Below is a transcription of the timely discussion:
Deanne Barrow: To kick off the discussion, let’s talk about what the proliferation of electric vehicles will mean for electricity demand in this country. A lot of people in the room are in the business of selling electricity, but demand for power has been flat or declining in most parts of the country. Will electric vehicles change that and when?
Abigail Tinker: From the utility perspective, Pacific Gas & Electric currently has the most electric vehicles of any utility. In terms of passenger cars, one in five electric vehicles sold in the United States is sold in our service territory. We had about 150,000 EVs registered as of the end of last year. We hope within the next 10 to 12 years to see that number go up by 10 to 15 times. We are aiming for two million by 2030. Adoption has been strong and has outpaced our early expectations, but it is a heavy lift to get to two million. The impact of that would be significant and is a reason why PG&E has made electric vehicles a central part of its strategy. We are making a big effort to promote EVs. They could account for as much as 5% to 10% of our total electric sales in 2030. [read more]
Harmeet Singh: The most recent forecast by the California Energy Commission is that electric vehicles in California will consume between 4,500 to 6,500-gigawatt hours of electricity annually by 2030. They are a big opportunity.
Russel Vare: Mercedes-Benz global targets are 25% electric by 2025. Based on the couple of million cars we sold in 2017, that would mean about half a million electric vehicles sold a year globally. Mercedes-Benz is a part of Daimler. Daimler also has trucks, vans, buses — everything from smart cars up to freightliner trucks — that are all undergoing electrification, too. We think this will have a significant impact on electricity demand when we look at our targets.
We are building a second battery plant in Germany, where Mercedes-Benz Energy is headquartered. Our Tuscaloosa plant is adding a battery factory and EV production line. We have plants in China, too. We have about $10 billion committed to R&D and production for electric vehicles, so it is a serious commitment. We are in about ninth place for passenger cars and are maybe the fourth or fifth largest global auto manufacturer when you add in all of our other vehicles. Other auto manufacturers are also moving in the same direction.
Matt Horton: The little-known fact that will probably be interesting for many of you is buses should be the first market in transportation that will go 100% battery electric. We think that’s going to take place in North America within about 10 years in terms of all new sales.
The total cost of owning an electric heavy-duty transit bus is already lower today than any fossil fuel-powered alternative. When we look at the cost reduction in batteries, the increase in range, the reliability and the performance, just on the economics alone, electric buses are quickly becoming the only viable alternative in North American transit.
We are not talking about millions of vehicles a year. There are about 70,000 buses in the US today. Every one of those will be carrying about a half a megawatt-hour of energy storage onboard, so a lot of battery capacity will be needed by the bus sector. It will outpace almost every other transportation mode for the rate of electrification.
Marc Fenigstein: The lightweight vehicles on which we focus are a different animal. It is complicated to predict how vehicles at such a small scale will affect the grid, but I can talk in terms of the storage demand of that segment. These are vehicles that need between one to 10-kilowatt hours of storage.
I think you will see 50% of the sector go electric globally within the next 10 years. That would represent about 30-gigawatt hours of annual battery demand. At that scale and with the amount of diversity, using such vehicles as storage assets becomes a complex challenge.
Electric vehicles will prove something smaller than the micro-grid, sort of the mobile nano-grid. People will be able to start using these vehicles as a mobile power station.
Barrow: Abigail Tinker, with all these electric vehicles on the road, why does the utility need or want the vehicles to interface directly with the grid?
Tinker: They will be interfacing with the grid when they plug in to charge. The question is whether there is something more they can do while connected to the grid during charging, either by timing the charging so that it is not creating issues or using higher cost electricity, or by discharging into the grid to help supply electricity.
It is a complicated challenge. The vehicles will be in motion. They are only useful to the grid when they are plugged into a charger. How many chargers are we going to have? What is the capacity of the chargers?
Barrow: We will come back to how to manage power consumption for the driver, but before we get there, let’s dig deeper into the details of how vehicles will be interacting with the grid. There are two ways: V1G and V2G. Can someone explain what those are?
Vare: V1G is just another word for smart charging. You are able to schedule the start and stop of charging. V2G is where you are discharging energy from the car and inputting it into the grid.
