Strategically timed vehicle charging can help green the grid.
Between the newly signed Inflation Reduction Act and last year’s Infrastructure Investment and Jobs Act, the federal government is committed to spending nearly $400 billion over the next ten years on the future of US energy and transportation. These expenditures include investments in transmission, renewable generation, nuclear power, electric vehicle charging, and consumer subsidies for electric vehicles.
Policymakers at the federal and state level are now faced with a raft of complex implementation decisions to enact dozens of new and expanded programs. The programs each have their own unique requirements and responsible agencies, but when it comes to the electric grid, everything is connected. Subsidizing a new transmission line can open up new areas for wind energy development. Government-supported technology breakthroughs that reduce the costs of nuclear or carbon capture and storage will affect the viability of competing technologies. New research from Stephen Holland (UNC Greensboro), Erin Mansur (Dartmouth) and Andrew Yates (UNC Chapel Hill) examines how policies interact and transform the electric grid in different ways. Last week California adopted new regulations that ban the sale of fossil-fueled vehicles by 2035, to be replaced primarily with electric vehicles. This new research shows how this transition could be a big win, or a loss, for the climate.
Modeling the Long-Run
I had always considered greening the grid and electrifying transportation as two separate steps toward decarbonizing the economy. On the one hand, policymakers would adopt policies that replace fossil fueled electric generation with zero carbon generation. And at the same time, they would pursue policies that replace fossil fueled transportation with zero carbon transportation. If these happen in concert, the economy ends up with a carbon free grid and a carbon free transportation system.
Prior research by the same authors, plus Matt Kotchen (Yale), shows what happens when the timing is wrong. In that paper, they found that charging electric vehicles in the U.S. got dirtier as the decade wore on. This is the opposite of what policymakers have been working toward. The paper attributes the trend to relying on coal power plants to meet the additional load. Lower carbon producing natural gas plants and renewable energy increased their fraction of total generation, but coal plants became more likely to be the ones ramping up to meet incremental demand.
The new paper develops a model to look beyond today’s grid to a future that could be dramatically different. The model lets the authors consider how different policies, on their own or in concert, could cause new plants to be built, and old ones to retire. They present snapshots of different future grids and carbon emissions. The model is not a precise description of the US power system, but it includes essential elements and allows them to run scenarios that illustrate how policies could interact.
Getting the Timing Right
The timing of electric vehicle charging emerges as a critical factor that could reshape the grid. Intuitively, charging electric vehicles at times when the sun is shining on solar panels and the wind is blowing past turbine blades would be best for cutting carbon emissions. The model highlights why and how this is the case.
When vehicle charging increases demand, wholesale power prices rise. This encourages companies to invest in power plants that can sell electricity at the higher prices. The timing of vehicle charging will determine which forms of generation are built.
Higher mid-day prices encourage more investment in solar generation. Higher prices that match the wind will encourage wind investment. Once a new solar or wind plant is built, it will not only produce energy when the vehicles need it, but will also produce energy at other times. The economics of competing technologies, such as natural gas, will suffer. Therefore if electric vehicle charging occurs when the potential for renewable generation is greatest and induces more investment in renewables, the vehicles can be not just carbon neutral, but carbon negative by pushing natural gas plants out of the market entirely.
However, the authors also investigate what would happen if the opposite occurs. If drivers primarily charge their vehicles in the evening – which is what other research shows is happening – power prices will increase at those times. Natural gas plants are better positioned to take advantage of the higher evening prices than renewables because they can generate at any time. Once these plants are built, they can operate during other hours too, discouraging investment in renewable energy and compounding the increase in carbon emissions.
The authors focus on natural gas generation as the fossil fuel option, but coal generation is still in the picture in the US too. In recent months some plant owners have delayed planned coal plant closures. In other words, the carbon impact from badly timed electric vehicle charging could be even worse than these authors model.
The researchers’ model points to concrete policy solutions.
Policies that increase charging vehicles when the wind is blowing and the sun is shining will help reduce carbon emissions. The authors discuss investing in charging stations in shopping centers and workplaces to enable convenient daytime charging. Fast charging at existing gas stations to serve people on their way to and from work and other daytime activities could also help. The best approach could differ by region, though. For example, in the southwest, noon-time charging when solar is at its maximum is most valuable. In the Midwest, the late afternoon when the wind is strongest is best.
The recent upgrades my family made to accommodate at-home vehicle charging run counter to the direction the paper is pointing. We made the investments to provide convenient access to charging in our garage at night. Maybe in the future we can make our home chargers available to the many contractors and apartment-dwelling work-from-home residents for whom our residential neighborhood is their workplace.
The analysis also emphasizes the benefits of technological cost reductions in renewable generation. Solar, wind and natural gas, and maybe nuclear and other more exotic forms of generation, will be duking it out in the marketplace. Capital costs for solar and wind have been declining, but natural gas capital costs have been declining too. The investment boost that wind and solar will get through the Inflation Reduction Act could potentially spur further innovation and accelerate cost reductions.
Federal and state policymakers have an exciting chance to make progress on many important aspects of the energy transition at once. In addition to electric vehicles, Holland, Mansur and Yates’ paper addresses other areas where the federal government is making big bets including nuclear, transmission and battery storage. Their research is an excellent example about how energy economists can provide insights to guide policymakers to maximize the impact of policy for the climate.
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Suggested citation: Campbell, Andrew, “Filling the Tank with Sunbeams and Breezes” Energy Institute Blog, UC Berkeley, August 29, 2022, https://energyathaas.wordpress.com/2022/08/29/filling-the-tank-with-sunbeams-and-breezes/
Andrew Campbell is the Executive Director of the Energy Institute at Haas. Andy has worked in the energy industry for his entire professional career. Prior to coming to the University of California, Andy worked for energy efficiency and demand response company, Tendril, and grid management technology provider, Sentient Energy. He helped both companies navigate the complex energy regulatory environment and tailor their sales and marketing approaches to meet the utility industry’s needs. Previously, he was Senior Energy Advisor to Commissioner Rachelle Chong and Commissioner Nancy Ryan at the California Public Utilities Commission (CPUC). While at the CPUC Andy was the lead advisor in areas including demand response, rate design, grid modernization, and electric vehicles. Andy led successful efforts to develop and adopt policies on Smart Grid investment and data access, regulatory authority over electric vehicle charging, demand response, dynamic pricing for utilities and natural gas quality standards for liquefied natural gas. Andy has also worked in Citigroup’s Global Energy Group and as a reservoir engineer with ExxonMobil. Andy earned a Master in Public Policy from the Kennedy School of Government at Harvard University and bachelors degrees in chemical engineering and economics from Rice University.