What else will batteries unlock?
This article is drawn from the Transport Weekly newsletter from GreenBiz, running Tuesdays.
Low-cost, high-energy batteries are beginning to do some really cool things such as replace gas peaker plants, power mainstream vehicles and kick-start electric aviation. Here’s another application to add to the list: slash electric vehicle (EV) demand charges.
Say what? Demand charges are a fee that a utility charges for electricity use, based on the highest rate at which the electricity is drawn during a monthly billing cycle. These are fees beyond just the cost of electricity, and they’re thought of as paying for the overhead of the grid gear.
Reports have found that these demand charges have been making public charging stations uneconomic in this early stage of the EV market. If the companies that manage those chargers passed the charges onto EV owners, most would run away screaming and never charge in a public spot again.
To get around this problem, some companies are starting to pair batteries with EV chargers (McKinsey dives into this in a report). The idea is that the battery can charge up when electricity rates are low and charge up vehicles when the demand for electricity is high. Yep, it’s peak shaving, similar to what companies such as Stem have been doing for buildings.
VW’s Electrify America, which is spending $2 billion on charging infrastructure, last week announced that it will work with Tesla to install over 100 of Tesla’s battery stations at some of its EV chargers. Electrify America Chief Operating Officer Brendan Jones said during an event that the No. 1 cost of EV chargers, outside of the capital investment, is demand charges.
Electrify America and Tesla aren't the only ones adopting this approach. Startup Freewire Technologies has developed a mobile EV battery charger (Mobi), and companies such as Microsoft and LinkedIn have been using Mobis on their corporate campuses, partly to avoid demand charges.
Down the road, when more electric vehicles are plugging into public chargers, the demand charges will be more spread out and less of a problem. Companies are also focused on rate reform, and convincing utilities around the United States to change pricing structures.
But the interim battery solution is an interesting one. The trend shows how low-cost lithium-ion batteries have emerged as a disruptive tool that can be used for any number of things.
The really cool part is we probably haven’t yet envisioned everything that powerful low-cost, high-energy battery technology can do. Energy storage markets have been so underdeveloped for so long.
This disruptive effect, of course, is occurring for other enabling technologies such as artificial intelligence, wireless networks and low-cost computing chips. All of them have been changing society and industry in many hard-to-predict ways (and some negative ways, too).
But I am eager to see how else these batteries will transform the way we live — and hopefully make energy and transportation more distributed, cleaner and more reliable.