With V2G, there are three ways to pull energy off a vehicle. One way is to pull AC power off a bi-directional motor inverter. You make the power train inverter bi-directional and pull AC energy off.
A second way is to do the same thing with an on-board charger. You can make that bi-directional and pull AC energy off the car. A third way is to connect directly to the battery and pull DC energy off the car with an off-board inverter. With that method, you have to convert the energy from the battery to AC somehow. You can either do it on-board or off-board. Different technology is required for V1G and V2G. V1G is potentially a lot simpler than V2G.
Barrow: So V2G is bi-directional charging, whereas V1G is just charging from the grid and not putting power back onto the grid from the vehicle.
Vare: Yes, but it is charging intelligently from the grid. Maybe Greenlots can speak to the nuances.
Singh: Let me give an example of a use case. As the electric vehicle population grows, we are already seeing that the growth is happening in clusters. There will be areas of more dense EV population than others. When an electric vehicle is added to a household, it effectively doubles that household load. It is equal almost to adding another home into the service territory.
Before you start seeing the effect of that on the larger grid, you will see it start to stress the local distribution system. An example of V1G is coordinated charging. Say you are in a block in a neighborhood. Every other home has an electric vehicle, and they all plug in during the evening. Through software-based controls, you can coordinate that charging and make sure that at an aggregate level, it does not exceed the threshold that the local distribution system can handle. No electricity moves from the electric vehicle onto the grid, but the rate of charging across multiple vehicles is controlled.
Tinker: V1G is happening already. The most simple use case of V1G is an individual customer managing the time of his or her charging to reduce their electricity bill. The customer has a demand charge on the electricity bill and does not want his or her car to charge when the demand charge is in effect, or there are time-of-use rates, and the customers want to time charging to get the lowest rate. For example, PG&E’s electric vehicle rate drops at 11 p.m. A customer will plug in the car when he gets home, but charging will be timed either through the car or through the charger so that it does not start until after 11 p.m.
If we have 100 vehicles all in one place that start charging right at 11 p.m., then that might cause issues. At this point, the main use case is for individual customers to manage their own energy costs by managing the timing of when they charge.
Barrow: In addition to the customer proactively managing when it charges, do you actually, in any programs, pay customers to charge or not to charge at certain times?
Tinker: We do that through demand-response programs that already exist. There are EV service providers or automakers that are aggregating EV charging to participate in those programs. Basically, the utility sends a signal to the aggregator and says from, for example, 2 to 4 p.m., we need you to drop 100 kilowatts of load. The service provider would figure out which chargers to shut off during that period and be compensated by the utility for that capacity.
Horton: The economics of V2G can be challenging. It depends a lot on the use case and the types of batteries used.
In our case, we have an industrial buyer, generally a municipal government. It looks at the level of its demand charges and decides how much it wants to reduce its electricity bill. Many of the transit agencies we work with are interested in what we call a battery service agreement. They buy vehicles without batteries and lease the batteries from a storage company.
When they do that, it removes any concern they might have of overusing the batteries. It is our responsibility to make sure there is enough energy storage capacity on the vehicle to drive the bus routes that they need. We figure out the rate of degradation and when to replace a battery for the customer.
In the utility scenario, we have looked at use cases where the economics of providing grid services are more attractive than the cost of battery degradation to the customer.
Vare: Mercedes-Benz does not have any plans for V2G. We are focusing on smart charging for passenger cars. Use of vehicles for demand response works much better in fleet scenarios involving medium-to-heavy-duty trucks. It is easier to deal with warranty issues surrounding degradation with those types of customers than with a 100,000-mile warranty for a passenger vehicle.
The bigger issue is less with the warranty and more with value. The value today for V2G is demand-charge avoidance, but you can already do a lot of that through V1G. When you start talking about discharging energy into the grid, you need a new market. A lot of markets are wholesale markets and are hard to access.
At my previous company, we worked on a project with the Los Angeles Air Force Base. The telemetry and metering requirements make it difficult and expensive to discharge power to the wholesale market.
Fenigstein: Moving into a leasing model takes the irrational ownership aspect out of the equation for customers. There is potential, but the leasing model relies on having a secondary market for used equipment.
Barrow: What is the irrational perspective of users?
Fenigstein: Ownership brings out all kinds of weird emotions in humans.
