Energy Insights Says PHEVs Have Great Potential in the Future Evolution of Intelligent Grids in Europe

MILAN, Italy and FRAMINGHAM, Mass — MAY 22, 2008 – Energy Insights recently released a new report, which examines how automakers, battery developers, utilities, and policy makers are approaching the possibilities of plug-in hybrid electric vehicles (PHEVs), as well as the technical challenges that must be overcome to achieve widespread commercialization. It also explores the benefits PHEVs could offer utilities in terms of increased off-peak power sales and the potential to tap the energy stored in PHEV batteries for ancillary services or demand response.

"PHEVs have great potential in the future evolution of intelligent grids. They can offer utilities benefits in terms of increased off-peak power sales and the potential to tap the energy stored in PHEV batteries for ancillary services or demand response," said Roberta Bigliani, research director, Energy Insights EMEA. "Their significant market penetration likely remains 10 years away. Nevertheless, utilities and carmakers should speed-up pilots and begin to rethink the grid and the requirements for handling distributed sources and two-way power flows."

The study highlights that, plug-in hybrid electric vehicles (PHEVs) offer both an opportunity and a challenge to the electric power system. PHEVs, which are similar to today's hybrid cars but include large batteries that can be charged directly from an electrical outlet, could be an attractive new source of revenue for utilities, particularly if the batteries are recharged during off-peak periods. Thanks to that onboard battery capacity, PHEVs conceivably could also provide that holy grail of the electric power system: significant energy storage. They could power the electrical grid in times of high demand or, more likely, could function as reserves or other ancillary services – a concept commonly referred to as vehicle to grid (V2G).

This opportunity, however, also comes with challenges, as it raises issues of interconnection and feeding power back onto the distribution grid from dispersed locations. This report's principal findings on PHEVs include the following:

PHEVs are already available as expensive, custom conversions but are unlikely to enter widespread commercialization for 10 or more years. The foremost obstacle to their successful commercialization is the cost and performance of the large battery storage systems needed for sufficient vehicle range.

Should PHEVs be deployed on a broad scale for V2G applications, the impact on the electric power system (particularly the distribution system) would be tremendous. The industry would have to learn how to manage large numbers of distributed energy storage devices and two-way power flows.

Energy Insights expects that PHEVs will become commercially available on a widespread basis around 2017 at the earliest. The bottom line is that, despite the efforts of numerous groups working to develop safe, durable, and reasonably priced batteries, there is no commercially viable PHEV battery ready to go to market. Despite this, the possible impact of PHEVs on the electricity sector – and beyond – is well worth monitoring. Utilities should consider following the lead of those companies which have initiated research projects to explore the potential of PHEVs as an off-peak consumer of energy and for V2G applications.

And in terms of rethinking the grid, it's not too early for distribution system owners to begin to do so. Given various trends, including growth in distributed photovoltaic markets, demand response opportunities, and the potential for other distributed energy and storage technologies to interconnect with the grid in the next decade and beyond, planners should begin sooner, rather than later, to start building the distribution system of the future.

For more information or to obtain a copy of this Energy Insights report, What Path are PHEVs Taking in Europe? (Doc #EIRS02Q), please contact crinelli@idc.com

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Energy Insights, an IDC company, is a leading global provider of research-based advisory and consulting services to the energy and utilities industry. Staffed by senior analysts with decades of industry-specific business and technology experience, Energy Insights provides full coverage of the energy industry value chain – from upstream to retail activities. Energy Insights provides a portfolio of offerings that are relevant to both IT and business needs. IDC is a subsidiary of IDG, the world's leading technology media, research, and events company.

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