LONDON, Aug 27 (Reuters) - Electric vehicles will have to overcome a number of barriers before they are widely adopted, but a lack of generation, transmission and distribution capacity on the power grids of major Western markets will not be one of them for many years.

Power generators, transmission operators and local distribution companies have large amounts of unused capacity in their systems, especially overnight, so they could easily recharge large numbers of electric vehicles.

But it will be critical that most charging takes place overnight and is kept well away from peak hours in the late afternoon when the grid is already stretched to meet demand.

Ensuring vehicle owners charge at the right time of day will require strong financial incentives, in particular making residential and smaller business customers face time of use pricing, many of them for the first time.

Until now, many residential and small business customers have paid a volume-only tariff which charges the same price per kilowatt-hour irrespective of the time of day electricity is used.

Traditional tariffs have not reflected the high marginal costs associated with serving additional loads during peak times compared with off-peak periods.

By contrast, large power users are already billed by the hour or half hour, with prices varying according to the time of day and demand on the grid.

In future, hourly or half-hourly pricing will be extended to a much wider range of customers to ensure generation, transmission and distribution capacity is used more efficiently.

There will be sharp differences between peak and off-peak power prices to ensure as much charging as possible is shifted to off-peak periods.

SPARE CAPACITY

In the United States for instance, electric power consumption across the Lower 48 states reached a multi-year high of 718 Gigawatt-hours (GWh) in the hour ending at 5pm Eastern Daylight Time (EDT) on Aug. 12.

But average hourly consumption so far this month has been only 540 GWh, implying capacity utilisation has been only 75% of the theoretical maximum. (https://tmsnrt.rs/3zr6xJu)

The implication is that generators, transmission operators and distributors could boost the amount of electricity delivered to customers by at least 33% using existing infrastructure, and even more at other times of year.

However, half of all the spare capacity was concentrated in the eight hours between 1am EDT and 9 am EDT, and two-thirds of spare capacity was in the 11 hours from midnight to 11 am EDT.

To ensure vehicles can be charged utilising the existing system, it will be essential to give owners an overwhelming financial incentive to charge during this period. (https://tmsnrt.rs/2XTK9uq)

Even more important, owners will have to be strongly discouraged from charging vehicles during the peak, when the grid is already stretched, roughly from 1pm EDT to 10pm EDT.

This example is for the United States, where electric consumption normally peaks in late July and early August, as a result of widespread air-conditioning demand, with a secondary peak in the winter heating season.

In other countries, the daily and seasonal peaks may be slightly different. In Britain, for example, peak loads tend to occur during the winter, around 5-6pm GMT between November and February.

But the fundamental point is that generating, transmission and distribution systems built to handle peak loads always have large amounts of spare capacity during off-peak periods that could be used for vehicle charging.

SMART METERS

Smart meters capable of charging for electricity by the hour or half-hour, coupled with time-varying tariffs that link prices to capacity utilisation and congestion on the grid, will be essential.

Existing flat-rate tariffs are not the result of a deliberate policy choice - they are historical legacies based on technology available in the late 19th and early 20th centuries.

When electricity service was brought to most homes, the only equipment available to measure consumption was a simple (“dumb”) accumulation meter, which measured only total kWh and could not record time of use.

For some decades, however, larger electricity users have already been charged for power based on time of use, generally by the half hour, using more sophisticated metering equipment available since the 1960s and 1970s.

Residential and smaller business customers have often been left with legacy accumulation meters and flat-rate tariffs because there were no strong incentives to move them to time-of-use tariffs and there was too much customer and political resistance to overcome.

Improvements in computer and communications technology have made it possible to install cheap smart meters in homes and small businesses.

Most countries have a programme for rolling out smart meters, with half-hourly measurement capability, though in some cases customers have been left on flat-rate tariffs.

But as governments adopt net-zero emissions targets, which will require widespread deployment of electric vehicles, deployment of smart meters and implementation of time-of-use tariffs will become critical.

GRID UPGRADES

Over the next decade, there is plenty of capacity in the electricity system to charge an increasing number of electric vehicles by using existing generators, lines and wires more fully throughout the 24-hour period.

In the longer term, some increase in generation, transmission and distribution capacity will likely be needed, especially if governments also push to electrify other energy services such as home heating and cooking.

If generator sets are used for more hours on average, more capacity will be needed to cope with increased maintenance and replacement requirements.

Some upgrades to local distribution networks may also be needed to cope with increased peak demand, but distributors already make such investments, for example when new dwellings are added to the network.

Far more significant, as additional energy services (heating, lighting, cooking, power and transportation) move on to the grid from formerly separate systems, the grid will have to be upgraded to become much more resilient.

The combination of formerly separate energy systems is a source of unintended fragility since any failure of the grid would leave households and business vulnerable to total loss of energy services.

Grid outages caused by storms, extreme hot and cold weather, geomagnetic storms, cyber-attacks, terrorism, armed conflict or operational error will have much more serious consequences than in the past.

As a result, the grid will need to be upgraded and hardened to make it more resilient and reduce the risk of prolonged and widespread failures. (See “Brittle Power: Energy Strategy for National Security”, Lovins and Lovins, 1982).

The electricity system will have to change to accommodate electric vehicles and other new electric services. Some of those changes will be profound, especially around pricing and the way residential customers think about the cost of electricity. But the required investment is unlikely to be a major obstacle to widespread deployment of fully electric cars. (Editing by David Holmes)