Here is a really simple analogy. Let’s say you pick a Toyota Corolla, where you can have total confidence that the engine will last at least 200,000 miles. You are probably going to own it only for 40,000 or 50,000 miles. Yet if I were to offer to pay you almost any amount to use your car as a generator while it is sitting in your garage, you are probably going to say no if you own the vehicle. And the economics do not even come into play.
It is the idea that this thing — this asset that you own — is being depreciated by someone else while you are not using it. It is a pretty hard hump to get over. Once you lease the asset, that emotional aspect goes out the window. You see that in the way people use leased vehicles versus owned vehicles.
Barrow: So V2G is going to be a tough sell to vehicle owners versus those who lease. Let’s talk more about value. Harmeet Singh, could you map out the value chain in V1G and V2G to give us a sense of what each stakeholder gets from it and what kinds of incentives could encourage customers to adopt V1G or V2G?
Singh: Starting with V1G, I will give you some examples of the systems that we have already deployed, what kinds of challenges they address and the value that they generate.
V1G can provide three different kinds of services.
One is infrastructure offset. You have local capacity constraints, but you do not want to invest that kind of capital to upgrade your infrastructure. Through V1G, you can deploy infrastructure that provides more capacity and manage it through software.
The second service is for the site itself by providing demand-charge mitigation. This is done through simple load shifting or peak shaving. It can also be paired with a stationary storage asset, such as a second-life battery, to provide a buffer to the local EV charging infrastructure.
The third service is a demand-response play. This involves aggregating the electric vehicle load and presenting that as a flexible load to the utility and then being able to curtail that load based on utility needs. All of these use cases exist today.
When you go to V2G, it becomes more complicated. There are a lot of players involved. The battery manufacturer needs to provide the capability to use the battery energy while the battery is not in use to turn your wheels for transportation.
Barrow: How much does that capability add to the cost?
Singh: I am not best suited to answer that question.
MR. FENIGSTEIN: I can answer it. For DC off-charge, nothing. It is done through control software. For AC off-charge, it is more than a dollar, so it is too expensive. We do not want the extra cost in our components.
Singh: Beyond that, there are other players in the value chain, such as the operators and the grid. Each one of the players in the value chain needs to have an incentive to participate, and participation must happen in a synchronized manner.
Now we get into issues regarding technology and standards. Every battery maker today may have its own proprietary technology. Standards are going to be key to enable interoperability so that the technology can scale.
Vare: Can I add a comment about smart charging? There is a study that Idaho National Labs did in 2015, where they looked at EV drivers across the country and measured when they plug in. They all plug in when they get home at 5 or 6 p.m., except for San Francisco.
In San Francisco, everyone took the trouble to program the charge time on his or her car to 11 p.m. because there was a rate benefit. Unless there is a value like that to the EV driver, there is no real incentive to adjust the time. There must be time-of-use rates or demand response or other incentives.
Horton: One of the drivers of interest in V2G among municipalities is for emergency-response situations. People often ask, with regard to a bus, whether it can connect to a hospital, for example, and provide electricity back to the grid that way. As cities are looking at resiliency, this has been one area where V2G has demonstrated real value at the municipal level. It is not just the dollars and cents that may flow back from the utility.
Barrow: I want to come back to the opportunities for municipal operators, but before we get there, how do you manage the power consumption for the user? If I am a vehicle owner and I need my vehicle for my daily commute, or even if I am a business and I need my vehicles to go on a daily run, why would I give up capacity in my battery to the grid?
Horton: Municipal users have regimented schedules and generally know exactly when they need to pull out in the morning. This provides more flexibility in terms of adjusting the timing of charging and discharge.
The challenge with transit buses is that they are generally parked and charging overnight, which is not the ideal time to be providing grid services. Having said that, there are other applications. Everybody talks about school buses as the ideal situation because they sit for a long time in the middle of the day and usually take the whole summer off.
There are also some heavy-duty applications that have a defined operating time frame. They do not have to run to the grocery store in the middle of the night. Every little sliver of this market is going to look at the pros and cons of V2G, and V1G, frankly, a little differently.
