EV Myth: the electric grid can’t support EVs and EVs will drive up electric rates

February 4, 2021

EV Myth 1: As EVs flood the mar­ket, the cost of elec­tric­i­ty will increase and will dri­ve up rates for non-EV drivers.

Myth BUSTED: Recent stud­ies have shown that util­i­ties bring in more rev­enue than costs with more EVs on the road, lead­ing to a decrease in elec­tric­i­ty rates for all cus­tomers, includ­ing non-EV drivers.

EV Myth 2: The elec­tric grid does not have the capac­i­ty to sup­port high num­bers of EVs on the road and infra­struc­ture over­haul will be required.

Myth 2 BUSTED: With time-of-use rates and prop­er man­age­ment of the grid, capac­i­ty is not a con­cern, even with large num­bers of EVs charg­ing. This is espe­cial­ly true when EVs are charg­ing over a wide­spread length of time and dur­ing off-peak hours.

You may see naysay­ers tout­ing the “fact” that large-scale adop­tion of elec­tric vehi­cles will lead to a high­er elec­tric­i­ty cost for consumers—putting the bur­den of an EV driver’s choice to switch to a plug-in vehi­cle on non-EV dri­vers. This argu­ment is false.

The argu­ment goes that the more EVs are on the road, the less elec­tric capac­i­ty the grid will have to charge them—and the added strain on the grid will lead to high­er elec­tric­i­ty prices for all cus­tomers (not just EV drivers).

A brief expla­na­tion of the elec­tric grid: 

Elec­tric util­i­ties vary rates based on the time of day: charg­ing high­er for peak demand and charg­ing less for off-peak use. Off-peak hours typ­i­cal­ly run between 11 pm and 8 am, though hours vary by util­i­ty and sea­son. Peak hours typ­i­cal­ly run from 8 am to 12 pm and from 2 pm to 6 pm. These hours are based on when elec­tric­i­ty is in high­est demand.

Many util­i­ties have start­ed to imple­ment “time-of-use” rates which are espe­cial­ly impor­tant when talk­ing about EV charg­ing. Time-of-use rates are a way of pric­ing an ener­gy user’s con­sump­tion based on when the ener­gy is used. If you are charg­ing your car at 4 pm on a summer’s day, the price you’ll pay for that elec­tric­i­ty will be high­er than if you charged at 1 am on that same day.

In actu­al­i­ty, wide­spread growth of EVs will make our grid more effi­cient and will dri­ve down rates for all cus­tomers. Below is a graph­ic depict­ing the “Vir­tu­ous Cycle of Util­i­ty EV Invest­ments” which out­lines how an increase in EVs will lead to increased elec­tric­i­ty demand (and sales) dur­ing off-peak hours, which allows for bet­ter uti­liza­tion of the grid. This means that rev­enues will out­pace costs, which will bounce back to the con­sumers by allow­ing the util­i­ty to decrease the rate of elec­tric­i­ty and low­er elec­tric bills for all ratepayers.

This con­cept has been demon­strat­ed in a study con­duct­ed by Synapse Ener­gy Eco­nom­ics in 2020. The study looked at the stres­sors on the grid in PG&E and SCE’s ter­ri­to­ries – two pub­lic util­i­ties in Cal­i­for­nia, where EV adop­tion is highest.

The study found, “over the eight years exam­ined [2012–2019], EV dri­vers in PG&E’s and SCE’s ser­vice ter­ri­to­ries have con­tributed $806 mil­lion more in rev­enues than asso­ci­at­ed costs, dri­ving rates down for all cus­tomers,” (Frost, et al. 2020). With greater EV adop­tion, util­i­ties have increased rev­enues more than costs, lead­ing to a down­ward pres­sure on elec­tric rates for both EV-own­ers and non-EV own­ers alike.

Addi­tion­al­ly, “Load Research Reports show that EVs are requir­ing few dis­tri­b­u­tion sys­tem upgrades and, when on [time-of-use] rates, are charg­ing at low-cost times [i.e. off-peak hours] for the grid…By charg­ing dur­ing off-peak hours, EVs impose min­i­mal costs on the grid and help to uti­lize resources more effi­cient­ly,” (Frost, et al. 2020). It is impor­tant to note that coor­di­nat­ed charg­ing and incen­tiviz­ing off-peak charg­ing is key. If these meth­ods are not used in tan­dem, elec­tric grids may very well need to expand capac­i­ty. Addi­tion­al­ly, elec­tric grid capac­i­ty and poten­tial expan­sion will vary great­ly across the nation, (David­son, et al. 2018).

Final­ly, vehi­cle-to-grid (V2G), a tech­nol­o­gy that allows ener­gy to be trans­ferred between elec­tric car bat­ter­ies and the pow­er grid, are quick­ly accel­er­at­ing and pilot projects have begun. These projects will act as a sec­ondary pow­er source to fur­ther uphold the pow­er grid dur­ing peri­ods of max­i­mum demand—a sce­nario that would be impos­si­ble with­out elec­tric vehicles.

Source: Jason Frost, Melis­sa Whit­ed, and Avi Alli­son “Elec­tric Vehi­cles are Dri­ving Elec­tric Rates Down.” June 2020. <https://www.synapse-energy.com/sites/default/files/EV_Impacts_June_2020_18-122.pdf>.

Source: F. Todd David­son, Dave Tut­tle, Joshua D. Rhodes, Kazunori Naga­sawa “Switch­ing to elec­tric vehi­cles could save the US bil­lions, but tim­ing is every­thing.” Decem­ber 4, 2018. The Con­ver­sa­tion. <https://theconversation.com/switching-to-electric-vehicles-could-save-the-us-billions-but-timing-is-everything-106227>.

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