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PHEV - Path to the Hydrogen Economy

Economics  -  Emissions  -  US Dependence on Foreign Oil

Economics of PHEVs

        Battery prices

        Vehicle prices compared with HEV and CV

        Projected energy costs

        Long-term cost recovery

        Benefits beyond price

Battery Prices

The PHEV includes a battery pack in addition to a smaller sized internal combustion engine. Stored electricity in the batteries provides better fuel economy, while the internal combustion engine allows extended range of travel. The battery pack is the main contributor to the vehicle’s increased upfront cost. Current prices of PHEV batteries with 20 to 60 miles of storage capacity range between $2,700 and $5,800. These prices will decrease over time as production volumes increase and battery manufacturers receive production contracts. Furthermore, a recent study by EPRI found that current technologies are capable of designing PHEVs’ nickel-metal hydride (NiMH) batteries that would last the entire lifetime of the vehicle (EPRI Journal).

Prices of HEVs

The overall price of a PHEV is 10-20% greater than its hybrid counterpart. The research organization CalCars demonstrates some of these prices. For a Saturn compact sedan, the projected cost gap between a current HEV and a conventional vehicle (CV) is $2,500 and between a PHEV and a CV is $4,500. For an Explorer mid-size SUV, the cost gap is estimated to be $4,000 between a current HEV and a CV and $6,400 between a PHEV and a CV (CalCars’ Vehicles).

Projected Energy Costs

The following figures demonstrate the total energy cost per year of driving vehicles, as well as the distribution of the miles from gasoline and electricity. The PHEV batteries were assumed to run at 0.33 kWh per mile (EPRI). Gasoline and electricity prices were $1.80/gallon and $0.03/kWh, respectively. The traveler was assumed to drive 25 miles each weekday, 20 miles each weekend day, and 500 miles on 8 occasions during the year.

Battery power provides energy for the PHEVs’ first 20-60 miles of travel each day. This means electricity costs replace gasoline costs in those allotted miles. Electricity in the US is generated from nuclear, coal, and gas power plants. The combination of diversified sources and a cheap, established coal market has consistently kept the price of electricity low. For a PHEV battery that that runs at 0.674 kWh per mile, it will cost approximately $0.04-$0.05 per mile when the price of electricity is $0.03/kWh. This contrasts with the cost of driving on gasoline. For a car that gets 20 mi/gal of gasoline, it will cost $0.08-$0.09 per mile when the price of gasoline is $1.80/gal. These calculations were made according to the assumptions in the figures shown above.

Cost Recovery

PHEVs have the potential for long-term cost recovery. In the study by EPRI, it was found that the combination of fuel and maintenance cost savings would allow PHEVs to reach cost parity with conventional vehicles. From the data in the figures above, the difference in energy costs for the CV and PHEV-20 was approximately $700. The savings over 7 years would be nearly $5000, nearly equal to the initial cost of the batteries.

Non-Monetary Benefits

Automobile owners gain additional benefits from PHEVs. Vehicles that run on electricity have lower maintenance costs than conventional vehicles. Unlike purely electric vehicles, PHEVs can run even if they have not been recharged. When the batteries are charged, they can provide a source of electricity, or backup power. Another welcomed advantage is the need for fewer trips to the gas station. After a PHEV battery has charged through the night, it is ready to provide 20-60 miles of driving from the stored electricity alone. This allows the owner to save on both time and money. Driving on stored electricity provides another benefit, lower emissions from the vehicle (CalCars’ Vehicles).

Emissions of PHEVs

        Definition of ZEV miles

        Pollutants from combustion of gasoline and diesel fuels

        Carbon dioxide and global warming

        US emissions of carbon equivalent

        Reduced emissions at power plants

Definition of ZEV miles

A PHEV’s mileage while running on the battery is called ZEV miles, or Zero Emission Vehicle miles. While the engine runs from battery charge, the internal combustion engine is shut off. The electricity from the battery provides energy for the car to run, without releasing any pollutants from the vehicle.

Pollutants from Combustion of Gasoline and Diesel Fuels

Conventional vehicles, diesel or gasoline, combust fuel in the engine for energy. Petroleum products contain hydrocarbon molecules, as well as some nitrogen and sulfur. When the fuel combusts, the oxygen reacts with the carbon, nitrogen, and sulfur elements to yield smaller hydrocarbons, carbon dioxide, carbon monoxide, nitrogen oxides, and sulfur oxides. Catalytic converters convert the hydrocarbons, carbon monoxide, and nitrogen oxides to carbon dioxide, oxygen, water, and nitrogen gas. This prevents many pollutants from entering the atmosphere, but does not hinder the release of the greenhouse gas carbon dioxide.

