Plug-in hybrid electric vehicles (PHEVs) have the potential of substantially reducing petroleum consumption and vehicular CO2 emissions relative to conventional vehicles (CVs). The analysis presented in this article first ascertains the cost-effectiveness of PHEVs from the perspective of the consumer. Then, the potential effects of PHEVs to an electric utility are evaluated by analyzing a simplified hypothetical example. When evaluating the cost effectiveness of a PHEV, the additional required premium is the most important financial parameter to the consumer. An acceptable amount for the additional upfront costs will depend on the future costs of gasoline and the on-board battery pack. The need to replace the on-board battery pack during the assumed vehicle lifetime also affects the allowed premium. A simplified unit commitment and dispatch model was used to determine the costs of energy and the CO2 emissions associated with PHEVs for different charging scenarios. The results show that electricity can be used to charge PHEVs during off-peak hours without an increase in peak demand. In addition, the combined CO2 emissions from the vehicles and the electric generation facilities will be reduced, regardless of the charging strategy.

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