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Revving Up for the EV Transition: Utilities consider their rate options

By Chuck Ross | Jun 15, 2023
EV charging  in a garage
As electric vehicle adoption picks up, utilities are recognizing just how quickly this growing market could affect existing infrastructure. Varying rate structures could be one way the free market could help moderate this impact. 

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As electric vehicle adoption picks up, utilities are recognizing just how quickly this growing market could affect existing infrastructure. Varying rate structures could be one way the free market could help moderate this impact. But current time-of-use (TOU) rate programs are pretty static and could lead to their own peaks if everyone starts charging at night. This could result in the accelerated aging of transformers and other equipment.

To address this, utilities and their regulators are studying dynamic rates that shift with energy prices and customer demand. These efforts are enabled by internet of things technology on the utility and customer sides of the meter.

U.S. dealers sold almost 935,000 EVs in 2022, representing 7.03% of all light-duty vehicles, according to the Alliance for Automotive Innovation. That demand ramped up during the course of the year, with fourth quarter figures pegging EV sales at 8.5% of all light-duty vehicles. 

This year has brought expanded availability and continued growth, with 42 models now available during 2023’s first quarter, versus 34 during Q1 2022, according to Kelley Blue Book. That group estimates first quarter 2023 sales grew by 44.9% year-over-year, for a record-setting total of 258,882 vehicles. BloombergNEF sees EVs claiming 52% of the U.S. market by 2030, a figure it revised upward from 43% following the passage of the Inflation Reduction Act, which incorporates wider tax credits for EV purchases.

Financial incentives are the carrot in the current administration’s efforts to spur EV adoption, with new proposed emissions standards for manufacturers acting as a possible stick. In April, the U.S. Environmental Protection Administration (EPA) announced standards that would lead to EVs comprising up to 67% of all new light-duty vehicles sold in the United States by 2032. Emissions standards are set as averages across a manufacturer’s entire fleet. The fleet-wide allowances that the proposed standards outline would require that up to two-thirds of vehicles sold across an automaker’s portfolio be zero emissions by 2032.

Beyond carbon-reduction, the EPA sees total projected net benefits of $850 billion to $1.6 trillion in reduced maintenance and fuel costs for customers and health savings related to lower levels of fine particulate matter, which contributes to lung and heart disease and premature mortality.

How does it affect utilities?

So, what will all these new EVs mean for utility demand and the distribution systems that support it? To a large extent, the answer will depend on the mix of models in any particular system’s service territory. EV efficiency is often categorized in terms of either watt-hours per mile (Wh/mi) or kilowatt-hours per mile (kWh/mi). According to the EPA, today’s offerings range from an average of 253 Wh/mi for the 2021 Hyundai IONIQ Electric up to 535 Wh/mi for the 2022 Audi e-tron S. Based on the EPA’s 14,000-mile annual average for U.S. drivers, these efficiencies translate to a monthly total of between 233 kWh and 583 kWh added to the monthly electricity bill. 

For comparison, the U.S. Energy Information Administration pegged average monthly consumption for residential customers at 886 kWh. In other words, depending on the vehicle, utilities could see per-customer demand rising from 25% to 67% for those charging an EV at home. 

Of course, it’s not just how much electricity EVs will use, in total, that utilities care about—it’s also how much the chargers will be drawing at any one time. The charging equipment supplying these vehicles today generally supports amperages from 30–50A—the amperage it actually operates at, though, is determined by what the vehicle is designed to accept. Obviously, higher amperages lead to faster charging. Currently, Porsche’s Taycan Plus tops the list, and the manufacturer recently released a wall charger for the vehicle capable of drawing up to 80A. 

Several large utilities are proposing new rate structures to help handle projected EV demand more dynamically than current TOU plans that set rates based on blocks of time that might change seasonally at most. These time-varying rates could shift in real time, based on demand and grid conditions. Several charging equipment manufacturers now offer products that can communicate with the local utility and respond to pricing signals to dial charging operations up or down. 

The Electric Power Research Institute (EPRI) is helping utilities plan for the coming EV market surge. Its EVs2­Scale2030 initiative launched this month, with plans to develop a timeline of anticipated EV loads down to the distribution circuit level. The three-year effort is bringing together manufacturers and utilities, and is intended to create tools meant to ease this transition. These could include “handshake” protocols to enable secure communications between utilities and chargers. EPRI estimates electrifying transportation—including trucks, buses and other commercial and fleet vehicles—could add more than 130 billion kWh of demand to the U.S. grid by 2050.

About The Author

ROSS has covered building and energy technologies and electric-utility business issues for more than 25 years. Contact him at [email protected].

 

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