Impact of electric cars on the Swiss electricity market

Transcription

1 Impact of electric cars on the Swiss electricity market Tesla roadster Sandro Pelaez April 20 th 2011 Energy Economics & Policy 2011 Dr. Thomas Rutherford ETH Zürich

2 1. Contents 1. Contents Summary Introduction General view of energy consumption in Switzerland General energy consumption Electricity consumption Changes in electricity production sources Facts of electric cars and mobility Today s electricity-powered cars Driving behavior in Switzerland Impact of electric cars in electricity consumption Need of energy for electric cars Impact in the total energy consumption Influence of electric cars in electricity consumption Political thoughts Conclusion Bibliography Figures Addendum

3 2. Summary In times in which electric cars are starting to be bought by customers instead of gasoline cars, everyone is enthusiastic about the gains in terms of energy efficiency and CO 2 emissions. But on the other hand, there are also threats concerning the introduction of these kinds of cars. One of the biggest challenges is the availability of enough electric energy at a reasonable price. In this paper a small model using the relevant energy data from Switzerland is made and is going to show the dimensions of the impact of electric cars into energy market. Further we will concentrate on the electricity market and the magnitude of the change in terms of electricity consumed. We will analyze the increase of energy in different scenarios. Finally it will be made an easy explanation of the possible consequences if the necessary regulations for the market are not made early enough 3

4 3. Introduction Today a revolution is taking place in the mobility industry. People are becoming conscious about the problems with pollution and global warming as well as the prices of gas are climbing to horrendous heights. At the same time technologies are reaching a state, that allows producing energy efficient and CO 2 -emission free, but still affordable cars. But which is the real impact to a normal Swiss customer in Switzerland in terms of electricity consumption? Four out of five households in Switzerland have minimum 1 car and 30% of all households have two or more cars (Bundesamt für Statistik & Bundesamt für Raumentwicklung, 2007). So we can tell that almost everyone is being affected by the entrance of electric and hybrid cars in the market. These cars are going to influence various factors in a direct way, like the car prices, the pollution or the CO 2 emissions. Further the impact of electricity-powered cars will probably also have influence on other related areas, like the electricity market is. 4

5 4. General view of energy consumption in Switzerland 4.1 General energy consumption The energy consumption Worldwide is developing nowadays very fast. Not only the quantity is increasing, but also the energy sources are changing. Following graph shows where the total consumed energy in Switzerland comes from. Figure 1: Total energy consumption in Switzerland by energy source ( )(Bundesamt für Energie (BFE), 2010) We can observe, that in the 50 s and 60 s the energy consumption rose exponentially based on fossil fuels end in the 70 s the electricity consumption begun to rise. Today s cars mainly run on gasoline, which in Figure 1: Total energy consumption in Switzerland by energy source ( ) fits into the red area. 4.2 Electricity consumption Electricity consumption in Switzerland is still growing, despite all the new green technologies being developed. If we observe the newest available energy consumption data for Switzerland, we see that only in the last year it grew 4% (Tagesanzeiger, ). 5

6 Figure 2: Total Electricity Consumption in Switzerland [Billion TWh] (Tagesanzeiger, ) The main causes for this increasee are the population and economic growth. New energy-saving technologies and policies seem to be able to slower the energy consumption arise, but not to lower it. As explained later on energy production will possibly experience a shift in energy sources. This could be related to a temporary lack of energy if energy consumption continues increasing. Figure 3: Energy consumption per capita (Data from BFE, 2010)Figure 3 shows the energy consumption since 1990 and its trend line. Electric energy consumption [kwh] Electricity consumption per capita per year[kwh] Energy consumption per 5000 capita [kwh] Trend of Energy 2000 Consumption Year Figure 3: Energy consumption per capita (Data from BFE, 2010) In which the trend line is calculated by a regression and follows a logarithmic curve: ln Year In which The R 2 -value is 0.8, which predicts a good model. 6

