lighting. Lighting accounts for roughly 15 percent of electric sales. LED lighting is enormously more efficient than alternatives and is taking market share fast. Installation of LED could, within 10 years, knock 7 percent off current sales. With this in mind it appears that LED looks like a sure thing while electric cars do not.

Too bad, because electric cars have some attractive characteristics aside from reducing air pollution and making buyers feel environmentally virtuous. For instance, if it charges at night, it creates off peak sales. The electric car, also, can act as an electricity storage device, just what the industry needs to store renewables.

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More than likely, the owner of the electric car would want to buy renewable energy, too, making the purchase really green. Imagine signing up for wind power (generated at night in many places) and charging up the car at night. Some firm within the electricity business would benefit from that arrangement, but not necessarily the conventional generator. Maybe a smart entrepreneur or even the automobile manufacturer will prepare an electricity package for the car buyer. The local utility might have to upgrade its equipment, which is currently not designed to run all out day and night, and the return on that equipment might be all it gets from the new customer.

So, the electric car, if it takes off, could become a game changer for the electric industry, maybe not in the short-term, and not necessarily for the incumbents unless they can package the solutions desired by the new buyers. In the meantime, those of you waiting for the electric car payoff might want to consider Ambrose Bierce’s definition of patience, “A minor form of despair, disguised as a virtue.” That change in game may be some time in coming.

By Leonard S. Hyman and William I. Tilles for Oilprice.com

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Projections of EV sales are all over the map. I believe that EV will take market share when they are at parity with ICE initial costs. But even then, there are no EV pickups. F150 still outsells all cars in the US. EVs must have the same form factor and capability in all market segments to overtake ICE. This is a couple decades and a 10x increase in energy density away from reality. So, probably 2036 before pickups are EV.
 

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Can EVs Save Electric Utilities?
Only if the utilities offer incentives to charge off-peak. JCP&L does not. So, if I do what is convenient for me and plug in to charge at the end of the day I am adding to their peak load. Not good for the utility.

KNS
 

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The driving force behind the California utilities' drive to install thousands of electric charging stations is easy to explain: electric utilities are selling less product every year (all those LED bulbs are making a huge difference in aggregate demand); the only real opportunity for growth is electric vehicles.

The big puzzle is why politicians haven't gotten behind the effort in a big way. You clean up the air. You reduce CO2. You create jobs by buying locally produced energy. You reduce the cost of transportation. And you put Saudi Arabia and their terrorist sustaining network out of business. What's not to like?
 

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I'm sure utilities will be more than happy to see EVs succeed, but destroy the oil business - really??

All of the environmental activism has managed to encourage legislators to choose a winner between coal and natural gas. Gas won, and the only cost-effective way to put in bulk generation are gas generation facilities. Every coal plant that has been shutdown in the last five years has effectively been replaced with a gas plant. The unseen effect of this so far is the fact that NG prices fluctuate much more rapidly and with orders of magnitude that coal never saw -- so electric prices will inevitably follow. Also NG demand is substantially higher than it has ever been.

Wind and distributed solar have been and will continue to be bit players where utility pricing is closer to the current national average. The most promising new projects being discussed are "Utility Grade" solar, but these are still tiny generation amounts compared to the typical fossil generating facility.

Demand side reductions have been huge, but the loss of manufacturing of all kinds in this country are bigger players than things like LED conversions across the country. Aluminum smelting, and the US loss of this business has had a huge impact on demand side, as a 250K TPY smelter can use up to 500MW of electricity on and ongoing basis.

Who do you think will have the largest military/industrial complex based on this list?
https://en.wikipedia.org/wiki/List_of_aluminium_smelters
 

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EV charging at night does save the power utilities because their generators keep running 24 hours a day, but have a reduced demand at night. Their generators cannot be stopped, and only a few can slow down or drop production when there is less demand. So the utilities love to have a demand for power at night to take up the excess energy that have.

