Tuesday, May 19, 2009

The United States Postal Service & Power Company?

Switching to electric delivery vehicles would enable the U.S. Postal Service to make millions by selling electricity and to reduce delivery costs by millions as well, a postal expert says.

Batteries for the electric vehicles could be charged during off-peak hours and kept connected to the grid, writes Michael Ravnitzky, Special Assistant to Commissioner Ruth Goldway of the Postal Regulatory Commission, in a paper published today on the PRC’s Web site. When not being used in delivery vehicles, stored power in the batteries could be sold back into the grid at times of peak or unexpected surges in demand.

(A presentation Ravnitzky did recently on the concept can be found here. The paper grew out of an op-ed piece Ms. Goldway wrote for The New York Times.)

USPS’s fleet of 142,000 right-hand drive delivery trucks is nearing the end of its useful life. The vast majority could be replaced by electric vehicles using today’s battery technology, Ravnitzky writes.

“Most daily mail delivery routes are short, repetitive and well-defined, and include many stops, making the postal delivery fleet a prime application for electric drive vehicles. The electrification of the postal fleet could significantly reduce gasoline and maintenance expenses while reducing the fleet’s carbon footprint,” he says.

“Historical experience with electric drive vehicles suggests maintenance cost reductions of at least 30 percent to 50 percent,” he writes. That, and an electricity cost that is equivalent to 80-cents-per-gallon gasoline, suggests annual savings for the Postal Service could be in the hundreds of millions of dollars.

On the revenue side, Ravnitzky sees more opportunity from storing electricity and having it available to the grid on a contingency reserve basis than from actually selling electricity. As such unreliable sources as wind and solar power became more of a factor in the grid, he notes, the needs to store electricity and have it available on a rapid-response basis will grow, he says. He estimates $2000 to $2500 annually in revenue per vehicle from various “V2G” (vehicle to grid) services – which would mean several hundred million dollars if most of the fleet went electric.

“The operators of the electrical grid are essentially running a massive just-in-time delivery system and it can be tricky to keep this system balanced."

Electric vehicles cost more upfront than gasoline-powered ones, and some investment in battery-charging operations would also be needed, according to Ravnitzky. Mass production of the expensive batteries would reduce the cost and presumably give a leg up to manufacturers developing similar products for the consumer market. Further study is needed to provide detailed information on capital costs, operational savings, revenue potential, and environmental impact, Ravnitzky says.

Perhaps his vision could be employed to provide a simultaneous bailout for three needy recipients – American car companies, the U.S. Postal Service, and the environment.


Gary said...

Thinking the Postal Service can make money by storing power in vehicle batteries and selling it back to the grid when the vehicles is not is use is just plane nuts. The vehicles will be in use at the time of high electricity demand. And batteries are a very expensive way to store electricity. But carry on. This one should be fun.

Does anyone know how postal vehicles are holding up? When they were bought, they were supposed to last for 20, or was it 30 years. What is the true story?

dr droock said...

What's really nuts to me is the whole idea that you can have intelligent electrical grids that can receive as well as send power. But it seems to be true.

The other really nuts thing is GM, Chrysler going bell up..etc etc etc.

Anyone in this business should know that just because something is nuts, is no reason to believe it might not happen.

Should be interesting to see how it all plays out.

Michael Ravitzky said...

The idea in the paper is a little different than has been described by a previous commenter. The paper actually recommends AGAINST selling power back to electrical system operators for peak supply purposes. Instead, a key financial benefit to the Postal Service and a way to help defray the cost of the delivery vehicles would be selling what are called ancillary services to the electrical system operators such as frequency regulation.

Frequency regulation is needed by electrical system operators to keep the electrical grid frequency at the correct value as the load changes throughout the day. The Postal Service can add or remove small amounts of power to adjust (raise and lower) the electrical supply frequency as the load changes, faster than power plants can possibly accommodate.

Frequency regulation requires relatively small amounts of electrical energy in and out and is worth much much more than the original cost of purchasing that power during off peak hours. The reason for this is that currently there are almost no ways for electrical system operators to store electrical energy. It must be used or thrown away.

For example, the Postal Service could purchase power during off-peak times at 8 cents per kilowatt-hour and sold back for frequency regulation at, say, 50 dollars per kilowatt hour.

The Postal Service could sign contracts with electric grid operators agreeing to provide such services upon demand during the available hours and days.

Electric drive delivery vehicles would also be less expensive to operate per mile than the existing gasoline vehicles, and be less vulnerable to changing gasoline prices.