Tinker: Heavy-duty and consistent-duty-cycle use cases will be the first to be good candidates for V2G. From the utility perspective, we look for vehicles that can provide capacity reliably, particularly if it is to alleviate a local distribution concern. A concept that is starting to get attention today is how can we avoid utility capital investment, such as a local distribution project, and instead manage load or distributed generation on the grid to solve that problem.
Barrow: Matt Horton, how does Proterra work with utilities and municipal operators in this space?
Horton: We engage with the utility early in the process. Today, transit operators are generally convinced that battery electric buses can do all the work that they need. Where they have significant concerns still is about the infrastructure.
Here in California, there are probably more than a dozen cities that have made a 100% zero-emission commitment for their municipal fleets. The thing that they are worried about is making sure there are enough charging stations deployed in time to allow for 100 to 400 buses in a single location.
Bringing the utility to the table early to help design how to get that much power to a single location, and to start talking about rate design and time-of-use and demand-charge mitigation strategies is critical.
All of that is really important in fleet usage generally. In most of these markets, we have had pilot programs that are fairly easy to do because there is not yet a heavy electricity load. We are now moving as an industry into the phase where we have to have tight coordination with the utility.
Frankly, a lot of municipalities are expecting their relationships to be a little adversarial. They are not quite sure what to expect. It has been refreshing for many of them when the utility says, “We want that demand. That is good for us. We want to help enable this.”
Fenigstein: For a sense of the scale of 300 hundred buses, do your buses start at 100-kilowatt-hour battery packs and go up from there?
Horton: Yes. The mainstay is going to be a 440-kilowatt-hour bus. That is what most of our customers are migrating toward.
Fenigstein: When you are talking about a fleet of a 100 buses, that is significant.
Barrow: What is the charging capacity?
Horton: A bus will usually have a 125-kilowatt charging capacity. We think that is about the most the market really needs.
Barrow: Let’s talk about the adoption curve and why residential users are farther down and fleet owners farther up on the adoption curve. Abigail Tinker, PG&E has data from a survey it ran on its customers. What did it find?
Tinker: PG&E just completed a pilot project involving a technology demonstration of a vehicle-to-home system. We had to modify a vehicle to be able to discharge to home because none of these is available on the market yet. The technology certainly is feasible.
What was most interesting was on the customer side. The customers are initially very interested in the concept of vehicle-to-home, with about 54% of those we surveyed showing interest, but that dropped below 10% as soon as the cost came into the picture. Overall there was high interest, but the cost far outweighs the perceived benefits.
Barrow: Is it just the cost of the equipment? What is the associated cost?
Tinker: It is the cost of the equipment and the installation. You have to install a secondary, critical-load panel that can isolate power from the utility so that the vehicle can discharge into the house. It is similar to the set up you would need for a backup diesel generator. We estimate the cost currently is $4,500. Based on the willingness-to-pay questions we asked the customers, their optimal price is somewhere between $800 and $1,000.
When asked about functionality, of those respondents that were interested, 30% wanted it for either resiliency or backup for a power outage. When we asked them if they would want it to discharge into the grid to earn incentives from utility programs, only 8% to 12% were interested in that. The asset, their car, being used for something other than their own transportation is a big hurdle to get over.
Harmeet Singh: Greenlots and BMW did an electric vehicle pilot program in Germany. During the day, EVs can soak up the energy from the sun and during the evening hours, soak up wind energy. We used a fleet of up to 100 BMW EVs to charge and store the excess wind energy in the EV batteries.
Barrow: How much capacity does 100 vehicles provide?
Fenigstein: If they are all Teslas, their top of the line model provides 100-kilowatt hours. So for 100 units, you are at 10,000-kilowatt hours of storage if they are all plugged in simultaneously.
Vare: And all empty.
Tinker: In the BMW study, on average, the vehicles were providing 20% of their capacity.
It also matters what the charger rating is. For a Tesla, a level 2 charger goes up to 19 to 20 kilowatts, but for most EVs on the market, the charger rating is at the 7-kilowatt level. Therefore, 100 vehicles would be about 700 kilowatts.
Barrow: Let’s take this in a different direction and talk about second-life batteries. Are Alta, Mercedes, and Proterra batteries being repurposed at the end of their useful lives for stationary applications?
