Tuesday, January 05, 2010

The Plug-In Hybrid Arrives in Berkeley: But Is it "Green" Relative to the Conventional Prius?

As you know, I am a keen observer of day to day life. Walking close to Solano Avenue in Berkeley last week I spotted this distinctive plug-in hybrid that openly advertised "its type".

Relative to the conventional hybrids, per-mile of driving, the plug-ins will need less gas but more electricity. What is the maximum carbon factor for electric power generation such that Al Gore would prefer that you drive a plug-in to a conventional Prius?

Suppose that a conventional Prius achieves 50 MPG. Given that one gallon of gasoline creates roughly 20 pounds of carbon dioxide, then one mile of driving a Prius creates (1/50)*20 = .4 pounds of carbon dioxide. Assuming a social marginal cost of $40 per ton of carbon dioxide, the global warming externality from driving this mile = (.4/2000)*40 = .8 cents.

Turning to the plug-in hybrid, according to this webpage I found; the electricity input per mile of driving an electric vehicle equals .33 kWh. So, we can now solve for the key threshold emissions factor.

Given Al Gore’s urge that we all reduce our carbon dioxide production, Al Gore is indifferent between you driving a Prius and Plug-in Prius if: .4 = .33*f or f = 1.2 . For now, I am ignoring the rebound effect.

f = pounds of carbon dioxide per kWh generated

How does this f compare to “real world” power plant emissions factors? We can look this up in the US EPA EGRID database.

So, here is the irony. For the nation, the average power plant creates roughly 2,400 pounds of carbon dioxide per mWh of power generated. Note that 2.4 > 1.2, so based on the algebra above Al Gore would prefer that you drive the conventional Prius. The Plug In doesn’t use oil but the electricity source is relatively dirty.

In California, the average power plant creates roughly 1,200 pounds of carbon dioxide per mWh of power generation. So, Gore wouldn’t care whether you drive the Prius or the new plug-in Prius.

So, what is my point? Al Gore needs high gas prices relative to electricity prices to encourage consumers to substitute to the plug in hybrid. But for these plug-ins to be “green”, he needs our power to be produced using mainly renewable and using much less coal.

He also needs the “rebound effect” to not exist. At a price of 10 cents per kWh, to drive 50 miles using the plug-in will cost you; (50/3)*10 which equals $1.70. This is cheaper than a $3 gallon gas. Facing this roughly 50% lower electricity price, the average driver who has studied economics may drive 15% more miles. This is the “rebound effect”. Put simply, demand curves slope down.

The expected growth in plug-in vehicles poses new challenges for California’s electric utilities. Suppose that communities that currently buy “green cars” such as Berkeley and Santa Monica will also disproportionately buy the plug-in vehicles. Then at night these communities will have a large number of households placing localized demands on the grid at those spots. If the utilities do not anticipate these demands then the system can be overwhelmed by these hotspots. The same issue arises during the day when people are at work and are parked and seek to charge up. I have been helping SMUD to better understand these geographical patterns and I expect that other utilities in California face similar challenges.

To start to see my ideas take a look at the Kahn and Vaughn 2009 paper and my IOE Scorecard piece. Paper #1 and Paper #2

As a humble California state employee, I am here to help you. Do you want fries with that?

UPDATE: Here is a very reasonable blog post that challenges me on a couple of points listed above.


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