07 May 2008

Solvable Problems--Plug-in Cars and Electricity Demands

The Wall Street Journal has an article about the effect of plug-in cars on electric utilities. As the use of plug-in electric cars grows, it could cause excess demand during already high usage times if people plug the cars in during the day. This could cause utilities to have to buy more power at high peak-time pricing, or even build more power plants--an expensive proposition fraught with political problems. If they plug them in at night, when demand is low, they'll simply sell more power and make more money.

The solution is economically simple, although politically difficult; just allow the utilities to use congestion pricing. Just as they have to pay more for energy they buy during peak times, they should be allowed to charge more during peak times. If electric use cost more during the day than at night, people would be more likely to plug their cars in at night. For those who want to keep utilities regulated, rather than allowing a full free-market, those different prices could still be regulated, so utilities don't "rip off" people during the day.

One upside on this--most people won't be plugging in their cars during the peak morning demand, as they'll want to have them "re-fueled" in time to drive to work in the morning.

The bigger problem is whether people plug them in as soon as they come home from work, during the next biggest utility demand period. It would be better for people to plug them in just before they go to bed, but then how many are likely to forget and in the morning find their car isn't juiced up? (Blogger raises his hand.) And that detail is why most people will want to plug in as soon as they come home, so a solution oriented toward that specific time period, say 5-8 p.m., is probably what's most needed.

5 comments:

Scott Hanley said...

How hard would it be for some engineer to attach a timer to your power cord? A couple extra bucks and the problem could be solved: plug it in as soon as you get home, recharge it at night.

The catch there, I suppose, is what happens on those rare occasions when you have an emergency run to the hospital at 10:00 or whatever?

I bet I'd use the battery on my laptop a lot more during the day if they went to that kind of pricing...just what you want.

James Hanley said...

"How hard would it be for some engineer to attach a timer to your power cord? "

Oh, you mean a market solution to the problem? Hmm, seems like the kind of thing I should have thought of. Especially since the technology already exists (and as you note, is quite cheap).

Without congestion pricing, there'd be no demand for it, probably. But if congestion pricing developed, there'd probably be a solid market.

James K said...

Differential pricing is an excellent idea. Electricity is highly perishable (It can't be stored on the grid). This means that electricity generated at 10am is not the same product as electricity generated at 10pm.

Of course the "emergency car use" problem could be fixed by longer-range batteries, which is why 300 miles is often touted as a necessary rage for operable electric cars.

In any case none of this will matter unless a carbon-neutral power source is found for all of these batteries. That means nuclear or some serious advancements in solar or wind power.

James Hanley said...

That's a good point about the perishability of electricity. I was assuming it as I wrote, but it's good to highlight it.

Re: Carbon-neutral power sources. For most Americans who would buy such a car, it would stil matter even in the absence of carbon-neutrality, because for us it's cheaper to power cars by coal than by gasoline. Doesn't do much to solve the pollution/warming issues, but could decrease the drivers' operating costs.

I'd be a perfect candidate for such a car, because my total daily driving (on weekdays) is normally in the range of 10 miles. The big question is how long it would take me to recoup the cost of the car in decreased gasoline purchases, since I generally buy a used car when I need another one. I'm afraid it might take 10 years or so, which wholly dampens my enthusiasm. 5 years or less is probably the recovery time necessary to get me to buy.

James K said...

Yeah, the technology isn't really ready yet. Give it a decade though ...