Vare: I’ll go first. We have done two pilots of large-scale utility programs. One is in Lunen, Germany using 1,000 smart EV batteries in a second-life project that is built at a recycling facility. It has a 13.5-megawatt capacity rating. It is bidding into the frequency regulation market, which is called the “primary reserve market.”
We have another pilot employing a different concept of partially used batteries and spare-parts batteries. One thing with batteries is that they need to maintain a state of charge, so if you are keeping spare parts for years, you need to charge them. The project provides about 17 megawatts using some spare-parts batteries.
We have been working on the technology for putting second-life EV batteries into commercial systems. It is part of our mission at Mercedes-Benz Energy to understand how to tackle the problem of reusing batteries as we see vehicle volumes growing.
Barrow: Russell Vare, what is the price of a second-life battery versus a new one?
Vare: There is not really a market. The demonstration I mentioned was unique in that they took the batteries from an in-house car-sharing program that was finished. The price is less than a new battery, but more than the cost of recycling.
Horton: Proterra designs our batteries so that they are underneath the body of the vehicle. We have four large battery packs on a standard-sized vehicle. Because they are exposed to the environment, they have been weatherized. They have been designed to be able to stack on top of each other for a second-life use.
We designed the vehicle knowing that six to 10 years into a vehicle’s life, it will still have a useful asset because of the energy density. The batteries are still going to have a lot of value to somebody. We wanted to make sure that they would be readily useable.
We do not have any batteries yet for secondary use because they are still in first-life use. Our first buses were delivered in 2010, so they are now about eight years old. At some point in the next couple years, we will start pulling those out and will be looking for a market.
Many of our customers want to hang on to the batteries for use in their own depots to lower demand charges. We are talking with utilities that are thinking about this. They would like to initially lease a battery to transit agencies and then own the battery at the end of its transit life so that they will have a ready supply of second-life batteries that can be deployed for demand response and other grid services.
Barrow: So the utilities are leasing batteries to customers and taking them back at the end of the lease?
Horton: Yes. The arrangement is that Proterra sells a bus to a customer without the batteries in it. The utility purchases the batteries from us and then leases them or provides an energy service to the customer: both the electricity and the use of the battery. At the end of its useful life in transit, the utility still owns that battery and can use it however the utility wants.
Barrow: In a grid-scale stationary setting?
Fenigstein: We’re at the other end of the spectrum where the scale of our packs for our current platforms is 6-kilowatt hours. Depleted to 80%, we are a little shy of 5 kilowatt-hours. At that scale, the battery is not actually that useful.
We certainly are refurbishing and recycling them internally for warranty purposes. It is more for environmental reasons and maybe a little bit of recovery of value for the business.
Barrow: Harmeet Singh, can you tell us about the technical challenges involved in second-life programs?
Singh: We are developing a product that is a fast-charging hub: for example, up to four fast-charging stations paired with stationary storage. We are integrating second-life batteries. When you are repurposing a battery from an electric vehicle for second life, electric vehicle battery packs have modules, and modules have cells, and not every module and not every cell degrades uniformly. There is an effort required to repurpose the right modules and the right cells into the second-life battery pack. There are costs associated with that.
Then there is the physical element of the form factor. If you want the battery packs to be more compact and more optimized for the given physical dimensions, the cost will be higher. Beyond that, there is the issue of incentives. More incentives are available today for new batteries than for second-life batteries. These sorts of issues are not unexpected from a technology perspective. I think integrating a second-life battery system is not that different from integrating a new energy storage system. It is a comparable effort.
Vare: Those are some of the challenges on which we are working. I mentioned a project we have using second-life batteries from 1,000 electric vehicles. One of the things that made that project more easy to tackle is that the vehicle batteries were all the same model and model year, and all had the same use cycle and the same state of health and life. Integrating 1,000 of the same batteries that came from the same place is a lot easier. Integrating different types of batteries with different types of state of health and different form factors are challenges to be overcome on the technical side.
Bloomberg New Energy Finance has some numbers on battery volume. It estimates that by 2025, there will be 95-gigawatt hours of used EV batteries and that 26-gigawatt hours of those will have some useful second-life applications. Therefore, when you look at the volume of EV batteries that are going to be coming off pretty early in the market, it will quickly dwarf stationary energy storage. [/read]