MONDAY’S STUDY: Transportation’s Electrification Timeline

Getting to 20 Million EVs by 2030 Opportunities for the Electricity Industry in Preparing for an EV Future

Michael Hagerty, Sanem Sergici, Long Lam, June 2020 (The Brattle Group)

Overview

The number of electric vehicles (EVs) in the U.S. is projected to increase from 1.5 million in 2020 to 10–35 million by 2030 and will be a major disruptor to the electric power sector

 Major adoption drivers include decreasing vehicle and battery costs, expanding EV models, increasing charging infrastructure, and growing market awareness of EVs

 Favorable federal and state policies create additional incentives for purchasing EVs, including federal and state tax credits, rebates, and Zero Emission Vehicle (ZEV) mandates Market participants throughout the industry will be involved in preparing for the transition to EVs

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 Commissions are weighing the appropriate regulatory and market environments for the industry to increase EV adoption

 While most chargers to date have been installed by competitive suppliers, utilities have an important role to play by building out system infrastructure, developing EV-specific rates, and increasing customer awareness This presentation provides an assessment of the investments needed across the electric power sector to support the deployment of 20 million EVs in the U.S. by 2030 with a focus on EV charging infrastructure

 While this analysis focuses primarily on light-duty vehicles, electrification of commercial fleets and freight trucks will further magnify electrification-related opportunities.

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Key Findings

$75–125 billion of investment is needed across the electric power sector to serve 20 million EVs by 2030

 20 million EVs will add 60–95 TWh of annual demand and 10–20 GW of peak load to the system and require 12–18 GW of renewable capacity and 1–2 million public chargers to serve EV demand

 Investments will be necessary across the supply chain, including $30–$50 billion for generation and storage, $15–$25 billion for T&D upgrades, and $30–$50 billion for EV chargers & customer-side infrastructure

 Total annual fuel savings of $12 billion/year relative to Internal Combustion Engine (ICE) vehicles translates to an estimated societal payback of 8.6 years to cover the costs of electric sector investments (7.2 years if GHG benefits are included) Over the past 5 years, public EV chargers increased by about 40% per year, a rate that must be maintained over the next decade to install an additional 1–2 million public chargers by 2030

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 To date, less than $2 billion has been approved for utilities to build out the necessary EV charging infrastructure

 While CA and NY have been leading in charger deployment, utility requests for funding in other states are rising EVs present significant opportunity, but also uncertainty, to the electricity industry over the next decade

 Industry planners and policymakers should take a three-pronged approach to planning for significantly greater EVs, including (1) proactively developing an EV roadmap, (2) crafting an EV regulatory strategy, and (3) identifying win-win-win solutions that address market barriers…

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What does it take to deploy 20 million EVs by 2030?

Projected EV sales vary significantly, and the exact number of EV deployment is not possible to predict precisely.

In this section, we’ll explore what it takes to deploy 20 million electric vehicles by 2030.

Growing EV fleet will significantly increase electricity demand and infrastructure needs

System planners will need to account for several uncertainties in projecting the impacts of EV on their system and the required system upgrades

Public chargers will need to increase by 15–30% per year (or more) to meet 2030 needs

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From 2014 to 2019, public EV chargers increased by 6x, or 40% per year (including workplace chargers)  66,000 Level 2 chargers (10 – 15 kW)  12,000 DC Fast Chargers (typically 50 – 150 kW)  About a third of the chargers are located in California U.S. will need about 1.25 million public chargers to supply 20 million EVs by 2030  20x increase in Level 2 (30% per year growth rate)  5x increase in DCFCs (15% per year) In addition, 6-10 million at-home Level 2 chargers will likely be installed at single family homes

20 million EVs require $75-125 billion of electric sector investment by 2030

Investment will come from market participants across the supply chain, including electric utilities, merchant developers, competitive suppliers, and EV owners  $30-50 billion for Generation & Storage to meet higher energy demand & peak loads  $15-25 billion for T&D upgrades to serve peak demand, access renewables, and connect to charging infrastructure  $30-50 billion for Chargers & Customer-Side Infrastructure to provide sufficient home, workplace, and public chargers

