Transportation and Energy: Electric utilities push for electric vehicle (EV) expansion to grow their businesses
Many people believe EVs are zero emission vehicles. As explained here, they are not zero emission when considering their lifetime energy use. In many instances, EVs yield a smaller reduction in GHGs than one would expect. This is because much of the vehicle’s lifetime energy consumption is during the vehicle’s manufacture, and in many scenarios, the electricity for charging the vehicles is produced by coal or other fossil fuel based generation.
Electric utilities need to create growth opportunities as, surprisingly, there has been a decline in retail sales of electricity. Not surprisingly, electric utilities want to see widespread adoption of electric vehicles to kick start demand for electricity.
Between 2007 and 2013, retail sales of electricity in the United States across all sectors dropped 2%. In addition, the American Society of Civil Engineers gave America’s energy in-frastructure a D+ grade in their 2013 report card and estimated a 3.6 trillion dollar investment needed by 2020.
“America relies on an aging electrical grid and pipeline distribution systems, some of which originated in the 1880s. Investment in power transmission has increased since 2005, but ongoing permitting issues, weather events, and limited maintenance have contributed to an increasing number of failures and power interruptions.”
Stagnant growth, rising costs, and a need for even greater infrastructure investment represent major challenges to the utility industry. To maintain our critical energy infrastructure while investing for the future, today’s electric utilities need a new source of load growth—one that fits within the political, economic and social environment. Electrification of the transportation sector is a potential “quadruple win” for electric utilities and society, and will enable companies to support environmental goals, build customer satisfaction, reduce operating costs and assure the future value of existing assets.
Transportation Electrification. Edison Electric Institute. June 2014. Retrieved from https://www.eei.org/issuesandpolicy/electrictransportation/FleetVehicles/Documents/EEI_UtilityFleetsLeadingTheCharge.pdf
It’s not just about power generation. A fast charger requires a 480-volt, high capacity distribution line to be brought in to the charging station. Apartments and condo complexes, which may have dozens to hundreds of units will require massive power distribution upgrades to deliver the necessary power to charge all those vehicles when workers come home for the night.
The linked paper does not say much about how existing fossil-fuel based electric generation will be removed, or what type of new generation will be used to provide this electricity. They estimate that over the next 16 years (by 2035), an additional 112 terawatt hours of generation capacity will be required by the transportation sector.
EVs are seen as a conduit to growth in the electric utility industry.
The bottom line is that the electric utility industry needs the electrification of the transportation sector to remain viable and sustainable in the long term. While the market has started moving in this direction and the technology has been proven, there is still more to be done. Without active engagement, we may not realize the many benefits that could be derived from widespread electric-based transportation. We must continue to innovate, invest and work closely with regulators, automakers, and other partners to develop policies and best practices that will allow electric transportation to flourish. Electrifying our own fleets is an important first step in moving the industry forward. The Edison Electric Institute in partnership with and on behalf of its member companies is requesting each member utility to dedicate 5% of its annual fleet purchase plan to plug-in vehicles. In many applications, this choice already makes economic sense. The 5% ask is a starting point. It is an investment in the future of our business. We must lead by example—showing our customers the benefits and possibilities of making the switch.
Some models for handling increased electrical demand include having customers pay for the new generation by installing customer owned solar PV. This outsources the utilities capital costs to the customer. The utility then buys electricity from the customers, albeit, often at price points that may not generate a fair return on investment to the customer.
Second, they propose smart vehicle charging systems whereby vehicle batteries are turned into grid storage systems. At certain times of the day, power flows into batteries and at other times, power is drawn out of the batteries back into the grid. Again, the utility outsources these costs to the customer. Battery chemistry can only be discharged/charged some number of times before the battery needs to be replaced. Replacement costs are high (up to about $25,000 or more) and the customer will find that letting the utility use their batteries will require a more frequent replacement, at the expense of the customer. While this make financial sense for consumers?
It looks like, at least for now, the electric utilities have found a way to outsource their costs to the customers while growing their business and profits – while reducing greenhouse gases some what.