A primer in plug-in hybrid economics

How many cars can Californians plug into the grid before new power plants are necessary?


Andrew Leonard
March 5, 2008 12:15AM (UTC)

Imagine a plug-in hybrid quietly recharging in every garage, vastly reducing society's dependence on oil. What's not to like? What are we waiting for?

Advances in battery technology? New solar power plants to handle the additional electricity demand? Higher gas prices to encourage more consumers, and automakers, to make the plug-in hybrid plunge?

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The cost-benefit calculus that determines when new technologies replace old ones is rife with imponderables, but if you're the kind of environmental geek who cuts your teeth on such fare, a brand new investigation of the pros and cons of plug-in hybrids in California, published in the March issue of Environmental Research Letters, is red meat.

The authors, three researchers at U.C. Berkeley (one of whom is Alex Farrell, now making his fourth appearance in How the World Works), endeavor to answer a set of critical questions. Included among them: How many plug-in hybrids could California's current electrical grid support before new power plants are required to supply the necessary electricity? And how high do gas prices have to be, or how low do hybrid battery costs have to fall, before fuel savings balance out the additional costs associated with plug-in hybrids?

Their answers, as usual in this kind of study, are based on such a dense thicket of assumptions that you kind of feel like the researchers are throwing darts while blindfolded at a spinning mobile. But they're championship dart throwers, which makes a difference.

First, conclude the authors, the current grid can support at least one million plug-in hybrids without requiring new generating plants, provided owners refrain from charging their vehicles at peak hours -- such as summer afternoons, when air conditioners are going full blast in Southern California and the Great Central Valley. They also estimate that the likely cost of electricity will compare favorably to $3-a-gallon gasoline.

So do plug-ins already make economic sense? Not so fast. If you add into the equation the cost of converting a hybrid into a plug-in, or simply factor in the price of plug-in hybrid batteries, the economics get dicier. The authors assert that the price of plug-in batteries will need to fall by almost a "factor of two" before switching to the cars is a prudent consumer decision.

Here's a taste:

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Even with gasoline dear at $4.00/gallon and electricity cheap at $0.05/kWh, vehicle purchasers may only find a compact car plug-in hybrid economical if its cost premium relative to an ordinary hybrid vehicle were under $2000 and if its cost premium relative to a conventional vehicle were under $3500. Such price premiums may require battery pack costs (including electronics, etc) under $650/kWh, while current battery pack prices for plug-in hybrids applications may well be in excess of $1000/kWh.

But here's the funny thing. After all the number crunching, the authors acknowledge that consumer decision-making is not always predicated on finely honed cost-benefit calculations.

All these calculations ignore other factors that influence vehicle purchase decisions. We believe plug-in hybrids can be introduced successfully into the market because these non-financial factors are very important, including the symbolism of using a green vehicle and of promoting independence from oil consumption. However, with current technologies and policies, plug-in hybrids are only likely to occupy a small niche of vehicle sales. For the large volume sales needed to make plug-in hybrids significant in California energy and environmental markets, technological, financial, and/or policy innovation must lower the cost premium incurred by their larger batteries.


Andrew Leonard

Andrew Leonard is a staff writer at Salon. On Twitter, @koxinga21.

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