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PJM/Better Place study finds unmanaged charging of 1M electric cars could add $750M in annual wholesale energy costs; need for CNO-managed smart charging

Simply plugging in one million electric cars (unmanaged or ad hoc charging) could add $750 million in annual wholesale energy costs unless smart charging is adopted, according to a joint study conducted by PJM Interconnection and Better Place, released by Better Place. PJM Interconnection is a regional transmission organization (RTO) that coordinates the movement of wholesale electricity in all or parts of 13 states and the District of Columbia.

Consumers who choose to leverage time-of-use (TOU) pricing can see some price relief—less than 10% annually—but the wholesale energy business would still feel the impact of ad hoc charging. Conversely, smart charging one million electric cars via a central network operator can cut in half the increase in wholesale energy costs compared to ad hoc charging or time-of-use pricing while reducing driving costs by one-fifth.

EV distribution and penetration in the study. The blue shared area in (a) shows EV distribution versus affluence. A histogram of EV penetration is shown in (b). Note that due to the flat distribution curve above a median income of $75k, the % penetration is constant throughout most of the census tracts. Click to enlarge.

The joint study conducted by PJM and Better Place analyzed the impact of one million electric cars on the MidAtlantic States’ grid. The study considered a distribution of 1 million EVs in the Washington-Baltimore Metropolitan Area and modeled the impact of charging the EV batteries in three scenarios: unmanaged charging; consumer-price-incentivized charging; and managed charging via a Central Network Operator (CNO).

The greater Washington – Baltimore area was selected for modelling because it already experiences transmission congestion issues and is a targeted area for electric vehicle adoption.

The PJM/Better Place team developed a consumer transportation model to predict hourly energy requirements of EVs and generate load inputs for PJM’s nodal pricing market model. PJM ran market model simulations based on the outputs of the energy demand model for each of the three scenarios in five different weeks of the year.

Major findings include:

  • The CNO-managed charging algorithm charges batteries based on a number of criteria: a) energy needed for next planned trip; b) time until energy is known or predicted to be needed; c) current battery state-of-charge; d) time of day; e) forecasted LMPs (Locational Marginal Prices); and f) real-time LMPs. For CNO-managed charging of 1 million EVs using real-time LMPs, the report found that PJM would save $350 million annually on cost increases due to the added load of EVs, compared to the unmanaged charging scenario&mash;a 45% reduction in additional energy costs that would otherwise be incurred from ad hoc charging of EVs by consumers.

  • The scenario with time of use (TOU) pricing reflects a distributed intelligence platform with a fixed pricing schedule that does not have a CNO. The two-tier pricing scenario, modeled on the pilot EV tariff developed by Southern California Edison (SCE) for EV charging, provided no significant benefit, according to the model. Compared to the unmanaged charging scenario, there was an additional cost of $32 million (4%) annually.

Charging Characteristics for TOU Scenario: The blue line shows the EV Network load in the TOU Scenario. The red line represents the TOU electricity prices. The Unmanaged Scenario load is shown in gray for reference. Click to enlarge.   Charging Characteristics for CNO Scenario: The blue line shows the EV Network load in the Better Place Managed Charging Plan. The red line represents the EV Network load-weighted average electricity prices. Note that these LMPs have changed from the Unmanaged case because the LMPs are themselves different and the load has shifted. The Unmanaged Scenario load is shown in gray for reference. Click to enlarge.

The analysis was carried out using Better Place’s network models and experience as a CNO. However, the results of this study are intended to be extensible to any CNO that provides managed EV charging.

For the study, the authors distributed EVs by census tract by Median Household Income (MHI), the proxy for affluence, according to the US Census 2000. They assumed EV penetration to be constant in regions with MHIs exceeding $75k. To define EV penetration outside of such high MHI regions, they used an arbitrarily defined parabolic cutoff.

Because of the ad hoc nature and unpredictability of when each electric car would be plugged in, the extra $750 million in annual costs would be borne unequally by market participants and consumers. With smart charging, a central network operator is able to leverage dynamic wholesale energy prices to optimize the entire fleet’s charging at the lowest possible cost and impact to the grid and the consumer. Our customers and utility partners around the world stand to benefit from smart charging.

