There is a widely held belief — thanks to anti-EV FUD sponsored by the fossil fuel industry — that supplying enough electricity to charge all the electric cars expected to be on the road in a few years will cost gazillions of dollars for the grid upgrades needed to meet the demand for EV charging.
Now, thanks to the folks at the Green Energy Consumers Alliance, we have facts we can rely on rather than the disingenuous distortions disseminated by partisan actors who are scared to death that electric cars will wreck their business model and make all those lovely profits they are used to earning disappear. Those people care not one whit about the climate emergency brought on by their own actions. Why believe anything they say when the truth is so easy to obtain?
What should be your first clue that all this yelping about EV charging crashing the grid is that none of it is coming from utility companies. They sell electricity. It’s what they do. It’s a business and they are very good at it. They want to sell more electricity, not less, and the EV revolution will allow them to do just that. They’re happy, we’re happy, and the Earth can breathe a little easier as a result.
EV Charging — Increased Costs and Increased Revenue
The folks at the Green Energy Consumers Alliance are more honest. They readily admit that as more people go electric, “there will absolutely be costs associated with upgrading infrastructure to make sure they can charge. There are wires to replace, transformers to install, and parking lots to trench for new charging stations. However, all those EVs enabled by grid improvements also pay into the system by buying more electricity.” In fact, the data show that EV drivers pay more into the system than those upgrades cost. That means utility companies make profits from EV charging, profits that drive down the cost of electricity for all ratepayers, including those who do not drive electric cars.
GECA shares with its readers several studies that support their argument. In 2020, Synapse Energy Economics examined the costs and revenues associated with EV adoption in the service areas of Pacific Gas & Electric and Southern California Edison in California between 2012 and 2019. The territory covered by these two utilities has some of the highest EV adoption rates in the country. The analysis by Synapse found that EV revenue exceeded costs by $806 million.
A 2022 update repeats this analysis by including data through 2021 and adding a third utility, San Diego Gas & Electric. This time, Synapse found revenue exceeded costs by $1.7 billion. The latest information from Synapse includes data from all across America, not just California. It finds that “across all regions in the United States, EVs have increased utility revenues more than they have increased utility costs, leading to downward pressure on electric rates for EV owners and non-EV owners alike.”
That trend holds true for medium- and heavy-duty vehicles. This 2023 study of two utilities in New York state found that if the two utilities created programs that pay for all electrical upgrades needed for fleet electrification, revenue should still exceed costs by hundreds of millions of dollars.
The Public Advocates Offices at the California Public Utilities Commission recently published a massive report on the impacts of electrification on the distribution grid for the three largest investor-owned utilities in California.
“We find that electrification applies an overall downward pressure on rates across all three of the large electric utilities. This is because, all other costs being equal, upward pressure on rates from increased infrastructure costs due to electrification is more than offset by downward pressure on rates from the increased consumption of electricity resulting from electrification. All ratepayers, even those who cannot (or choose not to) electrify, could financially benefit from electrification.”
Managed EV Charging is the Key
Every single study cited here stresses that managed charging is absolutely crucial to maximizing these cost benefits, GECA says. It explains that the electric grid is built to support the maximum needed use. As more electric cars are added, what strategies are available to minimize the upgrades needed to support charging them? The best way is to incentivize drivers to charge when the demand for energy is low. This is a technique known as demand response and it is something utility companies and regulators know a lot about.
The concept is simple. If you drive an electric car, would you prefer to pay more for the electricity you use to charge the battery or less? If you said “less,” step forward. You have now earned the Adam Smith Unseen Hand award. Humans are driven by economic considerations. We comparison shop at the grocery store and online. Some of us have been known to go out of our way to visit a gas station where the price per gallon is 2 cents less than it is at the nearest Gas ‘n’ Go. Give people a choice of paying more or paying less and the majority will choose to pay less.
In that report from the Public Advocates Office in California, the authors included this conclusion: “The peak load on the distribution grid is a key driver of the upgrades needed and the time at which EV owners charge is a key contributor to peak load. Approximately 70 percent of the costs identified — $35 billion — vanish (emphasis added) if EV charging is shifted away from hours of peak demand.”
There is one qualification needed here. Early in the EV revolution, most electric car owners charged their cars overnight. Rates are typically lowest between 10 pm and 6 am the next morning. But as a practical matter, most people plug in when they get home in the late afternoon or early evening. As more renewable energy gets incorporated into the electrical grid, the energy mix is changing. During the day, there is often more solar power available than the grid needs. But as the sun sets, the demand for electricity ramps up as people turn on their air conditioners, do their laundry, and heat up their ovens. That means plugging in when people get home may be the worst possible time to charge an electric car. Most EVs allow drivers to control when charging begins and ends. If people have an incentive to use those controls, most will do so. Otherwise, they probably won’t.
There are also smart EV chargers that are connected to the internet. That allows them to schedule charging during the times each day when rates are lowest. They also allow utility companies to reduce or delay charging during demand peaks. Those sorts of demand response techniques need to be prioritized by utility companies and regulators. As the Public Advocates Office points out, billions can be saved by taking advantage of such strategies.
There is another subset to this. If everyone sets their cars to charge at midnight when the lowest rates kick in, that can create an unexpected surge in demand right when the grid is least able to handle it. The upshot of all this is the new preferred time to charge an electric car is during midday when solar power is plentiful. But that means being able to charge at work rather than at home.
Algorithms can figure all this out — the permutations are quite complex. The result is that utility companies can or will soon be able to manage all demand for energy in a way that spreads out the load on the grid as efficiently as possible. That capability will avoid the need for many expensive grid upgrades altogether.
What readers need to know is that when you hear someone pontificating about how EV charging will crash the grid, you will know you are being lied to by someone who is using false information to spread fear, uncertainty, and doubt. The extra revenue utilities earn from EV charging will more than offset whatever the cost of those upgrades might be. So relax. Drive an electric car. Be happy!
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