Besides, the oil producers will never lose money, as there are other uses for petroleum and its derivates which are not for vehicle fuel burning. Finally, it is cleaner to burn fuels at the power generators than in the millions of vehicles on the roads.
 

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The driving force behind the California utilities' drive to install thousands of electric charging stations is easy to explain: electric utilities are selling less product every year (all those LED bulbs are making a huge difference in aggregate demand); the only real opportunity for growth is electric vehicles.

The big puzzle is why politicians haven't gotten behind the effort in a big way. You clean up the air. You reduce CO2. You create jobs by buying locally produced energy. You reduce the cost of transportation. And you put Saudi Arabia and their terrorist sustaining network out of business. What's not to like?
Those LED bulbs make the utility money, which is why they push people to use them. The utility wants to sell less product, especially during peak hours.
http://www.treehugger.com/energy-efficiency/ask-pablo-why-would-my-electric-utility-want-me-use-less-electricity.html
 

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If everyone drives electric cars the utility infrastructure will have to be upgraded. That's ok if the rate of change is within their ability to plan and make the upgrades. If it happens to fast the cost of electricity will increase to the point that people will seek alternatives. Could that be gasoline?
 

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Interesting article, but I can do without some of the pompousness. A couple of points I'd like to talk about:

Let’s start with the potential. No econometric projections. Just simple arithmetic. Roughly speaking, a car travels 100 miles on 34 kwh. Vehicles in the USA travel about 3.15 trillion miles per year. If all cars drove on electricity, they would require 1.07 trillion kwh, or 29 percent of current electricity sales. So electric cars would be a big deal if all cars went electric.
To which vehicles is this referring? Right now, most EVs are small passenger cars. Teslas are, by far, the least efficient EVs on the roads, but their power consumption is small compared to what an EV SUV or truck would require. The fleet average fuel economy for ICEVs is 23-24 mpg, and most of the EVs have been replacing ICEVs in the 30-40 mpg class. If we get to the point where battery energy densities can support larger vehicle EVs, their power requirement would be far higher than this estimate.

But last year, electric cars accounted for less than 1 percent of new car sales. Nobody really knows how to predict sales of a new product. Some, like the iPod, iPad and iPhone take off quickly. Others take a long time, and so far the electric car appears to be in the latter category. It needs infrastructure that not many entities seem in a hurry to build.

So, let’s make a few generous projections: electric market share averages 2.5 percent over the next five years, and 10 percent thereafter. Based on those calculations, electric cars will comprise 6 percent of the vehicle count and will add less than 2 percent to the current level of electricity sales.
I think that's less than generous. My personal prediction is that now that oil prices are increasing again and EVs such as the Bolt and Model 3 will soon be available (i.e., no compromise EVs near average vehicle MSRP), EV sales growth will be greater than 100% per year. I see EVs comprising 10% of new car sales within five years, and possibly as high as 50% of new car sales within 10 years.
 

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Electric cars hold the potential to destroy the oil business and save the electricity business. The big question now is when this will happen.
What a bunch of hogwash. Oil will not be destroyed and electricity producers are not in need of saving. Both are in need of adjustment - nothing more.

Last year the world consumed about 93 million barrels of crude oil per day. About 42 percent of that, or 39.5 mmbpd, was used for transportation.
And this year the world will use more. Since 1984 the only year oil consumption dropped was 2009 due to the worldwide financial crisis.
 

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That is the reason some have argued that we have already reached peak oil. Even with Saudi Arabia flooding the market and Iranian production coming online, supply is becoming more constricted. To a large degree, I agree with that opinion. I think we have seen the last time oil will ever be less than $50 a barrel.
The peak oil thing has been done several times, and each time it was proven wrong. The main reason people buy into that narrative is fear IMO.

We're producing more than ever here and we have lots left that hasn't been touched. The low crude prices have put many projects on the shelf, which is to say, we'll get back to it when we're ready.

