Battery Economics and Grid Stabilization

By Jeff MacKinnon, P.Eng., PE

I read an article last week about how using electric cars for grid stabilization will shorten the life of the batteries. In fact the article uses the trigger word detrimental!

But if you understand how the electrical utility industry works, and some basic understanding of battery chemistry, that's a no brainer. The real question is how detrimental is it? How much shorter is the total life of the battery? Is that increase in depreciation more than the utility will pay for another energy source on a second by second basis?

This is not a hindrance to the technical implementation of electric cars, household batteries like the Tesla Powerwall and other distributed sources as a grid stabilization means. Its an economics and business challenge.

Can you provide enough revenue to the car owner (asset owner) to cover the increased depreciation of the asset and a reasonable profit? Is this expense from the grid operator more or less than it would pay to a different party in the market for a similar service?

See its not that the idea to use car batteries is bad, its that in today's market there is no feasible way to provide the generation services the utility needs in a way that they can use. To give an everyday analogy, you don't buy gas for your car by the milliliter from your neighbor, you go to a service station and buy it by the liter. utilities do the same thing; however electricity isn't gasoline, its tied to a network and if you can aggregate a lot of different sources in a local geographic area; and offer it to a utility in a way they can integrate to their system, now it can start to make sense.

Engineer drawing a hybrid power system

However, today that isn't possible, but not for technical reasons for practical ones. There aren't enough cars (or other assets) connected to the grid and the cost of generation isn't high enough to cover the added depreciation to the asset. This is changing and we are spending a lot of time researching ways to make this happen, sooner. It won't be long before you will be asked to sign up to be part of an aggregated pool to sell energy to the utility and then get a small cheque based on how much the aggregator sold both locally and internationally.

Over the next couple of months I will be deep diving in on this topic and others in our newsletter. It is at most once a week and at least once a month, all depending on what we have to say at the time. You can join below!