A TRANSPORTATION REVOLUTION

34 E L E C T R I C P E R S P E C T I V E S

The time for electrifying all modes of

transportation is now.

By Tony Earley

A TRANSPORTATION REVOLUTION

Nissan Motor’s lithium-ion EV battery cells roll off the production line.

34 E L E C T R I C P E R S P E C T I V E SE L E C T R I C P E R S P E C T I V E S

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Nissan Motor Company

PG&E’s fi rst all-electric utility truck.

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WITH ELECTRIC vehicles (EVs)

currently making up only a tiny sliver of

the U.S. automotive market, it is not easy

to envision a day when gasoline-powered

engines might seem as retro

as tailfi ns or tape decks. Or

to think that, with a charging

station at home, our kids or

grandkids might visit a gas

pump as often as we do a

phone booth.

But if imagining these things

seems like a stretch, we should

remember that when it comes to transfor-

mative technological changes, history can

be cruel to the unimaginative.

Thirty-eight years ago, when one of

its engineers invented the digital camera,

Kodak didn’t see a big future in it. It was

bulky and slow. It cost a fortune. And,

ordinary people had no way to store or

print pictures. With digital technology in

its infancy, Kodak couldn’t conceive that a

new media universe was about to upend

its century-old core business. In a tale fi t

for a Greek tragedy, it went from icon to

anachronism in the span of a few decades.

Tony Earley is chairman, CEO, and president of PG&E Corporation.

Tony Earley

M AY / J U N E 2 013M AY / J U N E 2 013 35


Fuel of the Past and FuturePowering cars and trucks with electric-ity isn’t a new idea. As early as 1914, Henry Ford’s wife was driving a three-horsepower battery-operated Detroit Electric Model 47 coupe. Thomas Edi-son was another early fan, believing electricity’s inherent advantages would ultimately crown it the fuel of choice for getting around.

It’s been a long wait. But now, 100 years later, thanks to advances in tech-nology, electricity may fi nally be on the cusp of fulfi lling its promise as the fuel of the future.

Americans today, especially younger adults, increasingly want our country to become more energy independent, take fuller advantage of cleaner en-ergy sources, and make smarter use of our existing supplies. That’s a trifecta that electricity as a transportation fuel hits perfectly—all at the equivalent of around a buck a gallon.

Electrification represents a highly attractive win-win for utilities in particular: helping to advance clean

energy goals, while providing oppor-tunities to grow electric sales and keep rates in check by spreading costs over a broader customer base.

Big advances in the smart grid are also adding momentum to EVs’ future prospects. Huge leaps in IT capabilities are enabling utilities and customers to more effi ciently and effectively accom-modate plugging in.

But perhaps most important, people are increasingly coming to see that this new generation of EVs offers a great all-around driving experience. As McK-insey put it last year, “customers are discovering that [EVs] often deliver better acceleration, safety, and com-fort and may be able to support new vehicle-design innovations better than traditional technologies.”

Lead by ExampleIt’s precisely these advantages that are rapidly making EVs a go-to choice in PG&E’s own operations.

We currently operate more than 1,200 electric-based vehicles, a mix of

standard hybrids, plug-in hybrids, and fully electric on- and non-road vehi-cles. Our network of charging stations is also growing. Last year we added 76 new installations, bringing our total to 133 charge points at 40 loca-tions across our service area. With an-other 1,000 vehicles that run on natural gas and 1,500 more that use bio-fuel, PG&E’s alternative-fuel fl eet is the in-dustry’s largest.

Fuel-savings, lower lifetime main-tenance costs, and emissions reduc-tions are all part of the calculus that is driving us to turn more toward electric drive technologies. But there’s another factor that’s just as compelling: our crews love them.

Vehicles like our hybrid-electric bucket trucks, outfi tted with electric worksite idle management systems (EWIMS), are earning a die-hard follow-ing among PG&E’s frontline workers be-cause they provide a better experience on the road and at the job site.

With a conventional truck, crews have to idle the diesel engine for hours

WE CURRENTLY OPERATE MORE THAN 1,200 ELECTRIC-BASED VEHICLES, A MIX OF STANDARD HYBRIDS, PLUG-IN HYBRIDS, AND FULLY ELECTRIC ON- AND NON-ROAD VEHICLES. . P

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M AY / J U N E 2 013 37

in order to power the bucket lift, tool circuit, and climate control. Several years ago, when PG&E’s fl eet team was looking at innovative ways to reduce noise, cut emissions, and improve safety, they hit on an idea to power these systems with onboard batteries instead. We then partnered with equip-ment manufacturer Altec to make the concept a reality. The result was the EWIMS truck.

In use now for the past few years, the quiet trucks allow for clearer com-munication among crew members—a major safety benefi t—not to mention a more pleasant work environment. They also allow our crews to work

without disturbing neighbors. In fact, because the trucks can operate within local noise ordinances, they can be used around the clock whenever needed.

