Hybrid and Electric Cars: Implications for Electricity Usage

As of 2013, all electric vehicles are considerably more expensive than hybrid-electric vehicles, not to mention gasoline-powered cars.  However, the status quo is quickly changing as batteries are becoming cheaper and more efficient.  Range anxiety concerns are lessening as battery swapping, rapid charging stations such as the “Tesla Supercharger” and charging networks become more commonplace (currently, Estonia remains the only country with a nationwide network of charging stations).  With volatile oil prices and increasing gasoline prices, gasoline-powered cars are likely to share the road with more and more hybrid and all-electric vehicles in the future.

The changing composition of the vehicle fleet in coming decades is likely to have significant implications for the electric grid.  While Americans currently favor hybrid-electric vehicles with their long range and affordable prices, all-electric vehicles are likely to gain market share due to lower operating costs.  According to EPA estimates, fuel costs of all-electric vehicles are roughly half of average hybrids and they do not require oil changes or other routine maintenance common to hybrid-electric and gasoline-powered cars.

With the increasing share of all-electric and plug-in hybrid vehicles, electricity grids will face some challenges.  The existing grid, in particular local transformers, may not have enough capacity to handle additional power requirements.  Overloading problems may arise when several vehicles in a neighborhood are plugged in at the same time and/or at the time of summer peak loads.  Grid upgrades may be costly.

Fortunately, utilities have options.  Variable time-of-use rates can provide an incentive for charging at night to alleviate some of the overloading problems.  A number of utilities across the country are exploring vehicle-to-grid systems that would allow parked vehicles to communicate with the electric grid to either deliver electricity back to the grid or throttle their charge rates.

The challenges of all-electric and plug-in hybrid vehicles create a strong incentive to begin accounting for the number of these vehicles in a utility’s service territory.  Tracking the numbers will not only be valuable in solving the grid related issues, but also in energy, sales, and peak demand forecasts.  These forecasts feed into budgets, transmission and resource plans and rate cases.  Even though the numbers are small today, this is the best time to develop procedures for counting and identifying sources that can provide an accurate count of vehicles.  Remember, econometric models require good historical data as a foundation for a solid forecast.