The first generation of hybrid electric cars, led by Toyota's Prius, whetted appetites for environmentally-responsible driving. The arrival of plug-in hybrid electric vehicles (PHEVs), which are expected to be able to drive 40 miles or more using only battery power, could enable many commuters to go emissions-free for days or even weeks when recharged daily.

Although the critical battery technologies (including new lithium-ion chemistry) that will drive PHEVs into the future are still being developed and tested, car manufacturers — from startups such as Tesla Motors and Aptera, to major players including GM, Toyota, and Volkswagen — are nonetheless planning to offer vehicles in the next two to three years.

When this first generation of PHEVs hits the streets, they will offer extended battery capacities and driving range, and will also start to answer lingering questions about performance, safety, and the impact on electrical grids. The long-term success depends on their ability to reliably transmit power back and forth to the grid with the aid of to-be-developed intelligent hardware.

Consumers are likely to buy PHEVs because of the environmental advantages as well as the convenience and cost-savings of passing by the pump. As utilities incorporate more clean power sources onto the grid, PHEVs could start to have a dramatic impact on reducing greenhouse gas emissions. A study by the Argonne National Lab estimates plug-in hybrids could reduce greenhouse gas emissions by between 36 and 61 percent, depending on how much recharging is done at night.

California, New York, Massachusetts, and several other states have zero-emissions mandates, policies designed to encourage car-sharing programs and the development of PHEVs and other low-pollution vehicles. As federal and state programs begin to create more incentives for PHEVs and related clean energy technologies, they also have an opportunity to increase the reliability and efficiency of electric power systems.

One of the ambitious ideas being discussed is called vehicle-to-grid (V2G), which aims to accomplish two eco goals in one swoop — after PHEVs are charged using clean energy sources overnight, they could be used to help power the grid over peak usage periods during the day. However, there are numerous technological and logistical hurdles to overcome before PHEVs can interact with electrical grids in the way V2G proponents suggest is possible. Disparate industries including utilities, battery makers, and car manufacturers are trying to come up with a collective vision of V2G, but competing goals and interests are likely to make it a bumpy ride.

V2G, One Step at a Time

While most observers see V2G slowly developing over the next ten to twenty years, groups like the Rocky Mountain Institute (RMI) are actively promoting the idea, and see some of the important pieces already falling into place. At a recent conference in Portland, RMI brought together a group of leaders from the utility and auto industries, clean energy companies, IT systems providers, and others to discuss the future of the "smart garage" and V2G.

RMI's summary of the conference included a description of the road ahead:

"In the first wave of convergence between buildings, vehicles, and the grids, cars will charge up in a "smart" way. This means the time of day they charge, how fast they charge, the location and more will be dictated by driver preferences (including electricity bill limits) balanced against utility and building needs. All of the benefits mentioned above are available only when the car is recharging (uni-directional charging). In the longer term, bi-directional charging (often called V2G) can use vehicle batteries as storage, opening up more benefits, though more costly and technically challenging."

In a V2G system, PHEVs would need to be charged primarily at night to better utilize carbon-free energy sources such as wind farms and nuclear plants that are generating power around the clock. After PHEV batteries are charged, some of that power could be made available to the grid during the day, in which case the car owner would be paid a premium for providing power when it is most needed.

Efrain Ornelas, a senior project manager in PG&E's clean air transportation group, said that one of the first steps in setting up a V2G network is getting "smart charging" systems in place, where the utility has a two-way communication system with devices in customers' homes.

"Utilities are moving to smart metering, remote metering, and providing services like demand-response [where electricity customers reduce their consumption at critical times or in response to market prices]," said Ornelas. "So you'll soon see more smart ACs, pool pumps, and similar applications that use smart meters to communicate to home networks and smart appliances. Down the road, we could use some of this same infrastructure to start looking at V2G, but in the overall vision, that's ten to fifteen years away, as vehicle penetration is there."

To go from smart charging to a full-on V2G system, though, utilities would need to install even more equipment in customers' garages, including sophisticated sensors, metering devices, and intelligent connectors to allow power to flow from vehicle to grid. These components could be used to report problems and failures, analyze battery conditions, and send messages to customers. This distributed web of energy intelligence could potentially be used to notify users when the grid is being stressed or better manage power use to avoid peak rates. Before utilities will build out such a system, however, they will have to determine its real value.

"One of the key questions with V2G is around its value. Utilities need to find it valuable enough to pay something meaningful to the owners and operators," said Nadeem Sheikh, a strategy consultant with analyst firm McKinsey & Company focused on emerging technologies in the transport sector. "Utilities say it's interesting, but many have bigger challenges to deal with, and they may not want to track and bill small sources of energy. It will depend on their need for energy storage and what the costs are for consumers."

PG&E is conducting pilot programs monitoring small groups of customers charging PHEVs in their garages, and last year the utility started a V2G program with Tesla Motors to research remote smart charging applications. Ornelas said these trials could be used as the cornerstone of bigger programs down the road, and the utility might offer customer incentives in the form of discounted rates for off-peak charging.

"With V2G there are some real concerns, but right now we're focused just on the charging aspect, and trying to manage it to minimize the impact on load," said Ornelas.

PG&E is also working with auto manufacturers and the Society of Auto Engineers to develop new protocols and standards to allow cars to communicate with grids. Along with PG&E, PHEV initiatives are also underway with Austin Energy and Southern California Edison, which are fellow members of the Plug-in Hybrid Development Consortium. Ford is conducting a project with Southern California Edison and the Electric Power Research Institute, using 20 Ford Escape PHEVs to better understand the dynamics of connecting vehicles to an electric grid, customer usage patterns, technical standards and viable business models. Portland Gas and Electric likewise is conducting a trial of a dozen PHEVs.

