What does the Biden administration’s support of electric vehicles mean for utilities?
If you still can’t get the image out of your head of Will Ferrell punching a globe and challenging Norway’s position as the electric vehicle (EV) leader of the world in GM’s recent Super Bowl commercial, you’re not alone. It’s clear EVs are on everyone’s mind after a series of major announcements from automakers. 2021 is shaping up to be the year that EVs really accelerate as battery costs continue to decline and more vehicle models become available.
EVs were also the focus of an early executive order from the Biden administration for electrifying the approximately 650,000 vehicles in the federal fleet. This was a key part of his campaign priorities—and his clean energy plan also calls for installing 500,000 new EV charging stations across the country. This executive action sends a strong signal of support to the EV industry and electric utilities should be prepared for new EVs plugging into the grid.
If the Biden administration wants to make real progress on EVs, it should look to utilities for inspiration
Next to automakers, electric utilities are the most critical enablers of EV adoption for customers. A smart bet is that the Department of Transportation (DOT), Environmental Protection Agency (EPA), and Department of Energy (DOE)—in coordination with the White House Council on Environmental Quality—are likely to look at what’s worked so far for state agencies, municipal governments, and utility companies.
In fact, there’s already significant utility leadership in this space. According to RMI, major utilities such as Southern Company, Alliant, PNM, FirstEnergy, Portland General Electric, and Duke Energy are planning to electrify their own fleets. And Edison Electric Institute estimates investor-owned utilities are investing more than $2.6 billion in programs to support EVs and charging infrastructure throughout their service territories.
Utilities also play a unique role in the community. In partnership with cities and states, utilities can lead on green jobs, economic development, and equitable outcomes associated with the national EV agenda.
Instead of merely reacting to EV charging infrastructure service requests, utilities across the country are demonstrating that proactively shaping EV adoption in their territory has real benefits. By taking actions to remove barriers to EV charging now—and talking to customers to understand and address potential capacity constraints—they will be best positioned and ready for scale, should federal EV policy and initiatives ramp up over the next four years.
The Biden administration’s federal agencies could look to California for examples of ambitious policies including vehicle emissions standards, zero emission vehicle (ZEV) mandates, or even banning the sale of new gasoline-powered vehicles altogether. Less flashy yet still important, EV policies could include stricter safety and efficiency standards for charging equipment, including through ENERGY STAR certification.
We could also see greater direct federal investment in infrastructure planning activities. For example, DOT could prioritize a nationwide build-out of highway corridor fast charging so that EVs can reliably complete long-range journeys. Achieving this would require large-scale planning with local implementation through the states and utilities.
The Biden administration has made it clear that any transportation electrification actions will be centered on equity, environmental justice, and building a robust workforce. Transportation electrification has the potential to be a significant solution for local air pollution and climate change, and it’s likely that more federal policies will ensure that communities that bear disproportionate pollution from transportation will benefit from electrification.
What does EV growth mean for utilities?
In addition to these potential actions, it’s important to recognize that the federal government is just one player in the EV story. States and local governments have been driving the EV readiness movement for over a decade at this point. And of all the parties involved, utilities are the closest to the customer and therefore well positioned to understand energy usage habits and encourage EV adoption.
Customer education is crucial to increasing uptake of EVs as lack of awareness about EVs and charging technology remains a major barrier to widespread adoption for regular car owners, businesses, and fleets. Utilities are in a much better position to reach customers directly than the federal government and will continue to play a role in the customer’s life after the vehicle purchase—which isn’t always the case with the car manufacturer or dealer. Utilities can also help reduce the costs associated with EV ownership by incentivizing charging infrastructure purchases, supporting the growing network of public charging stations, and providing reduced time-of-use electricity rates.
As utility leaders know, the rise of EVs will also have a significant impact on the grid, especially in how to effectively manage the charging load. To properly prepare for a sizable growth in demand and allow for supporting EVs at commercial scale, utilities will need to get out in front of several key issues:
- Knowing where the EVs are (i.e., EV adoption is very localized) and how to broaden support to serve all customers.
- Encouraging load-shifting behavior, whether through rates or active load management programs, so not everyone plugs in at home during peak times.
- Supporting workplace and fleet vehicle charging.
- Monitoring vehicle-to-grid opportunities and pursuing pilots.
Utilities that haven’t yet plugged in with their EV customers don’t have to start from scratch. They can and should borrow from the successful examples of this work in action. For example, Baltimore Gas and Electric (BGE) offers a suite of incentives for commercial and residential customers through the EVsmart program. These include rebates for qualified smart charging equipment installed in homes and multi-family properties, and an EV time-of-use rate. BGE is also building out a network of utility-owned and -operated public chargers located on government property throughout its territory.
Our team is implementing a fleet advisory service program for National Grid in Massachusetts. This end-to-end assessment is available to 100 municipal fleets to evaluate the real opportunities for fleet electrification. We’re working directly with fleet and city managers to develop electrification roadmaps that save on total cost of ownership and reduce emissions. The program also incorporates real-time EV availability (including for medium- and heavy-duty applications), funding opportunities, and best practices to address key obstacles.
We also use Co₂Sight, an innovative decarbonization and energy planning platform, to produce a unified scenario analysis environment to help guide utility clients' energy and GHG emissions decisions. By having the ability to screen at a high-level or take a granular look at sectors of interest, Co₂Sight allows us to compare alternative scenarios and build an optimized pathway to an end goal. Utilities can assess the relative costs of integrated reduction solutions, and then educate external stakeholders and set priorities that drive action.
Key takeaways for utilities in this new phase of EV acceleration
While EV momentum was building prior to the Biden administration’s announcement, supportive federal policies and incentives will add to the trajectory of growth for EVs. Just think about the purchasing power of the federal government: It is so strong, it can drive the market to scale and push prices down.
Eventually, we could see the use of EV batteries become an important distributed energy resource to the grid. The federal government could invest even greater research into vehicle-grid integration (VGI) capabilities. With the potential for EVs to be aggregated for wholesale power market participation through FERC Order 2222, independent system operators and regional transmission organizations can also play a crucial role in creating more value for the grid from EVs. This means that utilities should consider actively-managed charging and future VGI enablement in their toolbox of EV programs.
Some of these policies impact utilities more directly than others, but all would drive new EV adoption and charging infrastructure deployment in utility territories. Now more than ever, utility leadership enabled by federal policy will be essential as EV adoption continues to grow.