The U.S. Postal Service projects smart grid revenue needed to make electric vehicle fleet cost effective

Michael Giberson

John Petersen at AltEnergyStocks comments on a recent analysis by the U.S. Postal Service of the economics of converting to an electric vehicle fleet.  Petersen observes that, “after years of reading up-beat promotional materials that talk about ten-year battery lives and seven- to ten-year payback periods, it was refreshing to see a more skeptical buyer’s analysis…”

The USPS report concludes that the switch only makes sense financially if (1) the initial purchase of the vehicles is heavily subsidized, and (2) the vehicles will earn a reasonably good stream of payments from providing ancillary services to the electric power grid via smart grid-type links.  Without both of those two sources of support, however, and the project looks less viable. (Federal subsidies for energy projects are currently falling like candy from a burst piñata, but I don’t think it can last forever. I opined on V2G revenue streams a week or so ago.)  The report doesn’t estimate any income stream from possible carbon credits, but under some policies under consideration carbon credits may offer an additional revenue stream.

An innovative part of the report recommendation is the suggestion that the USPS could serve as a “national laboratory” for testing electric vehicles.  The report observes that the Postal Service serves a geographically diverse area and so faces a wide range of operating conditions.  A random assignment of technologies to locations or some more sophisticated experimental design could maximize the value of information gathered from a widespread test.  Of course it is a separate question whether the social externality of the knowledge created is worth the large initial subsidy that the USPS estimates as necessary.

In the comments at AltEnergyStocks Tom Konrad suggests that the Postal Service could squeeze out additional efficiencies by tuning battery selections to routes (since some battery sizes/technologies are better for short routes and others better for longer routes) and also by swapping batteries on vehicles that return to base multiple times a day.  Seems like good ideas, or at least more treatments possible for the “national laboratory.”


One thought on “The U.S. Postal Service projects smart grid revenue needed to make electric vehicle fleet cost effective

  1. Interesting thinking. I really like the idea of using USPS as part of an experimental program to test various solutions, seems like pretty innovative thinking for that organization.

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