How Leading Utilities are Embracing Electric Vehicles

February 16, 2016 | Will Toor

A business owner has the chance to expand her market and immediately increase sales.  She jumps at the opportunity, right?

Electric vehicles (EVs) offer electric utilities exactly that type of opportunity to increase sales. And leading utilities across the United States are taking notice and embracing plug-in cars.

A new report by the Southwest Energy Efficiency Project (SWEEP) describes the opportunities and challenges that electric vehicles present to utilities.  It reviews why utilities should embrace EVs and what leading utilities across the country are already doing to increase adoption of electric vehicles.   This blog discusses several key points from the report. 

In a world of slowing growth in electricity demand due to increasing energy efficiency and more distributed solar PV generation, EVs offer utilities an entry into a sector of the economy which accounts for 28 percent of the country’s energy consumption.  Because EVs are so much more efficient than gasoline vehicles, in every southwestern state except Wyoming a switch to EVs lowers total energy use and emissions even as it increases electricity use.

In addition, most EV charging happens at customers’ homes during the night, when most utilities have excess power available on the grid. Because this charging is taking place outside of peak periods of demand for electricity, the net economic benefits to the utility and its customers can be quite large:  One study in California found that each EV created a net benefit of up to $5,000!  That’s because EVs charging off-peak improve a utility’s load factor, boosting sales during low nighttime periods of demand. The additional revenue generated by the increased sales more than offsets the costs to generate and deliver the additional power. 

In some parts of the country, supportive policies from cities, states and utilities are driving high EV sales- as much as 10% of new vehicle sales are EVs in the leading city, San Jose, Calif. The leading city in the Southwest is Boulder, Colo, where EVs made up slightly over 2% of new vehicle sales in 2014.  However, without a significant increase in current sales rates, in most areas there will not be enough EVs on the road to give utility electricity sales a big boost.  If utilities want to see a transportation sector powered by their fuel—electricity—then they should take action now to help grow this emerging market.

The good news is, forward thinking utilities across the country are already taking a wide range of actions to support EV sales in their communities, and they offer a model for utilities interested in becoming more active in the EV market.

These cutting edge utilities are:

  • Offering special rates to discourage charging during peak periods and encourage off-peak charging. 28 utilities currently offer special rates to EV owners
  • Providing incentives for customers to install charging stations at their home or businesses.  For example, Georgia Power offers residential customers rebates of $250 and commercial customers rebates of up to $10,000 
  • Installing and operating networks of public charging stations, often in partnership with third party charging companies.  For example, Kansas City Power and Light has installed more than 1,000 public charging stations across their service territory
  • Promoting EVs to their customers via their websites and other mediums

Utilities in the southwestern states have begun to actively promote electric vehicles. In Utah, Rocky Mountain Power has proposed spending $4 million per year for customer charging incentives as part of their Sustainable Transportation and Energy Plan. In Nevada, NV Energy is leading the way on a corridor of fast-charging stations that will connect Reno and Las Vegas on U.S. Highway 95. The three major utilities in Arizona all offer special rates for EV owners. In Colorado, one small utility, the San Miguel Power Authority, offers a $750 rebates to customers who purchase EVs.

Utilities that recognize that their own interests can be served by having a greater number of EVs in their service territory and act proactively to support this developing market will be best positioned to minimize the challenges and maximize the system benefits of EVs.