The potential impact of electric vehicles on global energy systems
Electric
vehicles are unlikely to create a power-demand crisis but could reshape the
load curve. Here’s how to bend that curve to your advantage.
Could electric vehicles (EVs) soon face a different kind of gridlock? With the electrification of mobility accelerating, energy producers and distributors
need to understand the potential impact of EVs on electricity demand. The good
news: McKinsey analysis suggests the projected growth in e-mobility will not
drive substantial increases in total electrical-grid power demand in the near
to midterm, thus limiting the need for new electricity-generation capacity
during that period.
Using information from
Germany as an example, EV growth is not likely to cause large increases in
power demand through 2030; instead, it potentially adds about 1 percent to the
total and requires about five extra gigawatts (GW) of generation capacity. That
amount could grow to roughly 4 percent by 2050, requiring additional capacity
of about 20 GW. Almost all this new-build capacity will likely involve
renewables, including wind and solar power, with some gas-powered generation.
Reshaping the electricity load curve
While the uptake in EV
sales is unlikely to cause a significant increase in total power demand, it
will likely reshape the electricity load curve. The most pronounced effect will
be an increase in evening peak loads, as people plug in their EVs when they
return home from work or after completing the day’s errands. However, at a
system level, this effect will represent a relatively small percentage at most.
Again, taking Germany as an example, we expect an increase in peak load of
approximately 1 percent by 2030 and about 5 percent by 2050—increases that the
system can likely absorb.
However, the changing
load curve will lead to challenges at a local level because the regional spread
of EVs will most likely vary—in some cases, significantly. McKinsey’s
geospatial-analytics forecast of zip-code-level EV penetration shows suburban
areas will likely become early EV-adoption hot spots. Therefore, even at
still-low nationwide EV-penetration levels, local pockets with significant EV
populations will probably emerge.
These residential hot
spots and other concentration points of EV charging, such as public
EV-fast-charging stations and commercial-vehicle depots, will see significant
increases in local peak loads. To forecast changes in the load curve in residential
areas, McKinsey conducted a Monte Carlo analysis.1For a typical residential feeder
circuit of 150 homes at 25 percent local EV penetration, the analysis indicated
that the local peak load would increase by approximately 30 percent.
While significant, the
peak-load growth in residential areas is not as dramatic as some assume. That
is because while a single EV can easily double peak consumption at the
individual-household level, the aggregation across many households (those with
and without EVs) reduces the relative increase in peak load at a substation,
even considering the effects of high-peak outlier days.
Beyond peak-load
increases, the highly volatile and spiky load profiles of public fast-charging
stations will also require additional system balancing. We simulated the load
profile of a fast-charging station to explore this situation in greater detail.
In this case, a single fast-charging station can quickly exceed the peak-load
capacity of a typical feeder-circuit transformer.
Unmanaged, substation
peak-load increases from EV-charging power demand will eventually push local
transformers beyond their capacity, requiring upgrades. Combining data on the
distribution of EV penetration per zip code from McKinsey’s geospatial analysis
with data on the current utilization of transformers reveals that
capital-expenditure requirements as a function of national-level EV penetration
follows an S-curve shape. In other words, while investment needs require very
few upgrades at low EV penetrations, they jump rapidly as the number of EVs
increases and eventually level off again at high penetration levels. Without
corrective action, we estimate that the cumulative grid-investment need could
exceed several hundred euros per EV.
Exploring potential solutions
Energy players have
several ways to address this situation. They can influence charging behavior:
for example, time-of-use electricity tariffs can give incentive to EV owners to
charge after midnight instead of in the early evening. Analysis shows this
could halve the increase in peak load. Easy to implement and proved in trials,
time-of-use rates will require oversight because their use can result in “timer
peaks,” which occur when many people inadvertently set their chargers to start
charging at the same time.
Alternatively, energy
players can deploy more local solutions, such as co-locating an energy-storage
unit with the transformer that charges the unit during times of low demand. The
storage unit then discharges at times of peak demand, thus reducing the peak
load. Another option could be using a small combined heat-and-power plant,
which could be an attractive solution if the generated heat has local uses (for
example, heating a warehouse as it charges a fleet of delivery vans).
As the cost of
batteries continues to decline rapidly, using energy storage to
smooth load profiles will become increasingly attractive. Other applications
include public fast chargers, depot chargers for electric buses and trucks, and
residential settings where more EV owners combine rooftop solar panels and home
storage. Several factors can drive the business case for installing energy storage. These include
shaving peak loads to reduce demand charges (extra fees based on peak loads)
and avoid grid upgrades as well as taking advantage of lower power prices at
certain times (by charging the battery when energy prices are low). Energy
users can also potentially seek compensation for offering flexible services.
While some investments
in grid upgrades or alternative solutions will be unavoidable, companies can
greatly reduce them by tackling their root causes. An example involves avoiding
peak-load increases altogether by shifting EV-charging loads. Early insights
into the charging behavior and the driving and parking patterns of EV owners
suggest that for a significant share of the time that EVs remain connected to
the grid, they are not actively charging. This share can range from more than
80 percent of the time for private, residential EV charging to some 25 percent
for public charging. This situation creates the potential to shift the charging
load and thereby optimize charging times and speeds from a system perspective,
thus making charging smart.
Intelligently steering charging behavior to
create value
Centrally coordinated,
intelligent steering of EV-charging behavior could create value in several
ways. First, it could allow even more effective peak shaving and thus greatly
reduce the grid investments discussed. Second, it could allow a reshaping of the
load curve beyond peak shaving to optimize generation cost (shifting demand
from peak to base-load generation). And, revving charging up at times of excess
solar and wind generation or throttling it down at moments of low renewables
production could help to integrate a larger share of renewable power
production. Finally, by providing demand-response services, smart charging
could offer valuable system-balancing (frequency-response) services.
A next-horizon
refinement of this approach involves vehicle-to-grid plans, which not only
shift the power demand from EVs but also make it possible for EVs to feed
energy back into the grid under certain conditions. Pilot studies have shown a
substantial willingness of EV owners to participate in coordinated smart
charging. The total value created can be up to several hundred euros per EV
each year, depending on local specifics.
To realize these
benefits, energy players must make some up-front investments in smart-charging
infrastructure and work to achieve effective collaboration with other
stakeholders. But once these aims are established, EVs will no longer pose a
cause for concern from an energy-system perspective. Instead, they will become
a source of benefit by making the system more cost-effective, resilient, and
green.
The expected increase
in EVs on the road creates a challenge for power companies. While EVs will not
lead to a substantial increase in power demand by 2030, they will reshape the
load curve, thus placing new strains on the grid. The suggestions offered here
can help energy players overcome this challenge and effectively integrate
growing numbers of EVs on the road, thus creating substantial benefits for the
energy system.
By Hauke Engel, Russell Hensley, Stefan Knupfer, and Shivika Sahdev
https://www.mckinsey.com/industries/automotive-and-assembly/our-insights/the-potential-impact-of-electric-vehicles-on-global-energy-systems?cid=other-eml-alt-mip-mck-oth-1808&hlkid=909d6d883e344cd0ab7ba726ddd611b0&hctky=1627601&hdpid=8ec69770-82c4-4a44-8c6e-4844c16d1cfc
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