Power Steering: Electric vehicle adoption calls for grid transformation

Electric vehicle adoption calls for grid transformation

With electric vehicles (EVs) forming a key component of the smart grid landscape being envisaged by policymakers, the transportation segment is gearing up for major changes. The segment currently accounts for nearly 72 per cent of the total global oil demand and hence, any development in this area raises concerns regarding a nation’s economy, security and natural environment. In this context, there are three main factors driving various countries towards transportation electrification: high and volatile oil prices, concerns over greenhouse gas emissions and the need for import risk mitigation.

The widespread adoption of EVs will not only have a positive impact on the environment by way of reduced carbon emissions, it will also lead to energy independence and give a boost to local job markets. Moreover, the use of EVs will result in significant savings for customers, as EV charging is expected to be cheaper than fuelling traditional cars. India, like its Western counterparts, is also gearing up for the deployment of EVs. The government has formulated a national plan and announced various incentives to boost the process. However, the successful roll-out of EVs on Indian roads will be contingent on the development of supporting infrastructure, which could prove to be a key challenge.

Target and incentives

According to the International Energy Agency’s Electric Vehicle Initiative, as of January 2015, the number of EVs deployed globally stood at around 0.66 million. Global estimates expect this number to reach 30 million by 2030.

In the Indian context, in April 2015, the government announced its goal of deploying 6 million to 7 million electric and hybrid vehicles by 2020 under the National Electric Mobility Mission Plan 2020 and the Faster Adoption and Manufacturing of Electric Vehicles (FAME). It proposed an investment of about Rs 140 billion in subsidies and other incentives for the same over a period of five years.

The FAME initiative will offer buyer subsidies of up to Rs 22,000 for an electric scooter, Rs 61,000 for a three-wheeler rickshaw, Rs 138,000 for a passenger car, and Rs 6,600,000 for a bus. The government is also working on a scheme to offer EVs to consumers with no down payment, which will be compensated by the savings earned on fuel. However, despite various announcements and plans, the deployment of EVs at the grassroots level is still slow. According to the Society of Manufacturers of Electric Vehicles, EV sales in India grew by 37.5 per cent to 22,000 units in the year ended March 31, 2016 (of which only 2,000 units were four-wheelers) as compared to 16,000 units in 2014-15. At these levels, achieving the objective of selling 6 million EVs by 2020 will be a difficult task. Moreover, going ahead, the lack of basic infrastructure like charging stations and difficulties in availing of credit from banks for buying vehicles could impede growth.

Impact on the grid

The deployment of EVs will bring about a disruptive change in the business model of utilities. Large-scale EV adoption will have a significant impact on power demand and its management, as a single EV plugged into a fast charger may double the peak electricity demand of a house. Even a low level of EV adoption may have a significant impact and hence it is crucial for utilities to manage EV charging.

To avoid disruptions during peak hours, the grid must be capable of balancing the power supply and demand of EVs. As such it should be equipped with features such as the time-of-use rate system to encourage drivers to charge during off-peak hours, management of the charging duration to streamline demand, intelligent meters at homes to distinguish usage for EV charging and home energy, vehicle location monitoring and energy usage, and an integrated robust billing system to accommodate all possible scenarios.

Key concerns of utilities

The most serious concern arising from the use of EV supply equipment (EVSE) is the utilities’ ability to manage the grid when EVSE loads are applied. Adding demand load is not a big risk with EVSE because the grid has the capacity to meet additional demand. The problem arises when a large proportion of that new demand is concentrated in a narrow window of time and is not evenly distributed throughout the day. This is primarily because residential power consumption tends to peak during late afternoon and early evening.

Another key concern is that utilities will have to incur additional costs to upgrade their distribution capacity, which will be needed to support the increased load from EVs, as well as develop additional generation and transmission capacity. Utilities will also need to gear up for situations wherein multiple consumers will be charging their EVSE simultaneously from the same transformer, which could lead to transformer overload. Moreover, business models for charging services need to be evolved.

Mitigation measures

Since the development of the required infrastructure for charging of EVs will entail a significant amount of time and capital, there is a need for all stakeholders to make concerted efforts to streamline the process, establish business and billing models, and tackle regulatory issues. A smart grid framework is mandatory for evolving a ”smart” charging solution. With a smart grid, utilities get informed when and how EV charging occurs, collect EV-specific meter data, apply specific rates for EV charging, engage consumers with information on EV charging and collect data for greenhouse gas abatement credits.

With regard to infrastructure management, the development of robust, reliable and secure connectivity to the home EVSE is vital for remote support and eliminating unnecessary on-site service calls. There is a need to develop infrastructure for demand-side management (DSM). An EV charge management system needs to be formed as part of an integrated DSM operation infrastructure and the same needs to be tied with utility energy procurement and despatch.

Utilities can also undertake EVS integration with the distribution management system. This will give them greater flexibility in managing reliable delivery of electricity, including the planning or expansion of networks to accommodate EV demand.

Moreover, AMI integration is also recommended. It will allow them to separate EV charging energy from the primary meter with the help of a sub-meter and ensure seamless billing for EV charging at a separate rate. Moreover, utilities can easily track and report EV charging usage for greenhouse gas credits and to predict local reliability issues.

Besides infrastructure management, utilities need to develop capabilities pertaining to grid management. In this regard, utilities could work towards developing distributed intelligence, demand response (DR) integration and effective coordination with generation.

Smart grids bring embedded intelligence and communication facilities with devices on the electricity generation and distribution network, resulting in better grid management for EV charging. Moreover, a smart grid integrated with DR programmes can shape the electricity load by stopping and starting EV charging as needed. As such, utilities are able to reduce peak demand, optimise intermittent renewable energy generation by managing EV charging, and ultimately coordinate this generation with EV charging.

Summing up

While electrification of the transportation sector poses numerous challenges, from the perspective of both utilities and consumers (high EV costs, long charging time, costly charging infrastructure, etc.), it also presents utilities with significant opportunities. Despite increased investment requirements, the addition of EVs will lead to the creation of new revenue streams with limited costs. However, in order to realise the full potential, all stakeholders must collaborate to develop an effective business model to deal with the potential impact of EVs.

In the Indian context, while the government has set tall targets, it will take more than a decade to deploy a significant number of EVs. That said, technologies too are expected to improve in the future and facilitate the integration of EVs with the power grid without much disruption.