Electric vehicles explained (Part 2)

26 September 2023

The AIBE Explainer series provides a breakdown of some of the key economic issues facing Australians today. This explainer has been written by our Director Professor Flavio Menezes, AIBE’s Westpac Fellow Dr Andrea La Nauze and HDR Scholar Thara Philip.

Electric vehicles (EVs) are crucial for Australia's road transport sector to reach a net-zero emissions goal by 2050. In our previous Explainer, we discussed EVs and compared the expenses of charging them to traditional fuelling methods. In this second instalment of our EV Explainer series, we will delve into how EVs can actively contribute to the transition of the electricity grid towards renewable energy sources.

As the number of EVs increase, the demand for electricity to power these vehicles also increases. Globally, EVs could require between 525 TWh and 860 TWh of electricity in 2030, up from 80 TWh in 2020. The impact of EVs on the electricity sector goes beyond the increase in demand, as it will also affect the electricity load curve – the amount of electricity demanded throughout the day. This is important because when and how EVs are charged will determine their overall impact in reducing greenhouse gas emissions. It will also determine their impact on the grid itself: the ability to optimise the power grid operation control, undertake network planning, and ensure grid reliability. For example, an EV user who charges during the evening peak will contribute to an increase in emissions compared to charging outside of peak hours. This is because the extra load will likely be met by fossil fuel generators, and if many EV drivers follow this trend, it may lead to costly network expansion. Similarly, unpredictable EV charging patterns will make it more difficult to plan network expansion, raising the cost of the energy transition.

Below, we explore what individual EV owners can do to assist with the energy transition in a way that is cost-effective for them.

vector art of electric vehicle plugged into green energy grid.

When is the best time to charge my EV from a financial viewpoint?

A general rule of thumb is to charge outside of the evening peak hours or high-energy use times, which are typically from 4pm to 8pm. Charging off-peak can lead to cost savings and also assist in reducing peak demand by avoiding costly network expansion and additional investment in generation to meet peak demand, currently mostly met by fossil fuel generators. Wholesale electricity costs have traditionally been low at night to reflect the fact that it is costly for coal-fired power stations to adjust their electricity production. Coal-fired power stations are referred to as baseload generators for this reason, and their bids tend to be low during periods of low demand to ensure that they are dispatched by the market operator. The market operator orders bids from lowest to highest, dispatching all generators that bid below the price at which the amount bid equals demand. Of course, the increased penetration of renewables has reduced the need for baseload generation.

Many retailers offer Time-of-Use (ToU) tariffs that establish varying electricity rates according to the time of day. Currently, these rates are typically low overnight due to lower levels of demand and wholesale costs during these hours of the day. Capitalising on these lower tariffs, EV users can charge their vehicles at home during periods of reduced electricity demand, ensuring cheaper EV charging. For those without rooftop solar and who charge their EV at home, charging at reduced ToU rates is usually the lowest cost method. ToU tariffs are also applicable at many public charging stations.

For those with rooftop solar, or rooftop solar and battery systems, charging using electricity generated from their rooftop solar that would otherwise be exported to the grid will usually be the lowest cost method. The feed-in tariffs paid by retailers for electricity exported to the grid are typically much smaller than the tariffs charged for consumption from the grid.

When is the best time to charge my EV from an environmental viewpoint?

The environmental impacts of charging at different times of day are more nuanced. EVs produce zero tailpipe emissions, and greenhouse gas emissions produced by driving EVs are also zero if they are powered by renewable energy. An EV charged through renewable sources like solar and wind boasts a greener footprint compared to one relying on coal or gas generation.

So, are EVs in Australia powered by renewable energy? The emissions impact of electricity use depends on where the additional electricity comes from. This is called marginal generation. At the moment, any increase in electricity demand is usually met by additional coal or gas generation, but increasingly, during the middle of the day, it will be solar. Why is that? In part, it is thanks to Australia's high rate of rooftop solar penetration, with more than one-third of households adopting rooftop solar. Solar power generation peaks during the day, typically from 10am to 4pm, depending on the region and weather conditions. This substantive increase in rooftop solar has reduced the demand for electricity from the grid in the middle of the day in what historically was the peak period. This is called the duck curve, which shows over time the change in the electricity load curve throughout the day for a particular day.

