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Opinion: Introducing the “Cash-Back Plug-In” Concept

by Felix Kramer,

Jon Wellinghoff of FERC is promoting the “Cash-Back Plug-In”

Think you’ve heard all there is about the benefits of plug-in hybrids? Sure, substituting “cleaner/cheaper/domestic” electricity for gasoline that has none of those characteristics is good enough reason to evolve cars. It turns out there’s much more.

Plug-In Partners, the national PHEV support campaign led by utilities, including local governments, companies and individuals, launched with a splash a year ago. On its first anniversary, Plug-In Partners’ Congressional and press briefing in Washington, co-sponsored by the Environmental and Energy Study Institute (EESI), served as the platform for a new way of thinking about electrifying transportation.

You’ll find it in four slides by Jon Wellinghoff of the Federal Energy Regulatory Commission, about aspects of what’s often described as “Vehicle-to-Grid” (V2G). Much becomes possible when millions of PHEVs and electric vehicles, parked more than 20 hours a day, are available as distributed energy storage for the electric power grid. A quick description and old links are found at the FAQ.

CalCars has soft-pedalled the potential of all the variants of V2G. It’s seemed too futuristic to talk about without sounding like a snake-oil salesman. And it’s not one thing: it’s about perhaps a dozen different services or relationships. But experts are starting to get excited about these opportunities. Remember when we used “personal” computers? Wasn’t it a surprise when the home and business computers of the ’80s in the mid ’90s evolved into a global network that has profoundly changed the world?

V2G and variants like V2H (emergency home backup) could some day overshadow the initial PHEV benefits on which we now focus. It’s still far away. But that doesn’t mean it shouldn’t motivate our decisions now—both to begin real-world demonstration programs and to provide more reasons for car-makers to move rapidly from “interest” in PHEVs to demonstration fleets.

In October we highlighted two reports about V2G and its reverse, G2V, showing parked PHEVs’ potential to store wind power in Sacramento and to offer Bay Area Rapid Transit commuters free parking and charging. And this month the Pacific National Lab’s eye-opening report dispelled capacity concerns by showing that if overnight all our cars became PHEVs, we could fuel 84% of them off-peak on today’s grid without adding more generators.

Now a member of the Federal Energy Regulatory Commission weighs in. Wikipedia explains FERC as “the United States federal agency with jurisdiction over interstate electricity sales, wholesale electric rates, hydroelectric licensing, natural gas pricing, and oil pipeline rates. FERC also reviews and authorizes liquefied natural gas (LNG) terminals, interstate natural gas pipelines and non-federal hydropower projects.” FERC has clout.

When Jon Wellinghoff, a former Nevada utility lawyer who is one of five FERC Commissioners, looks at the future potential for PHEVs, everyone starts to take notice. Wellinghoff’s opening graphic of a green dollar sign on a road is powerful. Even more compelling is what he calls PHEVs: “The Cash-Back Plug-In Car.” He shows annual fuel costs: $1,200 for a conventional car, $720 for a hybrid, $495 for a PHEV. Next come the important new numbers. After paying for fuel, CAR OWNERS GET $425 NET ANNUAL PAYMENTS for a Cash-Back Plug-In Car that provides “spinning reserves” to utilities (relieving them of having to maintain plants ready to kick in for unexpected demand). And CAR OWNERS NET $2,790 by providing both spinning reserves and “regulation services” (helping utilities maintain the system voltage within narrow ranges. (Not calculated are revenues for providing peak power!)

Wellinghoff also projects how rapidly a PHEV could pay back its additional costs. Calculations are based on additional costs of $19,000 for a PHEV or $20,000 cost for a V2G-capable PHEV—probably several times higher than mass-production costs. But even saddled by such conservative assumptions, the $2,790 number gives a five-year payback (see slide two for Wellinghoff’s sources).

FINE PRINT: Lest we sound overly enthusiastic, some of these applications may require relatively small fleets. For instance, regulation services for the entire State of California might require only 20,000 cars. Some may be most appropriate at big parking lots with heavy-duty electrical connections. Some, like peak power, may affect battery life because they deeply discharge batteries, while others, like spinning reserves, may take minimally stress the batteries (spinning reserves). None have yet been tested in real-world applications.

