Heads Up: EVs Show Promise, Challenges for Grid

December 7, 2022

Good news and some cautionary notes for EV charging infrastructure. You can still find whole banks of EV chargers in the midwest that are empty and awaiting customers. That happy situation not going to last.

Natural Resources Defense Council:

There’s a misconception that widespread charging of EVs will necessarily stress the electric grid, resulting in costly upgrades that drive up electric rates.

However, analysis of the three utility service territories with the most EVs of any in the U.S., Pacific Gas & Electric (PG&E), Southern California Edison (SCE), and San Diego Gas & Electric (SDG&E), conducted by Synapse Energy Economics found the opposite has been observed in the real world—EVs are pushing electric rates down, largely because they tend to charge overnight when people are sleeping and there is plenty of spare capacity on the grid. EV customers on time-of-use (TOU) rates, only do 9-14 percent of their charging during on-peak hours when total demand for electricity is at its greatest. And even EVs that remain on default rates that do not encourage off-peak charging consume less electricity during on-peak hours than typical households (though, we still need to move those folks onto time-of-use rates that increase fuel cost savings by rewarding off-peak charging).

Because EVs are not straining the grid to this point, there’s little marginal cost associated with accommodating EV charging, but significant new revenues (money that would otherwise go to oil companies) that is returned to all customers in the form of lower rates and bills.

Canary Media:

The typical electric-vehicle charging site today has a few EV chargers that can make do with the power grid that’s already there. But within the decade, demand for charging battery-powered cars and trucks at sites along highways will start to exceed the power draw of sports stadiums — and supplying that kind of power will require major interconnections to utility transmission grids. 

That’s the warning from a new report that finds there will be truly massive future power needs for EV charging in New York and Massachusetts, two states that have committed to selling only zero-emissions passenger cars by 2035 and moving to emissions-free trucks by 2045 and 2050, respectively. Similar megawatt-scale needs are likely to arise for the EV fast-charging networks already being developed in EV-forward states such as California, and now being planned in all 50 states with billions of dollars of federal funding

“Right now, when people are talking about capacity” for EV charging, ​“they’re asking which distribution transformer has capacity, or which feeder, or even a substation,” said Dave Mullaney, report co-author and a principal on the Carbon-Free Transportation team of nonprofit RMI.“But when you start to throw tens of megawatts on a distribution system, you’re quickly overloading it.” (Canary Media is an independent affiliate of RMI.) 

By 2030, over a quarter of the 71 highway sites studied in the report will require more than 5 megawatts in charging capacity to meet peak charging demand, the report found — roughly equivalent to the power demand of an outdoor professional sports stadium. By 2045, some sites could reach around 40 MW in peak charging demand, equivalent to a major industrial site. 

The new report — from RMI, clean transportation nonprofit Calstart, Northeast U.S. utility National Grid, and fleet-vehicle technology-services companies Geotab and Stable Auto — is one of the first of its kind to examine future charging needs with grid power availability in mind. Today, charging developers choose where to site stations based on factors including traffic, expected utilization and land availability, the report notes. But electric infrastructure ​“should play an equally critical role and can drastically impact development costs and timelines.” 

It takes only a few months to install EV chargers, but it takes years to approve and build major transmission grid extensions. Only a handful of truly megawatt-scale charging hubs now exist, and some of them are already facing delays in getting the grid connections they need, whether in densely packed urban areas or at remote highway sites

If state agencies and utilities don’t coordinate on how to supply high-voltage grid interconnections to the mega-charging hubs coming down the pike, the result could be delays and higher costs that hinder expansion of a technology that’s key to decarbonizing transportation. 

“If we wait 10 years or 15 years to make these investments, I can guarantee you they’ll be double or triple” what they would be if they were planned well in advance, said Brian Wilkie, National Grid’s director of transportation electrification in New York. On the other hand, ​“proactive planning and anticipatory investment” could lower the cost of project implementation by about one-third compared to projects that fail to take grid capacity and availability into account, he estimated. 

Electric Vehicles are Driving Electric Rates Down

This analysis examines costs and revenues associated with EVs between 2012 and 2021 in three of the top utility service territories in the United States for EV penetration: Pacific Gas & Electric (PG&E), Southern California Edison (SCE), and San Diego Gas & Electric (SDG&E). We observe that over the last decade, EV drivers in PG&E’s, SCE’s, and SDG&E’s service territories have contributed approximately $1.7 billion more in revenues than associated costs, driving rates down for all customers.

If the utility revenues from EVs exceed the utility system costs, then EV adoption can reduce electricity rates for all customers. Conversely, if the costs are greater than the revenues, non-EV owners could end up paying more for their electricity.

To address this question using real-world data, Synapse evaluated the utility system revenues and costs associated with EVs in the service territories of PG&E, SCE, and SDG&E. At the end of 2021, these three utilities alone served more than 735,000 EVs.2

Specifically, we analyzed the electricity rates that EV owners pay compared to the marginal cost of providing that electricity (generation, transmission, and distribution costs) plus the expenditures associated with utility EV programs.

