Major automakers and the Department of Energy are pouring money into research on plug-in hybrid vehicles. These cars promise to cut petroleum consumption by allowing commuters to drive to work using primarily electricity–stored on board in batteries–rather than gas. Although critics have warned that the vehicles could put too much pressure on an already strained electrical grid, experts are now arguing that rather than being a strain on the grid, plug-in hybrids may actually help prevent brownouts, cut the cost of electricity, and increase the use of renewable energy.

Plug-in hybrids, like today’s hybrid cars, can run on either an electric motor or an internal combustion engine. But plug-ins have much larger battery packs and can be recharged by being plugged into the wall, making it possible to rely much more on the electric motor. Although a handful of companies sell conversion kits to change conventional hybrids into plug-ins, the kits add thousands of dollars to the cost of the car (see “Plug-In Hybrids Are on the Way”). This additional cost, which is primarily from the batteries, is one of the reasons the major automakers haven’t yet mass produced such vehicles, although they are now developing them. GM, for example, recently committed to making a plug-in version of a Saturn SUV (see “GM’s Plug-In Hybrid”).

The concern is that plug-ins are not a good way to reduce gasoline consumption, because if they become popular, and millions of car owners recharged their cars at three in the afternoon on a hot day, it would crash the grid. But plug-in hybrids could actually help stabilize the grid if owners charged their cars at times of low demand, and if the vehicles could return excess energy to the grid when it’s needed–say while parked in the company lot at work during peak demand.

Since utilities have built enough power plants to provide electricity when people are operating their air conditioners at full blast, they have excess generating capacity during off-peak hours. As a result, according to an upcoming report from the Pacific Northwestern National Laboratory (PNNL), a Department of Energy lab, there is enough excess generating capacity during the night and morning to allow more than 80 percent of today’s vehicles to make the average daily commute solely using this electricity. If plug-in-hybrid or all-electric-car owners charge their vehicles at these times, the power needed for about 180 million cars could be provided simply by running these plants at full capacity.

This could be a boon to utilities, because they’d be able to sell more power without the added cost of building more plants. Ideally, this will translate into lower electricity prices, says Robert Pratt, a scientist at PNNL. It might also help utilities justify the added capital costs of building cleaner coal-burning plants, because they’ll be able to recover their investment faster by “selling more electricity with the same set of iron, steel, and concrete,” Pratt says.

Such a system could be further optimized by using smart chargers and other electronics. This system would include a charger that runs on a timer, charging cars only during off-peak hours. Researchers at PNNL are taking this a step further with smart chargers that use the Internet to gather information about electricity demand. Utilities could then temporarily turn off chargers in thousands of homes or businesses to keep the grid from crashing after a spike in demand.

The next step would be to add smart meters that would track electricity use in real time and allow utilities to charge more for power used during times of peak demand, and less at off-peak hours. Coupled with such a system, the PNNL smart charger could ensure that the plug-in batteries are charged only when the electricity is at its cheapest, saving consumers money.

But what many experts are excited about now is a concept called “vehicle-to-grid,” often abbreviated V2G. In such a system, plug-in hybrids, rather than being merely an extra burden to the grid, become a much needed way for grid managers to balance the amount of energy generated at any given time to match the amount of energy being consumed. Millions of cars, each with several kilowatt hours of storage capacity, would act as an enormous buffer, taking on charge when the system temporarily generates too much power, and giving it back when there are short peaks in demand.

In a V2G system, the batteries of millions of plug-ins would be used as a buffer to even out supply and demand and to help keep the grid stable, says Karl Lewis, chief operating officer of GridPoint, a startup based in Washington, D.C., that has developed technology that could help make such a system work. In this kind of system, each vehicle would have its own IP address so that wherever it is plugged in, the cost of the energy it uses to recharge would be billed to the owner. With the right equipment, the car could also return energy to the grid, giving the owner credit. Mock-ups of such systems have already been tested by the National Renewable Energy Laboratory (NREL), in Golden, CO, and by a company called AC Propulsion, based in San Dimas, CA.

Plug-ins could also serve as backup sources of power. In extreme cases, such as a blackout from a hurricane, the cars could keep essential systems up and running in homes and businesses. Even in this case, when the batteries could be drawn down considerably, the owner could rely on the internal combustion engine in a plug-in hybrid for transportation.

As an added benefit, “if millions of these [plug-in hybrids] were produced, it would enable some of the renewable technologies to really take off,” say Terry Penney, a technology manager for advanced vehicle technologies at NREL. The challenge of using a renewable source such as wind is that wind is intermittent, varying day by day and minute by minute. A network of plug-in hybrids could smooth out these fluctuations by storing extra energy and sending it to the grid when the wind dies down. Such a network would also improve the economics of wind power by making it possible to capture more of the excess power generated on windy days, says Willett Kempton, senior policy scientist in the Center for Energy and Environmental Policy at the University of Delaware.

Such systems are many years off, as it will take time to install the needed infrastructure. Once plug-in cars are widely available, however, they could help relieve some of the pressure on the grid today.