The Ergosphere
Saturday, June 25, 2005

Do hybrids require subsidies?

Over at Chicago Boyz, Jonathan Gewirtz says this about hybrids:
Yes, these vehicles are so good that they won't sell without subsidies.
Aside from being wrong so far as I can tell (the Prius was selling nicely from its introduction in 2000, and I can't find anything about a subsidy from earlier than 2004), Gewirtz implies that hybrids make no economic sense and would not sell on their own merits.

That's a strong assertion.  Does it have any basis?  Time to haul out an old envelope and that pencil stub....

Let's assume a gas-optional hybrid designed to be built in volume for cheap, and go 20 miles before it switches from electric propulsion to burning fuel.  It uses lead-acid batteries of the absorbed glass mat (AGM) type; there is no free liquid electrolyte to leak, and they are sealed in heat-welded plastic cases.  They have a calendar life of about 3 years.  At one cycle per day, they'd need to go about 1100 cycles to last 3 years.  The weight of the motor and its electronics are made up by reducing the weight of the engine versus a conventional car.

The battery life graph I cited in "Is the tide turning?" shows that such batteries would last 1100 cycles if they were discharged to approximately 50% before recharging.  If the car uses 250 watt-hours per mile, a 20-mile range would require 5 kWh and the battery would need an ultimate capacity of 10 kWh.

Some years ago, I re-powered an old UPS.  I removed its failed internal gel-cells and replaced them with a hefty deep-discharge storage battery.  This battery is rated at 105 amp-hours @ 12 volts (1.26 kWh nominal), weighs 65 pounds and cost about $70 at retail.  Scaled up to 10 kWh, this battery would weigh 516 pounds and cost $556.

Extra weight in a vehicle requires extra power to accelerate it and increases rolling resistance.  The battery itself can store (and regenerate) the energy to accelerate itself, but the rolling resistance has to be made up elsewhere.  If the vehicle tires have a rolling coefficient of friction of 0.008, the car would need an additional 8.2 watt-hours per mile to pull the battery.  This can probably be ignored.

The motor and electronics are more difficult to specify.  DC motors offering 28 peak horsepower are going for around $500 retail, with controllers running about the same (about $36/peak horsepower overall); however, these are low-volume items and do not reflect economies of scale.  AC Propulsion estimates a per-unit cost of $3500/unit for their AC-150 drivetrain in volume production (private communication), or $17.50/horsepower overall.  If that same price can be maintained for an 80 HP drivetrain that is highly cost-engineered, it would sell for $1400.  The overall cost of the vehicle would increase by $1956, with a $556 battery replacement every 3 years.

Savings:  If the vehicle runs 20 all-electric miles every day, it would go 7300 miles per year on no fuel whatsoever.  Economy beyond this might run 38 MPG vs. 30 MPG for a conventional vehicle; if the car ran 15,000 total miles per year it would consume 203 gallons of fuel vs. 500 for the non-hybrid.  The savings in fuel would run to $669/year at a price of $2.25/gallon, more at higher prices.  This would be offset by the cost of electricity; at a charger/battery efficiency of 65%, the hybrid would consume 2808 kWh.  At off-peak rates of $0.08/kWh, this would cost $225 for a net savings of $444/year.  Battery amortization costs $185/year, for a total savings of $259/year.

If the money to buy the car is borrowed at 11%/year for 4 years, the additional interest cost of the hybrid drivetrain is $215/year in the first year; the net benefit is small, but positive.  If the car is used for 12 years, the overall costs amount to $4485 ($1956 cost + $861 interest + $1668 replacement batteries) while savings at $2.25/gallon total $5328; net savings are $843.  If gasoline rises to $3.00/gallon, net savings rise to $2667.

Do plug-in hybrids make sense without subsidies?  Even without weighing the benefits of less pollution, greater convenience due to 60% fewer fill-ups, future-proofing and other positive attributes, it appears that they do. 
Good catch. There are still a lot of avidly right wing types who will go after anything that smacks of a green (supposedly leftist) solution.
Actually monkeygrinder, there are plenty of us who'd love to find green solutions. What we don't like are the watermelons - green on the outside and red on the inside.

Here's a handy test - are you in favor of nuclear power or not? If not, you're probably a watermelon. Or else ignorant of the technology and its capabilities.

