Transportation electrification should build on energy efficiency and renewables program success

Source: By Robin Lunt, Utility Dive • Posted: Monday, April 16, 2018

A fleet of safely autonomous electric vehicles shuttling people to work and school without any tailpipe emissions seems like a science fiction movie or the flashy concept from an international auto show. While the autonomous part may take some work, EVs are on the road today and enthusiasm for EVs is growing. Despite strides in battery technology, however, EVs are generally more expensive to buy and less convenient to fuel than internal combustion engine cars and require policy support to realize their potential.

EVs present a significant opportunity for technological change that will transform economies and enable growth while reigning in emissions. The electric generation sector has dramatically reduced its greenhouse gas emissions, so much so that the transportation sector for the first time surpasses it as the largest source of carbon dioxide emissions in the U.S.

As the power generation sector continues to decarbonize, transportation electrification presents an opportunity to leverage the power generation sector’s diverse fuel mix to also tackle the problem of transportation emissions. Electrification is not just for the green at heart; it also supports energy dominance and frees hydrocarbons for many other uses. But like any transition, electrification of transportation faces both infrastructure and policy challenges.

Vehicles may not instinctively fit within the purview of public utility policy, but promoting transportation electrification through incentives, standards and requirements fits within the well-established precedents of energy efficiency (EE) programs and renewable portfolio standards (RPS) that leverage public utilities to provide benefits to society and electric customers.

A brief discussion of these programs can demonstrate how policies to promote transportation electrification align with well-established EE and RPS incentives. Energy policy makers can and should make transportation electrification a third leg of the policy stool currently supported by energy efficiency and renewable portfolio standards.

Energy efficiency programs

Energy efficiency programs started decades ago as a way to conserve energy in the face of energy shortages and price spikes. While we have come a long way from President Jimmy Carter’s 1977 encouragement to wear a sweater, these programs have endured and evolved.

Energy efficiency policy takes on a multi-pronged approach, deploying a myriad of policy options from energy efficiency targets to retrofit rebate programs for commercial businesses to upgrades to more efficient lighting and controls. These programs are often run, under the oversight of a public utility commission, by utilities and paid for by surcharges to customer utility bills on the basis that energy efficiency is in everyone’s interest.

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Transportation electrification does not reduce consumption of electricity, but if charging occurs outside of the system peak (sometimes called “managed charging”), it can bring overall value to the grid. Demand response often gets lumped into energy efficiency. Off-peak or managed EV charging provides similar system benefits to demand response.

Managed charging can serve the grid by integrating more renewables that often generate excess power at times of low electric demand, and by increasing overall system utilization. Since utility systems must be built to serve peak demand, increasing the use of the system outside of that peak can spread those largely fixed infrastructure costs across more kilowatt-hours.

These system benefits of transportation electrification require utility involvement to integrate these variable loads into the system. Tapping into these potential benefits justifies policy support for EVs similar to that afforded to energy efficiency.

Energy efficiency programs often include customer engagement and education in addition to rebate programs to make it easier for customers to make decisions that benefit the overall system. Like buying new appliances or swapping out lightbulbs for LEDs, charging stations require a capital investment. Successful energy efficiency rebate programs could serve as a model for home and business EV chargers.

Electric vehicles create an optimal opportunity for utilities to engage with customers who are focused on their energy use as they shift from filling-up to plugging-in their vehicles. New EV owners will be energy-focused and ready to engage with their utility in a positive and new way. This would be an optimal time for utilities to offer dynamic and customized pricing options to their customers and policies should support and encourage utility efforts to do so.

Renewable portfolio standards

Renewable portfolio standards obligate retail sellers of electricity to include a certain percentage of qualified renewable electricity in their portfolio. Twenty-nine states now have RPS goals, and these standards have been very successful at cost effectively driving the integration of renewable generation. Originating in Iowa in 1983, the standards have evolved and grown over the years with Hawaii having the most ambitious goal of 100% clean energy by 2045.

Defining a specific target or goal for transportation electrification is a bit challenging when charging infrastructure versus EVs can seem like a chicken-or-egg conundrum. It is clear that any standards should focus on the infrastructure to support vehicle charging and should key off of RPS goals with a relatively light touch regulatory approach, setting a specific goal, determining what would qualify to meet that goal and then allowing the regulated entity to make cost effective procurement decisions with regard to ownership versus contracting with third parties.

Any transportation electrification standards should require public chargers to have interoperability with any car brand’s charger connecting types and should ensure that the charging stations provide secure data and information, and perhaps even control to the utility to ensure that the charging stations can meet customer needs and operate as an integrated component of the grid system. Finally, similar to RPS that have carve outs for specific resource types such as distributed generation, EV charging goals could provide metrics that direct the deployment of certain levels and placement locations of charging stations.

Finally, transportation electrification goes hand in hand with increasing RPS goals as an enabling technology for absorbing variable resources through managed charging and addressing broader environmental goals. Hawaii Electric Company (HECO), for example, anticipates that the majority of vehicles in the island state will be EVs by 2045, the same timeframe as Hawaii’s ambitious RPS target ripens. In its Electrification of Transportation Roadmap, filed in March with the Hawaii Public Utilities Commission, HECO emphasizes how the electrification of transportation is integrally tied to the state’s RPS and decarbonization goals.

Transportation electrification provides utilities an avenue for sales growth and a vehicle for positive engagement with customers while also integrating renewables and leveraging utility environmental gains into the transportation sector. A far cry from the shortages that called for conservation and rationing, but with the opportunity to achieve many of the same environmental goals, policy makers should seize the moment to support technological advances in transportation.

As cool as Tesla may be, policy makers cannot rely on the EV manufacturers to unlock the societal benefits of transportation electrification. States should build on the foundation of strong EE and RPS policies to accelerate the public benefits of transportation electrification.

Robin Lunt is a lawyer at Wilkinson, Barker Knauer.