“Electrification of the transportation sector is imminent.” That is the opening statement of a report released today by research and consulting firm Synapse Energy Economics. The study, entitled “Making Electric Vehicles Work for Utility Consumers,” analyzes the impact that this transition to electric vehicles could have on Minnesotans through our electricity bills and our health. It confirms that electric vehicles could benefit all Minnesotans — EV drivers and non-drivers alike — but that a handful of actions by utilities and the Public Utilities Commission will dictate how much consumers will benefit and how the benefits will be distributed.
EV growth will increase the demand for electricity. Luckily, much of the increase in demand can be easily absorbed into the existing system because of the timing of demand is flexible. Systems can be and are being designed to have EVs charge based on the availability of low-cost renewable power. This is really important to our grid. A typical driver plugs in their car for several hours overnight, and doesn’t care if the car charges at 9:00 p.m. or 2:00 a.m. as long as the battery is full when the owner is ready to leave the next day. As we have discussed on this blog before, time-of-use rates that provide a discount for charging EVs during periods of lower power demand are crucial. “Demand response” programs, which compensate EV-owners for allowing their utilities to shift their use away from expensive peak periods to less expensive periods, are equally important. This study confirms those stances.
With those policies in place, the study finds that having more EVs plugging into the grid should drive down the per-unit cost of electricity for everyone. Conversely, without those policies, the load from EVs could require additional power sector investments.
This study follows the 2018 study Minnesota’s Smarter Grid, which found that the flexible electricity load that EVs bring can allow utilities to use low-cost wind power that is increasingly available overnight, significantly reducing the cost of electricity and supporting a transition to renewable power. (Vibrant Clean Energy, which conducted the Smarter Grid study, is now conducting modeling in Xcel’s Integrated Resource Plan on behalf of CUB.)
The Synapse report also finds that transitioning from gasoline or diesel to electricity-powered vehicles should reduce both greenhouse gas emissions and criteria pollutants, improving public health. The health impacts of transportation have been borne disproportionately by low-income communities and communities of color, who are more likely to live near busy roads and highways.
Well-designed EV programs can be in the public interest, but they’re outside of the traditional utility role. Policymakers often struggle with how much utilities should spend on these programs (remember, utility funding comes from customers’ bills), and how or even whether to ensure that customer benefits exceed costs.
The study provides suggestions on how to quantify consumers’ costs and benefits, and how to ensure that benefits exceed costs. This is a helpful resource for both consumer advocates like CUB and utility regulators who need to act in the public interest.
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