Industry sees big opportunity, challenges with electrification

Source: Jeffrey Tomich, E&E News reporter • Posted: Monday, August 27, 2018

LONG BEACH, Calif. — You couldn’t blame electric utility executives for being glum a few years ago.

They faced billions of dollars in necessary grid investments and public pressure to clean up power plant fleets at the same time electricity demand was eroding. Customers were adding to the headaches by installing solar panels on their rooftops, giving rise to talk of an industry “death spiral.”

If industry executives needed something positive to grasp, they may have found it in a new movement that seeks to convert large swaths of energy consumption — everything from transportation to agriculture — to run on electricity.

The push to electrify more of the U.S. economy was the theme of an inaugural conference here that brought more than 1,700 people representing utilities, automakers, environmental groups, state regulators, grid operators and entrepreneurs to the Long Beach Convention and Entertainment Center this week.

Electrification 2018 was organized by the nonprofit Electric Power Research Institute and builds on the group’s national electrification assessment. It showed that electrifying more of the nation’s economy could, under certain scenarios, reduce total U.S. energy consumption by almost a third by 2050 and cut economywide greenhouse gas emissions by as much as two-thirds.

EPRI President Mike Howard kicked off the meeting, noting that the importance of electricity, utilities and the grid would only grow as cars, trucks, space and water heating, and heavy equipment are converted to run on electrons.

“The value of electricity 10 years from now and what it does to help all of us is going to be profound,” he said.

Perhaps no company has put forward a bolder plan to prove the concept than Southern California Edison, a utility that delivers power to 15 million people.

Last fall, the utility issued a white paper outlining a plan to use electrification to meet California’s 2030 greenhouse gas emission standards. The strategy includes adding up to 10 gigawatts of energy storage, installing charging infrastructure for 7 million electric vehicles in its service area, and converting up to a third of space and water heaters to electricity.

Pedro Pizarro, CEO of parent company Edison International, said the new demand would be met with increasingly cleaner sources of energy as the utility doubles renewable generation on its grid to 80 percent.

“Even though more electrification will increase electricity use, it decreases our economywide energy use from oil and natural gas [and] also decreases the associated climate-warming emissions that come from those sources,” said Pizarro, an EPRI board member.

Gil Quiniones, CEO of the New York Power Authority, the nation’s largest public power agency, said electrification is a way for states and utilities to counteract the Trump administration’s efforts to roll back Obama-era climate policies.

“It’s up to us to fight back,” he said. “It’s up to us to try things out, to learn from our mistakes, pivot and iterate and really transform this market as fast as we can and do it in a way that is inclusive and just to everybody.”

Transportation opportunities

The biggest and closest opportunity to electrify more of the U.S. economy and slash greenhouse gas emissions is the transportation sector — everything from millions of light-duty cars and trucks to mass transit and corporate fleets.

Bloomberg New Energy Finance, for example, predicts that by 2040, EVs will capture 55 percent of new car sales and make up a third of the nation’s vehicle fleet.

Still, while automakers such as General Motors Co., which has announced 20 new electric models by 2023, are setting the stage for mass-market EV adoption, how thousands of needed charging stations will get built is just starting to come into focus.

A key piece of the infrastructure puzzle is the network of nearly 1,000 charging stations being built along highways and in major cities by Volkswagen AG’s Electrify America LLC unit. VW agreed to spend $2 billion on clean car infrastructure under an agreement with federal regulators as a result of a diesel emissions scandal.

However, Robert Barrosa, Electrify America’s director of utility strategy and operations, said the plans represent only 10 to 15 percent of the charging network that’s needed.

“There’s a lot of infrastructure that’s required beyond our investment,” Barrosa said.

Britta Gross, director of advanced vehicle commercialization policy at GM, said there’s momentum beyond the Electrify America program, including commitments by 42 states to use a portion of a separate bucket of so-called Appendix D funds from the VW settlement for EV charging infrastructure.

And across the country, utilities continue to seek approval from state regulators to deploy charging stations or “make ready” infrastructure in their service areas.

Not surprisingly, California is leading the way. The state’s Public Utilities Commission has already approved a $1 billion investment with another $1 billion in requests pending, including a request from Southern California Edison two months ago to install 48,000 charging sites over a four-year period.

Even EV advocates, however, acknowledge the laundry list of challenges to ensure that charging infrastructure gets built where it’s needed, when it’s needed, as well as the importance of continuing to engage and educate auto buyers.

“I don’t think we should underestimate the challenge,” said Phil Jones, executive director of the Alliance for Transportation Electrification and a former Washington state utility regulator. “We believe the infrastructure in the ground is very inadequate, even in California.”

Despite some concerns about monopoly utilities wading into the EV charging business, their involvement is necessary to help “catalyze” the market because they have expertise in building electric infrastructure and have access to capital, Jones said.

“Some of the third-party providers don’t have the scale, quite frankly,” he said.

Questions for regulators

Utility investment in vehicle charging also raises new questions for state regulators, who said they must make certain that infrastructure spending and the new electricity demand added to the system benefit all consumers, not just a few.

Among the concerns is what all of the new electricity demand from EVs means for an aging grid.

David Kolata, executive director of the Chicago-based Citizens Utility Board, a consumer group, said utility rate design will be key to ensuring that EV-related electricity demand is steered to off-peak hours when it can help make better use of the grid and help reduce rates.

“Our fear is that we won’t do anything, and transportation electrification will happen and it will lead to higher rates and bills,” Kolata said.

California PUC member Carla Peterman said regulators must also ensure that utility distribution grids are modernized in a way to accommodate EV demand and that the energy used to meet the new demand is as clean as possible.

Ultimately, the role of utilities in the EV charging market isn’t totally clear yet, she said.

“We are still figuring out what part of this whole system utilities are good at,” Peterman said. “They can do it all, but what are they good at?”