By the end of this year, we will have more than 500 of these vehicles, and by 2017, more than 700. Thanks to their expanded work capabilities, we are seeing about a two and a half-year pay-back on the investment. Meanwhile, we’ve helped Altec create 100 new jobs in our service area at a newly opened manufacturing plant.

PG&E is also working on innovative EV applications with VIA Motors. The VIA extended-range pick-up trucks that

PG&E plans to deploy run the first 40 miles on batteries, and then con-tinue to drive on electricity

generated from an onboard gas-elec-tric generator for 400 miles or more. By driving primarily on electricity, the vehicles can more than quadruple their fuel economy and achieve zero emissions on 80 percent of the miles driven on typical fl eet routes on a nor-mal day.

But the VIA truck’s killer app is its ability to also serve as a mobile genera-tor, providing exportable onsite power that could help shorten small outages, eliminate some planned outages for maintenance, and boost the electric grid when needed.

The first generation trucks have 15-kilowatt (KW) capacity, which is enough to power a small or medium-sized house. A utility-grade output module, now in development, will provide 125 KW of mobile emergency power to keep critical facilities online.

In the future, these trucks could be-come a key tool in utilities’ emergency

THE VIA TRUCK’S KILLER APP IS ITS ABILITY TO ALSO SERVE AS A MOBILE GENERATOR, PROVIDING EXPORTABLE ONSITE POWER.

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response arsenal, allowing us to imme-diately provide power to fi rst respond-ers and those in dire need—saving time—and perhaps lives.

System Reliability and FlexibilityLonger term, EVs may play an even big-ger role in changing the way we serve customers, giving us access to new op-tions that provide greater system reli-ability and fl exibility.

For instance, EVs plugged in to the grid and “talking” to the utility over digital smart meter systems may one day be able to take (or give back) en-ergy under real-time, variable-charging arrangements. This capability could be particularly valuable in helping to manage the reliability challenges as-sociated with variable wind and solar power, as both become a bigger part of the country’s generation mix.

Output from these sources fl uctu-ates significantly, making it hard for grid operators and utilities to maintain the careful balance of supply and de-mand that is essential for power qual-ity and reliability. EVs could be part of the answer—their batteries effectively acting as a kind of distributed energy storage network.

Additionally, used EV batteries could potentially have second lives as com-munity grid storage units. Even though they no longer store enough energy to power a car, the batteries still retain 80-90 percent of their capacity, which would give them an additional life of 10 years on the grid.

Last year, General Motors and ABB

demonstrated a test unit made up of fi ve used Chevy Volt batteries that to-gether store enough energy to power three to fi ve average homes for up to two hours. And, utilities wouldn’t be the only beneficiaries. By creating a secondary market for batteries, these applications could improve the eco-nomics of ownership for EV drivers.

This year, PG&E is launching a small pilot project to explore purchasing batteries from drivers in advance and providing that value to customers in the form of an upfront incentive that reduces the initial cost of the vehicle.

EVs also can play a huge role as the industry and the country pursue fur-ther clean air benefits. That’s espe-cially true in California, where utilities and the state are counting on EVs to help achieve long-term air quality and greenhouse gas reduction goals.

According to the Environmental Protection Agency, electric vehicle usage in California produces only a quarter of the emissions produced by the average new car, thanks to the utili-ties’ clean generation mix. (More than half of PG&E’s electric supply is from sources that are renewable or emit no greenhouse gases.)

This advantage is expected to grow as PG&E and the other California utili-ties hit the state’s 33-percent renew-ables requirement. The same is true for many other parts of the country where renewables and new natural-gas-fi red power plants are providing a growing share of the electric supply.

Patience and PersistenceAs real as these opportunities are, though, seeing them reach their full potential is certain to require two things: patience and persistence.

It’s true that EV sales are growing at a steady clip. This past March was the best month ever for EV dealers. Looking ahead, U.S. sales are expected to grow at a compound annual rate of about 30 percent through the end of the de-cade, compared with two percent for the overall auto market.

GENERAL MOTORS AND ABB DEMONSTRATED A TEST UNIT MADE UP OF FIVE USED CHEVY VOLT BATTERIES THAT TOGETHER STORE ENOUGH ENERGY TO POWER THREE TO FIVE AVERAGE HOMES FOR UP TO TWO HOURS.

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But few expect that all-electric ve-hicles will be able to vie with conven-tional alternatives in the near term. Further breakthroughs in technology are needed. In the interim, plug-in hybrids will continue to be important transition vehicles.

For the makers of pure electrics, ex-tending current range capabilities is crucial to addressing the “range anxi-ety” that gives many potential buyers pause. Other priorities, for all types of electrics, include speeding up charging times and bringing down costs.

Automakers and battery companies are pushing hard to meet these chal-lenges. In one sign of progress, battery costs have come down significantly, and innovation is now improving around 5 to 8 percent per year, enough to double core performance metrics every 10 years.

Access to charging infrastructure also needs to be expanded. The U.S. now has more than 5,600 charging stations, and public and private enti-ties are adding an estimated 180 new electric-vehicle charging stations each month. But more are needed if the goal is to help win over drivers who are ac-

customed to always having a gas sta-tion nearby.

