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The Future of Energy: Despite Low Oil Prices, Don't Dismiss Electric Vehicles (EVs)

by Bob Shively, Enerdynamics President and Lead Instructor

 

On a recent trip to Silicon Valley, I was reminded of and amazed by the wealth of innovation that has fundamentally changed our world. A stroll through the engineering quad at Stanford University reveals the Gates Building, the Hewlett Building, and the Packard Building. Stepping inside the Huang Engineering Center one can view the original Google server, which was built by Stanford PhD students Sergey Brin and Larry Page.   


In the energy business, however, we have yet to see revolutionary breakthroughs driven by new technology. Certainly we’ve had evolutionary changes including distribution automation and smart meters. But breakthroughs that fundamentally change the business are yet to come.

 

It’s possible they will come at the consumer end of the delivery system through low-cost photovoltaic cells, technology that aggregates distributed resources, and/or distributed storage. Or it may come at the centralized end with small modular nuclear reactors or even fusion power. But despite current low oil prices, I wouldn’t bet against electric vehicles (EVs) being the driving (no pun intended) breakthrough technology.

 

Many industry observers might find this preposterous. After all, at the end 2013 there were approximately 70,000 electric vehicles in the U.S. and 104,000 plug-in hybrids. This is miniscule compared to more than 226 million registered vehicles in the U.S. Why, you may wonder, do car manufacturers even bother? A short answer: They have to.

 

In 1990 the State of California created a Zero Emissions Vehicle (ZEV) mandate. With ongoing modifications to the rules, nine other states have joined California including Connecticut, Maine, Maryland, Massachusetts, New Jersey, New York, Oregon, Rhode Island, and Vermont. The current rules will require approximate 15% of light-duty vehicles sold by 2025 to be either electric or fuel-cell powered. Together these states make up about a quarter of the U.S. car market. So to keep selling cars, manufacturers must find ways to get electric cars into the market.   

 

 

Meanwhile, some interesting competitors are coming into the EV space. Tesla has been there for a while and continues to produce spectacularly engineered (but not profitable) EVs. And Smart, now a subsidiary of Mercedes-Benz, was founded by the inventor of the Swatch watch. More recently, technology heavyweights have weighed in:

 

— Google has been working on the driverless car (which may or may not be electric)

 

The Wall Street Journal reported last week that Apple has secretly created a project dubbed Titan with several hundred employees working toward an Apple-branded EV

 

The well-known iPhone manufacturer Foxconn recently announced its own intention to partner with Chinese internet investment company Tencent to develop a low-cost electric vehicle in China

  

Clearly change is happening. And EVs are of interest to the electric industry not just as new load but also because the battery technology required for vehicles has great potential to provide short-term electricity storage on the grid whether or not the batteries are in a car. When Tesla announced its recent huge battery manufacturing facility in Nevada some speculated that batteries won’t just be used by Tesla for its cars but also by Solar City, a company part owned by Tesla founder Elon Musk. And indeed, Solar City just announced a GridLogic service where the company will build electric microgrids for cities, campuses, and military bases.

 

Utilities are also trying to get into the game. Pacific Gas and Electric recently filed with the California Public Utilities Commission a proposal to provide rebates to owners of EVs. These rebates would be funded by carbon emission credits created under the California program restricting greenhouse gas emissions.

 

It is hard to predict where this is all headed. Maybe the future lies in a model like MyEnergiLifestyleTM, which is a collaboration among Ford, Georgia Tech, and various consumer product companies including Whirlpool, Sunpower, Eaton, Infineon, and KB home. The MyEnergiLifestyleTM service integrates solar power, an EV, flexible loads, and an intelligent control system to minimize energy costs while maintaining full customer comfort. If and when such integrated systems become widespread, we may indeed have an energy revolution. And then no matter where oil prices lie, there will be strong incentive to buy an electric vehicle.

 

 

 

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