The first week of September saw the California grid pushed to the brink once again by record-high demand driven by unprecedented temperatures. In this blog we will examine this key challenge being faced by California’s energy system – and the significant role electric vehicles could play in its mitigation, drawing on Kaluza’s new Vehicle-Grid Integration (VGI) program with East Bay Community Energy (EBCE).
During September’s period of peak demand, the California Independent Grid Operator (CAISO) issued state-wide alerts, encouraging people to reduce their power consumption during peak hours – an occurrence which, as shown below, has become more commonplace in recent years.
Why is this happening more often?
Explained simply, rising temperatures are creating record-high grid demand, primarily from air conditioning load, and California’s current method for securing the energy resources it requires for meeting this demand – called ‘Resource Adequacy’ or ‘RA’ – is proving inadequate.
California’s RA system was born in the aftermath of the energy crisis of 2000-2001 during which millions of Californians lost power. It was created as a solution to prevent outages due to shortages of power during times of peak demand. In simple terms, the CPUC establishes how much capacity the system will require each month, based on the peak load forecast plus a planning reserve margin to account for outages as well as load and generation uncertainty. Load serving entities, which include utilities, community choice aggregators and energy service providers, then need to bilaterally procure resources in order to meet these required capacities.
During a similar crisis in 2020, the RA program came up short for a multitude of reasons including; the planned reserve margin being too low, a significant amount of – largely solar – generation not being available, and utility-run demand response (DR) programs not performing as expected. CAISO’s post-mortem of the most recent crisis is likely to draw similar conclusions. A new framework is being developed, and should be finalised next year, but it is not yet clear how much of California’s grid woes this will help remedy.
Demand response to the rescue
During similar demand emergencies in 2020, consumers came to the rescue – tweaking their thermostats, turning off appliances and shifting industrial processes in order to reduce their overall demand.
This September, collective action also saved the day – with consumers altering their energy use and day-to-day behaviours to reduce their demand by over 2GW, and partially offsetting the record-breaking peak demand of over 52GW on the 6th of September. This significant public response likely prevented blackouts – and even led the CAISO CEO to thank the public in a video update following the event.
What’s more, much of this response was voluntary, and customers were not compensated for their efforts. As a stark contrast, generators sold power at over $1,800 per MWh during the period of peak demand.
California’s reliance on public goodwill to avoid large scale blackouts is both unrealistic and unsustainable. While such an approach has come good on a handful of occasions, the level of response to these alerts has been falling as Californians grow weary of making sacrifices during extremely hot temperatures. There are also several mechanisms by which Californians can be paid for their demand response – it’s simply that, currently, they have no way of accessing them. More than 20GW of distributed resources exist across California – and realising their potential to avoid future crippling blackouts requires innovative demand response technology and strategy.
EVs can be the answer
California has moved to accelerate EV sales in CA by effectively banning the sale of new gasoline-powered cars by 2035. Under the California Air Resources Board (CARB) plan, 35% of automaker’s sales in the state must be electric by 2026, rising to 68% in 2030.
The rapidly accelerating uptake of electric vehicles across California will certainly pose a challenge for the grid – but could also offer a significant solution. On one hand, more EVs will exacerbate grid pressure by increasing the load at peak times; on the other, if this load could be redistributed and shifted, it could in fact benefit the grid.
If the charging of these vehicles is left unmanaged, they could have an enormous impact on the electricity grid. In a scenario of 6 million EVs, which if sales follow the CARB plan should materialise around 2029/2030), nearly 20% of all circuits within PG&E’s service territory could require costly upgrades.
The above chart indicates that, left unmanaged, EVs in California could add an additional 15GW+ to the grid during peak hours by 2035.
However with smart charging, which means shifting charging so that it occurs outside of peak hours when energy is cheaper and greener, this peak demand can be brought down significantly. Going one step further, with vehicle-to-grid (V2G) technology – which enables EVs to charge bidirectionally, exporting back to the grid and turning homes into green power stations – EVs can reduce the strain on the Californian grid at peak times rather than add to it. If utilities could tap into the huge potential of all these EVs, they’d be able to power every home in the state for three days.
Kaluza’s impact in California
At Kaluza, we are helping to prevent future instances of California grid emergencies with our recently launched pioneering Vehicle-Grid Integration (VGI) program with East Bay Community Energy (EBCE), one of the top clean energy providers in the United States.
The program will prove how EV smart charging can relieve system pressure by automatically shifting charging away from peak times, and allowing drivers to use their car when they need to, regardless of when they charge. On top of all this, drivers will be rewarded for doing so!
Bringing drivers along for the ride
Kaluza has invested significantly in customer research in California in recent months. We set out to understand not only exactly what makes EV drivers ‘tick’ – but also the nature of the key challenges around maximising and maintaining customer engagement in demand response programs.
This research included a week-long EV discovery mission in Oakland, where we interviewed existing EV drivers and customers on the verge of acquiring an EV. We then ran a workshop to explore what comprises a rewarding EV charging experience for real customers.
The importance of understanding the views and needs of real drivers along the EV journey is critical – especially as electricity systems transition to being more distributed and flexible at the edges of the grid.
When it comes to building customer-centric programs and propositions for EV drivers, we learned the following key points:
- The current process from EV purchase to EV charging set-up is disjointed and full of friction. Customers are prone to drop-off along this journey without ever fully considering smart charging or finding the right solution for their needs. This has a direct impact on how much of the potential DR from EVs comes to the system and is one of the key industry challenges as EV proliferation increases.
- Customers struggle to build a clear understanding of the costs associated with their EV charging. Significant time and effort is spent on trying to figure out speed vs. cost of charging between home and public charging. Customer education and seamless charging experience is key to help EV drivers make the best decisions based on their trip needs and electricity system benefits.
- It is not (just) about the money. Different customer cohorts have varying needs when it comes to defining a ‘rewarding’ experience. As long as a seamless and simple experience for smart charging is in place and customers know they are ‘doing the right thing’ customers prefer a number of options around what can be done with the rewards. While some prefer cash or reductions on their bill, early adopters also want to further benefit the cause and help their community become greener and more equal via opportunities to donate.
Bringing EV drivers along as we develop and improve this journey is hugely important – and opportunities to incentivise and reward smart charging are emerging as markets like California look to integrate more renewables onto the grid and their system needs become increasingly dynamic. Innovative ways to package these solutions and close collaboration between market stakeholders, which include utilities, auto OEMs, aggregators, and ISO, is what will bring the true potential of VGI flexibility.
At Kaluza, we are incorporating these key learnings from real drivers into our recently launched pioneering Vehicle-Grid Integration (VGI) program with East Bay Community Energy (EBCE).
The EBCE Smart Charge app, developed by Kaluza, will begin by servicing more than 1,000 electric vehicle drivers in California. As part of the initiative, Kaluza will enable drivers to easily ‘set and forget’ when they need their car ready via the mobile app, and optimise vehicle charging to occur when energy is cheaper and greener. The service could enable the average EV driver to save over $550 a year and reduce their charging carbon emissions by 36%[1].
This program is helping enable the true potential of EV flexibility in California, harnessing the power of EVs to reduce the impact on peak demand and helping to avoid the grid being pushed to the brink again in the future – while rewarding customers for playing their part.
[1] Drives 12.5k miles a year = 2783 kWh (assuming 80% of charging happens at home) = 2226 kWh of charging at home; charges on average anywhere between 2-5 times a week at home; plugs in at ~5 PM and “baseline”; is charging as much as possible at peak without any time of use shifting; is on EV2 tariff for the whole year (which generates a lot more savings than ETOUC – the other tariff we are looking at)
