Electricity is expensive. Drivers shouldn’t pay for it



With the rush to adopt electric vehicles, charging networks are rolling out in every country, government support is growing, and automakers are promising a slew of green cars. Yet even if all of this happens, it’s worth asking how the power grids will handle the demand for all that electricity.

Given the increasing prevalence of power outages around the world, I’m not sure they can. Electricity consumption from electric vehicles alone is expected to increase by more than 25%(1) . Even if charging networks are built, cabling under highways would barely suffice. Talk to EV drivers who’ve attempted car rides and they’ll complain about the anxiety associated with finding charging stations. More will be needed as adoption grows, and connecting networks will become even more crucial.

China, the world’s largest market for electric vehicles, may have a solution. Even with high adoption, controlled charging is becoming a necessity to limit impact on distribution transformers, study finds. But it also requires an upgrade of grid software, hardware and business operations. Another recent report found that if 60% of gas-powered vehicles were replaced and charging was largely unmanaged, national peak loads would increase by more than 8%. If managed, however, it would be 2.6%. In the event of an electricity crisis, this difference is significant.

It’s a bit of a chicken-and-egg problem: the available infrastructure will determine the charging behavior of drivers, but networks need to understand demand to come up with strategies. More and more, companies are realizing that it won’t necessarily be like gas stations, where consumers fill up on the go. It can be overnight at home, day at the office, or at the last minute. Either way, the grids need to cope and do better. Electricity distribution will need to be extended and reconfigured, while secondary substations, including transformers, will need to be upgraded – a mammoth task.

There are solutions (at least in part) to help ease the pressure, and many are being implemented in small measures. One is better batteries that take cars further. Yet these remain expensive and at some point they will have to be charged for. Large-scale energy storage is also becoming a more important part of the energy equation as it helps balance peak demand. China is investing to increase that in this decade to 100 gigawatts. Also in the United States, the use of industrial-sized batteries is on the rise in states like California and Maine, with Tesla Megapacks.

A longer-term solution is vehicle-to-network technology. While traditional power systems were designed to go one way – from the grid to the home or business (or EV), it goes the other way and allows EVs to be part of the solution. energy storage. But like most significant technological and behavioral changes that require huge investments, regulatory support is needed to create the right incentives.

China is now working to commercialize this, while putting in place policies to strengthen the process. Last year, China’s Standards Administration said its national standards would be aligned with electric vehicle charging needs. Earlier this year, the Ministry of Science and Technology released draft guidelines for energy storage and smart grid technology which focused on key issues including hybrid AC-DC power grids at scale and improving energy efficiency for different types of consumers. At the same time, billions of dollars are being used to modernize the country’s electricity networks.

The way China has conquered battery development and become home to the world’s largest and arguably most sophisticated commercial power packs shows that its approach to electric vehicle energy storage issues is working. The path to connecting networks will be similar. It will have to be a coordinated effort that will require a lot of subsidies and regulatory support. Simply put, ad hoc measures to improve distribution and transmission are unlikely to power electric vehicles. This is a lesson for Europe and the United States – otherwise their consumers will pay even higher prices for electricity.

More from Bloomberg Opinion:

• Here are the batteries we really need: Anjani Trivedi

• Tesla’s not-so-secret battery could help Texas: Liam Denning

• China cracks trillion-dollar electric vehicle issue: Anjani Trivedi

(1) If every American switched to electric vehicles. In addition, electricity demand will vary by country. For example, the share of electricity consumption required by an 80% share of electric vehicles in 2050 will vary between 3% and 25% of total electricity demand in EU-28 Member States, depending on the European Environment Agency.

This column does not necessarily reflect the opinion of the Editorial Board or of Bloomberg LP and its owners.

Anjani Trivedi is a Bloomberg Opinion columnist covering industrial companies in Asia. Previously, she was a reporter for the Wall Street Journal.

More stories like this are available at bloomberg.com/opinion


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