Utilities Race To Prepare For Electric Cars
Dec 21, 2009 - First Enercast Financial
SAN FRANCISCO (Dow Jones)--Many utilities, particularly on the West Coast, are scrambling to prepare for all the electric cars set to hit U.S. showrooms in 2010 as the power companies attempt to avoid any technical snafus.
California regulators predict about 33,000 plug-in hybrid electric vehicles will occupy the state's roads by 2011, growing to 1.6 million by 2020. Considering that electric-vehicle charging equipment has yet to be installed, the task of figuring out how to provide electric-vehicle fueling services to tens of thousands of drivers over the next few years is falling to the electric utilities that will be providing the fuel.
Growing concern about the environment, volatile gasoline prices, and policies that promote renewable and other cleaner sources of energy have sparked interest in electric cars among governments and consumers. Auto makers are responding with plans for a few dozen all-electric cars and hybrid-electric vehicles that also run on gasoline. Networks of public electric-vehicle charging stations will have to materialize to accommodate the new vehicles as utilities figure out how to keep the new vehicles from straining the grid.
"We're kind of the tail wagging the dog," said Andrew Tang, a senior director at PG&E Corp. (PCG) unit Pacific Gas & Electric.
PG&E, based in San Francisco, where hybrid and alternative-fueled vehicles are popular, expects to see 35 new electric-vehicle models coming on the market in the next two years. Tang said the utility is "very bullish on electric cars" but is still "chasing down business models [to determine] where we would get involved in helping the process."
Most utilities are partnering with an auto maker to help figure out where and how to install vehicle charging equipment and how to handle the increased power demand. An agreement by U.S. auto engineers to adopt a single standard for electric-vehicle plugs helps.
But critical questions remain, such as whether the cars will be popular; how much and how far consumers will drive them; and in the event they do take off, whether utilities, auto makers and charging-equipment suppliers can keep up with demand. Federal and some state incentives could nudge consumers toward electric cars, as could a return to high oil and gasoline prices.
Even at today's prices, it costs $11.60 for a typical California car to drive 100 miles, versus $1.50 to charge an electric vehicle that could drive the same distance, said Colin Read, vice president at electric-transportation company ECOtality Inc. (ETLE). The company, which makes electric-vehicle charging equipment, is heading a $100 million project, funded with federal stimulus money, to help utilities in San Diego; Portland, Ore.; Seattle; Phoenix; and Tennessee prepare for electric cars.
Sempra Energy (SRE) unit San Diego Gas & Electric, one of the utilities in the project, is partnering with Nissan Motor Co. (NSANY, 7201.TO), to prepare for Nissan's planned late-2010 launch of its all-electric LEAF model. Nissan said the LEAF will have a range of 100 miles per charge.
The utility is expecting thousands of hybrid and all-electric vehicles by 2011, and tens of thousands by 2015, said Hal Snyder, a vice president at SDG&E. The utility plans to install more than 2,500 public and private vehicle charging stations over the next two years.
Challenges in ensuring consumers have adequate vehicle charging equipment at convenient locations should be resolved over the next two years, during which auto makers are expected to resolve technology issues that have emerged with batteries they plan to use, Snyder said.
"We're hoping to come across the finish line at the same time," he said.
Read of ECOtality said the five regions in the government-backed pilot project will serve as "separate laboratories" where kinks can be worked out to help ease the transition to electric vehicles across the rest of the U.S. ECOtality predicts that nearly 1 million hybrid and all-electric plug-in vehicles will be on U.S. roads by 2015.
For auto makers, a key challenge will be educating consumers about the limitations of hybrid and all-electric vehicles, said Jana Hartline, a spokeswoman with Toyota Motor Corp. (TM, 7203.TO), which has both types of autos in the works.
"We need to be honest and upfront about what these vehicles can and can't do," Hartline said.
(Cassandra Sweet writes about energy and environmental markets from San Francisco. She can be reached at 415-439-6468 or email@example.com.)
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