Insight: EV rollout will require huge investments in strained U.S. power grids

Evs SA

05/03/2021 12:00

By Nichola Groom and Tina Bellon
    March 5 (Reuters) - During several days of brutal cold in
Texas, the city of Austin saw its fleet of 12 new electric buses
rendered inoperative by a statewide power outage. That problem
will be magnified next year, when officials plan to start
purchasing electric-powered vehicles exclusively.
    The city's transit agency has budgeted $650 million over 20
years for electric buses and a charging facility for 187 such
vehicles. But officials are still trying to solve the dilemma of
power interruptions like the Texas freeze.
    "Redundancy and resiliency when it comes to power is
something we have long understood will be an issue," said
Capitol Metro spokeswoman Jenna Maxfield.
    Austin's predicament highlights the challenges facing
governments, utilities and auto manufacturers as they respond to
climate change. More electric cars will require both charging
infrastructure and much greater electric-grid capacity.
Utilities and power generators will have to invest billions of
dollars creating that additional capacity while also facing the
challenge of replacing fossil fuels with renewable energy
sources. 
    Extreme weather events add additional layers of difficulty.
    "Reliability keeps you awake," California Energy Commission
member Siva Gunda said in an interview.
    Rolling blackouts during a California heat wave last year
prompted the state to direct its utilities to procure emergency
generating capacity for this summer and to reform its planning
for reserve power. 
    The state plans an aggressive phase-out of sales of gas- and
diesel-powered cars and trucks by 2035 - which, if achieved,
would require vast increases in electric grid capacity. (For a
graphic on the extra power that will be needed for electric
cars, click https://tmsnrt.rs/3rhyX4S ) 
    The power and transport sectors combined make up more than
half of U.S. greenhouse gas emissions. Their simultaneous
greening is considered critical for the United States - the
world's second-largest emitter behind China - to meet its
obligations under an international accord to address global
warming. (For a graphic on the energy sources that fuel U.S.
transportation now, click https://tmsnrt.rs/387haFR )
    

    The goal is to power electric cars with renewable energy
rather than the coal and natural gas that currently dominate the
U.S. power supply. To realize that vision, electricity from
intermittent sources like wind and solar will need to be stored,
probably through battery technology, so that cars can charge
overnight or at other times when supply outstrips demand.
    
    DOUBLING POWER CAPACITY
    A model utility with two to three million customers would
need to invest between $1,700 and $5,800 in grid upgrades per EV
through 2030, according to Boston Consulting Group. Assuming 40
million EVs on the road, that investment could reach $200
billion.
    So far, investor-owned companies have plans approved for
just $2.6 billion in charging programs and projects, according
to trade group Edison Electric Institute.
    "The electrification of the transportation sector will catch
most utilities a little bit off guard," said Ben Kroposki,
director of the Power Systems Engineering Center at the National
Renewable Energy Laboratory (NREL).
    The organization estimates that, by 2050, the
electrification of transportation and other sectors will require
a doubling of U.S. generation capacity.
    If not managed carefully, the needed investments could
saddle consumers with higher energy bills, according to a report
last month by California’s utility regulator. Another challenge:
lower-income customers often can't afford to make the upfront
investment in electric cars, home batteries and rooftop solar
systems that could save them money in the long term.
    
    'CHICKEN AND EGG' PROBLEMS
    Utilities are embracing EV sales growth as both a promising
new source of revenue and an opportunity to use excess wind and
solar power generated at very windy or sunny times when supply
exceeds demand.
    Investments in both the grid and charging infrastructure
that are recovered from ratepayers could add between $3 billion
and $10 billion in cumulative cash flow to the average utility
through 2030, according to Boston Consulting Group. The forecast
also includes potential revenues from new products outside of
utilities' regulated businesses, such as customer fleet routing
or charging station maintenance.
    The revenue opportunity is still nascent, however, with EVs
making up less than 2% of all vehicles registered in the United
States. And utilities must invest in infrastructure now for
consumers to feel secure in their purchase of an EV, said Emily
Fisher, general counsel of utility trade group Edison Electric
Institute. 
    "There is definitely a chicken-and-egg situation with
charging infrastructure," she said.
    