I see so many of these claims of "we're going to reduce our dependence/production/need/whatever". It's wishful thinking more often than not. I drive a Volt, but I don't try to fool myself into thinking it makes much of a difference one way or another.

http://instituteforenergyresearch.org/ said:
Despite the G7 interest in phasing out fossil fuels, fossil fuels continue to be used in global energy markets to provide increasing comfort and economic activity to nations and their citizens. India, for example, has indicated that it will use coal to bring electrification to much of its population without power. According to the Guardian[iii], 5 of the G7 countries increased their coal use between 2009 and 2013 but still demanded that poor countries slash their carbon emissions. Britain, Germany, Italy, Japan and France together burned 16 percent more coal in 2013 than 2009 and plan to construct more coal-fired power stations, according to the Guardian. Clearly, for many of the rich countries, it is do as I say and not as I do.
 

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Very interesting recent article in Bloomberg: The World Nears Peak Fossil Fuels for Electricity. Among other predictions:
The adoption of electric cars will vary by country and continent, but overall they'll add 8 percent to humanity's total electricity use by 2040, BNEF found.
Looks like we're leading the pack!
 

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EVs + Solar = A profound shift of power demand away from mid-day to overnight. Utilities are, in some places, squawk about having too much solar in the middle of the day that they can't get rid of it.

It's clear to me that there's going to have to be a significant shift in how the electric companies deal with the time of day. Batteries or hydraulic power storage might be a key to dealing with this.
 

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EVs + Solar = A profound shift of power demand away from mid-day to overnight. Utilities are, in some places, squawk about having too much solar in the middle of the day that they can't get rid of it.

It's clear to me that there's going to have to be a significant shift in how the electric companies deal with the time of day. Batteries or hydraulic power storage might be a key to dealing with this.
Back when I was in the central station power generation business, the only way that pumped hydro peak storage even barely made economic sense was when the cost of the power used to pump the water was extremely cheap due to high capital costs and inefficiencies in the overall cycle. I don't think much has changed since then.
 

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EVs + Solar = A profound shift of power demand away from mid-day to overnight. Utilities are, in some places, squawk about having too much solar in the middle of the day that they can't get rid of it.

It's clear to me that there's going to have to be a significant shift in how the electric companies deal with the time of day. Batteries or hydraulic power storage might be a key to dealing with this.
I think that squawking is coming from natural gas power plants because solar is starting to step on their turf. Solar, unlike wind, is fairly consistent in when it produces power and how much power it produces. Considering over 30% of the power in our grid comes from natural gas and ~3% comes from solar, power grids have more than enough room to throttle back natural gas to account for solar. Solar production could increase by 10 times, and the only real "damage" it would do to the power grid is to price fossil fuel power plants out of the market. I can think of worse fates.
 

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Back when I was in the central station power generation business, the only way that pumped hydro peak storage even barely made economic sense was when the cost of the power used to pump the water was extremely cheap due to high capital costs and inefficiencies in the overall cycle. I don't think much has changed since then.
Hydraulic still has the environmental stigma as well, since you're significantly changing the water levels to support the power need - not whats living there.

Battery technology still needs to come a long way in availability and pricing to be a contributor, but needs to develop much more before spinning reserve from fossil fuels is not required. Some of the country has weather and winter loads are as high or higher than summer loads. Solar can't really help in cases where it may not be available for days at a time - especially during a cold snap.
 

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Everyone whom I know and have asked give me the impression that they will die owning an internal combustion engine. From a world population perspective, I hope a lot of people die soon, before mass extinction, including human population, because of the destruction of our natural environment. SHTF. People need to start acting on the news. The Millenials already get it.
 

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Everyone whom I know and have asked give me the impression that they will die owning an internal combustion engine. From a world population perspective, I hope a lot of people die soon, before mass extinction, including human population, because of the destruction of our natural environment. SHTF. People need to start acting on the news. The Millenials already get it.
For the first time in modern history, life expectancy rates are dropping. The shift might come sooner than you think. The one flaw in the movie Idiocracy is that it failed to account for the number of people who would die in their 30s and 40s to COPD and diabetes.
 
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