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Postal Service as Giant Battery? A Plan for Cashing In

By Elizabeth McGowan

Apr 5, 2010

Reporting from Washington

By trading oil for batteries, the struggling U.S. Postal Service could transform its fleet vehicles into overnight moneymakers that deliver much more than the daily mail.

The cash-strapped agency has the potential to earn millions by storing and stabilizing some of the nation’s grid energy in mail trucks during off-peak hours. The idea comes from PJM Interconnection, a regional electricity transmission organization (RTO) that transmits electricity to 13 states and the District of Columbia over 268,5000 squares miles east of the Mississippi River. PJM envisions “borrowing” the batteries of electrified fleets of postal trucks, school buses and trash trucks as cyclical energy sinks for its network.

“Right now, these fleets are just sitting idle at night,” explains Kenneth Huber, PJM’s advanced technology manager. “Charging those batteries would allow us to store wind energy and also balance load and generation at the right frequency.”

For that to happen, of course, plug-in and hybrid electric vehicles have to advance beyond the boutique stage.

The Obama administration has vowed that 1 million plug-ins of all varieties will be on U.S. roadways by 2015. BMW, Nissan and General Motors — with their respective Mini E, Leaf and Chevy Volt — are among 30-plus entrants in this potential “EV evolution." Mitsubishi announced last week that it intends to put an EV on the road for . Early adopters in places such as San Francisco and San Jose are already leading the EV charge, and stimulus money is giving momentum to a movement that has traditionally bumbled forward in fits and starts.

On the fleet side, Ford plans to begin selling an , the Transit Connect, late this year that will will run on lithium-ion batteries that can travel 80 miles on a single charge.

The Postal Service already has a of electric vehicles in its in fleet. Hypothetically, if it replaced its continental fleet of 144,000 mostly fossil-fueled delivery vehicles with battery-powered plug-ins, it could rake in annual payments between $237 million and $378 million from RTOs across the country. (More on that arithmetic later.)

Putting Wind Power to Use

Currently, plug-in owners in PJM’s service area could charge their batteries for free in the off-peak wee hours of the morning because much of the wind power generated then is going to waste.

Wind producers pump about 3,000 megawatts of clean energy into a PJM market that has a total of 164,895 megawatts of generating capacity. And Huber’s figures indicate wind generation at PJM expanding 15-fold in the not-too-distant future.

“Our storage capacity is at a minimum because we only have access to pumped hydro,” explains Huber, an electrical engineer. Very few industries in PJM’s territory have on-site water supplies for that kind of energy storage, so “that’s why we’re looking at compressed air, flywheels and batteries. The idea of these vehicles being available, that would be ideal.”

PJM sees potential for propelling its postal plan from paper to parking lot in the near future.

U.S. Rep. Jose Serrano (D-N.Y.) introduced in December that would spur vehicle-to-grid technology and require the Department of Energy to collaborate with the Postal Service to manufacture, test and deliver 20,000 electric drive vehicles for local postal delivery. A Serrano requested from the Office of the Inspector General last summer suggested that an initial launch of 3,000 electric postal vehicles could save the government $1,500 per vehicle every year in gas alone.

The challenge, the study pointed out, will be the initial funding. The Obama administration may be amenable to some investment, however. Just last week, the president that he would double the number of hybrid vehicles in the federal fleet to set an example for the nation.

Show Me The Money

An RTO such as PJM doesn’t own any assets. Instead, it is charged with controlling electricity delivery reliability and operating a market that pays wholesale prices for energy. In addition to frequency regulation, grid regulators require RTOs to meet certain standards with lost generation, price markets and black starts after power outages. Historically, maintaining a frequency of 60 hertz is vital for industry and other electric-powered machinery.

Frequency regulation is now the most lucrative market of the four, , and that’s why PJM sees an opportunity for Postal Service plug-ins.

Regulators require PJM to maintain a frequency regulation of 1 million kilowatts. Assuming that one electric vehicle has a power output of 15 kilowatts, PJM would need just over 60,000 such vehicles to meet 100 percent of its frequency regulation requirement.

For the past five years, PJM and other North American RTOs and independent system operators (ISOs) have paid $25 to $40 per megawatt hour for any equipment — which can include vehicles — participating in the regulation market, Huber says.

That’s how the Postal Service could cash in. At the range of reimbursement rates listed above, each of those 144,000 delivery vehicles plugged in for 12 overnight hours could earn between $4.50 and $7.20 per day. Sheer volume elevates that to real money — $237 million to $378 million annually. Even a fraction of that fleet earning money off the grid would pay off for the Postal Service.

The global power company AES already earns $600 to $960 daily from PJM’s regulation market because it keeps a megawatt stationary hooked to the grid 24 hours a day.

From USPS to Your Garage

While PJM is zeroing in on fleet vehicles that are parked all night, drivers of passenger car plug-ins shouldn’t feel left out. Utilities and RTOs nationwide are exploring how to tap into this potential bonanza of reserve power.

Constantine Samaras, an associate engineer at the nonprofit Rand Corp., is confident that plug-ins will become technologically efficient enough to be an integral piece of greening up the grid and the entire transportation sector.

He points out that replacing traditional cars with 10 million plug-in hybrids — models that can go 40 miles in all-electric mode — can reduce U.S. oil imports by up to 500,000 barrels daily, depending on what type of fuel is powering the local grid. That same fleet could slice emissions of heat-trapping gases by an estimated 5 to 20 million metric tons per year.

Furthermore, data from the U.S. Census Bureau indicate that 94 percent of American households could now charge a vehicle via home electrical outlets. That huge majority puts Samaras in clear agreement with the Electric Power Research Institute about making residential plug-in infrastructure a priority for utilities, regulators and all levels of government.

Pricing these low-emission but relatively expensive vehicles so American fleet operators and homeowners will open their wallets is a tricky business in a world of fluctuating fuel costs and so many other moving targets, Samaras says. Settling on the magic numbers for incentives such as tax credits and utility rebates is a balancing act for even the most skilled number crunchers.

Thus far, however, the White House seems undeterred. The Obama administration has dedicated $2.8 billion in stimulus grants toward electric vehicle research and development, according to a DOE spokeswoman. That complements the department’s 2010 electric vehicle R&D budget of $114.6 million — more than a threefold increase over the 2008 budget figure.

Those leaps are clear signals that the president is seeking a transportation game-changer in a sector with 246 million vehicles that spew one-third of the country’s greenhouse gases, says Patrick Davis, program manager with DOE’s vehicle technologies program.

“Infrastructure is expensive, so you can’t afford to follow a build it and they will come philosophy,” Davis says. “You have to get it right if you’re going to be selling a $30,000 electric car to people. It has to be quick, cheap and seamless.”

He is confident that infrastructure can be funded, batteries can be perfected and the price can be right.

“It’s not a question of if this can be done,” Davis says. “It’s when. And how do we speed this along?”


See also:

U.S. Postal Service Could Deliver America the Electric Car

Fuel Efficient Fleets Saving Corporations Money

Nissan Scores $200 Million for Biggest-Ever Electric Car Grid Project

Excellent discussion ...

The economic value, especially for early adopters, of PHEV/EVs' ability to act in a storage capacity for the grid is quite clear for those who study / work Smart Grid like issues. That the Post Office could help ease its financial burdens, in more than one way, via this value is one that (sadly) I hadn't thought of. Great piece, thank you for writing it.

A very interesting article.

A very interesting article. Potentially, people could literally transform their car into a power storage unit where they could sell power back to the grid. It is smart solutions such as this which could transform how we use energy in this country. We are finding more and more energy alternatives where the role of energy is being decentralized and integrated into small roles within society. These small roles make up the bigger picture where we as a nation are more energy efficient. And everyone can agree this is a good thing. Of course investment and time are two of the factors working against this scenario. This is where government must step in and continue to set the standards higher and provide the incentives to see this transition.

Miss the point?

It's possible that you missed a very large point in the story or at least mis-re-stated it. The story is not about selling back the power to the grid, which is economically suspect. As it states, the profitable part is frequency regulation for the grid. That doesn't happen during the daytime when they're driving around, it happens at night when the delivery vehicles are charging. So it's an extra $6 or so each night while they are plugged in and drawing (not returning) electricity. The extra $1500/year (at 250 working days annually) or maybe even $2,000/year if they can do it on weekends too could be enough to pay the extra expense of the battery if the battery last 8 or 10 years. Another unanswered question is what does this do to the battery lifetime. If it shortens it too much, it won't make sense economically, but my guess is that it won't hurt it too much.

I'm not sure about one major point. What's regulating the frequency during the daytime when my mail is being delivered? Will that vendor so easily surrender the regulation market at night? Perhaps so if it is something like a gas turbine that can easily come on line and just as easily shut off. But if it some other source, they may not just step aside for EVs. Like I said, I don't know, depends who does it now.

I think the point you're

I think the point you're missing David is that wind power is stronger at night, the time when these vehicle are plugged in, but that night wind is power is lost without this kind of storage.

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