There is a lot of good news for the electric vehicle industry these days -- chief among them are the record-level gas prices. In fact, gas prices in the U.S. are now at their highest levels in history for the month of April, approaching the $5 per gallon mark in many states, a full 2 months before the summer driving season. EVs, with a “per gallon equivalent” in the $1.00 to $1.50 range, continue to present an increasingly viable solution, with early models now looking ready for “prime time,” so to speak -- or at least as good as one could expect from a first-generation technology.
While forecasting the rate of EV adoption over the next 5 or 10 years is every analyst’s favorite parlor game, the real question remains: is the grid ready for EVs?
Our latest GTM Research report, The Networked EV: The Convergence of Smart Grids and Electric Vehicles is centrally focused on the communication and grid infrastructure build-out necessary to allow EVs to scale. Based on countless conversations and analyst briefings, it is clear that utilities, regulators and governments do not have not have a firm grasp on the either the requirements or the costs associated with the coming EV rollout (a fact that scares EV car manufacturers half to death). The good news is that EVs are now hitting the market in the same period that utilities around the globe are racing to make their grids more intelligent, as national and regional governments have come to understand that you cannot run a 21st-century economy using a 20th-century grid.
While EV charging demonstrations such as the DOE-sponsored EV Project and private investments such as NRV Energy’s eVgo electric station rollout continue to make the headlines in the U.S., in our estimation, the real work that needs to be accomplished is on the electric power grids themselves. It is worth noting that EVs will challenge us to get every functional area of smart grid in place: grid communications, metering, real-time data management and analytics, and most notably, distribution automation.
Not only is this effort of the integrated smart utility to support electric transportation not getting enough ink, presently, most media and analyst coverage concerning the build-out for EVs is centered on only one of two areas: 1) the need for more public and home charging stations or 2) the now widely understood transformer overloading issue, whereby the addition of one too many EVs on a certain distribution transformer overloads the equipment and causes an outage. While those are real concerns -- and we, in fact, do detail the charging infrastructure and transformer build-out challenges -- our research aims to evolve the conversation beyond those known obstacles to highlight the emerging, and necessary, intersection of electric vehicles and smart grid.
Much of the work that needs to be done to prepare for EVs falls under the smart grid sub-market of distribution automation (DA), as the grid itself will need not only to become more “self-aware,” but also to be capable of autonomously self-correcting against sags, surges, and the disruptive loads that electric vehicles will present. Simply put, the impacts of EVs on the actual distribution grids will prove to be severe, and getting it right will require a major overhaul. The Networked EV report details the most pressing impacts, investigating the challenge of providing both the right amounts of voltage and reactive power (aka “VAR” or volt-ampere reactive), the possibility of the three phases on a circuit becoming imbalanced, and the need for not only adequately sized transformers, but also conductors, and in some cases meters and panels. The report further explores the possibility of needing to enact sequence changes (removing transformers that step-down the voltage) to ensure sufficient voltage at the edge of the grid -- an important point, as a large percentage of early-adopter first- and second-generation EV owners are likely to live in the suburbs or outer suburbs, at great distances from substations.
While some of this might sound a bit esoteric, these challenges are going to unleash a whole new generation of dynamic devices -- and a large market opportunity for grid equipment vendors (such as GE, ABB, S&C Electric). Next-generation equipment, including tap changers, voltage regulators, capacitor banks and reclosers, will serve to address these challenges and introduce a new level and complexity of switching and protection. As such, we anticipate a growing market for distribution automation, all of which will be built up on smart grid communications, sensors, next-gen hardware, and software (GTM Research has forecasted that the U.S. market for DA will grow from $2.3 billion in 2010 to $5.6 billion in 2015).
It is also vital to highlight the role that communications will play in the success of EV: virtually all of the solutions that will be required to integrate EVs can only be attempted after smart grid communications are installed. For example, good luck trying to discover how much power an electric vehicle is drawing in real-time, or the voltage at a particular location, using those old fashioned non-communicating, electro-mechanical meters. Fortunately, the ongoing, large-scale investments in AMI, which put in place end-to-end communication networks, are laying the first tracks for the grid communication platform. While AMI networks may end up primarily supporting EVs more through smart metering, dynamic pricing, and demand response capabilities (and not necessarily DA applications), it’s very important to recognize that the seeds of investment in grid communication have begun. Industry experts, from companies such as Cisco, Silver Spring Networks, Trilliant and AT&T, are now racing to understand the more rigorous requirements of distribution automation (including, but not limited to, latency, bandwidth and network management concerns) in order to extend the functionality of first-generation networks to facilitate and automate critical control and protection for on-going grid reliability.
It is our expectation that adequate smart grid build-out at both the grid level (through increased DA, communications and data analytics) and at the customer level (through smart chargers and user-friendly portals and apps) will underpin the growth of the EV market. Today, no one would willingly choose to use a dial-up connection to access the web, and similarly, in 2020, when the third-gen EVs intended for the mass-market consumer are expected to become available, nobody is going to want to rely on Edison’s legacy grid to charge their vehicles.
In smart grid circles, the investments that President Eisenhower made in creating the interstate highways in the 1950s -- the economic benefits of which continue to be realized to this day -- are often hailed as the type of strategic long-term infrastructure investments which ensure long-term viability and success. More recently, all of us have been witness to incalculable wealth creation that has cascaded off of the information super-highway. In today’s world, getting the grid prepared for our energy future is the next highway.
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David Leeds will be moderating a discussion about smart grids, electric vehicles, and distribution automation on the panel "Ensuring Grid Stability Upon the Integration of EVs and Renewables" on Day 2 of The Networked Grid 2011 in San Francisco.