Now that electric cars are rolling off the assembly line into the main stream market, do you think that electric companies are going to jack up prices of electricity because of the new and growing demand of their product? It makes sense; look how the price of gasoline has shot up. Supply and demand. I think all of us even the ones who run a traditional gas powered vehicle are going to pay for it in the long run because more power is going to be consumed charging cars. What do you think?
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Great question! The best way to figure this out is to put yourself in the shoes of the business people running both petroleum and electric companies.
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Successful electric cars will actually put the gasoline makers and electricity makers in competition with each other. Competition is a central feature of capitalism, and is generally supposed to be very good for consumers (which is why big companies HATE true competition and try to prevent it whenever they can.)
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If your job is to sell gasoline, and customers start to leave (to drive electric cars) because they don’t like the price of your product, what do you have to do? If you don’t want all those customers to leave, you’d better make your gasoline prices as cheap as you can!
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Likewise for electric companies. The utilities actually love electric cars because they charge overnight – and electric companies normally don’t have customers for electricity in the middle of the night – in fact, much electricity goes to waste overnight because many generating plants can’t be easily shut down.
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Right now, if you call up your utility and tell them about your electric car, most of them will offer you a discount for overnight charging. My utility gives me half-price for charging my Volt at night. I don’t see this changing very soon. One day it might, but today the utilities LOVE the idea of stealing customers away from gasoline.
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Because that’s how competition is supposed to work.
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Study below shows that we could switch about 3/4 of all drivers to electric cars without building new plants – because of all the excess electricity available overnight:
http://www.sciencedaily.com/releases/26/12/06121…
The short answer is no, electric prices are not likely to be affected by electric cars. There are several reasons:
In the first place we need to understand how much electricity we use and what effect electric cars will have on the size of the electric market. If we converted every vehicle to electricity, every car, truck plane, train, boat and eliminated all oil used for transportation we can estimate the change in electrical usage based upon the 70% of refined oil that is used for transportation fuel. Our electrical system is so large that this switch would amount to only about a 30% increase in the demand for electricity.
What we presently use for daytime air conditioning (about 15% of all our electrical usage) is likely to be far greater than what we use to charge electric cars for at least the next 20 years. If we are able to get 1 million electric cars on the road by 2015 then this will be about 1/2 of 1 percent of our present fleet size. How much have electricity prices risen due to the growing air conditioning load?
Studies have also been done to determine the amount of new power generation equipment that would be required if all of our cars were converted to run off of electricity. If they were charged off peak at night we could power up to 84% of our present fleet with no new equipment. This is because there is a tremendous capacity that is unused off peak at night.
Electric cars are a huge benefit to the eclectic grid operators. The rate we pay for electricity is based upon production costs and equipment costs. When the same equipment can be used to its full capacity day and night this results in a reduction not a rise in overall cost per kWh because the equipment cost is spread over a larger income.
But the production cost can also be less for coal fired power plants. Such plants cannot be turned off at nights like a gas fired plant. The boilers must be kept warm and a coal fired boiler cannot raise or lower its temperature quickly or damage is more likely for the boiler tubes. While turbines might be turned off the boilers must kept warm. This already cost fuel. If instead that fuel can be used to produce an income rather than just keep the boilers warm the overall production costs will decrease.
This type of benefit/savings is likely to be even greater in areas which have a high amount of coal fired powered plants. In those places there are fewer gas fired power plants that can be turned off, and more coal plants that must be kept warm overnight. Nuclear power plants are likewise never turned off or down very much for the same reasons. In the case of nuclear equipment cost is very high and fuel costs are relatively low.
Estimates have suggested that electric utilities could reduce the cost of electricity sold at night 6 fold and continue to make money. Off peak electricity is commonly offered at night at 50% off. So for the utility electric cars charging at night have the double benefit of providing more income and using otherwise little used energy. They would be in a difficult position trying to prove to a utility commission that the EV was costing them money that required a rate increase.
That’s what the “smart meter” is for. To raise the cost of electricity in the day time when most people use it. Most of the electric used to air condition buildings in the summer is used in the daylight hours right when the rates will be up.