Carbon Dioxide and Global Warming

The level of carbon dioxide in the atmosphere continues to increase. One source of carbon dioxide output is the combustion of fuels. In the atmosphere, carbon dioxide is capable of absorbing, and thus trapping, the sun’s heat. This is a potential cause of global warming, a gradual trend of increasing temperatures over the Earth. Evidence of global warming is seen especially in the arctic regions. A recent study found that arctic temperatures are rising at a rate twice as fast as other areas on Earth. More data shows that 15 to 20 percent of the ice at the North Pole has melted in the past 30 years (CNN.com-Study).

US emissions of Carbon Equivalent

Currently, the United States’ transportation sector contributes around 470 million metric tons to the nation’s total emissions of 1.8 billion metric tons of carbon equivalent (EPA: Global Warming). One contributor to these carbon emissions is passenger vehicles. Because the majority of passenger vehicles are driven less than 40 miles per day, most PHEVs would not need to burn fuel. The miles driven on most average days would be covered by the stored electricity.

Reduced Emissions at Power Plants

Producing electricity at power plants releases less pollution than combusting fossil fuels for conventional vehicles. This can be seen in two ways. PHEVs use grid electricity to charge their batteries. The majority of this charging time occurs at night when owners are home from work. When the demand for nighttime electricity increases, power plants have a new incentive to increase base load capacity. Power plants waste the greatest amounts of fuel when they produce electricity during peak demand. An economical choice for increasing base load capacity involves increasing the efficiency of the power plant from the typical 30-40% efficiency to 50-60% efficiency, a level that is attainable by combined cycle plants. At higher efficiency, power plants would be consuming less fuel while producing more electricity. The second way that reduced emissions can be seen is through nuclear power plants. These power plants use the energy released through the fission process of uranium to generate electricity. No pollutants are emitted from nuclear power plants.

Reduction of US Dependence on Foreign Oil

        US vulnerability from high demand on foreign oil

        PHEVs role in reducing US dependence on oil

        Diversifying the sources

        Domestic opportunities through PHEVs

US Vulnerability from High Demand on Foreign Oil

Currently, the US imports around one-quarter of the world’s total oil production. This amounts to approximately 20 million barrels each day. Depending heavily on foreign oil places the US in a vulnerable position. In 2004, crude oil prices shot up by $10 per barrel. During this time, drivers saw gas prices rise from an average of $1.59 per gallon to over $2.00 per gallon (Energy Information Agency). In addition, manufacturers and consumers in the US experienced increases in the price of manufactured polymers produced from petroleum products. One source of price instability, conflict in the Middle East, continues to threaten the economics tied with oil prices.

PHEVs Role in Reducing US Dependence on Oil

Currently, the US is faced with paying the price for oil even at its peak due to such high demand for petroleum products. The use of PHEVs will help to reduce US dependence on oil imports. Currently, transportation in the US consumes 65% of the oil that is imported (Office of Energy Efficiency and Renewable Energy). PHEV owners would reduce the amount of gasoline used for travel by driving from stored electricity in the battery pack. Because the average driver drives fewer than 40 miles each day, the majority of vehicles would not even need to use gasoline. Reduction in the petroleum demand by the transportation sector would lead to a more relaxed petroleum market for US industries that would continue to rely on oil products.

Diversifying the Sources

The option to power a car with electricity also creates greater diversity of sources. When a particular market experiences high demand, price increases are likely. Competition between more energy providers helps to keep prices low for the consumer. PHEVs allow the driver to choose between paying electricity or gasoline prices. In addition, some of the money that would have been paid to foreign countries for oil would instead go to domestic power plants to produce electricity.

Domestic Opportunities Through PHEVs

The entry of PHEVs into the market provides an opportunity for US manufacturers to pursue the production of batteries, the generation of more efficient electricity, and other industries associated with PHEVs. The money that would have been spent solely on foreign oil now has the chance to remain in the

US to produce demand for new jobs, to heighten research in technology, and to strengthen domestic economy.

 

Prepared by Jean Randall.