Automakers worldwide are speeding up their efforts to develop electric vehicles and meet demand in China, the world’s largest auto market.
Last year, China’s government issued rules that require automotive companies to sell more alternative-energy cars in the country. Beginning in 2019, China requires that EVs make up at least 10% of each automaker’s output. The minimum share increases to 12% in 2020.
The new quota system allows the auto industry to take on more of the financial responsibility for electric cars. It also reduces the Chinese treasury’s involvement, which has paid for research grants and subsidies for EV developers and buyers.
The automotive industry thus is being pushed toward a radical change due to Chinese rules for EVs. Ford recently announced it will invest $11 billion in EVs by 2022. This is a significant increase considering the company planned to devote only $4.5 billion to electric cars just three years ago.
In October, General Motors announced it will begin selling two new EVs in the next 18 months and will have at least 20 new models in the next six years. Most of the new vehicles will be based on a new architecture with a longer range than the Chevrolet Bolt’s 238 miles (383 km).
French automaker Renault plans to double EV sales outside Europe, especially in China, to boost its revenues to €70 billion euros by 2022. Furthermore, Volvo has said it will produce electric cars in China for global sale starting in 2019, and even Tesla is considering opening a factory in the country.
A recent analysis from Bloomberg New Energy Finance suggests EVs could account for half of all new cars sold by 2040. This begs the following question: As electric cars become more popular, how would a driver charge an EV when electricity is unavailable?
The aftermath of Hurricane Maria in Puerto Rico demonstrates the potential devastating consequences of not having electricity for an extended period. Thus, backup-charging infrastructure is necessary so EVs can operate when power is inaccessible.
Microgrids could help ensure drivers can charge their EVs during a blackout. Each microgrid consists of a group of distributed energy resources that connect and disconnect from the grid. A microgrid can include a combination of the following resources to provide electricity: solar, wind, energy storage, EVs, demand response, energy efficiency and others.
During Hurricane Sandy in 2012, microgrids provided power to key sites. New York University’s microgrid was able to disconnect from the main grid and provide reliable electricity to the campus. Princeton University’s microgrid powered its campus for three days when electricity was unavailable.
As a result, many Northeastern states began pursuing microgrids after the hurricane because they cost less than traditional upgrades and provide an extra layer of reliability. For instance, Connecticut allocated two rounds of funding for several microgrid pilot programs to support electricity reliability and resiliency.
Microgrids provide many other benefits. They can deliver voltage support for distributed generation, consume excess energy by charging batteries and help meet electricity demand in neighborhoods that have several EV owners.
Microgrids also could save money where electricity is expensive, such as in remote locations or in areas with high electricity prices.
In the U.S., utilities are motivated to build traditional infrastructure to make a profit. Thus, utilities are reluctant to incorporate distributed resources that could create a microgrid because that would translate into less electricity purchased from them.
In December 2016 the California Public Utilities Commission began a pilot program aiming to incentivize utilities to adopt distributed resources. The plan will allow the three investor-owned utilities in the state – Pacific Gas and Electric, San Diego Gas and Electric and Southern California Edison – to make a profit when distributed resources replace a traditional upgrade.
The California pilot will award the utilities with a 4% financial incentive that will be applied to the annual payment for the resource. The public utilities commission aims to prevent rate increases by ensuring the cost of distributed resources plus the financial incentive given to the utility is cheaper than the traditional investment replaced.
After the California pilot is refined, perhaps other states will allow utilities to make a profit when adopting distributed resources to create microgrids. This would provide the grid with much-needed reliability and resiliency while ensuring EV owners can charge their cars when the main grid is down.
Since China has created rules for alternative-energy cars, Beijing is creating a sweeping change in the automotive industry that will affect the types of cars available on the market. As automakers are scrambling to develop EVs, it is critical that solutions are deployed so drivers can charge their cars when electricity is absent.
Constance Douris manages the energy portfolio as vice president of the Lexington Institute, a nonprofit public-policy think tank based in Arlington, VA.