The ABCs of EVs
A Guide For Policy Makers and Consumer Advocates
Once a subject of prophecy, electric vehicles (EVs) have now arrived. While still a small share of car purchases, they are becoming a familiar sight on American roads—and industry analysts predict EV sales will grow at a robust clip in the next decade, as consumers become familiar with the advantages of their technology, and anticipated cost reductions and extended driving ranges turn EVs into appealing alternatives to gasoline-burning cars.
Why should policymakers and consumer advocates concern themselves with EVs? After all, we don’t typically focus on end-use electricity—there aren’t regulatory proceedings about refrigerators or coffee-makers. However, EVs are different from other appliances in ways that have profound implications for the electricity system.
An EV in the garage could increase the electricity consumption of an average household by 40%—and
millions of them could require costly expansion of electric system delivery and generation capacity. But if EVs and EV infrastructure are managed as distributed energy resources, the rise of transportation electrification can lead to lower—not higher—electric rates for all consumers.
This report is intended to help policymakers forge local and regional strategies designed to capture the potential of EV growth to contribute to system optimization. We identify factors favoring EV market penetration; assess its ramifications for the electric grid and the consumers who depend on it; advance a set of principles to protect the interests of electricity customers; describe proceedings and initiatives underway in a number of jurisdictions; and lay out options for state regulatory action.
We conclude that proactive regulatory efforts to set the direction of state policies are crucial at this nascent stage of EV market development. While regulatory outcomes will reflect differences in law,
market structure, supply technologies, load dynamics, social goals and other factors, effective
EV policy initiatives will have common elements across jurisdictions. They will:
- Benefit from collaboration among the diverse community of EV stakeholders;
- Maximize consumer and social value by employing smart EV dispatch to optimize system load shapes;
- Adopt optional dynamic and time-based rates to incentivize system-beneficial charging behaviors;
- Promote interoperability, common standards, and open networks for EV infrastructure;
- Ensure that EV policies benefit underserved/disadvantaged communities;
- Subject proposed utility investments to cost-benefit tests, performance standards, and compatibility with comprehensive strategic plans designed to maximize grid value and customer benefit;
- Maintain regulatory oversight of any customer-funded or public investment in EV infrastructure.
To craft viable policies, lawmakers and regulators will first need to consider threshold questions about the scope of state regulatory authority and its applicability to a range of issues related to the pace of EV market penetration and its effects in a jurisdiction. The lengthy list of issues to be examined in an EV evaluation process include:
- Implications of EV growth for load shapes, rates and rate designs;
- Available metering, charging, and load management technologies;
- Options for administration, location and support of charging infrastructure;
- Consumer protection rules;
- Consumer education and information;
- Geographic and demographic disparities in EV adoption;
- Allocation and recovery of EV-related costs and investments;
- Value, scale and design of pilot programs;
- Opportunities and obstacles to regional cooperation;
- The roles of public utilities, private vendors, EV owners and other actors.
EV issues are complex, and there won’t be a one-size-fits-all solution. But if consumer value and system optimization are the central priorities shaping formation of EV policy, public benefit will be the result. This guide is intended to help lay the groundwork for achieving that goal.