THE ENERGY INDUSTRY TIMES - FEBRUARY 2018
Industry Perspective 13
Taking charge?
In a future where 50 per cent of all
cars, buses and motorcycles are
‘all electric’ across the EU28, the
annual electricity demand would be
330 TWh higher.
To some this may not seem much
but it is equivalent to adding a country
the size of Italy to the electricity
demand of the EU28. If the 330 TWh
was considered on a standalone basis,
it would require 45 GW of baseload
plant which is equivalent to 14
Hinkley Point Cs. But what does it
mean for investment needs when
considered in the existing electricity
system and what impact will it have
on the generation and distribution of
electricity?
With spare capacity on the current
system, additional energy demand
could in theory be accommodated
without the need for new capacity.
We use Great Britain (GB) to demonstrate
this. In GB, peak demand
currently occurs in the winter at
around 18:00 (see Figure 1). Imagine
all cars slow charge at the same time
overnight in a seven-hour period
starting at 23:00. In this example, it
would be possible to accommodate
over 21 GW of charging demand before
a new peak demand period is
created. However, if charging starts
when people return home from work,
at 18:00, then the impact is direct
and new capacity is required immediately.
Assuming a 50 per cent penetration
of EVs in GB, the demand
from charging over these seven hours
translates to 20 GW and so can in
theory be accommodated within the
existing generating capacity.
However, the situation both today
and in the future is not well represented
by this characterisation for a
number of reasons, not least:
n the continuing increase in nondispatchable
generation such as solar
and wind; and
n the growing potential of flexible
demand from appliances and EVs, to
balance supply and demand in a
smart, digitalised, decentralised
energy system.
As the amount of wind and solar
grows in the electricity system, the
shape of electricity demand will no
longer be the main driver for when
to charge an EV, as low electricity
prices will not necessarily coincide
with periods of low demand overnight.
Rather than charging overnight,
it will make sense for EVs to
charge during a sunny or windy period.
Assuming that the average EV
user charges once a week, then as
shown in Figure 2 the best day to
charge in Germany during week 45
2017 is November 11th.
The price of electrical energy on,
say, a 15-minute dynamic basis, can
provide the right signal about when
best to charge an EV. Consumers
will, if so enabled by technology in
the future, set their preferences and
the EV will do the rest. Such preferences
may be that they never
want less than 40 per cent charge in
their EV and are willing to pay a
maximum amount per day for their
electricity.
The pricing of electricity will also
need to be dynamic so that as demand
increases, prices respond and
additional demand sees its impact on
price levels. For this to work, of
course, consumers will need smart
meters that can record demand on
this 15-minute basis and retail prices
that reflect the changing value of
electricity in each 15-minute period.
A key question is: can EVs solve
the grid problems they cause? It is a
matter of distribution and diversity.
In practice, our electricity systems
rely on diversity of demand to hold
down costs. The fact that people use
electricity at different times means
that the capacity of the system is
lower than it would need to be if they
used it at the same time.
With non-smart systems it doesn’t
matter to the residential consumer
when their electricity demand occurs
as settlements are based on half-hourly
or hourly profiles rather than on actual
demand. But in a world in which
flexible demand is chasing low electricity
prices, there is an incentive for
consumers to charge their vehicles at
the same time. Natural diversity will
reduce and distribution systems will
need even greater levels of investment.
The cost of distributing electricity
will be low most of the time and
then increase significantly when grid
capacity grows scarce. There will exist
at times a tension between the cost
of electrical energy and the cost of
distribution. The cost of delivered
electricity will vary significantly with
time and location.
The impact that this has on the
electricity system will depend on the
underlying characteristics of the system.
In systems with high levels of
hydro storage, the variation in electricity
prices driven by wind and solar
will be low. The incentive to all
charge at the same time will be reduced.
In systems built to cope with
mainly electric heating, home-based
slow-charging demand is proportionally
less important as the distribution
system is already built for larger
loads (as long as one avoids having
the heating on at the same time as the
EV is charging).
One solution is a system of dynamic
pricing that reflects the cost of
electricity at a specific location. The
pricing option could be a variation
on nodal pricing, common in many
electricity markets, but which is extended
down to the local distribution
level, even to a price at the top of a
city street. Whatever the form, the
key will be reflecting the cost of
electrical energy and the cost of distributing
electricity to an appropriate
degree of temporal and geographical
resolution.
Unless customers see the cost of
their actions through locational dynamic
pricing of electricity, it is likely
that very significant investments
in electricity distribution infrastructure
will be made unnecessarily. In
the interim, a system of pricing distribution
use on a kW capacity rather
than kWh energy basis to reduce individual
consumer peaks may alleviate
the issue. Some trials of command
and control by distribution
companies, in which the distribution
company controls the charging time,
have taken place but it is difficult to
see how this is consistent with a
smart energy future.
Another key question that remains
with EVs is their ability to inject energy
back into the grid economically.
With current technology, the received
wisdom is that cycling of the EV battery
has too great a cost, but battery
technology will no doubt improve
over time and, if re-injecting from an
EV creates a value that can be captured,
then developments will likely
lead to a lower cost.
The economics of EVs reinjecting
electricity into the system could end
up being based on the cost of storing
energy in, and re-injecting energy
from, an EV (or static) battery versus
the cost of grid reinforcement. So
when you want to charge your EV at
a specific time and there is local grid
congestion, you will charge from
other EVs that are discharging energy
in your local street or area.
The available re-injection capacity
from EV batteries will be limited by
the connection to the grid and by the
ability of the grid to distribute electrical
energy. An EV battery can deliver
a large amount of power to the
motor by comparison to its grid connection.
But even with this limit, the
GW of capacity that could be delivered
by a 50 per cent penetration of
docked EVs is large and this could
lead the way to an electricity system
premised on renewables and EV battery
storage.
So we may find that the problems
that EVs cause in the future are actually
solved by EVs themselves.
This will be the case as long as the
correct price signals are seen. And
this may mean having a new electricity
market design fit for the future
that prices not only the electrical energy
dynamically during the day, but
also the grid congestion on the same
basis down to a local level. It is uncertain
exactly how EVs may develop
and given this uncertainty a flexible
pricing system may be the best
solution to make the most of the flexibility
they will bring.
The truth is that EVs will fundamentally
challenge the whole of the
electricity industry. Developments
are already being seen in some markets
but a huge amount of work remains
to be done. If we are too slow
to bring about these changes, we risk
making generating capacity and grid
investments in the shorter term that
become unnecessary in the long-term
and that will burden consumers with
higher costs for years to come.
Matt Brown is Vice President, Energy
– Western Europe, Middle-East and
Americas, Pöyry.
Electricity
infrastructure
developments are
already being seen
in some markets
to accommodate
electric vehicles.
However, a huge
amount of work
remains to be done
to avoid making
generating capacity
and grid investments
in the shorter
term that become
unnecessary in the
long-term.
Matt Brown
Brown: The impact on the electricity system will depend on the
underlying characteristics of the system
Filling the overnight trough: a
winter day
Figure 2. Germany generation and prices for week 45, 2017.
Sources: 50 Hertz, Amprion, Tennet, TransnetBW, EEX, EPEX