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The Role of Utilities in the EV Transition

Electric utilities have an important role to play in the transition to EVs

While regulatory and market environments influence the extent of utilities’ involvement, utilities are well-positioned to build charging infrastructure to help drive EV adoption and achieve ambitious EV targets

 Clean energy plans provide opportunities to the utilities for greater involvement in the electrification activities

 Approved funding for utilities is primarily aimed at “make-ready” infrastructure from the distribution system up to the charger, including line transformers, service lines, meters, and panel

 Chargers mostly installed by non-utility suppliers (see next slide)

Tension between private and utility investment needs to be resolved to be able to leverage each player’s unique strength in the ecosystem

 Commissions are balancing the need to provide sufficient charging infrastructure with the desire to keep the market open to competitive suppliers

Increased EV adoption can be a Win-Win-Win outcome across market participants

 Customers will have access to a larger network of chargers and reduced costs of achieving EV policy goals

 Private infrastructure companies will see increased demand for their products

 Utilities will see increased sales and improved asset utilization and contribute to infrastructure investments

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Private sector focuses primarily on installing publicly-available EV chargers

ChargePoint and Tesla have more EV charging stations than any other networks, although Electrify America will likely have a larger role going forward

 To date, only 159 public charging stations are utility-owned (or 0.6% of total U.S. public charging stations)

 Tesla spent about $220 million building out its Supercharger network of over 800 stations

 Electrify America is set to invest $2 billion in Zero Emission Vehicle infrastructure by 2027 (including hydrogen refueling stations)

 ChargePoint network has 38k chargers with plans for 2.5 million globally by 2025 (majority in North America and Europe)

Approved utility EV charging infrastructure investments rose to $1.5B through Q1 2020

 Majority of approved funding has been for installing “make-ready” infrastructure, not chargers

 EV-related program requests have increased sharply since 2016 with 27 programs approved in 2019

 To date, most programs are less than $25 million

 Only 4 requests for over $50 million approved, all in Calif.

 Small initial approvals are likely to lead to larger requests in future rate cases

 Utility programs are primarily approved on the basis of supporting state-level EV deployment goals

 Utilities will increasingly need to perform cost-effectiveness analysis as they transition from pilots to larger programs  An additional $1.4 billion is pending approval (about $60 million per request on average)

Utility investments in EV charging infrastructure have been approved across the U.S

California approved $1.2 billion in utility funding for EV charging infrastructure since 2016…

New York is targeting $900 million in EV charging infrastructure funding through 2025…

Other states have taken different approaches to approving EV infrastructure investments…

Other states have taken different approaches to approving EV infrastructure investments

Recommendations for Industry Planners and Policymakers

Electricity industry should take a three-pronged approach to planning for a world with significantly greater EVs

Proactively develop an EV roadmap to maximize opportunities and limit challenges of EV adoption

 Develop location-specific EV adoption forecasts that identify the impact of key local drivers

 Incorporate forecasts into resource, grid, and EV infrastructure planning and investments

 Design tailored EV adoption programs and mechanisms, including EV-specific rates to maximize cost savings to EV owners and limit peak load impacts

Craft EV regulatory policies that articulate societal and non-energy benefits of EV adoption

 Propose framework for cost-effectiveness assessment that takes into account societal benefits of electrification and for prioritization of infrastructure investments; Total Value Test by EPRI/Brattle offers such a framework

 Propose a phased approach to infrastructure investment that would allow balancing risks associated with an emerging technology and customer benefits resulting from the technology

Facilitate collaboration across the supply chain to identify win-win-win solutions that address barriers

 Identify under-served markets which are not prioritized by private investment and channel a share of investments into these markets (i.e. multi-unit buildings, low income areas, and low-traffic areas)

 Ensure best use of ratepayer funds by leveraging strengths of different market participants

 Make customer outreach a centerpiece of EV efforts and advance equitable access to infrastructure for all customers…

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