Global commercial EV sales are expected to roughly double this year over 2023, while passenger EV sales could increase by 21%. In the US, BloombergNEF anticipates that passenger EV sales could account for 13% of new-car purchases and reach just under 1.9 million.
Meanwhile, the world added 50% more renewable capacity in 2023 than in 2022 as increases in Europe and the United States hit all-time highs. The International Energy Agency expects to see the fastest growth yet over the next five years.
While more EV adoption and renewable energy deployment are progress toward the clean energy transition, they also create more strain on grids. Solar and wind production occur at specific hours of the day, making it difficult to maintain grid stability and ensure reliable power.
EV sales are still increasing, according to BloombergNEF (BNEF). In fact, passenger sales are expected to exceed 30 million in 2027 (in BNEF’s base case scenario), growing to 73 million per year in 2040.
Renewables and grid challenges
Clean energy is driven by government policies to reduce carbon emissions and combat climate change while using readily available, domestic, cheap resources like solar power. For example, the Inflation Reduction Act (IRA) of 2022 marked America’s largest investment in climate and energy, accelerating the deployment of renewable sources. Such incentives, along with decreasing costs, position clean energy to meet the increasing electricity demand — which is expected to rise with greater EV adoption.
Unfortunately, growing reliance on renewable energy also presents challenges, particularly around grid stability. Traditional power plants constantly produce output and are always ready for utilities to call upon for power. However, renewable energy sources are inherently intermittent. Solar or wind-power production availability depends on weather conditions. This variability, coupled with increasing demand for electricity, can strain the grid and increase the risk of outages as operators try to balance power supply and demand.
Moving away from fossil fuels and gas-powered vehicles will require better electricity management to meet demand and “dispatchable” renewables, so utilities can depend on renewables for reliable power supply.
Energy management programs
One way utilities and other energy providers are better managing electricity supply and demand to balance grids is by offering programs that reward or penalize ratepayers (typically commercial and industrial customers) for the amount and pattern of their energy consumption.
For example, demand charge programs impose fees on C&I users based on their highest power demand during a billing period. Demand peaks require larger capacity generation, as well as transmission and distribution systems that are expensive to build and run. Demand charges help cover the costs of maintaining and upgrading the electrical grid to handle peak loads.
However, they also incentivize customers to manage and reduce their peak demand, thereby promoting more balanced and efficient electrical grid use.
While demand response programs are growing in the US in areas like California and New York, Europe — ahead in its renewable energy capacity — has implemented other ancillary services to help balance its grid. Grids need to run at a specific frequency to operate safely and reliably (about 50 or 60 Hz, depending on the region), but failed power plants, transmission lines, and more renewable energy integration can make grid frequency more sensitive to changes that can cause power quality issues or outages.
Frequency response programs incentivize customers to charge or discharge their battery energy storage system (BESS) during imbalances and allow the grid to return to an ideal frequency.
Behind-the-meter batteries
Batteries are the key to overcoming the intermittency of renewables by storing production for grid operators to enlist to meet demand during peak periods. Front-of-the-meter batteries support high-voltage transmission lines by resolving frequency challenges, reducing the need for additional generation during peak periods.
However, this top-down approach requires massive batteries and expensive infrastructure that takes time to build when we need to optimize the grid now.
A bottom-up approach of installing smaller batteries at behind-the-meter C&I customer sites — particularly those with EV charging stations — would make more economic sense with faster deployment and benefits for grid operators, businesses and EV drivers.
- Grid operators: Behind-the-meter batteries avoid the expense and time of making infrastructure upgrades while providing resources to call upon to reliably meet power demand and avoid outages.
- Businesses: Investing in an onsite BESS enables participating in grid programs while value-stacking benefits over time, such as increasing sustainability, lowering the cost of energy by considering time-of-use (TOU) prices, and mitigating demand charges.
- EV drivers: Batteries ensure that EV charging stations can reliably supply power to commercial and passenger EVs, allowing drivers to avoid anxiety and stay on schedule.
Innovative technologies will only increase the value of BESS. Advancing AI-driven energy management systems can automatically and intelligently control energy flow across sites and to/ from the grid for total optimization and benefits. At the same time, efficient second-life batteries will reduce costs and improve availability and sustainability.
The United States can look to Europe to see how growing levels of renewable energy penetration amid increasing EV adoption and power demand change markets and technologies. From electricity pricing fluctuating within smaller time increments to account for varying levels of renewable energy to behind-the-meter batteries turning customer sites into distributed energy resources, similar trends could come to the US in the next few years.
The transition to clean energy and electric vehicles is crucial for climate change, and batteries will help us manage this shift carefully to avoid potential disruptions and ensure that the grid remains resilient and capable of meeting future energy demands.
