Postal Service as Giant Battery? A Plan for Cashing In

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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 under $30,000. 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 electric fleet vehicle, 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 small number 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 legislation 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 study 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 announced 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, Huber says, 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 battery system 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

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