Come up with ideas that don't involve more and bigger govt and you'll have all kinds of buddies across the political spectrum. Green and red don't mix, and the more you get rid of the reds the more green you can have if that's what you really want.
This is all well and good, but what really needs to happen is some smarter distribution, relaying and metering by utilities. Otherwise you're not going to get those off-peak rates.

In the past small electric coops in central IL have offered gizmos to hook up to water heaters and similar loads to permit disabling them remotely at times of high system demand. That effectively truncated some of the peaks in power demand. The ones I recall were in the 80's - much more sophisticated equipment is available now.

Something similar for hybrids might be good too. People who buy hybrids now might be scrupulous about unplugging during peaks, but if they become popular that won't happen.
Overnight charging is about as off-peak as you can get, and it would make the generators really happy as they could shift more generation to base-load plants using cheaper fuels.

If you really want to get into the DSM sphere, you want something like the vehicle-to-grid interface tested by AC Propulsion.  That would take care of peak-shaving and allow the car to be a profit center for the owner.
Using the car as a "profit center" would presumably reduce battery life. What is the net profit?

Also, if profit can be made, why not dispense with the car and just hook the batteries to the grid?
" Using the car as a "profit center" would presumably reduce battery life. What is the net profit?"

Some types of batteries have calendar life limits as well as cycle life limits.  Failing to use the available cycles discards some of the work the battery could be doing.

"Also, if profit can be made, why not dispense with the car and just hook the batteries to the grid?"

1.  The batteries are not profitable by themselves, but they pay off handsomely when used to substitute for expensive motor fuel.  Thus, they need to be in a vehicle.
2.  Cars spend most of their time parked.  If they are plugged in when parked, they are hooked to the grid.  This yields a two-fer:  you pay for the batteries once, but you get the dual benefits of fuel savings and grid regulation services to pay for them.
J Bowen -
I was responding to the specific person E-P had posted on. I didn't say "all" and I didn't say "we".

I find your watermelon metaphor to be ridiculous, and reject your framing.

At a more general level, energy issues will be bringing together a true center in this country. Might be the only thing that can combat the polarization of politics.
A better dichotomy would be between people who see that life is complex, versus those who want simple solutions.

I like the free market, and I actually think nuclear has a reasonably strong value overall. But here's a complication to think about: if nuclear had to live or die in the free market, it would die: no one is willing to ensure it. Instead, we have the Price-Anderson act, which is an enormous subsidy for nuclear.
Nick, in a very real sense, you are describing the post peak oil reality.

Right now, we can afford energy subsidies, because we have oil coming out of our ears. More oil will be produced this year than any other year in the last 100 years.

After oil peaks, there will be a premium on energy sources that don't require subsidies. (subsidies: doesn't sound like the free market to me...)
In an ideal world, there would be no subsidies. Instead, we'd develop good estimates of the cost of pollution, and other external costs not included in the market price, and apply those as taxes, which would reduce other taxes, like income taxes (or deficits, if that made sense).

But we don't seem able to do that very well. sigh.
I think hybrid tax credits are only coincidentally a left/right thing. What I mean is, the general ideological position of conservatives is less government and lower taxes. Liberals are generally speaking more open to taxes to fund valuable public programs.

Now, speaking dispassionately, when you want to move the fleet mileage higher you have two choices, the carrot or the stick.

The "stick" (taxes) is already in the liberal arsenal, and so they are ready to use it. The conservatives (on general principles) want lower taxes, so they resort to credits.

I think it is very silly and non-pragmatic to just knee-jerk one way or the other , but then I'm a pragmatic moderate (most days).

FWIW, I think for this particular problem the stick (taxes) would be more effective, but I don't think many in government (of either party) have the guts for it. So they will dispense credits, which may have the enhanced societal effect of making the credited vehicles seem socially "good" (while deepinging public debt).
Quick question: if plug in hybrids took off, what whould that result in in terms of increased electricity generation demands?
The result you'll get depends on the assumptions you make, but the analysis I made in You find you get what you need is my shot at the limiting case.

If you assume that 50% of all transport fuel is replaced by electricity and you get no benefits from hybrid efficiency (almost certainly not valid, but people might want performance more than economy) you'd need about 92 GW average to charge cars.  Average US electric consumption (24/7/365) is ~440 GW, so it appears that charging plug-in hybrids during the overnight period would probably require no additional generating capacity at all.  It would shift the preferred balance from peaking plants to base-load, and it would reward greater expenditures on efficiency (CCGT rather than simple-cycle gas turbines).
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