7 This demand increase could generate in the future a supply shortage, which could lead to increasing prices. The switch of gasoline to electricity may be one big factor in future, whichh will affect additionally the electricity demand not in the whole world, but also specially in Switzerland. 4.3 Changes in electricity production sources As told before, another relevant issue for further development of the electricity market is the source from which electricity is produced. In Figure 4 we can observe the increasing electricity production in Switzerland which is relative to the consumption split up in their sources. One important fact we see is that while storage power stations (Speicherkraftwerke) did not raise much since the 70 s, the nuclear energy production increased to cover the needs for energy. Figure 4: Energy production in Switzerland by source (Bundesamt für Energie (BFE), 2010) In energy policy there are many challenges nowadays. On the one hand the energy consumption remains growing and the production must increase. Further oil prices are growing and the threat of global warming are forcing us to decrease the usage of fossil power sources for electricity production. The latest incident in the nuclear plant of Fukushima (Japan) showed us, that also nuclear energy hides huge dangers. Forgotten voices are getting loud again, requesting for a fast leave of the nuclear energy or at least not to build anymore. Even if this will not be the case, incremented security arrangements will possibly make nuclear energy more expensive. If we observe the influence of this event to the situation in Switzerland and add it to the fact, that renewable energy sources need time and money to be established, we deduce that energy prices will rise for sure. 7

8 5. Facts of electric cars and mobility 5.1 Today s electricity-powered cars Not all technologies are the same interesting for the consumers depending on their technology or the range they can reach without having to recharge the energy. Basically there are three different types of cars containing electric motors available on the market: - Pure electric cars: They store their energy mostly in (chemical) batteries and are powered only by electric motors. - Hybrid cars: A hybrid car is a car, which uses two or more distinct power sources (Wikipedia, 2011). There are many combinations for hybrid cars, but the most commercialized cars are with a combination of electric and combustion engine. Their advantage is that the batteries can be loaded while breaking or with the excess of energy produced by the combustion engine. - Plug-in hybrid cars: This is a subcategory of the hybrid cars. The special point, why it is worth to list them separately is, that the batteries of their electric power source can be loaded directly by plugging them to an electric power source. This is an additional feature which gives the user the possibility to drive even cleaner (hybridcars.com, 2011). The user will have to decide which of the cars pays off for his needs. While electric cars only have a range of about km, hybrid cars can reach as much as a gas car, because they also use gasoline. Following the visions for the future, there will be only place for cars which do not emit CO 2. For this study it is assumed, that only electric cars substitute the gasoline cars although it could be that other technologies are introduced and change completely the structure. Electric cars have an efficiency of around 20 kwh/100km (Wikipedia, 2011). Of course this value is without taking into account the efficiency of electricity production, which is not needed for our purpose. 5.2 Driving behavior in Switzerland Despite one of the worldwide best public transportation systems, in Switzerland cars are still wellused means of transportation. From (Bundesamt für Statistik & Bundesamt für Raumentwicklung, 2007) a trend of distance driven per person and per day can be read: Km per day per person in car km Year km per day per person Figure 5: Km driven per person and day in a car 8

9 The distance seems to be very low, but increasing. Other references, like from the city of Zürich (Tiefbauamt Stadt Zürich, 2009) tell from average distances of km in For this study a conservative number of 25.5 km per person and per day is taken. 9

10 6. Impact of electric cars in electricity consumption 6.1 Need of energy for electric cars For calculating the extra electricity needed for electric cars following calculation is made. We suppose a 100% replacement of electric with today s means of transportation. With following data given: - Distance driven in cars per day and per person: - Energy efficiency of electric cars: 25.5 # =0.2 h - Number of people in Switzerland (The World Bank, 2009): We calculate the total energy used per year: = # = 365=14.4 h Impact in the total energy consumption With the substitute of gasoline cars through electric cars, we will replace the energy needed for gasoline through electric energy. The energy needed for gasoline can be calculated from the average gasoline consumption of the cars in Switzerland and the energy density of gasoline (12kWh/l): - Average gasoline consumption (Auto Schweiz, 2007): =6.9 - Energy density of gasoline (Wikipedia, 2011): =9.5 h Total energy in form of gasoline needed for private cars: = h 1 This total energy is neglecting losses of energy while charging the cars and related to the supply of electricity. 10