California is currently transitioning to default TOU (Time of Use) rates and away from the prior default tiered electric rates.
Unlike tiered rates, TOU rates have different prices during on-peak hours and off-peak hours and are meant to align prices more closely with the actual cost to provide electricity during those hours. By charging EVs primarily during off-peak hours, customers can simultaneously lower their electric bill and reduce costs on the grid.

The California TOU rate structures generally include a high-priced on-peak period, a low-priced off-peak period, and an in-between mid-peak period. It turns out that these rates are effective at encouraging customers to shift their electricity usage to lower-cost hours, based on 2021 data from the 10th Joint IOU Electric Vehicle Charging Infrastructure Cost Report.

Rather than increasing demand on the system, EV customers on TOU rates often hit their monthly maximum demand when the system is least taxed— typically between 11 p.m. and 2 a.m.

Data from the utilities indicate that customers whose EVs are separately metered charge their vehicles outside of on-peak hours between 83 percent and 92 percent of the time, as shown in the following figure.

The results of our analysis indicate that, across three of the service territories serving the most EVs in the United States, EVs have increased utility revenues more than they have increased utility costs, leading to downward pressure on electric rates for EV-owners and non-EV owners alike. Under the assumption that customers have been paying mid-tier rates between 2012 and 2021, we estimate that EV drivers in PG&E, SCE, and SDG&E territories have contributed $1.7 billion more than associated costs (in 2021 dollars). Figure 4 shows the extent to which revenues from EVs outweigh the costs imposed for the period 2012-2021 under this scenario.11

In the case in which 75 percent of EV customers were assumed to take service on rates designed for EVs,12 revenues still exceeded costs between 2012 and 2021 by a total of $1.4 billion.

A key reason why revenues from EVs outweigh the costs is that EV customers—particularly those on TOU rates— tend to charge during off-peak hours. By charging during off-peak hours, EVs impose minimal costs on the grid and help to utilize resources more efficiently. In fact, recent research conducted by Lawrence Berkeley National Laboratory, PG&E, and the Natural Resources Defense Council shows that shifting EV charging to off-peak times could allow the grid to accommodate all homes having EVs without upgrading most parts of the distribution system.

But it’s more than homes. Highway based EV charging is going to require some ambitious upgrades to the grid to service multiple charging sites along busy highways.

Canary Media again:

This challenge has not yet been taken up by most of the states implementing the National Electric Vehicle Infrastructure (NEVI) Formula Program, said Benjamin Mandel, Calstart’s senior director for the Northeast region. Created by last year’s federal infrastructure law, the program has $5 billion to help every state build at least a skeleton of charging networks along major transportation routes, while allowing states that currently have relatively low rates of EV adoption to avoid installing more costly chargers than they’re expected to need in the next few years. 

But while initial installations made with NEVI funds might not draw a lot of power, state governments and their private partners would be wise to locate those small charging hubs where they’ll have the capacity to grow. 

NEVI calls for at least four high-speed charging stations supplying at least 150 kilowatts of charging along every 50 miles of major highway corridors — a peak load of a little more than half a megawatt per site. But the new report presumes that high-traffic sites will need 10 to 20 chargers capable of supplying 350 kilowatts apiece within the next five years — which would pull up to 7 megawatts of peak load — and 30 to 40 chargers in the next 10 years, or as much as 14 MW of peak load. 

That’s a heavy lift. We’d better get going.

But wait, more nuance from Austin’s Pecan Street project –


Yes, EVs consume larger amounts of electric power, and as more of them hit the highways, those electric demands only increase. However, smart grid management will almost surely mean turning to EVs to help smooth demands on the power grid during peak periods like heat waves, say researchers.

“Not only does the flexibility [of EV charging] offset the increased load … and the capabilities are there; we can also implement solutions that help take load off the grid,” said Cavan Merski, data analyst for Pecan Street, a smart cities and green energy research firm in Austin, Texas.

In fact, the demands on the grid in the future may not come only from electric cars, but a warming planet which is bringing longer and hotter heat waves, prompting more air conditioning use, particularly in the U.S. South, in states like Texas.

“When we talk about planning for the future, if climate change accelerates, if we start hitting these more severe summer peaks, we’re going to have to account for this,” said Scott Hinson, chief technology officer for Pecan Street, in some of his comments during a virtual presentation Tuesday. “And these systems were not necessarily designed for thermal transfers, and thermal exchanges where the high temperature is 109, 108, that regularly. The design guides for our area have been 97, 99 for years, not those temperatures.”

To be clear, EV owners should not have to worry about the power utility draining their car battery just so the next-door neighbor can maintain a chilly home during a heat wave. That’s not the scenario the Pecan Street team imagines. Instead, the vehicle-to-grid arrangements will likely evolve as small bursts of power siphoned from car batteries.


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