An innovation and policy agenda for commercially competitive plug-in hybrid electric vehicles

TLDR

Plug‑in hybrid electric vehicles combine grid electricity and liquid fuels for propulsion. The study aims to identify the technologies and incentives required for PHEV charging to support mainstream adoption. The analysis finds that, under current prices, millions of PHEVs could charge economically in California—especially off‑peak—but battery cost reductions or higher gasoline prices are needed for fuel savings to outweigh vehicle costs, and charging patterns determine whether the grid can accommodate several million vehicles without new generation.

Abstract

Plug-in hybrid electric vehicles (PHEVs) can use both grid-supplied electricity and liquid fuels. We show that under recent conditions, millions of PHEVs could have charged economically in California during both peak and off-peak hours even with modest gasoline prices and real-time electricity pricing. Special electricity rate tariffs already in place for electric vehicles could successfully render on-peak charging uneconomical and off-peak charging very attractive. However, unless battery prices fall by at least a factor of two, or gasoline prices double, the present value of fuel savings is smaller than the marginal vehicle costs, likely slowing PHEV market penetration in California. We also find that assumptions about how PHEVs are charged strongly influence the number of PHEVs that can be charged before the electric power system must be expanded. If most PHEVs are charged after the workday, and thus after the time of peak electricity demand, our forecasts suggest that several million PHEVs could be deployed in California without requiring new generation capacity, and we also find that the state's PHEV fleet is unlikely to reach into the millions within the current electricity sector planning cycle. To ensure desirable outcomes, appropriate technologies and incentives for PHEV charging will be needed if PHEV adoption becomes mainstream.