All present fertile immediate opportunities for groups like the US Department of Energy, the California Energy Commission and power companies to begin demonstration projects. And with state and federal government, utilities and industry all now saying, “wake up,” we hope auto-makers start paying attention to interconnection opportunities—on top of the urgent greenhouse gas and independence benefits—already driving the electrification of transportation.

If they don’t, someday the strategy of holding out for years for somewhat better batteries for PHEVs could go down in history as the least practical idea and the worst mistake the auto industry ever made.

Felix Kramer is Founder of The California Cars Initiative, a Palo Alto-based nonprofit startup of entrepreneurs, engineers, environmentalists and consumers promoting plug-in hybrids through advocacy and technology development.


Roger Pham

V2G is a great idea for PHEV with highly efficient genset such as H2-FC at 60% efficiency, or H2/CNG-ICE at 45% efficiency, and highly durable nanotech battery or EESU, no matter how you look at it.

It would save significant investment for utility company from not having to build peak-output capacity. Each PHEV with its own genset can provide the peak-output capacity when plugged into the grid. At night, with idling excess electrical production capacity from the utility company, the PHEV's will absorb this to charge their batteries, hence reducing the fluctuation in power demand that will accelerate wear and tear on the power turbines. In another word, great load-leveling capacity.

It would protect the fragile and often overloaded grid from excessive stress that can lead to a power outage. In an event of a weather-related large-scale power black out, a lower level electrical power may still be available for vital and emergency services from all the V2G PHEV uploading their electrical production. A CNG/H2-capable PHEV (ICE running on H2/CNG) would be best since it can be adapted to run from natural gas home pipeline that would be invulnerable to storms that knock out powerlines.

In colder climates, a V2G PHEV can be adapted to release its waste heat for home heating while selling electrical power to the grid! No need to invest extra in a local CHP unit at additional cost!
In summary, V2G with the right combination of technologies can significantly lower overall associated costs as well as lower net CO2 release.


I would say that comparison between PHEV and conventional ICE is kind of misleading. Regular hybrid vehicle has way better fuel efficiency any way (Camry hybrid 40/38 mpg Camry V6 22/31 mpg). Hybrid just uses 30% less fuel, being it gasoline or NG.

Now the really tricky question is whether it worth to upgrade HEV to PHEV, and if yes, does it worth to use PHEV in V2G mode.

Roger Pham

Wells, wells, wells,

Ah sure enjoy good singin', hear! Whah don't yah upload yah music in MPe fer all of us to hear?

Ah would predict that one day, concentrated power utility plants will be as obsolete as the main frame computer of the past.
If you have got two very efficient PHEV's and only use them a small portion of the time, why not make them work to generate the power to earn their keepin'? FC-genset and ICE genset can last for ~40,000 hrs or more, where as automotive use will be but ~4,000 hrs in the car's average lifespan.

Someday, most home will have H2 pipeline replacing NG line of today. Someday, H2 will be all the fuel that you'll get from a local gasification/high-temp electrolysis plant!! In that case, there will be no different in thermal efficiency between home-generated electricity vs combine-cycle power plants. Home electricity will have much less transmission loss, and waste heat can be used during the winter for home heating, or in the summer for cooling by the use of vapor-absorptive cycle chillers. Vast reduction in net CO2 release!!! Furthermore, with H2 from solar and wind and biomass, there will be no net CO2, vast increase in overall efficiency and cost reduction!


Country mouse utilites have to pay third parties to manage spinning reserves etc. They can potentially do it more cheaply via V2G because there are no capital layout costs. People won't be buying EVs for V2G, they will buy them for transport, hence people don't have to make the return from V2G (ie charge the utility) that compensates fully for their capital investment.