11 Of course this view is unfair, because in the energy consumption of the gasoline cars there is a wheel to wheel efficiency included, while in the electric cars the electricity production is not included in the calculation. Indeed in statistics a 100% of switch to electric cars would show a decrease of 100% =99.7% In terms of energy consumption needed for private mobility. 6.3 Influence of electric cars in electricity consumption The much more interesting part is the impact, which electric cars could have into the electricity market. As calculated before, 100% of electric cars would use totally 1900 kwh per person and year. For symbolizing the impact of the electric cars into the electricity market it makes sense to compare the electricity need with the forecast for consumed energy (See Figure 3: Energy consumption per capita (Data from BFE, 2010)). For better understanding an amount of 10%, 50% and 100% of electric cars compared to the total number of cars is calculated: Electricity consumption per capita per year [kwh] Electric energy consumption [kwh] Year Energy consumption per capita [kwh] Trend of Energy Consumption 10% electric cars 50% electric cars 100% electric cars Progressive increasing Figure 6: Electricity consumption per capita with electric cars By simply seeing this picture we see the significance of electric cars in the energy consumption could be. For example the orange curve shows the utopist situation in which every year 5% of the cars are replaced by electric cars. Figure 7 shows the percentage energy consumption expected for 2020 if the normal energy consumption keeps developing like until today and electric cars are introduced. 11

12 10% electric cars 50% electric cars 100% electric cars Electri c cars 2% Rest of Electri city 98% Electri c cars 10% Rest of Electri city 90% Electri c cars 19% Rest of Electri city 81% Total: 8415 kwh Total: 9171 kwh Total: kwh Figure 7: Percentage illustration of impact of electric cars in electricity consumption in 2020 If all the cars would switch to electricity until 2020, energy consumption per capita of kwh and electric cars would do almost 20% of this consumption. Because of the regulated electricity market in Switzerland, a relationship between energy prices and consumption cannot be confirmed. The calculation of the regression with Stata (Figure 8) even would show a decrease of price with augmenting energy consumption over the years between 2004 and But the statistical values show, that there may be no relationship between this two factors Electricity Price Fitted values Figure 8:Relationship between energy prices (Rp) and electricity consumption (GWh). Data from (Bundesamt für Energie (BFE), 2010) This can be explained by the big reforms which are taking place in Switzerland over the last years. For example, the market structure is changing slowly from a defined monopoly system to a competitive market or new organizations like Swissgrid where invented to reduce costs. 12

13 Energy policy is in a very fast moving moment in Switzerland and that is why it is expected, that many changes will happen in the next years. Nevertheless a prediction of the impact of electric cars based on the actual situation can be made using basic microeconomic rules. With them a forecast of the different development possibilities can be made. Following dynamics in the electric industry could be activated if electric cars are introduced in the big style 2 : Due to all previously named problems, there will probably exist an energy shortage or at least, an energy shortage could arise when electric cars expand. We start from a stable market with the demand and supply curves like in Figure 9 in which P1 and Q1 are the starting price respectively the starting quantity supplied: 4.5 Price P D Q1 S Quantity Figure 9:Electricity market supply and demand at the beginning Then energy shortage arises, which brings the demand curve to switch to the right: 4.5 Price P P D1 Q1 D2 Q2 S Quantity Figure 10:Electricity market supply and demand after the demand increase 2 For this suppositions all previous assumptions and situation descriptions are used. 13

14 If the government still does not intervene, more energy will be produced and the electricity prices will go up (P2). In this situation it is possible, that electricity reaches too high levels for having an electric car. It is also probable, that with the entry of electric cars, less gas is sold and thus gasoline prices decrease. Thus if electric cars still have higher prices than cars with an combustion engine, it will become unattractive for people to buy an electric car, which will maintain an equilibrium between electric and gasoline cars. 14

