Customers seek cleaner transport options and lower total cost of ownership, both of which EVs can provide, while utilities seek to manage the charging times of these new electricity-consuming EVs and align that charging to the times of day that are the most economical.
How E+U companies Can Prepare for Electric Vehicle Growth
Andrew Dillon | West Monroe Partners' Energy & Utilities
Tell us a bit about West Monroe Partners and the research you would like to discuss here?
West Monroe Partners is a national consulting firm that is unique in its blending of business and technical professionals to deliver effective services and solutions to a wide range of clients in energy, finance, healthcare and technology. We recently presented a white paper on Transportation Electrification (TE) and Electric Vehicles, as well as a Webinar on TE Program Design and Optimization.
Why will the current electric infrastructure be put under significant stress in the upcoming years?
The electric grid is undergoing a transformation at the grid edge, due to the fact that every day consumers, businesses and corporations have been adopting renewable energy systems at a consistent pace for years, and most recently are beginning to adopt electric vehicles at a very high annual growth rate. What this means for the grid is a lot more activity and dynamic energy usage by customers. The grid will need to be prepared to adapt to these new trends and technologies, including the ability to forecast where and when these distributed energy resources (DERs) will be emerging, and how to reinforce the grid to manage them.
What are some of the opportunities available to utilities and their customers as the transportation sector moves toward electrification?
The key opportunity in transportation electrification is for utilities and EV owners to align their objectives so both parties experience a win. Customers seek cleaner transport options and lower total cost of ownership, both of which EVs can provide, while utilities seek to manage the charging times of these new electricity-consuming EVs and align that charging to the times of day that are the most economical. The worst case scenario would be to have millions of new EVs adding Gigawatts of charging at peak times of the day, when the grid is the most strained. Instead, EV charging behavior should be shifted to times of the day when the grid is actually under-utilized – thus contributing to a more efficiently utilized grid. In addition, because one of the major points of owning EVs is to drive a more sustainable green energy vehicle, it doesn’t make sense for EVs to charge at a time of the day when there is no renewable energy flowing, such as at dinner time when the sun is down and renewable energy is at a low, meaning that most electricity would primarily be coming from coal and natural gas. Aligning EV charging to peaks in renewable energy creates a winning scenario for customers, the utility, and society.
What can utilities do to enable EV infrastructure development that can achieve higher load growth?
Today, utilities are looking at the economic business case of Transport Electrification, and coming to the conclusion that EVs are great for the grid and their customers. It’s one of the few true win-wins, which is why you see utilities asking the federal government to extend the federal EV rebates that flow to new EV purchasers, and boost EV adoption. Utilities are increasingly submitting requests to regulators to advance EV charging infrastructure, as well as for capital expenditure to cover the costs of EV chargers so that EV buyers remain confident that there is enough public charging. EV owners are always able to charge at home, but utilities in California, Oregon, New York and other states have received approval to cover the cost of certain EV charging connection costs, and that is key to moving EV adoption forward. As an example, in California, corporations and apartment building owners are able to apply to PG&E’s EVCN program and SCE’s Charge Ready Program to enable rapid growth in the installation of EV chargers at major employers and large multi-unit dwellings. This allows all types of energy customers to charge their EVs at work if they don’t have a garage.
How can utilities establish systems to absorb EV load growth without affecting grid reliability?
As mentioned earlier, utilities seek to align EV load to optimal times of the day, and not the peak load times in the evening when everyone comes home from work. Many utilities are already using something called Time of Use Rates, or ToU, which basically incentives energy customers with lower prices at the most economical time of the day, and raises the rates at the least efficient times of the day. This has proven highly effective. In my case, my family owns two EVs, a Volt and CMax Energi, and we always charge once the very low ToU rate kicks in later in the evening so that our cars are charged and ready by the time we leave in the morning. Families like ours save many hundreds of dollars per year on fuel per car.
What can utilities do to provide new services that engage commercial and industrial (C&I) customers looking to install EV infrastructure?
Utilities are now actively holding a dialog with key C&I customers to explore conversion to electric delivery and commercial vehicles of all kinds. Electric Transit Buses have one of the best business cases, driven both by dramatic reductions in maintenance costs, lower fuel costs and simplification of fueling infrastructure versus gas and diesel facilities. Shipping companies are similarly assessing the same benefits of reduced maintenance and lower fuel costs, but are needing to look more closely at the full delivery route requirements to insure they can complete deliveries from a charge at the central hub or if they need to plan for en-route charging, which requires an analysis of availability for each C&I business and their vehicle use. The conversation requires a Total Cost of Ownership analysis, spanning fuel savings, maintenance savings, energy use incentives from the utility (such as demand response and optimized charging times) and comparison to that of the cost of fleet conversion to commercial EVs and installation of EV chargers. This is a fast growing space, and a wide range of businesses are attracted to the possibility of impacting their company’s bottom line with lower operational costs for fleets and stationary EVs, like electronic forklifts and cranes. To address this, West Monroe Partners is developing an EV TCO modeling service which can provide greater clarity on the cost to adopt EVs in the MD/HD and other EV sectors.
What are key elements to highlight when drafting a plan to regulatory?
Each state regulatory body has a different set of initiatives and challenges, and as a result each utility needs to align their transport electrification objectives to the local regulatory agenda. A few key elements include performing a business case analysis that takes into account the layered benefits from all the beneficiary stakeholders, including the customer, the business community, disadvantaged communities, the utility and the state as a whole. There are great resources that demonstrate bottom line financial benefits in health cost reductions, as well as environmental cost reductions related to a shift from fossil fuel to electric transport fuel. Additionally, neighborhoods along high transport corridors show disproportionately high levels of health conditions and health costs related to vehicle exhaust, which is avoided by EVs. There is also a net benefit to the state from TE that draws from the reality that a state will see less outflow of capital to import gas and diesel, and switch to electricity generation within the state. This improves the state balance sheet, and markedly increases job creation within the state. Finally, EV ownership is part of a generally popular sustainable energy direction, which voters are lining up behind, in order to participate in a greener energy future through their transportation choices.
The content & opinions in this article are the author’s and do not necessarily represent the views of AltEnergyMag
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