When additional electricity use comes from live or stored solar and wind power, EV charging is emissions free. EVs that are charged in the middle of the day therefore tend to support the transition to a renewable grid. Importantly, as the penetration of renewables increases, financial and environmental considerations will converge. Cheaper charging options are already becoming available during daytime hours, with some retailers currently offering cheaper rates during the middle of the day. Soaking up this abundant electricity by charging during the middle of the day will therefore be cheaper, lower the stress on the grid, and have positive environmental impacts. The increase in the uptake of home and community batteries will allow the benefits of rooftop solar EV charging to extend beyond daytime hours and to be shared with others who can’t install rooftop solar.

Some employers and organisations are also setting up charging stations that are fully powered by renewable energy. For example, as part of UQ's commitment to sustainable transport, EV charging stations have been installed for use by the UQ community. UQ’s infrastructure includes the 64-megawatt Warwick Solar Farm that is powering UQ to 100 per cent renewable.

An aerial view of UQ's Warwick Solar Farm while under construction in 2019
An aerial view of UQ's Warwick Solar Farm while under construction in 2019.

How can I optimise charging my EV?

Most EVs come with programmable charging settings that allow users to schedule their charging times. This means that EV users can plug in their vehicles at their convenience, and the EV would draw power from the grid only during the scheduled time. EV owners can aim to maximise their benefit from lower electricity rates and reduced environmental impacts through prudent use of this technology.

Third-party smartphone applications are available to help EV owners schedule and automate their charging. These apps consider factors like electricity rates, renewable energy availability, and optimal charging times. For instance, the smart charging app ChargeHQ allows you to monitor your rooftop solar production and automate EV charging accordingly.

Man charging electric vehicle and managing charge with phone app.

What is the future of EV charging?

Australia's EV charging future is on the brink of innovation, poised for a dynamic transformation through the introduction of smart charging technology. This technology encompasses both managed charging (V1G) and Vehicle-to-Grid (V2G), promising a step change in our charging infrastructure.

Managed charging (V1G)

Managed charging, often referred to as V1G technology, enables EVs to intelligently adjust their charging rates and schedules in response to grid demand and the availability of renewable energy sources. In Australia, various initiatives are actively working to establish managed charging programs aimed at optimising energy consumption and alleviating grid strain during peak usage times. Two notable examples include the AGL EV smart charging trial and the Endeavour Smart EV Charger plan, both of which are presently accessible for EV owners to enrol in.

Vehicle-to-Grid (V2G)

V2G technology empowers EVs to feed surplus energy back to the grid. This capability takes on increased significance when considering the duck curve we discussed earlier. By choosing to charge during daylight hours, EVs can actively assist the grid in managing demand, thereby enhancing its overall performance and stability.

Crucially, when vehicle-to-grid functionality is activated, capable EVs can export surplus energy stored in their batteries back into the grid during peak usage times. Looking ahead, it's projected that the National Energy Market will require a substantial 640 gigawatt-hours (GWh) of energy storage by 2050 to transition to renewable energy sources effectively. Remarkably, EV batteries are expected to offer about four times the necessary capacity. By harnessing even a fraction of this potential through technologies like V2G, there exists a significant opportunity for substantial savings, potentially saving billions of dollars on large-scale battery and network infrastructure expenses.

vector art of smart energy grid with multiple power sources.

In conclusion, smart charging holds great promise for propelling the growth of Australia's sustainable transportation and energy infrastructure through increased EV adoption. However, as explained above, the choice to charge during daylight hours using renewable sources presents a key opportunity for EV owners today to actively contribute to the cost-effective transition to a net-zero emissions future.

Ongoing research by AIBE seeks to uncover the most effective incentives to encourage EV owners to charge their vehicles at the most opportune times.

Read more about the UQ CHARGE-EV Project