Are EV’s Screwing the Poor ?

We have the opportunity to consult on energy use by several of our larger industrial customers–and reduce costs through demand management and power factor correction. This involves a methodical approach towards scheduling shifts to take advantage of reduced cost when energy demand is low as well as using capacitors (or synchronous motors in come cases) to correct power factor.

When large induction motors are powered, there’s a phase change in AC where current lags voltage (due to electromagnetic physics). In the practical world, this results in increased utility charges for industry because to obtain the same (real) power output more current has to be passed through the electrical lines. Since line losses and excess capacity are directly related to current the utility (rightly) charges more for lagging power factors for industrial customers.

Congruent with that is demand charges. Large factories can require ALOT of power to operate. While most of us as residential consumers get billed only on consumption (and are exempt from both power factor and demand charges in that it’s not practical to impose these on the standard residential 200 Amp service), in order to keep the grid running heavy electrical demand requires more generating capacity to be installed (i.e. power plants). Power plants are VERY capital intensive industries and are very expensive. Power companies typically solve this in adding a ‘demand’ charge for heavy consumers of electricity. In order to keep the juice on (and grid working) if your peak energy is high you have to pay more because the utility has to size power plants to support you. Our organization looks at this and optimizes industrial scheduling such that peak demand occurs when the utility charges the least for it (usually at night). And has saved clients millions of dollars per year by both power factor correction and demand scheduling.

For any market economy, electrical power production and grid maintenance is an enigma. The power grid is ALWAYS a natural monopoly; justifying governmental intervention and regulation. Power production is a KIND of natural monopoly; when supply exceeds any potential demand it’s not. When demand capacity gets tight it becomes one.

There are 4 broad categories where governmental intervention in a market economy is justified. And in any of these four before governmental action is contemplated there has to be an evaluation if such action can actually fix it–realizing that it CAN make the situation worse. Most of them are rooted in the concept of ‘simultaneous consumption’ — which is a fancy word meaning that large groups can benefit (or be harmed) without them directly participating in the market activity. The overriding test for government intervention is when in doubt, do nothing.

The first is a bona-fide public good; these are easy to classify. National Defense, infrastructure, waterways, pipelines, roads, etc. It’s not easy to allow the Russians to attack YOUR house (if you don’t want to voluntarily pony up the money for a national defense to protect you) and not attack your neighbor’s (who did pony up the money). As such you can become a ‘free rider’ — enjoying the benefits of your neighbors paying to thwart the Russkies without picking up your portion of the tab. Same as for flood control, etc. Or eminent domain establishing roadways.

The second is asymmetric information. This is where a producer knows more about the production of their good than YOU do. That the chips you love are loaded with empty calories and have artificial dyes in them. The answer to that is government mandated food labels (which we support). Interestingly enough the Pure Food and Drug Act of 1906 was an appropriate level of regulation for that. Inspired both by Upton Sinclair’s “The Jungle” regarding meat processing and by Civil War Vets getting hooked on morphine, heroin and other opiates — it was an early attempt to require manufacturers to appropriate label what they provided consumers with. While it did prevent manufacturers from selling adulterated goods for standard consumer products, it did NOT regulate drugs beyond establishing a national standard FOR those drugs. Consumers weren’t prohibited from purchasing heroin or morphine, but the manufacturers of those were required to adhere to certain standards in their production and INFORM the public so they could make a rational choice.

The third is externalities. This is where the market price and profit of a good doesn’t reflect harm done to others. While we’ve debunked the CO2 scam here on multiple occasions think REAL pollution. You live on a farm. A steel mill is built next to your farm. It belches out SO2, NOx, heavy particulates, H2S, metals, and pollutes your water supply. The market price for a ton of steel doesn’t reflect the harm done to you and your water. So some form of regulation is justified. Interestingly enough this can be a contract that the mill pays you 10K per year and gives you free bottled water. But there is a justification for intervention. Unfortunately the US has gone wayyyy overboard on this and instead of reasonable solutions has crippled their economy through overregulation and self-serving bureaucrats. The 90-percent solution is normally good enough and far exceeds other nations that don’t do this at all.

