Could Electric Vehicles Kill the Power Grid?

Toronto without power in 2003. Source: Wikipedia user Camerafiend.

In August 2003, 55 million Americans and Canadians lost power for two days in the largest blackout in American history. While this blackout was largely a product of human (and software) error, it's a compelling example of what can happen to the grid when the right -- or wrong -- circumstances align. 

Electric vehicles, or EVs, are gaining in popularity. According to the International Energy Agency, global sales of EVs doubled from 2011 to 2012, while here in the U.S., the Electric Drive Transportation Association reported that sales of plug-in cars nearly doubled from 2012 to 2013, and are on track to grow by 30% in 2014. From 2011 to 2013, the percentage of cars sold that featured electric drive -- this includes hybrids and plug-ins of all types -- increased from 2.3% to 3.8%, a whopping 50% jump.

What's the potential impact of adding all these new vehicles to America's power grid -- a power grid that has been described as old enough that Nikola Tesla and Thomas Edison would recognize many of its components?

After all, it only takes two EVs to equal the power demand of one average American home. 

The impact of a single electric vehicle

Tesla's upcoming Model X will add further demand for EVs. Source: Tesla Motors.

The most popular fully electric vehicle in the U.S. is the Tesla Motors  (NASDAQ: TSLA  ) Model S sedan, with the company expecting to deliver 35,000 in 2014. Furthermore, Tesla management expects to be building cars at a rate of 100,000 per year by the end of 2015, enormous growth from today's levels.

According to Tesla, the average driver would need about 4,800 kilowatt hours, or kWh, of electricity per year to travel 15,000 miles. The average American home pays $0.12 per kWh, so you're looking at about $576 per year in additional electricity cost. Compared to a gas-powered car that gets 25 mpg and paying $3.85 per gallon, that's a cost savings of $1,700 per year. That's pretty awesome, if you don't mind paying more than $70 grand for a Model S. 

But what's the impact of that 4,800 kWh on power usage? According to the U.S. Energy Information Administration, the average residential customer consumed just over 10,800 kWh in 2012, so we are talking about increasing power use by a whopping 44% per home, per electric vehicle. There are more than 115 million households in the country. Here's what power consumption -- just for residential customers -- would look like based on an EV in every driveway:

Data source: EIA and Tesla Motors.

Adding to the load at the worst possible time
Adding 44% to the demand load isn't the big risk with EVs, because our grid has capacity to meet additional demand. The problem is when so much of that new demand is concentrated into a narrow window of time. Residential power consumption tends to peak in the late afternoon and early evening, when people arrive home from work and school en masse.

Ford C Max Energi.

The concern with EVs, then, is that the power demand they add to the grid isn't distributed evenly over the day. Going back to information supplied by Tesla, the average daily commuter would pack that new demand into about 90 minutes, potentially every afternoon when he or shre returned home from work, right when residential power demand is peaking. 

Source: IEA presentation

Technology and time to the rescue 
While plug-in vehicle sales are rapidly escalating, the raw numbers are still relatively small. Sales did double from 2012-2013, but the actual increase was from about 55,000 units to just under 100,000. Through July 2014, EDTA reported just over 66,000 plug-ins sold in the U.S. This would put total plug-ins sold since 2010 at just below 235,000 cars, adding a more manageable level of demand to the grid. 

The IEA's EV Initiative has set a goal of having 20 million electric vehicles on the road globally by 2020. That's an enormous increase from today's levels, but not enough to even remotely put the grid at risk in the U.S. 

Power companies such as CenterPoint Energy  (NYSE: CNP  )  are beginning to take a closer look at the impact now, before it becomes a threat. As the Houston Chronicle recently profiled, CenterPoint is working with makers of EVs today in order to be prepared to manage demand later. 

Just as technology is allowing plug-in vehicles of all kinds to grow market share, technology will also be the answer for the ability of the grid and utilities to meet future demand. One of the simplest ways to manage demand already exists, via charging only during set times of the day. The best -- and cheapest -- time to charge an EV is very late at night when energy demand is lowest. 

This corresponds to utilities still operating baseload power plants, which are largely underutilized at these hours, because not only is household demand at its lowest, but commercial and industrial needs are also lower. This increased demand would actually be a boon for utilities, which frankly are losing money at these hours due to the incredibly high fixed costs associated with operating a power plant. 

Technology that can actively control when a car is charging is a major possibility. Utilities can offer incentives to EV owners to allow the utility to actively manage charging, and reduce or alter a charging cycle in real time based on grid use. 

Distributed utilities, in-home power storage part of the solution
Some estimates put sales of plug-ins at a half-million units per year by 2023, and there will be demand on the grid. However, the same technology that is putting EVs on the road in growing numbers -- cheaper, better batteries -- could offset some of the demand on the grid. 

Tesla battery backup unit. Source: SolarCity.

Earlier this year, SolarCity  (NASDAQ: SCTY  ) -- another company backed by Tesla CEO Elon Musk -- announced that it was partnering with Tesla to offer battery storage for residential and commercial customers. While it will be years before this technology becomes established and affordable, and before utilities and regulators allow it in many markets, the potential for EV owners to store power from solar systems, to use later for things like charging an electric vehicle, could be a reality when EV sales reach levels that could threaten grid operators. 

Final thoughts: It's a long road 
It's going to be a decade before enough EVs are in enough driveways to make this a serious threat, and you can be sure that technology will keep advancing at the same time. These advances will largely address the potential threats that EVs present. 


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Read/Post Comments (3) | Recommend This Article (2)

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  • Report this Comment On August 24, 2014, at 6:42 PM, JPWhiteHome wrote:

    It will be a long time before EV's pose any real concern. In the interim since 2007 we have witnessed a gradual reduction in electricity consumption in the US, the utilities are hurting sales wise, not capacity wise.

    My personal situation is that my electricity usage since 2007 is down 20% thanks to new windows and a high efficiency heat and air unit. Oh yeah I forgot to mention that the reduction *includes* 18,000 miles per year in my LEAF. With efficiencies I have created enough headroom to accommodate an EV and still use less electricity. A high percentage of LEAF owners install solar panels, further reducing the demand on power plants.

    In a separate article, the utilities in Europe are concerned that by 2025 they will be redundant because so many consumers will have solar, EV's and home battery storage, they won't need the utilities.

    The Utility companies should encourage EV adoption as it will help preserve their revenue stream. EV induced blackouts should be the last item on their list of concerns.

  • Report this Comment On August 25, 2014, at 11:00 PM, Photonengineer wrote:

    Energy conservation through efficiency, and yes, the installation of a PV system, has created the same situation for me.

    It's not just utilities in Europe that are running scared. Earlier this year, at the Edison Electric Institute's yearly meeting, the topic of an increasingly obsolete business model (centrally distributed power) weighed heavily. Expect the lobbying wing to put up a fight against future solar installations and storage systems.

  • Report this Comment On August 27, 2014, at 11:39 AM, Capt601 wrote:

    An article about EV's and the grid, and you mention it will hit the grid at the worst time, yet you don't even mention almost every EV has the option to be started at a certain time. And something that almost every EV owner does, as the rates at night are significantly cheaper. Most charging is done after midnight, and well done before people are waking up.

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Jason Hall

Born and raised in the Deep South of Georgia, Jason now calls Southern California home. A Fool since 2006, he began contributing to in 2012. Trying to invest better? Like learning about companies with great (or really bad) stories? Jason can usually be found there, cutting through the noise and trying to get to the heart of the story.

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