The committee assumed that most PHEV charging will be accomplished at night, when electric power demand is lower and rates are likely to be lower than during the day. Encouraging PHEV owners to charge their vehicles during off-peak hours will require both rate schedules that reward time-appropriate charging and equipment that can monitor—or even control—time of use. Under the Energy Policy Act of 2005, utilities are “required to move towards smart meters that allow time-of-day pricing,” and smart meters are already being installed in certain areas to improve electric service, encourage efficiency, and shift energy use to off-peak hours. Many utilities are planning to deploy smart meters within the next few years.
Modernizing the transmission grid to achieve a smart grid as well as distribution systems would also benefit PHEVs by improving reliability, accommodating daytime charging, helping reduce carbon emissions, and controlling costs (NAS-NAE-NRC, 2009). DOE recently released a solicitation offering $3.9 billion in grants to “modernize the electric grid, allowing for greater integration of renewable energy sources while increasing the reliability, efficiency and security of the nation’s transmission and distribution system” (DOE, 2009a).
In its scenario analysis, the committee examined two cases that bracket the national average residential rate of 10.4 cents per kWh (EIA, 2009a) and that represent likely PHEV charging rates: 8 cents per kWh and 15 cents per kWh. The former would apply in areas with residential TOU rate structures; the latter would be in areas where rates are high or if they rise, perhaps because electric power generation is decarbonized.
CO2 will be emitted from power plants that generate the electricity that replaces gasoline that PHEVs do not require relative to conventional vehicles. As shown in Figure 3.1, the primary sources of electric power in 2007 were coal, natural gas, and nuclear energy. From 1997 through 2007, these three sources provided between 84.6 and 89.5 percent of total net generation. Nuclear power generation releases no CO2, but coal and (to a lesser extent) natural gas do.3
CO2 emissions by U.S. electric generators and combined heat and power facilities in 2007 were 2,517 million metric tons (EIA, 2009b), or an average of about 1.3 pounds of CO2 per kWh. One kWh will take a small electrically driven car about 5 miles. Over the same distance, an equivalent gasoline-powered car that gets 30 miles per gallon (mpg) would emit 3 pounds of CO2, more than twice as much. An HEV at 50 mpg would release about 2 pounds.
From 2000 to 2007, average electricity demand increased by 1.1 percent per year. The 2009 EIA Reference Case projects electricity demand increasing by 26 percent from 2007 to 2030—about 1.0 percent per year on average. The largest increase is in the commercial sector (38 percent), where service industries continue to lead demand growth, followed by the residential sector (20 percent) and the industrial sector (7 percent) (EIA, 2009a). EIA also provides low and high growth cases for 2030. Figure 3.2 compares the generation mix for the three cases in 2030 with the 2007 case.
EIA’s Reference Case projects that the average retail price for electricity in 2030 will be very close that of 2008, 10.4 cents per kwh, with the high growth case at 10.8 cents and the low growth at 9.7 cents per kwh. These modest price differences are unlikely to have a material influence on PHEV economics and acceptance.
It should be noted that EIA forecasts are required to assume the continuation of existing policy, so no substantial efforts to reduce CO2 emissions from electric generation were included. The committee used the EIA projections for its business-as-usual scenario.
For PHEVs to deliver their full potential to reduce CO2 emissions, the electricity used for charging them must be generated from technologies such as nuclear, renewable energy (e.g., solar, wind), and fossil fuels with carbon capture and sequestration. Because government policies will be required to drive these changes, the rate at which the country