Wednesday, December 13, 2006

Fueling the Plug

The Pacific Northwest National Laboratory (PNL) of the Department of Energy has just released a study addressing the capacity of the US electricity grid to handle the additional electricity demand associated with the widespread adoption of plug-in hybrid cars. They found that existing power plants and transmission lines could support the equivalent of 84% of today's vehicles, provided they recharged during off-peak times. That is welcome news for those who see plug-in hybrids as a key contributor to reducing our reliance on imported oil and cutting vehicle emissions. Analyzing the results further, however, suggests that PNL's finding is necessary, but not sufficient for making such cars a practical alternative to cars that rely on liquid fuels for all their energy needs.

I applaud PNL for thinking big and looking ahead to a time when plug-in hybrids might be truly mainstream, rather than unique prototypes or home conversions. It's easy to justify putting the first few thousand plug-ins on the road, but before they can replace all conventional cars, we need to answer a long list of questions, including:
  • Can existing power plants and distribution networks, including the regional grids that make up the US electricity supply backbone, handle the additional load of millions of electric vehicles. According to PNL, the answer is yes, at least in the Midwest and Northeast, provided they recharge off-peak.
  • Would the result of such a shift reduce US greenhouse gas emissions? Although I couldn't find the specifics on the PNL site, an article on the study in yesterday's Wall Street Journal indicated that full conversion to plug-ins, presumably using the current mix of coal and natural gas-fired power plants with extra off-peak capacity, would cut GHGs by about 5%. That's much less than what one might expect from such a radical change in the sector responsible for one-third of all US CO2 emissions.
  • Would the economics of a plug-in hybrid make sense for consumers without massive government subsidies? PNL suggests that the payout would be between 5 and 8 years. They interpret that as a yes, but I question both the figures and their interpretation.
  • Could domestic coal and gas supplies support the increased demand from power plants involved in a massive shift from gasoline to plug-in hybrids? PNL didn't seem to have addressed this, but I believe this is a big concern, at least for gas. If US natural gas supplies are tight--and expensive--with hardly any now going into transportation, where would the incremental gas come from to fuel the off-peak combined-cycle generating capacity that would recharge many plug-ins? The answer would have to be either LNG, or shifting gas away from other demand sectors.
  • If plug-in hybrids reduced overall gasoline consumption dramatically, would their electricity consumption continue to be exempt from the highway taxes collected on liquid fuels, and if so, how would highway maintenance be funded? This is a policy question, but if we're looking at the big picture, it can't be ignored.

The vehicle-level economics, in particular, deserve more attention, since they represent a much larger up-front investment than current hybrids, the sales of which seem to have slowed, as gasoline prices have come down from the summer peak. At $2.50/gallon, the average fuel bill of the average car in America is $1,200/year. If, as PNL suggests, the plug-in hybrid upgrade costs $6,000-10,000/car, then even if electricity were free, the payout period would stretch beyond the typical initial car ownership period. It would have to be reflected in much higher resale values, in order to avoid dramatically increasing the average cost of vehicle operation. As I've shown before, plug-ins will face very tough competition from conventional hybrids that capture the most valuable increments of fuel economy, leaving much less benefit from which plug-ins can justify their added cost.

As encouraging as I find PNL's announcement in terms of keeping an important energy option open, we're left with a lot of unanswered questions, not the least of which is whether such a strategy should even be contemplated without a dramatic shift in our electric generation capacity away from fossil fuels and toward nuclear power and renewables. As the PNL study shows, the current generating capacity can't deliver big greenhouse gas reductions from a switch to plug-in hybrids, and the extra coal and natural gas to fuel it present equally serious hurdles.

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