ATE: How the power utility plays major role in future of transportation electrification
The role of the utility in transportation electrification is key to ensuring that benefits will be created both for the consumer and for the electric grid, according to a just-released white paper by the Alliance for Transportation Electrification (ATE).
One of the major catalysts of growth in electrification of the transportation sector has been the involvement of the electric utility sector in paving the way for this growth, according to “Driving for Benefits: The Utility Role in Transportation Electrification,” a white paper developed from multiple filings before state commissions and other state agencies over the past several years by ATE.
Utilities have a major role to play in ensuring the grid can handle such growth in electric use, making its customers aware of the benefits of EVs, providing incentives for the development of the infrastructure needed to charge the vehicles on the road, and directly investing in this infrastructure, write the paper’s co-authors, ATE Executive Director Philip Jones and Bruce Edelston, senior advisor of ATE.
“Utilities have substantial experience in providing reliable infrastructure for electricity delivery and can put this expertise to work,” they write.
Specifically, the white paper details how utility involvement in transportation electrification is focused on three areas: investment in the grid (primarily in distribution systems but additional generation and transmission may be needed as well) that is needed to ensure that there is sufficient capacity to serve EV charging needs; “make-ready” investment that includes the wiring and equipment needed between the connection with the utility’s distribution system and the stub at which the charging ports will be installed; and possible ownership and operation of charging stations, often in partnership with private third-parties.
“The needs for investment in all three areas are so great that utilities have a critical role to play either in kick-starting the market, complementing third-party investment, or providing services to fill in gaps that will not be served by private third-parties,” according to ATE.
For instance, utility investment in the grid in advance of the demands that EV growth will place on the system “is the most obvious area for a robust utility role,” the paper says, so it’s imperative that utilities plan for and invest in upgrades early.
To do that, ATE says that utilities must work with state Public Utility Commissions to provide detailed, long-term forecasts of needs and justify cost recovery for these investments, a process often referred to as integrated resource planning.
Utilities also should work with Electric Vehicle Service Equipment owners and operators — also known as EV service providers — site hosts, fleets, large work-centers, multi-unit dwellings, and other potential charging station developers and users to understand their future needs to the extent possible, says the white paper.
ATE thinks “it is indisputable that charging hardware is being installed too slowly in relation to the imminent introduction of a wide array of electric vehicles,” the paper concludes. “While… the private sector of EVSPs is an important part of the solution, utilities are well suited to complement and indeed spur private market investment by addressing multiple market challenges through a portfolio approach.”
ATE’s Jones told Daily Energy Insider on Monday that there are two important aspects to the portfolio approach from a utility standpoint.
“First, we want utilities to look at all the different EV use cases, and develop programs and rates with incentives to spur enrollment with customers and infrastructure,” Jones wrote in an email, noting that use cases include residential charging, commercial charging (at depots and home locations), metro center charging, corridor charging, workplace charging, and the challenging use cases of multi-family residences and rural.
“These have different economics, utilization projections (e.g., rural, underserved, and perhaps multi-family may be relatively low utilization in early years, so utilities can help these use cases pass ‘the valley of death’ that all emerging technologies face in energy,” he wrote.
Secondly, and speaking as a former PUC commissioner, Jones pointed out that the portfolio approach means to assess the cost-benefit analysis on a total portfolio basis, rather than use case-by-use case.
“Thus, the Alliance fully supports the involvement of investor-owned, municipal and cooperative utilities with infrastructure, including ownership, operation, leasing, maintenance and other business models,” concludes the paper. “Of course, the utility must justify its cases to own and operate this infrastructure to the commission or its governing body with good arguments and evidence.”
Charging forward
According to the ATE white paper, the market should not and will not be developed with utility ownership crowding out the private sector. Instead, utilities will likely constitute a smaller part of the overall market over time, but can serve as key catalysts in the early days of market development, the paper says.
“We are still in what we call the early adopter phase of market transformation, but moving quickly toward mass adoption or majority adoption,” Jones explained in his email. “So the utility role is to assist the customers and host sites — as well as the vendors and network operators in the EV ecosystem — move earlier rather than later to adopt these technologies, and do it in a smart, efficient way.”
This involves several areas where utilities can help, such as helping to change customer behavior (like moving charging load off-peak); educating customers on rate design; and making the grid ready for incremental electrification loads, Jones said.
“So we believe that the utility can help serve these multiple roles, including proactive planning ahead of time for this infrastructure, as well as engaging with customers and education,” according to his email.
Jones further explained that he sometimes calls these “hybrid” or “parallel” markets between the utility owned and operating charging assets, as well as the private-sector charging stations.
“These can operate in parallel, or even sometimes the private-sector vendor can contract with the regulated utility to do an entire turnkey operation,” he said. “The utility role can lighten up when the market becomes more mature, but we are not anywhere close to that stage yet.”
More considerations
Jones said the other areas critical to the utility role that are briefly mentioned in the white paper include reliability and uptime and planning and coordination.
For example, regarding reliability and uptime, Jones noted that the non-Tesla public charging stations are not at a sufficient reliability standard yet.
“The industry collectively must improve this, and the federal government and Joint Office, through the national laboratories, have an initiative underway — called ChargeX — to get at the root problems and challenges here, and importantly develop metrics and analysis to improve this,” said Jones. “The utilities could assist in this process as well, especially if they own and operate assets either directly, with a partner, or with a lease-subscription option.”
Utilities are fully regulated on reliability and peak capacity and they think long-term horizons in 10 to 20 years instead of the three to six year time frame of many private-equity funded charging operators, he added. “As their loads become more integrated into the distribution grid, utilities will have to play a more active role here,” he said.
Another critical area is planning and coordination. Jones said utilities and their engineers are very good at planning and building out transmission and distribution (and generation in the vertically integrated states), and “if one gives them the sufficient data and resources to do this, utilities can plan proactively in a way that goes beyond traditional IRP (integrated resource plan) planning,” he said.
And, he pointed out, although transportation electrification plans have become a best practice across the country, “we need to go further now which may challenge the regulatory paradigm especially for the significant electrical loads created by medium-heavy duty fleet electrification at the very local level, below the substations and feeder banks.”
Such hyper-local demand could be significant, said Jones, “so we have to develop better data, planning, and regulatory guardrails to allow utilities to do proactive planning for these loads, and build ahead of need based on the evidence.”
