Why Electric Vehicles Worry California Power Regulators

Pylons; Photo by Net_Efekt

Though historically high gas prices provide a strong market demand for electric vehicles (EVs) in California, it is the state with an electric grid that is the least able to support these cars. With automakers set to launch at least a dozen EV models by 2012, California’s electricity regulators are scrambling to respond to the expected power needs, with policy to accommodate the emerging, private sector infrastructure required for widespread EV use. Meanwhile, car company CEOs are holding their breath–while also optimistically moving forward despite, regulatory uncertainty.

California’s grid is like the economy: overleveraged!

California’s power grid resembles the state’s current economy in both its health and ability to meet needs. California’s electricity demand is barely met by production, which must occur in real-time due to the absence of electricity storage mechanisms. This creates a volatile spot market in the race to meet peak summer demand, when many Californians run air conditioning. In this context, regulators at the California Public Utilities Commission (CPUC) brace for an onslaught of EVs, which are projected to occupy up to 10% of the domestic auto market by 2020, according to Renault’s bullish estimate.

Energy supply: playing grid Jenga

Charging stations, and especially quick charging stations like those being tested by AeroVironment (an EV charging station maker) and Think (the Norwegian EV company that partnered with them), may exacerbate California’s peak demand issues. AeroVironment’ charging stations use 440 volts to charge an EV battery in fifteen minutes (standard US wall sockets supply electricity at a rate of 120 volts). The AeroVironment charging station’s quick, intense charges may create demand “minipeaks” that, on top of summer peak demand already met only by expensive spot market purchasing, could destabilize the grid. Additionally, a future of widespread EV use points to significantly increased energy demand overall. Where will it come from? In order to supply more energy, to accommodate EVs or growth generally, California must expand its grid.

Regulations will focus on consistency

Solutions for grid expansion include building new infrastructure (green jobs!), increasing smart grid technology proliferation and creating new power facilities on the supply side. These projects are likely to be state sponsored and utility profit friendly, thus unlikely to face serious political opposition.

Regulations around EV charging stations and grid upgrades are most likely to focus on triage- how to prevent a grid collapse due to new potential EV demand. As a result, consistency, logistics and cost assignment are the areas of likely focus. Interconnection consistency, for example, ensures that poor grid connections cannot compromise the grid overall. Regulation may also assign the costs of new grid infrastructure, especially where the grid is expanded specifically to meet the needs of private companies (like a charging station in the middle of nowhere).

Charging station and battery type uniformity would be ideal, but can only come later. Regulators are currently being forced to make energy rules ahead of the market they will effect. With no defined size, keystone product and amidst constant innovation, there is the danger that rules will stifle market efficiency. The real regulation of EVs will come after Californians have chosen their favorite EVs and charging systems, when the EV impact is measurable.

Making it work

Even with impending CPUC regulation, EV are a clear “go” for California as well as the larger national market. CEOs should expect rules that will affect but hopefully not stifle their businesses. Not only would harm to car sales, during California’s worst-ever recession, be political suicide, but three fourths of the CPUC commissioners are Schwarzenegger-appointed ex-corporate lawyers. In one of the only times that these backgrounds will benefit the public, California can reasonably rely on the CPUC to approve industry-friendly rules.

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