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  • Peter Asmus

California Legislation on Electric Vehicles Could Be a Global Game Changer

Our energy systems are being transformed by the dramatic increase in distributed energy resources (DER) that are now populating power grids around the world, including in Alaska, which leads the U.S. in microgrid deployments. Once viewed as a major challenges, these DER assets, popularized globally by rooftop solar PV and then more recently distributed energy storage, are challenging our conventional thinking on how our power grids work.

Yet the most transformative of all DER assets could be electric vehicles (EVs.). Once viewed as a major headache for utilities since each EV represents the equivalent draw of electricity as a new house on their distribution grids, advances in digital controls now make it possible to charge and discharge EV electricity demand in creative ways that serve rather than compromise power grids. Furthermore, with the right market structures, these EVs can deliver value from your home or business all the way up into wholesale markets. The adoption of FERC order 2222 sets the stage for this possibility to become a market reality in the majority of states in the U.S. (with notable exceptions in Alaska, Hawaii and Texas).

But we have a long way to go. California’s SB 233, introduced in California by Senator Nancy Skinner (D-Oakland) this year, could be a game changer. I think it is the most single important climate-related bill across the globe. This blog will explain why.

EVs Once Viewed as Grid Challenges

A tipping point for EVs in becoming mainstream consumer offerings is steadily approaching. By 2030, government vehicle fuel efficiency regulations and continued development of advanced battery chemistries and manufacturing capacity are likely to make EVs cheaper to purchase than competing liquid or gaseous fuel powered vehicles. Consumer Reports notes that already today, the total cost of ownership of an EV is cheaper than a traditional gasoline-fueled vehicle.

For the electric power sector, EVs are a boon, but a boon that requires active management. While basic load growth is good for the sector -- especially in an era when the focus has been traditionally to shrink loads in the name of energy efficiency -- the uneven distribution of that growth within a specific location or at a specific time of day could prove burdensome for utilities. Actively managing and spreading the EV charging load across infrastructure assets and time could not only prevent infrastructure upgrade costs but may also decrease grid balancing costs. This is an important aspect as more intermittent renewable resources are added to generation portfolios.

The technology to sync up an EV to the grid and then deliver value from a mobility transportation asset into a stationary grid application needs to be validated. Luckily, there is good news on that front with many pilot projects proving out these concepts throughout the world. The federal government is helping with the Inflation Reduction Act and other initiatives But I would argue California is still the place to be when it comes to harnessing the power of EVs for reducing pollution in front-line disadvantaged communities, while also helping to balance growing renewable energy pools required to meet the global climate change threat. While a few pilot projects have popped up in the state – including this one in Oakland, California -- we have only scratched the surface of what could be possible as well as necessary to meet the global climate change challenge. .

Batteries on Wheels

When we’re not driving them, electric cars, trucks and buses can act as “batteries on wheels.”  Emerging vehicle-to-grid (V2G) technologies can be used to power homes and businesses by tapping the batteries in electric vehicles when the grid goes down. These mobile energy sources can also be moved where they’re needed most during power outages, like backing up medical centers, fire stations and food stores.  The key to using EVs for energy storage is buying “bidirectional” EVs. That means investing in a car with the ability to both charge and discharge energy. These vehicles happen to be incredibly affordable. The Nissan Leaf, for example, is bidirectional and also the cheapest EV on the market. With bidirectional EVs, we could eliminate our dependence on backup generators, whose planet-warming carbon emissions create smog and contribute to a slew of respiratory illnesses like asthma, bronchitis, and lung cancer.

Batteries of the sort in EVs can potentially respond more quickly and accurately to grid signals than other utility grid service assets, such as natural gas powered peaker plants. (They are also much cleaner, as pointed out in a Guidehouse Insights white paper.) This speed and accuracy could boost grid efficiency, but in most markets, these performance advantages are not compensated accordingly. Continued advance of organized markets for grid services will improve the business case for bidirectional EVs. There are skeptics, of course. They argue EVs are already expensive -- and this will just make them more so.

Once a consumer decides to buy an EV, the marginal cost of buying a bidirectional EV instead of a unidirectional EV is small. The most popular bidirectional EV, the Nissan Leaf, is currently the cheapest EV on the market. Most of the added cost burden of a bidirectional EV comes from the bidirectional charger, which can be up to five times as expensive as an ordinary charger. However, these chargers are expected to get cheaper, and bidirectional EVs can still plug into ordinary chargers. Another oft-cited cost concern is that bidirectional charging shortens the car's battery life. However, this is only true if the EV owner exceeds the guidelines for charging and discharging.

Global data shows the magnitude of the V2G bidirectional EV opportunity. According to research published in Nature, EV batteries could satisfy short-term energy demand globally as early as 2030. The graph below illustrates the untapped storage capacity of electric vehicles globally relative to the available stationary storage as of 2020: energy storage capacity in EVs is much greater than stationary battery resources.

Image Source: Fermata Energy

US studies from researchers at MIT and the University of Delaware have shown similar results. The current EV fleet in California – if bidirectional – could represent as much as 10 gigawatts of capacity, enough capacity to theoretically retire the state’s entire dirty and expensive fossil fuel peaker plant fleet.

What Does SB 233 Do?

The passage of California’s SB 233 out of the state Senate transportation committee on a 11-3 vote last month offers a peek into the future - and what might be possible if the California’s EVs were “bidirectional.” This term - bidirectional - is related to V2G in that it refers to the ability of EVs to not place a load burden on utility power grids but instead offer up a compelling solution to meeting peak demands while lowering emissions, accelerating the transition to a zero-carbon energy economy. In short, V2G is a system that allows EVs to be used as energy storage devices, enabling them to sell excess electricity back to the grid during peak demand hours when electricity is most expensive. V2G is now technically possible. Please see this recent webinar recording entitled Charge Ahead: Transform EVs from Grid Challenge to Solution for an educational discussion featuring the Clean Power Alliance, the largest community choice aggregation program in California.

In a nutshell, here is what SB 233 requires: the California Energy Commission (CEC), in consultation with California Air Resources Board (CARB), to convene a stakeholder workgroup to examine challenges and opportunities for V2G and produce a report for the Governor and California Legislature no later than January 1, 2025. The heart of the bill, however, is this requirement: beginning in model year 2027, all new EVs sold in California be bidirectional capable, including light-duty passenger vehicles and school buses, except as exempted by CARB.

California already has well over a million electric vehicles on the road, which represent approximately 39% of the national total, according to the California Energy Commission. Given that the state has set a goal that all new vehicle sales be EVs by 2035, the role of V2G using bidirectional EVs as a potential grid resource will only increase over time. Since each electric bus includes a battery that can represent 100 kW of energy storage capacity, this growing fleet represents a vital resiliency and grid carbon reduction strategy asset class. As California goes, so goes the nation. When the state sets energy efficiency standards for refrigerators – the largest electricity consuming device in any home – back in 1976, manufacturers did not want to make one refrigerator for California and another for the rest of the country. As the late Art Rosenfeld pointed out in my 2009 book Introduction to Energy in California (University of California Press), these standards, and related building standards, were then copied by the federal governments, saving U.S. citizens roughly $500 billion annually. (China and Russia also adopted similar standards.)

California Governor Gavin Newsom as well as other leaders note how V2G is indeed a game changer. I’ll be moderating a panel entitled How to Build a Nationwide EV Network with Microgrids on May 16 at the Microgrid Knowledge annual conference in Anaheim, California.

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