Encouraging Evolution and AdoptionIf utilities have an enormous stake in ensuring that EVs continue to evolve and prove their potential on a larger scale—and I believe we do—we must be ready to do our part.

The service that electric companies provide, and the way we provide it, is a fundamental part of the EV customer experience and value proposition. Util-ities will need to be fl exible and work closely with regulators to consider ev-erything from new system investments to rethinking how we charge for our product.

Finding solutions that can help us create value for EV customers is one of the most important and exciting issues for the industry—and one we are particularly focused on at PG&E. Seven of the country’s top 10 markets for alternative-fuel vehicles are in Cali-fornia, and four are in our service area. Right now, California buyers account for 35 percent of all EV sales in the U.S., according to the California Center for Sustainable Energy.

And, the trend looks likely to con-tinue.

Pointing to “demographics and in-come levels, favorable attitudes toward renewable energy, supportive pub-lic policies and incentives, and geo-graphic characteristics,” Pike Research expects that Californians will buy 25 percent of plug-in and pure EVs sold in the U.S. for the rest of the decade.

Readying our system involves a number of challenges. EVs represent the largest electric load to be intro-duced in a residential setting in the past 50 years. In practice, that means that even relatively small numbers of EVs can have a surprisingly signifi cant impact on local grids.

How signifi cant? EPRI estimates that EV charging doubles the load associ-ated with a person’s home. In places like the San Francisco Bay Area, where homes generally use less energy, plug-ging in an EV might be equal to adding three new houses to a block.

America’s utilities, including PG&E, typically have more than enough “off peak” generation capacity to power growing numbers of EVs. What some may not have are neighborhood distri-

MORE CHARGING STATIONS ARE NEEDED IF THE GOAL IS TO HELP WIN OVER DRIVERS WHO ARE ACCUSTOMED TO ALWAYS HAVING A GAS STATION NEARBY.

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bution networks able to suddenly han-dle the equivalent of a few new homes.

In certain areas, circuits will have to be upgraded to reliably serve the new demand EVs create. Companies and regulators will have to factor these needs into broader infrastructure in-vestment plans in the years ahead.

Coordination with buyers also is key. It’s crucial that utilities work with auto dealers to help identify where and when EVs are coming onto the grid. That way, utilities can ensure that systems are ready and customers are receiving the information, rate plans, and service they expect.

A related issue is ensuring that EVs charge at the optimal time of day, rela-tive to other demands on the system. For most utilities, that will mean fi nd-ing ways through smart grid technol-ogy and time-varying pricing or other

incentives to encourage charging dur-ing off-peak hours, primarily at night. Although even that might change in areas like California where growing solar production may open another charging window at mid-day.

EV customers in PG&E’s service area have the option to choose a special time-of-use rate that takes advantage of our smart meter network and allows them to charge at reduced prices in the evening. Charging after dark avoids overstressing the grid and—in Califor-nia—reduces the need to call on power from plants that are the least clean and effi cient in the system.

PG&E also is about to kick off an EV incentive and rebate program for residential EV smart-charging, which will provide us with valuable fl exibility benefi ts while encouraging greater EV adoption via fi nancial incentives.

Customers As PartnersNone of the challenges to widespread adoption of EVs is insurmountable to-day. Meanwhile, the incentives to do so are more extraordinary now than ever before.

But fulfi lling electric transportation’s potential will require a utility industry that’s an active partner in EVs’ success. First, we must be aggressive in electri-fying our own fl eets; a few demonstra-tion units are not enough. Utilities also must continue to innovate, invest, and work closely with regulators, automak-ers, and other partners to develop poli-cies and best practices that will allow EVs to fl ourish.

Above all, though, we must remem-ber that our most important partners will be our customers. The future of EVs is ultimately in the hands of millions of consumers.

Our relationships with customers put utilities in a position to be a trusted resource. As an industry, we need to do more to capitalize on that opportu-nity. Examples include working harder to educate potential buyers about the true cost of “fuel,” helping to facilitate hands-on EV test-drives, and providing clear and accessible information about our EV rates and how to install charging equipment at home.

Engaging with our customers on these issues will be essential to making a large-scale transition to EVs success-ful. That means informing them, but it also means listening to them, har-nessing their ideas, and not least, building on their interest and enthu-siasm to create a new conversation around EVs.

It’s been said that all revolutions seem impossible beforehand—but looking back they seem inevitable. I believe that within a generation or so, we will look back at electrifi cation as a case in point.

Large-scale transportation electrifi -cation is one of our greatest opportuni-ties—maybe the greatest—to change America’s energy future. That’s a bold aspiration to be sure. But, it’s one that, however distant the possibility may seem today, is within reach if we con-tinue to pursue it. ◆

EV CUSTOMERS IN PG&E’S SERVICE AREA HAVE THE OPTION TO CHOOSE A SPECIAL TIME-OF-USE RATE THAT TAKES ADVANTAGE OF ITS SMART METER NETWORK.

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A TRANSPORTATION REVOLUTION

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