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Electric Vehicles: The Case for (and Against) Incentives

Fortnightly Magazine - April 15 1996

on the SCE system for eight scenarios for the large-scale deployment of EVs over the next 20 years. The scenarios allowed a wide range of assumptions about the number of vehicles, batteries, the extent of daylight charging, and the control of charging during nighttime hours. The study results indicated that generators fired by natural gas could supply around 90 percent of the electricity needed to recharge the EVs. The analysis also revealed that SCE could accommodate a surprisingly large number of EVs within its existing resource plan.

For example, two million EVs could be accommodated through "smart control." The "smart control" scenario envisioned a two-way communication system to allow SCE to shape its nighttime EV charging loads to fit within its other electric loads. (Note, however, that two million EVs in the SCE service territory represents an extreme case, implying one EV out of every three vehicles in southern California.)

Figure 1 shows how the combined loads might appear on a summer day 20 years in the future (at the end of SCE's long-term planning period). Figure 2 shows a different load profile, assuming nighttime charging conducted at the customer's convenience. In this scenario, the EV loads appear in the evening hours and end up creating a second peak around 8 to 9 p.m. on a summer day far in the future. Analysis revealed that the loads in Figure 2 would prove more difficult to serve within the company's existing resource plan; additional generating units would be required. With only one million EVs in the SCE service area, the study showed that SCE could accommodate the extra loads even if nighttime charging was left to the customers' convenience.

Our study then estimated the increase in SCE's annual operating costs and total revenue requirements for each scenario. With two million EVs, for example, the cost of fuel and electricity purchases was expected to increase by around 21 percent, with total revenue requirements up by around 10 percent. We estimated that the two million EVs would cause electric sales to rise 13 percent by the end of the long-term planning period. These estimates imply that SCE could lower its average electric rate by around 3 percent. In scenarios with one million EVs, we estimated that the company could reduce its average electric rate by around 1.5 percent.

The rate-reduction estimates came in lower than one would have expected from previous studies. The main reason lay in the impact of EVs on marginal costs. High EV loads tend to flatten the daily load profile (as shown in Figure 1). When this happens, utilities should expect EVs to "push cheaper power plants off the margin." The rise in marginal costs boosts the cost of power purchases from independent power producers that sell electricity as qualifying cogeneration and small power production facilities (QFs). This cost increase proved quite important in the SCE scenarios, which envisioned a large number of power purchases from QFs.

EVs will likely affect the distribution system as well as generation. My research did not address distribution system impacts, but I can place the