Strategy for Overcoming Cost Hurdles of Plug-In–Hybrid Battery in California

Advances in electric drive technology, including lithium ion batteries as well as the development of strong policy drivers such as California's Global Warming Solutions Act, now contribute to a more promising market environment for the widespread introduction of plug-in vehicles in California. Nevertheless, battery costs remain high. This study explores a strategy for overcoming the significant hurdle to electric transportation fuel use presented by high battery costs. It describes offsetting plug-in-vehicle battery costs with value derived from post-vehicle stationary use of hybrid batteries and quantifies the possible effect the net present value that several of these benefits might have on battery lease payments. With a focus on blended-mode plug-in hybrids with minimized battery size, even the subset of values explored (regulation, peak power, arbitrage, and some carbon reduction credit) promises to lower battery lease payments while simultaneously allowing vehicle upgrades and profitable repurposing of vehicle batteries for stationary use as grid support, electrical storage and generation devices. Such stationary, post-vehicle battery-to-grid devices could not only provide valuable services needed by existing statewide grid-support markets but could also provide customer side benefits, improve utility operation, help defer costly grid upgrades, and potentially support the profitability and penetration of intermittent renewable energy.