    AUTOMAKERS BET BIG ON EVs
    Major U.S. automakers General Motors  GM.N  and Ford  F.N 
have announced large investments in EV development to keep pace
with electric-car pioneer Tesla Inc  TSLA.O  and to prepare for
the prospect of tougher emissions regulations. EV share could
grow to 15% by 2030, according to U.S. Department of Energy
forecasts.
    The electricity to power all those cars is expected to come
primarily from renewable energy sources and natural gas,
according to NREL. Even if natural gas generation increases to
support electrified transportation, overall emissions are
projected to decline, the organization said.
    Large new investments may pose difficulties for utilities
already experiencing weather-related problems. In Texas, many of
the companies that would be making those investments face a
financial crisis stemming from last month’s cold snap. Utilities
and power marketers face billions of dollars in blackout-related
charges, and several have filed for bankruptcy.
    
    CHARGING UP
    Daimler Trucks, the world's biggest maker of heavy-duty
haulers, plans to sell electric vehicles in Europe, North
America and Japan by next year. But the company is grappling
with how to charge what will one day become hundreds of
thousands of battery-powered trucks, said Daimler Trucks
chairman Martin Daum.
    The need for massive investments in grid infrastructure and
charging stations "cannot be underestimated," Daum said.    
    Ford Chief Executive Jim Farley last week called on U.S.
government leaders to support EV sales with favorable regulation
and subsidies for the production of batteries and charging
infrastructure.
    But Robert Barrosa, senior director at Volkswagen AG's
 VOWG_p.DE  Electrify America, which is building out
fast-charging stations throughout the nation, said the gradual
pace of EV adoption will allow utilities to adapt.
    "We're not in a doom-and-gloom situation," Barrosa said.
"We're not going to 80% battery electric sales overnight...it
will be a natural transition."
    Barrosa said U.S. energy consumption decreases over the last
20 years, due to efficiency gains in appliances and the
transportation sector, mean that the U.S. power system has
enough established capacity to support EV growth without the
immediate need for big investments. (For a graphic on U.S. power
generation and consumption, click https://tmsnrt.rs/3e5f6SH)    
   Utility Xcel Energy  XEL.O  said EV adoption would likely not
require capacity additions until after 2030, and that near-term
investments would mainly be in distribution systems. The company
is planning to accommodate 1.5 million electric vehicles in its
Midwest and Western service territories by 2030, about 30 times
more than its current capability.
    The utility in December received approval to spend $110
million on electric vehicle charging infrastructure in Colorado,
which passed a law in 2019 requiring utilities to develop plans
for widespread transportation electrification. The plan is
expected to add 65 cents a month to residential customer bills. 
    Electric vehicles - especially commercial ones with large
batteries - can help stabilize the grid in the long run by
feeding power back into the system during times of peak demand,
using chargers that allow electricity to flow in both
directions. Passenger cars that sit idle most of the day could
one day earn money by feeding power back into the grid with the
help of bi-directional chargers, utilities predict.
    During the Texas outages, some Twitter users said they used
their electric vehicles to power their homes. But wider
applications of such vehicle-to-grid technology would require
larger infrastructure changes and utility involvement.
    "Planning is going to be more sophisticated," said Ryan
Popple, co-founder of Proterra, which produced some of Austin's
electric buses. "And as vehicle-to-grid becomes more common with
our commercial fleets, it's actually going to make the overall
technology even more attractive." 

    <^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
Fossil fuels power the U.S. transportation sector    https://tmsnrt.rs/3bTLCV0
Estimated U.S. capacity if 66% of all cars are EVs by 2050
Estimated U.S. capacity if 66% of all cars are EVs by 2050    https://tmsnrt.rs/3sDe6sW
The U.S. is generating more electricity than it consumes    https://tmsnrt.rs/305RjK6
    ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>
 (Reporting by Nichola Groom and Tina Bellon; editing by David
Gaffen and Brian Thevenot)
 ((Tina.Bellon@thomsonreuters.com; +1 646 573 5029; Reuters
Messaging: tina.bellon.thomsonreuters@reuters.net; Twitter
@TinaBellon))