How much would people pay for a back up system to power their house during a power outage?How much would it be woth to parents of soldiers to use no foreign oil?
If cars run on electricity then electric utilities replace opec and become biggest pom pom wavers for this system.Democrats get behind this and can become the party that freed America.
Utilities may be able to subsidize or finance favorably the battery packs.I read about these possiblities in nineties in MIT Technology Review,the tech is there we just need the ploitical push.Please visit the links and research the cal cars ideas before coming to a conclusion.


There is an article in december 06 issue of MIT Technology Review on v2g.They mention s a startup co. [Gridpoint} that has developed the v2g tech needed.The tech has been tested already at NREL.
Another link states that batteries that reach end of their auto use can be used by utilities for stationary power for an additional 10 - to 15 years.{ utilities could buy battery from auto owner at end of batt life as additional incentive for auto buyers to buy into v2g system.}.
Edison Electric Institute says president Bush repeatedly asks about progresss in li-ion batt progress.
If we push our pols to follow this tech the utilitie would be in much better financial position to employ co2 mitigation technologies.


Went to the DC car show yesterday and was camped out in front of the Volt and the Toyota Prius. The Chevy guy was there while the spokesmodel was eating lunch and he was enthusiastic as he could be, but didn't think it would be sold for 3-4 years. "Battery isn't there yet".
Started talking about PHEV and BEV with a Toyota model and she called the Regional Development Manager over, very nice guy. Claimed he had never heard of CalCars and had not heard of any rumors of BEV development of a Prius or any other Toyota in the next several years. Not what I had hoped to hear. I still hope that the battery development will make a difference sooner rather than later.



You're right about the dirtiness of coal but you're not figuring it into the production of gasoline. Gasoline has a negative energy balance. The energy to refine it has to come from somewhere so the impacts of that energy need to be figured in. I'm guessing the local grid is where refineries get their power. If that's the case then the EV's electricity is no dirtier than the energy needed to create the gasoline in the first place. Nevermind how inefficient ICEs are with the energy that they consume.

Ed Danzer

In rural USA we will never have any energy pipe line, and have a marginal grid. Since November in Washington State we have had 5 power outages for a total of 8 day with out power. Yes we own a small diesel generator for that reason.
As to selling power back to the grid. There is a real concern about feeding power on to the grid when there is a problem. I know a person who has a small hydro-electric project in limbo because of the switch gear requirements. Load balancing the grid is difficult and seems to becoming more difficult.
Be careful about believing published efficiency ratings. These are usually the best ever recorded when a system is new and during ideal test conditions. During rainy or foggy conditions I doubt the 92% of the power gets to my house.


You're right about the dirtiness of coal but you're not figuring it into the production of gasoline. Gasoline has a negative energy balance.

If by that you mean that 1 gallon of crude has more energy than 1 gallon of gasoline, that's right. But that's conversion efficiency, not energy balance.

The energy to refine it has to come from somewhere so the impacts of that energy need to be figured in. I'm guessing the local grid is where refineries get their power.

The heavy lifting (mostly heat production) is run internally off natural gas and natural gas liquids.

If that's the case then the EV's electricity is no dirtier than the energy needed to create the gasoline in the first place. Nevermind how inefficient ICEs are with the energy that they consume.

I'm all for PHEVs, I'm just saying that you need to be careful about your energy source. Most existing coal plants can be made much cleaner and more efficient (conversion to combined cycle is not cheap, though), but even in that case, far too much is taken out by open pit mining and mountaintop removal. I picked a standard gasser because that's about the least efficient (and by far the most common) ICE out there, and if a coal-fired PHEV or BEV can't even compete with that on carbon, that's a problem. PH/BEVs off renewable or nuclear electricity -- those are good things.


I would ask everyone to be wary when dealing with any energy corporation. Moving your car from OPEC to Enron is moving from the frying pan to the fire. Energy traders joked about freezing little old ladies during the deregulation of electricity. It took months of political pressure from the states, before the Federal Energy Regulatory Commission stopped being the energy traders' lapdog. (I won't bore CalCars by repeating my joke about EV's as rolling blackouts.)


