How EVs Will Impact Electricity Markets (and Companies)

The rise of EVs—particularly self-driving, autonomous EVs—will place a new and different stress on the electricity grid. BNEF projects that EV charging will add nearly 3,000 terawatt-hours of additional demand to the global grid by 2040.

These demand patterns fall into one of two scenarios, according to BNEF. The first is referred to as fixed system charging and is EV charging that occurs at a stationary site–such as a warehouse, fleet depot, or manufacturing facility. The second is flexible system charging, which assumes that EVs are plugged in whenever they are not being driven. In this scenario, EVs use smart technology—including the ability to autonomously drive themselves to charging stations–to charge when electricity costs are at their lowest.

Each of these scenarios have big implications for electricity generation. In the fixed system scenario, where charging is less publicly available and predominantly occurs when vehicles are parked at the end of the day, spikes in demand are likely to occur. This scenario resembles California’s famous solar “duck curve,” where demand drops off while residents are at work in the middle of the day, then surges in the evening when they return home and begin to use electricity. As EV penetration increases in California, this curve is shifting to a so-called “dragon curve” that reflects the increased charging demand that is expected to occur as people arrive at their workplaces and plug in.

Both the duck and dragon curve scenarios are problematic for the grid. Demand spikes push up power prices and are difficult for generators and grid operators to adequately balance without the use of peak assets (power generation plants or stored energy, in some cases). Infrastructure will require an appropriate rate program to match these demands, and will be bolstered by autonomous grids that rely on intelligent and immutable systems, powered primarily by renewables. This will instill a sense of consumer trust in the system and further relieve any concerns about if vehicles are adequately charged.

The flexible system scenario relies on greater public infrastructure to allow EVs to charge whenever they are not in use. On-board software monitors power prices and charges the vehicle only when the grid is flooded with supply and the price for power is at its lowest. In this scenario, power demand is spread over a greater period, avoiding the need for peak assets to be deployed (and the associated cost of peak generation). The flexible scenario is preferable for the power system, as it helps to balance demand and supply, but may be difficult for transmission infrastructure and power generators to adequately respond to. Smart chargers will make a difference here, as they will be able to communicate directly to the grid and balance charging needs with time-of-use and demand-response sensitivities.

Recognizing the potentially disruptive power of EVs, utilities are already beginning to plan for these coming changes. One method is to use demand-response to encourage shifts in customer behavior that take advantage of the grid when supply is at its peak. In this model, utilities will maintain control over when vehicles can charge and will shift and shuffle response based on demand and peak periods. Customers can be offered the opportunity to opt-in to have the utility control their charging in this method.

A second method is to employ a time-of-use rate or tariff which will incur higher prices for customers that charge during peak hours. These financial incentives encourage off-peak charging instead.

Even if utilities themselves don’t own the charging infrastructure, providing transmission access to facilities that do will be a critical role for utilities to play.

Another key factor in electricity generation to support EV infrastructure will be the penetration of renewables on the grid. Renewable resources like solar will be at their peak during mid-day hours, making flexible charging attractive. This will advantage EV infrastructure owned by real estate operators such as charging stations, convenience stores, restaurants, shopping centers, public buildings, and workplaces.  However, the fixed charging scenario will impact individual EV owners and fleet operators, who may need to re-charge during specific hours and in specific locations.  In this case, renewable generation plus storage may be most effective.

Learn more in our new white paper, The Disruptive Power of Fleet Electrification.