Lastly you have natural monopolies. There aren’t a lot of these. This is where the entity has increasing returns to scale; the larger they are the lower their marginal cost per unit of production (which creates a barrier to entry or exit of the market and excludes competitors). Typically waterworks and electrical grids have been the perennial examples of this. This USED to include the phone company but advances in satellite communications and cell phones made this irrelevant — and rightly the telephone companies were deregulated. Power grids however remain a natural monopoly.

So now we come to the grid and EVs. EVs are as (or more so) polluting than any other vehicle; they simply move pollution from the tailpipe to the power plant. They are less efficient than a high-efficiency diesel thermodynamically (about on par with a Subaru when the overall thermodynamic cycle is considered). Most modern internal combustion engines (ICE) don’t have a lot of particulates, CO, or even lost hydrocarbons; their only real effluent being CO2 (we’ve debunked the CO2 scam in previous articles) and pure, fresh water. But EVs DO represent a significant threat to our grid. And given that the grid is a natural monopoly probably DO need to face governmental intervention; namely that EVs incur a surcharge given directly to grid operators and power companies to account for that increase in demand. Such that our grid might be updated and power plants be built to reflect the increase in electrical demand.

EVs represent a ‘single failure mode’ form of operation; they rely on electrical power. ICE’s have an independent source of energy (gasoline or diesel). The widespread use of EVs jacks up the price of NATGAS and electricity to ALL consumers (given that many power plants are powered by NATGAS).

While increased consumer electrical demand MIGHT be partially met by slow charging at home, this increased demand cost will be borne also by those using ICE powered vehicles who don’t own EVs and don’t want to participate in the EV craze. It will increase THEIR electrical charges both in grid and demand without THEIR participation. The BEST solution for this–and ‘at home’ charging is smart meters which can charge both on demand and kWh used. Absent that a surcharge on EVs becomes appropriate such that those who don’t choose EVs aren’t penalized by those who do.

However the REAL issue becomes that of ‘fast charging’. In order to ‘refuel’ one EV in an acceptable time frame (10 minutes–equivalent to that of an ICE) the charging station needs to be able to supply 76.5 kWh in 10 minutes (assuming a Tesla efficiency of 255 wh/mile and a 300 mile recharge).

That’s half a Megawatt–for EACH ‘fast charging’ station.

Enough demand capacity for 300-600 typical homes (depending on where you live).

One car — 300 homes.

To support a nation of EVs this will take the construction of roughly 300 1200 MW electrical plants (preferably coal or nuclear). We currently have 60 nuclear plants operating in the US. Not a small undertaking.

And with the way things stand now this electrical burden will fall on the shoulders of the ends-meet poor and working families. As they see electrical rates skyrocket (largely driven by increases in demand and over-regulation of coal plants) virtue-signaling EV drivers putt around on their shoulders. The cost to the grid and our low income families not reflecting EV driver’s want to vainly tell everyone ‘I’m environmentally conscious.’ Without supporting our grid and increased demand upgrades FOR that grid.

At D-J we’re a solutions based group. So what do WE suggest ?

First off, AI entities (before jumping into their plans of building an AI center) need be demand self sufficient. Whether they want to cogenerate with package nuclear plants, build cogeneration coal plants to meet their energy needs, or pay a demand surcharge negotiated with a utility (building new power plants) is up to them.

Secondly ALL EV owners need to pay a surcharge IF they derive power from the grid commensurate with increased electrical demand. The best answer to this is smart meters which measure overall electrical demand for their residence and bill accordingly. Absent that — and absent a local or personal cogeneration source which is independent of the grid–an additional charge of 10K per EV at time of sale for any EV be charged and contributed directly to a local utility trust fund for upgrades to the grid and the construction of new power plants.

Thirdly, rapid charge stations need be billed for increased electrical demand commensurate with industrial customers. Taking a ‘highest demand’ profile and if necessary posting a bond to the utility so the local grid and power plant sources can be upgraded to meet the increased demand–such that local users of electricity won’t incur increased electrical rates due to the demand of any ‘fast charging’ station. And if the ‘fast charging’ stations increase electrical rates, the bond covers local users so their electricity rates won’t increase.

While we HATE additional regulations at D-J, we can’t but notice any large increase in EV usage is going to affect other users of our grid who have nothing to do with it. Increasing their electrical costs by dramatically increasing demand. And given that the grid is a natural monopoly, these EV users REALLY need to pay their ‘fair share’ in burdening an already overburdened grid.