One of the questions that researchers are looking at during the current PHEV trials is the impact of recharging batteries through a standard 110-volt connection, and what impact it will have on the grid if thousands of PHEVs are plugged in at once. The existing grid infrastructure is expected to handle that load if customers are primarily recharging batteries at night, according to a 2007 study by The Pacific Northwest National Lab. But as more vehicles start charging during the day at peak times, it could force utility companies to build more power plants or reconfigure transmission infrastructures to keep up with demand.

"V2G doesn't make a lot of sense with a 110-volt charging because the transmission losses alone make it unattractive, and there is also the excess cycling of the batteries to consider," said Miller. "Vehicle to home is a more plausible discussion, which could possibly add value as a clean UPS (uninterruptible power supply) solution on coastal markets. When we get to 240-volt charging, V2G might make sense, but we don't want to overtax the grid."

The Battery Equation

Given the importance of new battery technology to the future of PHEVs, one of the wild cards in the V2G discussion is how fast and successfully the new breed of lithium-ion battery packs can be developed.Developing a safe, reliable, and durable battery technology has proven to be an ongoing challenge, and there are a number of different companies competing in this potentially lucrative space.

"With lithium ion, there are many different designs. We started with simple laptop batteries, but now we're seeing phenomenal advances in terms of capabilities, capacity and safety," said Ornelas.

Currently there are still more questions than answers regarding next-gen PHEV batteries. Ted Miller, a senior manager for energy storage strategy and research at Ford Motor Company and member of the U.S. Advanced Battery Consortium, said that durability and safety are the two most pressing concerns, and U.S. automakers are working together to help guide the companies that are developing PHEV batteries for the U.S. market.

"All of the work we do with USCAR (United States Council for Automotive Research) is pre-competitive work and advanced development efforts," Miller said. "We try to agree on requirements and goals, and promulgate standards that make sense."

The US Department of Energy (DOE) is funding five PHEV battery projects with $17 million, with an emphasis on battery cost, battery life, and batteries for both 10- and 40-mile range PHEVs. The companies selected for awards include 3M, A123Systems, Compact Power, EnerDel, and Johnson Controls. Another company that has been successful in developing a next-gen hybrid battery is Valence, an Austin-based company that has developed a lithium phosphate battery design now being used in commercial electric vehicles in the U.S. and Europe.

Earlier this year, Valence won a $70 million contract to power a fleet of all-electric commercial delivery vehicles in the UK. The systems will be installed in vans and trucks produced by Smith Electric Vehicles, one of the world’s largest manufacturer of electric vans and trucks. Robert Kanode, CEO of Valence, said that he expects his company's PHEV batteries will absorb more than 4000 charging cycles, and will last from eight to twelve years under daily operation.

Kanode added that performance improvements are being made at a faster pace than before that will soon lead to a new generation of batteries. "In next few years, this [battery] industry will go to high capacity cells, and when that happens, you'll replace round cells with a lighter, cheaper, and higher capacity pack," said Kanode. "It will be easier to cool and have other advantages, so we'll see more supply and when it's achieved you'll see a real difference."

While battery technology is getting more advanced in terms of safety and efficiency, it isn't getting much cheaper and still represents a major chunk of a PHEV's manufacturing cost. The Chevy Volt, for instance, will sell for about $35,000, and the battery pack is expected to cost anywhere from $5,000 to $10,000. This scenerio isn't likely to change quickly, since the high cost of PHEVs will prevent car manufacturers from ordering the volume of batteries that would help drive down costs — a classic chicken and egg problem.

During testimony earlier this year before the House Appropriations Subcommittee on Energy and Water Development, Argonne National Lab's Don Hillebrand noted that, "government should continue support for research and development, provide market incentives for conventional hybrids, and consider added incentives for plug-in hybrids." "A sustained effort to develop domestic battery manufacturing capability will be equally important."

Congress recently added a $7,500 consumer tax credit for purchasing PHEVs, and federal support for plug-in hybrids will likely expand even more during the Obama administration as the president-elect strongly backs both the vehicles and the supporting smart grid technology.

There are a number of different ideas being discussed about how to offset the cost of batteries, including leasing them to customers, and having utilities buy up batteries after they have reached the end of their useful life in PHEVs.

"Any battery is at the end of its life when it can only be charged up to 80 percent, but after that you can put it in a wind or solar farm and use it for a very long time," said Valence's Kanode.

In Europe and other parts of the world, the design goals for PHEVs are somewhat different than in the U.S., where commutes are longer and car buyers have somewhat different tastes. Nonetheless, some of the programs being developed abroad could provide instructive examples for the U.S. as it begins to build out an infrastructure for PHEVs.

Shai Agassi, the CEO of Better Place, is developing a well-financed effort to create an infrastructure of battery charging/swapping stations across Israel and Denmark, where it would own batteries and provide them to vehicle owners as a service. Drivers would trade in drained batteries for fresh fully-charged battery in a process that should take about as along as a filling a gas tank today. A major advantage of this type of system is that PHEVs will be much cheaper if the batteries aren't part of the cost, and cars could be leased or deeply discounted to promote the service.

Despite the advantages in delivering clean transportation and home recharging, the high cost of PHEVs and the many challenges of creating a viable V2G system make it unlikely that we will see significant V2G applications anytime soon.

"Some people are pushing for feeding (battery) energy into the grid, but others are saying we can have 90 percent of the solution with 20 percent of the complexity by just getting people to charge at night and not making grid problems worse," said McKinsey's Sheikh.

(Image: The Oregonian)

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