Carbon-Pros Analyst Blog

Stage four represents the long-term view. Yesterday we covered stage three, utility-scale power storage systems. Today, we cover two additional advanced components of the smart grid: 1) using electric vehicles (EVs) as part of the grid's storage infrastructure and 2) supporting energy trading markets with real-time pricing.

Globally, every major car manufacturer is developing EVs or plug-in hybrid electric vehicles (PHEVs). Next year Nissan, will bring to market an EV named "Leaf." Nissan estimates that 10% of all vehicles will be electric by 2020. Germany aims to have a million plug-ins by that time. If automotive analysts are correct, we will put tens of millions of PHEVs and EVs on the road in the next two decades. This makes the batteries in these vehicles potentially available for buffering peak electrical demand. Most EVs will be charged at night and will store enough power to let the utilities draw on battery power during peak demand.

A challenge will be the development of smart charging stations that balance the customer's need for driving range with the utility's desire to borrow power during peak periods. It may seem futuristic but in less than 18 months, Nissan's Leaf will have many of the components needed for connection to the smart grid. The car includes network connectivity so that drivers can use their smart phones to modify charging preferences, reset the air conditioning temperature, or ask Nissan to run remote diagnostics. Ideally, EVs will be topped off with power during the day, say by plugging them into solar panels in a parking lot. Theoretically, these cars can charge themselves in the morning and then sell some of the power to the utility during its afternoon peak. If you are wondering what difference a car battery can make, you may not realize the power packed into electric cars. We're not talking about today's car batteries. By 2020, EV battery packs could store 100kWh. That's enough juice to power the electrical needs of several of your neighbors' homes for 24 hours. Since the utilities will draw only to cover peak demand, the power stored in one EV can go a long ways.

The final elements in smart grid stage four are real-time pricing and energy trading. With pervasive high-speed digital communications in place and real-time pricing available, localized energy supply and demand imbalances will become more transparent. Real-time pricing includes an advanced form of demand response where consumers can "program" their electrical loads to take advantage of such things as the low cost electricity available during a wind storm. In initial testing, consumers see real-time pricing as too complicated. They more readily adapt to time-of-day pricing with the general understanding that power is cheaper at night than during the day. Energy trading markets would allow all participants, including the consumer, who may own distributed generating assets, to sell power to the highest bidder. Such markets are admittedly far off. They are impossible in our current regulatory scheme. But consider that market forces will push electricity towards a much more efficient system. Open source supply and demand will reveal many inefficiencies. The opportunity to profit will lure capital towards whatever means and methods cost effectively eliminate these inefficiencies.

Stage four is almost two decades into the future, i.e. the 2025-2030 timeframe. At this point the grid may appear to be growing into a “big brother” phenomena with tentacles reaching deep into our personal lives. Keep in mind that none of the demand-side efficiency programs will be forced on consumers. Consumers will opt-in or opt-out of these programs based on their relative merits. Utilities who effectively market the smart grid's energy-saving features will find many customers willing to accept the incentives offered and become a partner with their utility.

My own household is already in the early stages of this transition. We generate about 90% of the electricity we consume. We fully expect to become a net-producer of electricity by 2010. We will achieve that without giving up our modern lifestyle and its many conveniences. As many pioneers have done before us, we have educated ourselves and become smart electrical consumers. The smart grid will make us even more so. More important, it will enable the mass market of 100M households to do the same while requiring very little of their time or attention.