15 7. Political thoughts For politicians there are three mayor issues to solve: 1. To manage that there is enough energy in the future 2. That this energy is affordable 3. To set develop norms for environmentally safe production and use of energy While in the first one the only options are to increase energy production or to decrease energy consumption, other two are very contradictory and set a lot of challenges. Electric cars are at the first point of view solving the first and the last problems: They are efficient (thus they use less energy) and they are theoretically environmentally safe. With the small model showed before we can see, that the introduction this technology not can influence negatively on the electricity availability, but consequently also in the price. As we all know, actually the most affordable and convenient energy sources (if we only look at the quantity and price) are not really renewable. If there is an energy shortage it is very possible, that the lack of energy will be filled by these dirty technologies. As follows we can deduce that electric cars possibly will not bring the results we need, at least not in the short term. On the other hand, we could demonstrate that the influence of the electric cars into the already short market will result in a situation, which will make the acquisition of them less attractive. Finally politicians will have to decide, if it is really so important to get rid of gasoline or if it is maybe the less worse case. If it is finally showed, that this has to happen some conditions must be created: - Enough energy must be available - A price structure must be introduced, which makes affordable to use electric cars - The pricing structure must also allow that electricity is still affordable for normal users. 15

16 8. Conclusion The car industry is very hard developing energy efficient cars with renewable energies. Consumers are willing to buy these cars as soon as they become affordable. Everything seems like a normal market situation with sellers and buyers. But as showed in the easy model before, the influence of electric cars into the energy industry is too big to let this situation take its own dynamics. Electric cars will need lots of the already scarce electricity. This fact will influence the electricity market on a grand scale, which will not only affect the cars-owners, but also the other consumers. Politicians have to be aware, that if an introduction of these types of cars is wanted, more regulations are needed, than only supporting the purchase of them. A reasonable price policy has to be designed before and the electricity production must be assured in advance. 16

17 9. Bibliography Auto Schweiz. (2007, 06 01). Energieeffiziente Autos im Vormarsch. Retrieved 04 01, 2011, from Auto Schweiz: Bundesamt für Energie (BFE). (2010). Schweizerische Elektrizitätsstatistik Zürich: BBL. Bundesamt für Energie (BFE). (2010). Schweizerische Gesamtenergiestatistik Bern: BBL. Bundesamt für Statistik & Bundesamt für Raumentwicklung. (2007). Mobilität in der Schweiz: Ergebnisse des Mikrozensus 2005 zum Verkehrsverhalten. Neuchâtel: Bundesamt für Statistik. Bundesamt für Statistik (BFS). (2007). Mobilität in der Schweiz: Ergebnisse des Mikrozensus 2005 zum Verkehrsverhalten. Neuchâtel: BFE. hybridcars.com. (2011, 04 09). Retrieved 04 09, 2011, from Tagesanzeiger. ( ). Der grosse Energiehunger der Schweiz. Tagesanzeiger. The World Bank. (2009). Population. Retrieved 04 01, 2011, from The World Bank: Tiefbauamt Stadt Zürich. (2009). Kernzifferspiegel Zürich: Stadt Zürich. Wikipedia. (2011, 04 01). Electric Car: Energy Efficiency. Retrieved 04 01, 2011, from Wikipedia: Wikipedia. (2011, 04 02). Energy Density. Retrieved 04 02, 2011, from Wikipedia: Wikipedia. (2011, 04 07). Wikipedia. Retrieved 04 09, 2011, from 17

18 10. Figures Figure 1: Total energy consumption in Switzerland by energy source ( ) (Bundesamt für Energie (BFE), 2010)... 5 Figure 2: Total Electricity Consumption in Switzerland [Billion TWh] (Tagesanzeiger, )... 6 Figure 3: Energy consumption per capita (Data from BFE, 2010)... 6 Figure 4: Energy production in Switzerland by source (Bundesamt für Energie (BFE), 2010)... 7 Figure 5: Km driven per person and day in a car... 8 Figure 6: Electricity consumption per capita with electric cars Figure 7: Percentage illustration of impact of electric cars in electricity consumption in Figure 8:Relationship between energy prices (Rp) and electricity consumption (GWh) (Bundesamt für Energie (BFE), 2010) Figure 9:Electricity market supply and demand at the beginning Figure 10:Electricity market supply and demand after the demand increase

19 11. Addendum 19