New report identifies important best practices for utilities, regulators, and other stakeholders
If you think electric vehicles are still a niche technology, think again. The International Energy Agency (IEA) estimates that more than 1 million electric vehicles (EVs) were on the road in 2015, including 400,000 in the United States. In order to limit global warming to 2°C or less, the agency says the world will need 150 million EVs by 2030 and 1 billion by 2050, implying a 21 percent compound annual growth rate from now until 2050.
India is considering a state-financed plan that would let drivers buy EVs for zero money down, then pay for the vehicles out of gasoline savings. The plan aims to transition India’s entire fleet to electric vehicles by 2030.
China is also aiming to have a fully electrified fleet, eventually, and has a target of putting 5 million battery-electric and plug-in hybrid electric vehicles on the road by 2020. EV sales there quadrupled to more than 247,000 last year, more than double the 115,000 sold in the U.S.
EVs already have a larger market share in Norway, at 17 percent, than anywhere else in the world, and although the country is not banning the sale of gasoline and diesel vehicles, as recent reports suggested, it is formulating targets for zero-emission vehicles in order to reach climate goals.
EVs currently have a 10 percent market share in the Netherlands, which is discussing the possibility of banning the sale of gasoline vehicles and only allowing EV sales by 2025.
Programs and incentives drive booming market growth
In the U.S., a variety of state and federal tax incentives, other local benefits, and deployment targets are supporting double-digit growth rates in EV adoption and charging-station installation:
- California aims to have 1.5 million EVs on the road by 2025—a more than 600 percent increase over the roughly 200,000 EVs it has today—along with the supporting charging infrastructure. And the three big investor-owned utilities in California are developing programs to radically increase the number of charging stations available in their territories, under a variety of innovative programs.
- Nine states have followed suit on California’s Zero Emissions Vehicles program, which sets goals for manufacturers to sell EVs. Several states have begun to transition their fleets of state vehicles over to EVs.
- The Drive Clean Seattle program aims to increase EV adoption by 400 percent and get 15,000 EVs on the road in the city by 2025, as well as to triple the number of publicly available fast chargers.
- The City of Indianapolis intends to replace its entire gasoline-powered fleet with EVs by 2025. The City of Houston now has one-quarter of its fleet plugged in. New York City plans to create the largest municipal electric vehicle fleet in the country.
- Group purchase programs in Colorado for Nissan LEAFs quadrupled sales in Boulder, and increased sales by a factor of six in Northern Colorado.
So although EVs are a small part of the fleet (0.16 percent) and of new vehicle sales (0.7 percent) in the U.S. now, watch out: Their adoption could follow the path of other disruptive technologies, like cell phones and Internet access, and become ubiquitous in an astonishingly short time.
This is particularly likely as the world begins making real strides toward its climate change targets. Bloomberg New Energy Finance estimates that electric vehicles could account for 35 percent of all new vehicle sales worldwide by 2040, as the price of long-range EVs falls to less than $22,000 and drivers begin to appreciate how much cheaper they are to drive than internal combustion vehicles.
Utilities: Be prepared
If utilities and their regulators are not prepared for such a rapid expansion of the EV fleet, it could have negative effects on the grid. The life of grid infrastructure components could be shortened and greater investment in peak capacity could be required, making the grid less efficient, increasing the unit costs of electricity for all consumers, inhibiting the integration of renewables, increasing grid power emissions, and making the grid less stable.
But if utilities and regulators anticipate rapid EV growth and plan accordingly by implementing the right incentives and tariff structures, EVs could become an incredibly valuable grid asset, and actually reduce the cost of electricity by helping to optimize the grid so that it operates more efficiently.
EVs can enable the growth of wind and solar on the grid by absorbing their output when it is greatest, helping utilities avoid new investment in grid infrastructure, reducing electricity and transportation costs, reducing petroleum consumption and emissions, improving energy security, and supplying ancillary services to the grid, such as frequency regulation and power factor correction.
Utilities should prepare for a rapid adoption of EVs for another reason: avoiding undue stress on the electricity distribution network. EVs with high-capacity batteries, such as the 30 kWh 2016 Nissan Leaf, can consume as much electricity as the average U.S. residence consumes in a day. In order to avoid overloading distribution grid components, utilities will need to either invest in expensive grid upgrades or offer electricity rate structures that encourage vehicle owners to recharge their vehicles when grid power demand is low. Managing charging patterns is already important for neighborhoods with more than three or four EVs in places such as San Diego and Silicon Valley.
How will your decisions help or hamper the grid of the future?
But the EV revolution will need more than utilities and regulators to support it; many of us have important roles to play. A new report from RMI’s Electricity Innovation Lab (eLab), Electric Vehicles as Distributed Energy Resources, developed in conjunction with the Regulatory Assistance Project and San Diego Gas and Electric, identifies best practices for elected officials, vehicle manufacturers, regulators, utilities, and other stakeholders, as well as important considerations for consumers and consumer advocates.
Among other things, we have to ensure that charging stations are installed and available at the right time and place for drivers to use them. But what that means may vary by state and utility grid. We have to ensure that EVs are affordable and practical for the broadest possible cross section of drivers, as a matter of social equity. And we need to influence, with increasing precision, where and when EVs are charged through a combination of partnerships, incentives, and market structures. In its early stages, the interesting challenges and opportunities related to vehicle grid integration will be local or even hyperlocal, at the scales where grid-related issues will first emerge.
By working together and managing EV charging so that it happens at the right times and places, EVs can be integrated into the electricity system in ways that deliver net benefits to utility customers, shareholders, vehicle owners, and society at large.
Image courtesy of iStock.