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Electric Vehicles and Gas-Fired Power

A strategic approach to mitigating rate increases and greenhouse gas price risk.

Fortnightly Magazine - December 2011

loads. Similar flexible compliance options may be needed for energy efficiency goals tied to total sales. In the Duke Carolinas case studies, the need for flexible compliance wasn’t as pronounced because the regional RPS and energy efficiency goals are relatively low. However, in regions with high RPS and energy efficiency targets, the need for flexible compliance would be greater.

3) Utilize smart meter technologies to sub-meter and incentivize off-peak electric vehicle charging: Utilities should ensure that their smart meter technologies are capable of tracking EV charging separately from other household loads for emissions accounting purposes, to manage increased loads in specific load pockets, and to provide the right pricing signals to encourage off-peak charging. Furthermore, utility executives must provide leadership and emphasize the importance and potential rewards of electric vehicles, to signal that any distribution network challenges from electric vehicles can and must be overcome.

These policy changes would help establish a pathway to reduce GHG emissions in regions that are currently dependent on coal and don’t have abundant renewable energy options, while maintaining relatively low utility costs and rates. This strategy could be both less costly and easier to achieve than an abrupt transition to renewable energy sources right away in these regions. A successful energy policy in the U.S. must acknowledge that neither the resource potential nor the cost of reducing GHG emissions from the electricity sector is equally distributed across the country.

Implementing regional policies to encourage vehicle electrification, as part of a flexible compliance mechanism for utilities to meet GHG policy goals, could represent a winning solution for policy-makers, electric utilities, and the environment. However, without new policies in place, there are real risks from EVs for utilities as well. The default outcome likely will be that the carbon reduction benefits of electric vehicles will be attributed to the transportation industries, and not to electric utilities. Policy action will be required to change that outcome.

 

Endnotes:

1. The term “electric vehicles” is used throughout the paper for simplicity’s sake, but the study results apply to both plug-in hybrid electric vehicles (PHEVs) and fully electric vehicles (EVs).

2. Axsen, John, Kenneth Kurani, Ryan McCarthy, and Christopher Yang. “Plug-in Hybrid Vehicle GHG Impacts in California: Integrating Consumer-informed Recharge Profiles with an Electricity Dispatch Model.” (Energy Policy) 39, no. 1617-1629 (2011).

3. In this usage, “lifecycle emissions” include emissions from the extraction and processing of the vehicle’s fuel use, as well as the direct emissions from the vehicle.

4. Obama, President Barack, “State of the Union Address,” January 2011.

5. EPA, “2017–2025 Model Year Light-Duty Vehicle GHG Emissions and CAFE Standards: Supplemental Notice of Intent,” 2011.

6. A notable exception includes members of the Electrification Coalition, such as NRG Energy’s David Crane. See: http://www.electrification coalition.org

7. Note that these carbon abatement costs don’t necessarily assume or require that there be an explicit market price for carbon, such as through a cap-and-trade program. Rather, these costs may be in the form of control, abatement or mitigation costs. We have assumed that the cost of carbon dioxide emissions starts at $15/short ton