By  Jennifer Kho and Brian Caulfield

The U.S. Department of Energy release a study on Monday finding there is enough “off-peak” electrical capacity to power 84 percent of the country’s 220 million vehicles if they were so-called “plug-in” hybrids. Like conventional hybrid vehicles, so-called plug-in hybrids rely on gasoline and electric engines to boost miles per gallon. However, they allow owners to plug their batteries directly into wall sockets to charge batteries more quickly and slash gasoline consumption even further.

Some critics have pointed to increased grid congestion and power outages as an obstacle to plug-in hybrids, but the report supports the long-espoused argument of plug-in advocates: most people would plug their cars in at night, when the grid produces surplus electricity.

The study “is a boon to GM and Toyota, who are increasingly staking their future on electric-powered vehicles, because it removes one of the big questions,” said Joel Makower, a principal at Clean Edge.

The report points to a solution to two inefficiencies dogging the energy industry. First, centralized utilities can generate energy much more efficiently than internal combustion engines. Second, much of the U.S. power grid’s capacity is underutilized, especially at night.

As a result, switching to plug-in hybrids could slash overall output of so-called greenhouse gasses, reduce U.S. dependence on foreign oil, and soak up much of the utility industry’s unused capacity."The study suggests the idle capacity of the electric power grid is an underutilized national asset that could be tapped to vastly reduce our dependence on foreign oil," said Eric Lightner, from the DOE's Office of Electric Delivery and Energy Reliability, in a statement.

Piper Jaffray analyst Jesse Pichel said he agrees with the findings, but that they come as no surprise.

“We make excess electricity at night,” he said. "It sounds like everyone already knew it." But he added that with 85 percent of oil being used at the pump, plug-in hybrids that could reduce the need for oil in cars would also go a long way to solving U.S. problems in the Middle East.

However, plug-in hybrids still have some kinks to work out before they can do that.

For one thing, Mr. Makower said, it’s still unclear how the study’s conclusion can be reconciled with the increased concern about grid congestion and grid capacity.

In other words, how will the industry make sure that plug-in owners will only charge their cars at night? Currently, there is no national time-of-use metering program, which would charge users different electricity prices depending on when they use the electricity.

“This really makes a huge case for time-of-use metering, which solar and renewable-energy advocates have been calling for for years,” he said. “If we can get national time-of-use metering, then all of a sudden, those findings make sense. Electricity would be priced according to demand, aiming to spread electricity use during all times of day, instead of concentrating it on the middle of the afternoon.”

Moreover, while there is enough off-peak capacity to easily power vast numbers of plug-in hybrids in the Midwest and East, parts of the West could be more difficult. The report noted that there is limited additional capacity in the Pacific Northwest, where much of the region’s hydroelectric capacity is already well utilized.

Finally, in the short-term, total sulfur dioxide emissions would increase as utilities burn more coal to keep up with demand, even as urban air quality improved due to lower tailpipe emissions. The increased demand, however, would like result in newer, cleaner coal-fired plans over the long term, according to the study.

ABI Research analyst Dan Benjamin said the finding that the grid is ready for plug-in hybrids is good news, but it doesn’t address the major obstacles to plug-in hybrids.

“It’s is a good thing and shows people are beginning to think about this in a serious way,” he said. “It’s important, but at the same time, this wasn’t the major holdback for electric vehicles. Whether or not some of the highly pro [plug-in hybrid and electric car] people want to admit it, battery life and cost are still big issues.”

Plug-in hybrids are expected to cost about $6,000 to $10,000 more per vehicle. As a result it would take owners five to eight years to break even on fuel costs. However, the break even point could come quicker if utilities offer a pricing break to plug-in hybrid users so they can soak up some of their off peak capacity.

In addition, plug-in hybrids take too long to charge and require a lot of batteries to get beyond the 100-mile range, Mr. Benjamin said. “It’s not like there’s going to be 220-million plug-in hybrids on the road anytime soon,” he said. “That’s not to say it won’t happen; it’s just not imminent.”

In any case, the study, conducted by researchers at the DOE’s Pacific Northwest National Laboratory, suggests that plug-in hybrid vehicles may find powerful ally in the utility industry.

"With cars charging overnight, the utilities would get a new market for their product,” said scientist Michael Kintner-Meyer, from Pacific Northwest National Laboratory, in a statement noting that PHEVs would increase residential consumption of electricity by about 30 percent to 40 percent. “The increased generation could lead to replacing aging coal-fired plants sooner with newer, more environmentally friendly versions.”