How Electric Cars Could Save the Grid

Their idea is simple: electric cars have to plug into the power grid anyway to get their batteries recharged. Why not use those batteries collectively as electricity "sponges" to soak up and wring out the excess power from utility companies that fluctuates notoriously on any given day?

Utility companies would benefit because they'd have a place to store energy; car owners would receive a fee to participate; and car manufacturers would have an attractive selling-point by which to promote their vehicles.

And it doesn't take much to get started.

"If you can collect 300 cars, that fleet is sufficient for a utility operator to run a V2G operation," said team member Ajay Prasad, professor of mechanical engineering at the University of Delaware in Newark.

Car owners drive, on average, about one to two hours per day. So statistically, a large percentage of the total population of cars is sitting idle at any given time.

At the same time, electric grid operators play a balancing game of generating electricity that will meet customer demand. On top of that, they must pay to keep a generator fired up that will serve as a back up in the event of a catastrophic failure on the grid. Until the failure, that energy is wasted.

But if all of those parked cars were electric and plugged into the grid, the utility operator could automatically draw on the batteries exactly as needed, meeting demand. And instead of paying a power plant to generate energy that would be wasted anyway, they would pay a fee to the electric car owner for making the battery available.

This sounds fine and dandy, except it won't work in India. Well, it won't be needed in India until far into the future. I guess our current needs far exceed what the grid can pump.

The Poverty Business

In recent years, a range of businesses have made financing more readily available to even the riskiest of borrowers. Greater access to credit has put cars, computers, credit cards, and even homes within reach for many more of the working poor. But this remaking of the marketplace for low-income consumers has a dark side: Innovative and zealous firms have lured unsophisticated shoppers by the hundreds of thousands into a thicket of debt from which many never emerge.

Federal Reserve data show that in relative terms, that debt is getting more expensive. In 1989 households earning $30,000 or less a year paid an average annual interest rate on auto loans that was 16.8% higher than what households earning more than $90,000 a year paid. By 2004 the discrepancy had soared to 56.1%. Roughly the same thing happened with mortgage loans: a leap from a 6.4% gap to one of 25.5%. "It's not only that the poor are paying more; the poor are paying a lot more," says Sheila C. Bair, chairman of the Federal Deposit Insurance Corp.

Some economists applaud how the spread of credit to the tougher parts of town has raised home- and auto-ownership rates. But others warn that in the long run the development could slow upward mobility. Wages for the working poor have been stagnant for three decades. Meanwhile, their spending has consistently and significantly exceeded their income since the mid-1980s. They are making up the difference by borrowing more. From 1989 through 2004, the total amount owed by households earning $30,000 or less a year has grown 247%, to $691 billion, according to the most recent Federal Reserve data available.

"Having access to credit should be helping low-income individuals," says Nouriel Roubini, an economics professor at New York University's Stern School of Business. "But instead of becoming an opportunity for upward social and economic mobility, it becomes a debt trap for many trying to move up."

The formula produces profits. Last year, net income on used cars sold by outlets Byrider owns averaged $828 apiece. That compared with only $223 for used cars sold as a sideline by new-car dealers, and a $31 loss for the typical new car, according to the National Automobile Dealers Assn. Nationwide, Byrider dealerships reported sales last year of $700 million, up 7% from 2005.