Beneficial electrification programs, which promote the deployment of electric-powered equipment, can help utility customers meet their sustainability targets by reducing site emissions and primary energy demand while improving the economics at the customer level. Such programs can also allow electric utilities to increase system effectiveness and their net margins as a result of improved load factors.
By promoting electric technologies—such as light-, medium-, and heavy-duty electric vehicles; non-road transportation; material handling equipment; agricultural water-pumping; and port and airport equipment—a typical utility can benefit from the increased system utilization and improved load factor well-designed beneficial electrification programs may provide. Furthermore, the revenues from increased energy sales, to the extent that they exceed incremental cost, serve to reduce the need for rate increases—to the benefit of the customer, all ratepayers, and the utility.
A significant need, a compelling opportunity
Electric technology programs (sometimes called decarbonization, efficient, or beneficial electrification programs) address the growth needs of electric utilities while also providing compelling benefits for businesses, consumers, and the environment. Utilities can promote across a variety of applications, including the use of on-road vehicles, as well as non-road equipment, including forklifts, airport ground support equipment, agricultural equipment, and cranes.
These technologies typically have a much longer life (and utility revenue stream) than their conventional counterparts—typically powered by non-regulated fuels such as diesel, propane, or gasoline. Utilities can increasingly promote these technologies in ways that limit the impact on peak demand and that focus on increasing off-peak and shoulder period usage.
Electric technologies typically use approximately 90% fewer moving parts and have no engine fluids or hoses resulting in reduced maintenance costs. They can often reduce fuel costs by 50% to 70% and decrease exposure to volatile commodity prices. Businesses that use electric technologies may experience a safer, more efficient work environment with less vibration and noise congestion due to the quiet operation of electric-powered equipment.
Air quality is a major concern for many U.S. cities, and over 100 million people reside in areas that do not meet air quality standards for ozone. With electric technologies, utilities serving such counties can promote zero- site-emission technologies, offer real benefits to the environment (potentially qualifying for state and local environmental incentive payments), and help position themselves as environmental leaders while serving customer needs to reduce greenhouse gas emissions.
Potential growth by the numbers
We’ve evaluated over 110 individual electric technologies for inclusion in utility beneficial electrification programs. The potential incremental load, revenue, and emissions impact can be significant (see Table 1).
Utilities can individually promote technologies of interest (such as a “Forklift” or “Agricultural Pumping” program) or fold specific technologies into broader based sectoral programs (such as “Materials Handling”). Three particular programs—material handling, agricultural pumping conversion, and forklift programs—offer pointed case studies on the importance of beneficial electrification.
Case study: Material handling program
A material handling program promotes a set of technologies found in many utility service territories, including forklifts, truck stop electrification, electric-standby truck refrigeration units, golf carts, and basic airport ground support equipment.
The program in this particular case study provides incentives for customers to adopt covered technologies (see Table 2). We provide customer targeting, trade ally recruitment, technical support, account management, marketing, and database project tracking.
The utility in this case study has approximately 400,000 customers and annual sales of approaching 12,000 GWh. The annual implementation budget for the program is approximately $1 million, including approximately $330,000 for customer incentives. Over three years, this program has increased annual revenue by approximately $10 million, or 0.6%, with an ROI of over 250% and reduced annual carbon emissions of over 60,000 tons.
Similar materials handling programs can be developed to meet the needs of most medium and large utilities, and can be customized to address other technologies that might be present in the service territory.
Case study: Agricultural pumping conversion program
Utilities that serve a territory with a significant agricultural sector can benefit from an irrigation pumping program, which encourages farm operators to power their irrigation systems with electricity, rather than diesel. While net savings to the farmer will vary based on rates, regulations, and fuel prices, common payback times for the farmer range between six months and two years.
Additional advantages for farmers include avoided exposure to volatile diesel prices, significantly reduced maintenance costs and noise pollution, and air-quality compliance benefits (in certain regions). Typically, the utility will want to target pumps in reasonable proximity to an existing three-phase line (or even a single-phase line if adjustable speed drives/phase converters are used).
For a utility serving approximately 9,000 agricultural accounts, this program will, over the lifetime of the pumps, have an ROI of approximately 92%. However, this program does not provide any incentives directly to the farmers since the payback is already very attractive, and the primary barriers are not financial but a lack of education and awareness, time to navigate the line extension process, and trade ally engagement.
Case study: Forklift program
Perhaps the easiest entry point into electrification programs is a forklift program.
With the increasing availability of electric forklifts in larger sizes and the improving suitability of electric lifts for outdoor use, there exists significant opportunity to encourage the displacement of diesel and LPG forklifts with electric lifts. And, with the increasing acceptance of rapid-charge technologies (which recharge a forklift in as little as 30 minutes), the ability to keep load impacts off-peak is significantly enhanced.
Program administration includes:
- Coordinating with the utility’s development group to identify high-value customers.
- Training forklift dealers regarding the benefits of electric lifts.
- Establishing trade ally support networks (including battery manufacturers).
- Conducting studies to establish load profiles for rapid and conventional charge lifts.
As a result of the program in this case study, over 4,000 electric forklifts have been placed in the utility’s service territory and the market share of electric lifts has grown by 46%. The program has added 44,000 kVA of load, and has reduced emissions by the equivalent of 32,000 passenger cars.
Becoming a trusted advisor
Almost every piece of commercial, industrial, and residential equipment that gets replaced has the potential to be electrified and bring those benefits to the customer, the utility, and all customers in the service territory. With the right electrification program model in place, utilities can serve as a trusted advisor to customers and trade allies—helping to inform replacement choices while promoting the advantages of electrification.