NewEnergyNews: TODAY’S STUDY: The Road To Transportation Electrification

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    Tuesday, October 09, 2018

    TODAY’S STUDY: The Road To Transportation Electrification

    The Future Of Transportation Electrification: Utility, Industry And Consumer Perspectives

    Lisa Schwartz, et. al., August 2018 (Lawrence Berkeley National Laboratory)

    Introduction

    While the residential, commercial and industrial sectors of the U.S. economy are heavily electrified, the transportation sector today uses little electricity.1 Pure battery-electric vehicles (EVs) and plug-in hybrid EVs each represented less than 1 percent of the nation’s total vehicle sales in 2017.

    A recent comprehensive assessment of transportation electrification looking out to the year 2040 made the following observations:

    • Battery costs, and thus EV prices, will continue to decline over time, especially with substantial gains in technology learning and economies of scale, as well as robust research and development.

    • A modern power system that supports vehicle-to-grid communication and time-of-use pricing will be a vital component of a future where plug-in EVs make up a large fraction of the light-duty vehicle fleet.

    • EV adoption seems to be greatest when multiple actions are taken in parallel, such as improving consumer awareness, providing direct subsidies and making infrastructure investments.

    • Public charging is a critical component for encouraging consumer adoption of EVs.5

    The role of utilities in providing EV charging infrastructure to support increased transportation electrification is a strongly debated issue. This report presents differing viewpoints on several key questions:

    1. What are the potential benefits and risks of transportation electrification — to electric utilities, to retail electricity customers and to society?

    2. What roles should utilities versus competitive providers play in accelerating deployment of EV infrastructure? What infrastructure investments are others making, and how should utilities complement those investments?

    3. Who will use EVs — and how?

    4. What types of utility infrastructure will be needed to serve EV users, who should pay for it, and how will utilities recover their fixed costs?

    5. What incentives should EV customers face to encourage right-time charging and discharging?

    6. What policy and regulatory approaches will:

    ’ • Encourage efficient siting of charging stations — including fast-charging

    • Enable utilities to participate in infrastructure deployment

    • Foster competition by competitive EV charging providers

    • Establish enforceable standards to facilitate consumer adoption of EVs

    • Address underserved markets

    • Protect consumers

    Authors representing diverse perspectives provide their responses:

    • Utilities – Philip B. Jones, Alliance for Transportation Electrification (Chapter 1)

    • Third-party service providers – Jonathan Levy, EVgo/Vision Ridge (Chapter 2)

    • Consumers – Jenifer Bosco, John Howat and John W. Van Alst, National Consumer Law Center (Chapter 3)

    Jones calls for policy and regulatory measures that enable utilities to play a significant role in closing the infrastructure gap for EV charging. He lays out a comprehensive path, from mandates for vehicle emissions and fuel efficiency, to stakeholder processes and studies, and to public utility commission decisions that balance incentives for utilities to accelerate capital investments in charging infrastructure with affordable retail rates, while ensuring charging services are accessible to all communities, rate classes and potential EV owners. He outlines the market transformation process that is needed for EV infrastructure to overcome market barriers and leap over the “valley of death,” striking comparisons with challenges that energy efficiency technologies have faced and the strong utility roles that helped the efficiency industry gain a more secure foothold in the market. With the EV infrastructure “pie” growing quickly, Jones recommends a focus on increasing the size of the pie, rather than arguing who gets a particular slice (or the crumbs). Finally, he discusses actions several states are taking to prepare for an electrified transportation future and provides a regulatory toolbox for public utility commissions to consider, as well as short case studies of state activities.

    Levy stresses the need for utilities to work with EV charging companies, policymakers, regulators and other stakeholders to address opportunities and challenges in the marketplace today. The critical areas for utility focus in his view are EV charging tariff structures, “make-ready” infrastructure,6 expeditious interconnections for charging stations and consumer education. Levy urges a driver- and rider-centric approach to charging infrastructure that avoids a patchwork of utility programs across the country, along with policy and regulatory approaches that enable a robust and sustainable private charging industry. He sees the relationship between utilities and EV charging companies as “coopetition”: While at times a utility may “undercut” other market participants, the utility also will benefit by working with experienced EV charging companies that have sited, installed and operated charging solutions for customers — and EV charging companies can benefit from utilities as customers. He suggests that utilities seek out gaps in the market and complement investments by others that rely on a broad base of infrastructure to benefit drivers broadly. Specifically, he recommends that utility investment focus in the area between private and public capital — for example, make-ready investments that advance the public good, facilitate the utility’s pursuit of additional customer demand, and buy down some capital costs to attract more private capital.

    The National Consumer Law Center (NCLC) examines the implications of transportation electrification for consumers, particularly low-income households, and explores policy approaches to address equity and access concerns and maintain public support for electrification. NCLC suggests that transportation electrification policy should aim to achieve the following:

    • Increase transportation access and security for low-income consumers

    • Equitably allocate costs and benefits for low-income consumers

    • Address the disproportionate air pollution burden that low-income communities face from power generation and transportation sources

    NCLC calls for pursuing EV infrastructure investments in a way that lessens the impact on ratepayers and shields low-income households from unaffordable rate increases, while providing sufficient infrastructure to support broad EV adoption. Among the strategies NCLC recommends are the following:

    • Bill payment assistance programs to reduce the burden on vulnerable customers

    • Rate designs that preserve affordability for low-income consumers

    • Separate EV charging rates, possibly accompanied by separate meters, to spread a manageable amount of early costs among EV drivers, but at a rate that is not so high that it would serve as a disincentive to low- and moderate-income drivers as they consider whether to drive EVs

    • Time-of-use and other rate design options to optimize charging times and help lower the cost of electricity for all consumers

    • Incentivizing infrastructure for public transportation and school buses to spread benefits

    • When charging stations are to be installed, placing them in locations that are responsive to community needs and can be used by low-income communities and low-income residents of multifamily buildings

    • Incentives to increase private investment in charging stations that serve the needs of low-income communities

    Applying consumer protection strategies to ratepayers more broadly, the Maryland Office of People’s Counsel recently proposed principles for considering utility proposals for EV infrastructure investments, in order to balance multiple considerations, such as grid optimization, interoperability, underserved communities, public needs and the competitive market, as well as potential ratepayer benefits.7 Cited potential gains from utility EV programs include demonstrable system benefits, managing EV loads to reduce energy costs, aggregation of EV demand for dispatch as a distributed energy resource, and fostering coordinated regional planning.

    According to the People’s Counsel, design and implementation of utility EV programs should:

    • result in a more efficient grid through load management;

    • align with and balance the state’s various policy goals, including targets for reducing air pollution and energy waste;

    • with respect to size, scope and costs, be based on reasonable analysis and alignment with policy objectives;

    • result in optimally sited EV infrastructure; and

    • use effective evaluation, measurement and verification practices to encourage transparency and inform ongoing program design and improvement.

    A recent resolution by the National Association of State Utility Consumer Advocates also highlights the need for careful consideration of utility EV investments in order to minimize the impact on ratepayers.8 The resolution in part calls for “states to continue to evaluate and analyze key electric vehicle adoption issues with an emphasis on the core responsibilities of public utilities, a specific focus on the efficient integration of electric vehicles and charging infrastructure into their systems, the avoidance of adverse impacts on the system from electric vehicle loads, the development of alternative rate designs if appropriate, the adaptation of distribution planning to minimize system risks and provide the opportunity for longer term system and cost benefits for their ratepayers, and the equitable sharing of any costs and benefits.

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