Collaborating with Utilities and Municipalities

Clearly, electric vehicles (EVs) will have an impact on electric utilities. If EVs are charged during times of peak electricity demand, they may stress the current grid and require the construction of additional electricity supply. Furthermore, recharging vehicles during peak demand would significantly reduce the operating cost benefits expected from electric vehicles. To maximize recharging efficiency and minimize stress to the grid, “smart grid” technology that allows communication between recharging vehicles and the electrical grid will be required. Automakers and utilities will have to work together to develop this “smart” vehicle-to-grid communication system. Overcoming these challenges will require significant collaboration between automakers, electric utilities and governmental regulatory agencies and legislators.

Because utilities and automakers have not had to work together in the past, effective collaboration requires developing new relationships and learning about each other’s business and regulatory challenges. For example, utilities and automakers have very different business models: utilities operate regionally and have little to no direct competition within their markets, while automakers operate and compete globally. Further, automakers are primarily regulated at the national level, while utilities face more local and state regulations, which increases the difficulty of establishing a national strategy for vehicle-to-grid interaction. It will be important for automakers and utilities to understand and address these kinds of differences as they work together on vehicle electrification issues.

Ford has taken the lead in forging relationships with utilities and municipalities to address these challenges and facilitate the successful implementation of electric vehicles. In 2007, we initiated the Ford Plug-in Project, a collaborative effort involving the U.S. Department of Energy, the Electric Power Research Institute, the New York State Energy Research and Development Authority, and 10 utilities (Southern California Edison, American Electric Power, ConEdison of New York, DTE Energy, National Grid, New York Power Authority, Progress Energy, Southern Company-Alabama Power, Pepco Holdings and Hydro Quebec). Through this project we are road testing our Ford Escape plug-in hybrid prototypes that are equipped with vehicle-to-electric smart grid communications and control systems that will enable plug-in electric vehicles to interface with the electric grid, and will allow the vehicle operator to determine when and for how long to recharge the vehicle. This will potentially enable the user to take advantage of lower, off-peak utility rates.

We are also working with utilities, municipalities and states across the country to develop and facilitate the use of EV implementation best practices. Some of the key issues we are working on with local utilities and municipalities include the following:

• Time-of-use electricity rates: We are encouraging utilities to adopt a “time-of-use” rate structure, which would enable them to charge different rates at different times of the day based on overall electricity demand. Under a time-of-use structure, electricity rates would be lower at night when there is lower demand on the electrical grid. Since most EVs charge at night, this increases the benefits of electrified vehicles for consumers. It also helps utilities by giving customers an incentive to charge at times when electrical demand is already low, which helps to balance out utilities’ electrical loads.
• Maximizing the publicly accessible recharging infrastructure: We are working with municipalities and utilities to develop more public recharging stations and to encourage a thoughtful and holistic approach to planning for publicly accessible recharging. In the next 18 months, we expect to see at least 12,000 publicly accessible charge stations installed in cities throughout the U.S., up from about 1,800 currently. This is an important step in fostering electrified vehicle use. However, the placement and design of publicly accessible charging stations requires careful consideration to maximize their usefulness to EV drivers. We are endorsing a holistic “urban planning” approach to charging station development in which local officials actively plan the locations for publicly accessible EV charging based on traffic patterns and the locations of other charging stations. This kind of approach will result in charging locations that are used more often and will make more-efficient use of investment dollars. We are also encouraging standard rules and signage for public refueling infrastructure that would tell drivers what type of charging is available, the hours when EVs can use charging stations, the length of time an EV can remain plugged in and how rules for charging stations are enforced.
• Standards for private third-party charging stations and the resale of electricity: In many cases, publicly available refueling stations will be installed and run by private businesses, such as gas stations and restaurants. In most states, when a third party resells their electricity, as they would to an EV driver, they are considered a regulated utility and face the same stringent regulations a utility must follow. We are working with states to encourage updating regulations so that reselling electricity for transportation would not be subject to utility-like regulations. This will encourage the development of more publicly accessible recharging stations.
• Home EV charging station permitting process: Homeowners are required to get a permit from their municipality and/or utility to install a home EV charging station. Historically this process can take more than two weeks. We have been working with utilities and municipalities to encourage reducing the permitting process to a couple of days.
• Promoting EV incentives: Through our work with cities and utilities, we have identified a range of actions that will help consumers make the transition to electrified vehicles – for example, infrastructure incentives to offset a portion of customer costs for hardware/installation.
• Building codes for new construction: We are working with municipalities to develop codes for new building construction that would make them “EV ready,” with best practices such as wiring for EV chargers.

We are working on these issues in a variety of ways. Much of this work is focused on the 19 markets we have identified as our initial targets for EV sales. In these markets, we are involved in direct partnerships with utilities and municipalities. We are also serving in a formal advisory role to utilities in several states. Ford is an active member of the Electric Drive Transportation Association, an industry group that is working to implement EVs in the U.S. And, we are testifying before state legislatures around the country to endorse legislation that will facilitate the successful implementation of EVs.

Our collaborations with utilities and municipalities are yielding key lessons that we are incorporating into our continued efforts to make electrified vehicles successful in the real world. Some of the key learnings we have gained so far include the following:

• Electric vehicles provide additional impetus to develop smart communication systems between the vehicle and the grid. This communication will allow the consumer to know if and when lower electricity rates are available (as some utilities will offer lower rates during the night when energy demand is low), and help prevent additional loads on the infrastructure. Providing utilities the ability to control when vehicles are charged, or assurances that vehicles will not be charged during peak demand time, could prevent costly infrastructure upgrades, some of which may be passed back to the customer by the utility (e.g., if a transformer needs to be upgraded).
• Smart vehicle charging will require that utilities and automakers develop a common standard for vehicle-to-grid and grid-to-home meter communications. Currently, utilities tend to operate regionally, but electric vehicles will increase the need for common national and even international standards. We have worked to develop a common charging standard in the U.S., and we are now focused on fostering the development of an internationally common charging standard.
• Widespread use of electric vehicles will likely require that vehicle power consumption be measured separately from home electricity use, requiring either additional meters or “smart” meters. In addition, the pooling of electrified vehicles in a particular region may require upgrades to the transformers and/or substations that form the electrical grid in that area.
• There are interesting possibilities for vehicle-to-grid and vehicle-to-home power flow. However, there are also significant challenges to making these possibilities a reality. For example, technical, safety, codes/standards compliance, legal, robustness and business case issues need further study prior to commercialization.
• Vehicle owners will likely want to be able to charge their vehicles at any geographic location and – in those cases where another payment method isn’t used – have the cost applied to their home energy bill. In addition, vehicle identification and home meter association must be seamless for the customer. This kind of mobile or remote billing for vehicle charging services will require a paradigm shift in the utility industry’s current billing processes and tools.
• Automakers and utilities both benefit from working together on outreach to local, state and federal regulators and legislators. Ford and our utility partners are already working with legislators and regulators on national standards for vehicle charging infrastructure and incentives and strategies to bring costs down.
• Utilities and automakers need to work together to educate consumers about the differences between electric vehicles and traditional vehicles so that consumers understand how to make the most of electric vehicles and charging infrastructure.