Electric Vehicles and Demand Response: A Marriage of Efficiency?

By Matthew Madden

Will two technology trends converge to create a more energy efficient future?

The long-awaited future is now for electric vehicles. If you’re reading this, you’ve probably been inundated recently with news covering this emerging market. In recent weeks, we’ve heard the following:

  • Nissan confirmed the company will fulfill their commitment to deliver the first 20,000 electric vehicle Leafs despite numerous production setbacks
  • Google and the National Renewable Energy Laboratory announced a partnership to develop a database of electric vehicle charging stations and integrate that database into Google Maps
  • The Department of Energy released a report that stated the U.S. is on track to meet the Obama administration’s goal of 1 million electric vehicles on the road by 2015

Whether motivated by environmental concerns or national security issues, the widespread adoption of electric vehicles can only be considered good news. That is, unless you’re a utility company executive that needs to ensure the electricity grid continues to deliver the clean, reliable power we’ve come to expect. The opportunity to sell “fuel” for your vehicle is certainly attractive to the utilities but they also need to keep the lights on. I’m sure the utilities welcome the innovation but they also need to be concerned with converting vision to reality from an operational standpoint.

Concurrently, the demand response industry has established itself as a viable model for managing peak grid demand and ensuring more efficient electricity usage for commercial, industrial and residential locations. Companies such as EnerNoc and Comverge have emerged as leaders in this developing market by providing financial incentives to their customers. Can the lessons learned from the evolving demand response market be applied to the electric vehicle infrastructure market to help alleviate the concerns of the utility executive?

The first question to ask is what would be the impact of widespread adoption of electric vehicles to the grid. A joint study developed by the National Defense Resource Council (NRDC) and the Electric Power Research Institute (EPRI), accounting for variables such as a modest roll-out of electric vehicles and typical charging times compared to grid capacity, determined that adoption of electric vehicles will not collapse our electricity grid from a macro level. Of course, the details are what matters when discussing disruptive technology.

A grid-wide collapse may not be a significant concern, but utilities are worried about local disruptions. After the introduction of the Toyota Prius, the formation of so-called “Prius clusters” materialized as individuals with the same socio-economic profile and shared concern for environmental issues – individuals who also happen to live in the same neighborhoods – purchased the hybrid vehicle. The same trend of clustering can be expected as electric vehicles become increasingly accepted but, this time, there will be consequences for the local electricity provider.

The degradation or under-sized nature of local existing transformers could threaten a utility’s ability to deliver reliable power if, for example, a number of individuals on a single city block decided to purchase electric vehicles and charge those vehicles at the same time of day. Utilities and charging station infrastructure companies are developing plans and incentives to encourage customers to charge at grid-friendly/off-peak hours, but individuals – particularly affluent early adopters – may be more concerned with convenience than cost.

The answer is applying demand response functionality to the electric vehicle infrastructure – a development that is increasingly being referred to as the “killer application” of the smart grid market. Given the localized concern of power disruptions, utilities will be more than willing to pay for the ability to monitor and manage the electricity demand from electric vehicles on their grid. Providing utilities with the information to understand the demand at the granularity of a transformer and the associated ability to manage and shed that demand at a similar level of detail – particularly during peak demand times and events – will become a significant global market as the adoption of electric vehicles is realized.

Traditional utility equipment providers – such as ABB, Siemens and GE – innovative software companies – such as Tendril Networks and Gridpoint – and leading edge electric vehicle infrastructure companies – such as Coulomb Technologies and Ecotality – are all vying for this market. In fact, relationships and partnerships exist between many of these organizations in an effort to develop the proper mix of technology and relationships necessary to compete in such a burgeoning market. It may be years before we’re able to anoint the winners, but deploying demand response technology to the electric vehicle market certainly appears to be the winning strategy.

Matthew Madden has 15 years of sales and business development experience including nearly a decade selling communications networks to the largest utilities in the country. He can be reached at matthew.madden@presidiomba.org

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