Electric vehicles represent an enormous opportunity for utilities. But they could also create a lot of problems by overwhelming certain parts of the grid.

As a result, utilities are trying to get to know electric vehicles (EVs) better, to ensure they're an asset and not a liability. To that end, Pacific Gas & Electric announced a partnership with BMW this week to test the potential for EV batteries to provide services to the electric grid. The 18-month pilot will help PG&E better manage power demand and help set up a reward scheme for participating vehicle owners, which could theoretically incentivize more EV purchases.

PG&E will manage at least 100 kilowatts of demand from BMW batteries, which is comparable to what large industrial and commercial customers currently offer as part of PG&E’s demand response programs. The pilot will be broken down into two parts: a stationary unit made up of repurposed BMW batteries and a charging program for up to 100 BMW i3 vehicles.

As part of the BMW i ChargeForward Program, when PG&E needs to reduce demand it will send an alert to the automaker via the internet with information on how much load it needs to cut and for how long. BMW will then send a signal directly to each vehicle taking part in the event via telematics equipment, ordering it to stop charging. Once the event is over, each vehicle will get a signal to start charging again.

PG&E will pay BMW for these services, just like any other demand response participant. BMW will transfer the savings to customers through an upfront enrollment incentive and an ongoing incentive based on how much load they’re able to reduce. EV owners will be able to monitor their performance and opt in or out of PG&E requests using a mobile app.

Other utilities are also testing the demand response capabilities of EVs at family homes. Last October, Con Edison partnered with Landis+Gyr to test control switches for residential EV charging stations. And in November, Pepco added another option to its Plug-In Vehicle Charging Pilot by joining with Itron and ClipperCreek to test EV chargers as virtual smart meters.

In addition, the Electric Power Research Institute (EPRI) is conducting a project with a number of utilities and automakers to establish an open standards-based smart charging program. The idea is to enable utilities to communicate with any type of EV through a charging station, a smart meter or directly with the car. The program will also lay the foundation for two-way power flow between EVs and the grid. The U.S. Air Force launched a major bidirectional power flow program last year.

These programs will produce data that will help utilities ensure they provide reliable service to the distribution grid as EVs become more popular (in PG&E’s case, there are already more than 60,000 EV customers, more than in any other service territory). They will also help utilities establish rates for a wider group of EV customers based on the regulatory framework and wholesale markets in their area.

Are reused EV batteries viable?

The second component of PG&E’s new pilot with BMW, the stationary energy storage unit, will offer different insights. That part of the program will use lithium-ion batteries formerly installed in BMW’s Mini E demonstration vehicles to absorb surplus energy and release it upon request. 

According to a recent report by the Climate Change and Business Research Initiative at UCLA and UC Berkeley law schools, so-called second-life batteries “could provide multiple value streams to customers and grid operators and benefit the environment by integrating variable renewable energy and reducing the upfront cost of electric vehicles.”

The study noted that second life batteries could be worth several thousands of dollars each, ranging from $2,400 for a used 24 kilowatt-hour Nissan LEAF battery to $8,500 for an 85 kilowatt-hour Tesla battery pack. This aftermarket could sweeten the deal for potential EV buyers.

It’s not totally clear how economically viable reusing automotive batteries will be for buyers, however. During a recent Energy Gang live podcast, Mateo Jaramillo, director of powertrain business development for Tesla Motors, said that used battery packs are unlikely to be competitive with new ones, at least in the near term.

“So will a used EV battery in seven or eight years be cheaper [and] more cost-effective to integrate into whatever application you’re trying to get it into than a brand new battery in that year?” asked Jaramillo, responding to a question from the audience. “Right now, the answer doesn’t look like it's 'yes.'”

Given that Tesla is building the world’s biggest battery factory, it has an interest in stimulating battery demand. But that doesn’t mean battery reuse won't be a priority for producers.

New battery production costs are tightly controlled. There is existing data on the price of a battery per kilowatt-hour and numerous forecasts on how quickly prices are expected to fall. “But no one has a reworked battery cost,” said Dan Bowermaster, program manager for electric transportation at EPRI.

To reuse a battery, each component has to be taken apart and each cell tested. If a cell exceeds a certain quality threshold, it can be reused. If not, it has to be replaced or fixed, which involves chemical and mechanical work. Even if all cells in a pack pass muster, the battery may need to be restructured. The battery in the Chevrolet Volt, for instance, is in the shape of a 'T.' Meanwhile, a homeowner looking for energy storage might prefer a battery in the form of a cube.

That said, there could be applications where the cost-benefit relationship for reused batteries works, said Bowermaster. The quality level needed for renewable energy storage is different from backup power needs at the substation level, down to the demands of a neighborhood or a home.

“In different spots on the grid, it might make more sense to use reused batteries, and in others, it might make more sense to use new ones,” said Bowermaster. “Every spot on the grid will have different needs and different technical specifications.”

As for what exactly those needs and specifications are, “Nobody knows at this point,” he said.

For the conversation with Tesla's Jaramillo, listen to The Energy Gang live podcast here: