North America

Night Moves: The Future of Charging Electric Cars in Ontario

The Ontario government recently announced a plan to subsidize electric cars by up to $14,000 per vehicle and pay for them to be charged at night, among other things. Night-time charging is a key factor in electric vehicle ownership, as in most cases it takes several hours to charge an electric car.

This begs the question: what will the price of overnight electricity in Ontario be in the years ahead?

Today overnight electricity is cheap because most nuclear power plants in Ontario and coal plants in nearby states like Michigan cannot easily be turned off at night, in contrast to gas plants or hydropower facilities which can more easily ramp up and down their output to match real-time electricity demand. An estimated 60 percent of Ontario’s power is generated from nuclear, compared to around 15 percent in Canada as a whole and 20 percent in the US. Around 50 percent of the power in Michigan, Pennsylvania, Ohio, Indiana, and Illinois (states that are close to Ontario) comes from coal, compared to 33 percent in the US as a whole and 10-15 percent in Canada. Ontario and the Midwest are also among the leaders in wind turbines, which do not turn off at night either, and Ontario, Illinois, and Pennsylvania are by far the top three North American producers of nuclear power.

Going forward, however, there are compelling reasons to think that this overnight surplus of electricity will no longer exist.

The first reason is fracking. In the past few years the US has seen an enormous boom in shale gas production, which has been leading much of the country to begin switching off their coal plants and replacing them with cheap natural gas. The stock prices of US coal companies have already dropped by over 90 percent since 2014, and by over 97 percent since 2011. As more gas and less coal is used to generate electricity, the price of overnight electricity is likely to spike relative to the price of daytime electricity, since gas plants tend to be far easier to shut off at night than coal plants.

This is relevant to Ontario because the biggest gas booms in the US since 2010 have been in nearby states like Pennsylvania, and because Ontario already has the extensive natural gas infrastructure required to import and distribute American gas (especially via Michigan, which has the largest gas storage capacity in the US). Indeed fracking has made gas so cheap in the region that even Ontario might look to it again as a source of energy production, instead of building new nuclear plants or wind farms.

The second reason overnight electricity prices are likely to rise is robots. Machines that combine mobility with computation are highly energy-intensive, but, unlike humans, they do not need to sleep at night or relax in the evening. Take, for example, Amazon’s robotic warehouses: they have caused the company’s night-time electricity use to rise substantially since they were introduced, given that before they came along Amazon’s warehouses were either inactive overnight or else employed human workers who ran on food (and overtime pay) instead of electricity. If and when this robotic economy finally goes mainstream, then, such demand for overnight power could be replicated at large. We should expect late-night electricity use to skyrocket: robots are no longer science-fiction.

The final reason is environmentalism. In order to keep greenhouse gas emissions down (which is, after all, the main point of subsidizing EVs), many voters are pushing for more solar panels and wind turbines to be built. Solar and wind are complementary to one another, not only because the sun often shines brightly at different times as the wind blows strongly, but also because wind farms and solar farms usually inspire non-overlapping types of NIMBY-driven political backlash. Ontario already gets 5-6 percent of its electricity from wind compared to less than one percent from solar, so it might be that going forward its solar power growth will outstrip its wind power growth. Of course, solar power will not help to bring down overnight electricity prices. Even the wind, however, tends to blow less strongly overnight than during the day – a fact that runs contrary to conventional wisdom, since the wind can usually be heard more clearly at night.

As solar, wind, and gas replace dirtier coal in the regional electricity network, there will also be environmentalist-led pressure to stop heating homes with fossil fuels and instead adopt electric-powered heaters like those used in Quebec and the Pacific Northwest. This too would be likely to cause overnight electricity prices to rise. Quebec, for example, uses electric-powered heating and so has its electricity demand peak during frigid winter nights, whereas Ontario primarily uses gas-powered heating and therefore has its electricity demand peak during hot summer days. Should Ontario or nearby US states switch over to electric heating in order to reduce carbon and methane emissions from natural gas, the region’s overnight electricity usage will rise.

The need to help support solar and wind power could lead as well to the building of more pumped-hydro facilities, which pump water uphill so that it can flow back downstream through a turbine when other power sources are in low supply, such as when solar panels are blocked by clouds or the wind is not blowing. There has been talk lately of building more pumped hydro in Ontario, in places like Niagara and Marmora, as pumped hydro is the most efficient form of electricity storage. Given that Ontario’s daytime power is not cheap (at least, not by Canadian or American standards), this water would be pumped at night. It is an energy-intensive process, however, requiring 20 percent or so more energy to pump uphill than is generated from releasing it back downhill. Thus it would lead overnight prices to rise.

In closing, any electric-vehicle policy approach that assumes that Ontario’s overnight electricity costs will remain cheap is probably a shortsighted one. Ontario’s overnight electricity costs are likely to rise substantially as a result of natural gas replacing coal, robots working slavishly every night, and the move towards cleaner sources of energy like wind power and, especially, solar power.

Without being certain of future electricity prices,  the EV subsidy plan is like a leap, or Leaf, in the dark.

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3 thoughts on “Night Moves: The Future of Charging Electric Cars in Ontario

  1. Pingback: Future Economics

  2. Thanks for this blog post on electric cars; I really enjoyed it and am definitely recommending this blog to my friends and family. I’m a 16 year old with a blog on finance and economics at shreysfinanceblog.com, and would really appreciate it if you could read and comment on some of my articles, and perhaps follow, reblog and share some of my posts on social media. Thanks again for this fantastic post.

  3. Maybe we can, maybe we can’t … continue to act as if there ought to be no limits to our consumption of material goods.
    Electric cars don’t really address this underlying issue despite their feel-good presentation.
    We still have to create the materials for the cars and the charging stations and the roadways, etc. etc.
    I certainly may be wrong. However, I don’t think that there is going to be an ultimate technical solution to our social problems.
    Well, at least, I suspect that there won’t be a benign technical solution!

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