—Hugh McDermott, Vice President of Utility and Smart Grid Alliances for Better Place

Smart charging is possible when there’s real-time coordination through a centrally dispatched grid, which will facilitate prioritization and varying charging rates. Flexible load benefits of EV charging are captured more easily by RTO, ISO and Utility operations through integration more directly into existing operations and practices.

—Chantal Hendrzak, PJM’s General Manager Applied Solutions

The goal of the study was to demonstrate the value of the “EV Network Operator (Aggregator)” that manages EV charging and the impact on the wholesale energy market, production costs and ancillary services. The results of the study have been shared with the PJM TOA-AC (Transmission Owners Agreement Administrative Committee).



Bob Wallace

"the extra $750 million in annual costs would be borne unequally by market participants and consumers"

Let's see, 14,000 annual miles in a 25MPG car leaves consumers purchasing 560 gallons of $4 gas. That's $2,240 per consumer.

One million consumers switching from gas to electricity would mean that $2,240 million isn't spent on gasoline and $750 million might now be spent for electricity?

Why do I see this as a welcomed problem?



while i agree that if all costs are equal, even the extra $750 million might be a bargain compared to gasoline, but not all costs are equal.

you can buy a loaded versa for $16,000. a leaf is double that. thus, from a consumer's perspective, electricity has to cost significantly less than gasoline in order to justify the extra upfront costs for most consumers.

consumers thus far seem unwilling to pay too much extra upfront for long term savings, and a plethora of studies in the US, Europe and Asia all suggest the same.

therefore, what this study suggests to me is that EV charging is going to be more expensive than anticipated without smart charging. with smart charging, however, EV charging could be much cheaper and that could help suck a big chunk out of the extra battery costs of EVs.

consequently, I don't see this as a "welcomed problem". instead, without a major battery breakthrough, smart-charging will be critical to EV penetration, especially beyond early adopters.

fortunately, while consumers are unwilling to think long term, utilities for instance, are used to thinking long term, especially in terms of infrastructure. therefore, this study demonstrates that smart technology makes obvious economic sense, especially long term.


Renting the EV battery pack for a monthly fee equivalent to gas saved would work out to no extra initial nor extra ongoing cost for owners.

Restricted e-range is still a problem to be addressed.

John McAvoy

If utilities (who have the long term capital) own the batteries like they own the generators and rent the use of both like they already do the latter, suddenly Leafs cost similar to Versas, are more reliable and do not require Middle East wars to guaranty affordable energy.


Smart charging is one of the most low-hanging of the fruits - just set a timer on your charging outlet and set it for 11pm (or whenever is appropriate)- if and when utilities become serious about this they can also move customers to time-of-use pricing.


Dont compare the Leaf to a stripped econobox.. it competes well with midsized cars (in size, luxury and options) in the $25k level, due to the $7500 tax credit. Once you take fuel savings into account it beats them.

Tom Saxton

HarveyD wrote:

> Renting the EV battery pack for a monthly fee equivalent
> to gas saved would work out to no extra initial nor extra
> ongoing cost for owners.

Right, that way instead of consumers saving money, Better Place takes those savings as profit.

At the US average price of 11 cents per kilowatt-hour, a dollar's worth of electricity will fuel an electric vehicle for 30 to 35 miles. Why would I want to hand that savings over to someone else?

Tom Saxton

Ben Farrow of Puget Sound Energy explains that from the utility's point of view, an electric vehicle is about the same as a water heater in terms of power draw and annual energy consumption. If you drive a LOT your EV might use energy like a hot tub.

Since electric vehicles can and should be charged mostly at night, they provide a market for wind and hydro power that runs off-peak. For this reason, I think EVs could actually make electricity cheaper for everyone.

Anyone telling you that EVs are going to mess up the grid or energy costs is trying to sell you something.


Thanks for saying it in an apparently more diplomatic way Tom.


If you install a separate networked meter, there is no problem. You agree to a Time Of Use policy and get the discounts if adhered to. The power company knows how much you use and when.

When EVs become more widespread they will have to do something coordinated because it will be necessary. Right now the number of EVs out there is so low it does not matter much.

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