Currently, off peak/late night electricity production goes to waste. Does any one think that once there are millions of PHEV/BEV's charging late at night that off peak rates will remain low -- or -- will electric utilities start charging more for this service via a smart grid?? A smart grid could have been implemented 10 years ago but why would an electric utility want to cut their face off? -- think about it!! This is not electric utility bashing post but it is good food for thought -- afterall -- I'd rateher pay an electic utility for storing energy via a PHEV/BEV battery vs an entity like OPEC to run an ICE.


33: There are very few utilities in the US who are not regulated. They won't be setting arbitrary rates although they can be quite clever in justifying increases to the controlling commissions.

One can debate about the fairness of a rate but states absolutely have the the power to set them. And the feds can too if they wish.

One headache with smart grids is that sending power from home to the utility for storage results in a power transmission loss. Then sending power back at night to charge home batteries or EVs again has the loss. It is possible with the wrong load profile to experience the loss twice and yet not improve anything at either end.

The transmission loss problem is avoided when power is generated at a site and used there - most commonly solar cell arrays at homes, schools, etc.


The Federal Energy Regulatory Commission has never had a good idea and with this turkey they're still batting a thousand. Think about it. During the dinner hour, when electricity use is peaking, they will drain your car battery and feed it back into the grid. Never mind shortening your battery life; what if you forgot an ingredient for dinner and have to run to the store? Hello genset.


The Federal Energy Regulatory Commission has never had a good idea and with this turkey they're still batting a thousand. Think about it. During the dinner hour, when electricity use is peaking, they will drain your car battery and feed it back into the grid. Never mind shortening your battery life; what if you forgot an ingredient for dinner and have to run to the store? Hello genset.


Sometimes I wonder if the fossil fuel companies are paying PR firms to post comments. The knockers comments range from daft to deliberately obfuscating.

V2G is the best idea of the century. Time will prove it.

Ever notice that people get home from work at exactly the same rate as the afternoon peak ramps up? Funny thing happens, when people are driving, they aren't cooking dinner.

Did you know that wind power varies with the cube of the wind speed? Ever been sailing? The wind comes in gusts, momentary gifts from the wind gods that our existing grid tries in vain to catch. Oops, missed it. Darn, missed it again. If only there was somewhere to put it - just imagine.

Just how long can a wind generator go between servicing? Let's see now, with floating bearing and automated lubrication; 5 years, 10 maybe? If NASA went to work on the problem, could they come up with a 50 year service interval turbine? How much does that cost per kWHr? How does that compare to mining coal, truckload after truckload?

We've become so used to the status quo, we've lost all imagination.

Tonight, the coal fired boilers will run, they will make steam, they will spin countless turbines around the country. What will they do with this energy? Most of them, nothing. They will wait patiently for breakfast, for you and I to turn the jug on, only then will that energy have utility.

If only. If only there was somewhere to put it.


non expert here!!! is the electric company always generating full power and therefore blowing off steam in some way, getting rid of extra electricity? that could be used to "store energy" by making hydrogen, which I hear is more expensive to make than gas. point being the hydrogen could be used to power vehicles. also what happens in the summer months when everyone's A/C's are on full blast and causing brown-outs? there is no excess electricity being generated then I would assume.


Sacramento Municipal Utility District and BART have run some numbers on this, and it appears that even during rush hour, sufficient numbes of vehicles are plugged in to backup utility power.
It might pay a user like BART to subsidize the use/charging or BEVs at their parking lots to even out their usage.
Moreover, V2G allows utilities to build much higher percentage of wind capacity than they otherwise would, up to 50 percent. Since wind tends to be stronger at night than day, V2G offers capacity to store that unused wind and distribute it during the needed peak times. "Peaking" units tend to be relatively inefficient gas turbines, so saving on these will save a disproportionately large amount of gas.

the national security aspect alone, of making the grid more resilient to blackouts, or terrorist attack, is a compelling reason to got this direction.

V2G is a powerful concept that has taken hold at the top of Toyota and GM. They now get it that this is a race to get to the first viable PHEV/BEV.
Once the technology is demonstrated, the pluses are so compelling that it will be like the internet on steroids. Huge upside for those that get there first.

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