Big Vehicles Could Mean Big Benefits for Electric Utilities

Utilities have much to gain from the upsurge in fleet adoption of electric trucks and buses. In fact, some EVs will actually make the power grid easier, cheaper, and cleaner to run. But the catch is that they have to adequately plan for the coming wave.

Heather Pohnan | July 28, 2023 | Clean Transportation, Electric Vehicles, North Carolina, Utilities

It’s easy to understand why electric utilities have been quick to embrace electrification: consumer demand for electricity flatlined after the Great Recession, while demand for electric vehicles (EVs) has only been increasing. But utilities and their customers stand to gain even more from the budding upsurge in fleet adoption of electric trucks and buses. In fact, in some circumstances, EVs can actually help make the power grid cheaper, cleaner, and easier to run. That might sound a bit backward, but it’s true and there is just one catch: utilities have to plan for it.

By proactively making plans to accommodate new consumer demand for electricity, utilities can avoid stalling the progress of medium and heavy-duty electrification. But why do these vehicles matter? Read on below to see how the transition to electric trucks, vans, and buses can provide many benefits to utilities, fleet operators, and utility ratepayers, and take a look at our whitepaper on this topic for a deeper dive.

Medium- and Heavy-Duty Vehicles: An Untapped Resource with Widespread Benefits

Trucks and buses are in a distinct category of vehicles that are designed to carry heavy loads that weigh many tons.  It won’t surprise most readers to find out that their large size is part of the reason why they are a major contributor to annual carbon dioxide emissions. The other reason that they are high emitters is because these vehicles run primarily on diesel fuel. A gallon of diesel emits roughly 15% more carbon dioxide than a gallon of gasoline, and trucks and buses are consuming a lot of gallons.

Burning diesel also produces harmful diesel particular matter (PM), which is responsible for a number of public health issues. The link between fossil fuel combustion and negative health outcomes is also not news, but it’s important to note that diesel PM is highly localized in communities where the fuel is being burned. And research shows that legacy housing practices like redlining mean communities of color are more likely to be near highways, warehouses, truck terminals, and ports, which are all locations with a lot of truck traffic and thus higher levels of diesel PM.

If electrified, medium- and heavy-duty vehicles, like trucks, delivery vans, transit buses, and drayage buses, have the ability to reduce demand on the grid, benefit better public health, and more.

So why do we need such large vehicles anyways? In many cases, medium- and heavy-duty (M/HD) vehicles are specialized for work purposes like freight or parcel delivery, and they even provide important services like buses for passenger transport or municipal fleets dedicated to sanitation or emergency response. Here is where electrification comes in: the fact that these vehicles are large, drive a lot, and are associated with harmful pollutants means they might actually have the potential become a grid resource with a wide variety of benefits.

Electric Power Sector 101

Electrification of transportation is not occurring in a vacuum. Instead, it’s happening in tandem with a transition already underway in the electricity sector. Fossil gas is the dominant fuel in the region, but the resources supplying power to the grid can vary based on the time of the day, and by season throughout the year. The resources used to generate electricity in a given time period are part of what determines the benefits associated with potentially using EVs a grid resource, as well as the net emissions reductions from electrification.

Importantly, the amount of generation also varies. Utilities have the difficult task of balancing supply to meet demand on a minute-by-minute basis. Utilities must generate and deliver more electricity during certain hours, usually during the day time, when the load “peaks” and customers are using the most energy. Seasonal peaks are also shaped by consumer demand for electricity. Typically, winter and summer having higher peaks due to energy usage from heating and cooling respectively. Let’s take a look at North Carolina for example, where peak electricity demand tends to occur during summer afternoons and winter mornings, with lower load days being more common in the spring and fall.

Source: “Assessment of Medium- and Heavy-Duty Vehicle Electrification,” page 3.

And this variation can influence the resources used to generate electricity too, since some types of power plants are better-suited to begin producing energy on short notice or during peaks. As the power sector copes with existing consumer energy needs, it might seem counterintuitive that EVs, especially big ones like medium and heavy-duty trucks, could possibly be a benefit. But the fact is that they can help make this job more manageable by shaping electric load so that demand is kept even during certain periods, like overnight. Programs that direct EV charging load to match the timeframe when the resources that are available rather than the other way around also make it easier to avoid times of lower constraint. EVs are also valuable in utility systems with high renewable energy penetration, since they can be directed to take advantage of excess solar or wind generation that might otherwise need to be curtailed.

But how can we get M/HD vehicles to charge at opportune times, and avoid peak load? Well, there are actually a variety of approaches that utilize existing utility planning and regulatory practices.

Managed EV Charging is a Demand-Side Resource

The reverse of balancing supply to meet demand is when utilities attempt to align consumer demand with timeframes of lower resource constraints. This is usually accomplished through incentives, programs, and other methods like direct control. When this idea is applied to EVs, it’s referred to as ‘managed charging.’ The benefits from managed charging of M/HD vehicles in particular are significant due to the ubiquity of fleets and the large battery sizes of these vehicle types. This makes them a potentially significant grid resource: a large, variable load that can ideally be incentivized to also be flexible.

One of the most commonly used forms of managed charging is time-of-use (TOU) rate structures. This is a passive form of charging management that uses electricity pricing to align charging demand with the desired timeframe. TOU rates typically vary prices based on the time of day relative to peak demand, e.g., on-peak, off-peak or super-off peak, or real-time hourly pricing.

Another approach is for utilities to use active managed charging. The basic idea behind active managed charging is that utilities can respond to times of peak demand or other events impacting the grid by having direct control of EVs. In exchange for some form of compensation, drivers or fleet operators will allow a utility service provider to take control of the speed and timing and availability of vehicle charging. There is significant potential value, but drivers and fleet operators may understandably hesitant to hand over direct control of charging with few or no caveats. Utilities should seek to test a variety of approaches to how program requirements and incentives are structured in order to mitigate these concerns.

Bidirectional charging, sometimes known as vehicle to grid (V2G), is a more advanced implementation of managed charging that allows for energy to flow from an EV to the grid when called to do so by the utility. Essentially, the goal of V2G is to use a fully-charged EV battery as a form of distributed storage available for dispatch. This utilizes specialized equipment and is generally still only being used in pilot programs. However, some types of vehicles have already been identified as good potential candidates for V2G due to their operating schedules. For examples, school buses are not expected to be in operation during summer afternoons when electric utilities in North Carolina tend to experience peak loads. This means school buses could be used as grid storage resources to help actually reduce electric utility peaks at these high-demand times.

Both passive and active managed charging programs provide benefits to the electric utility and electric fleet customers. By directing charging away from times of potential grid constraints, and even using vehicle batteries as electric grid storage resources, utilities have tools to use during times of grid constraints. These constraints could take the form of a lack of generation resources during a peak load or extreme weather event, or outages on the distribution or transmission system that block the flow of electricity to certain parts of the grid.

Planning is Everything

The most challenging aspect of electrifying larger vehicles will be delivering electricity to where it will be needed on the grid. All too often, proposals to build more generation are falsely cited as a solution to improve reliability and resiliency, when these problems actually arise on a much more localized level. The grid is a complex system of power lines of different voltages, substations, and transformers that were built to move electricity from far away power plants to consumers. The distribution system is the part of the grid that is usually much closer to where the electricity is being consumed. And as charging stations with faster and more powerful charging capabilities (primarily Direct Current Fast Charging or DCFC) are deployed, the electric utility may require additional upgrades to distribution infrastructure such as substations, feeders, and transformers to accommodate those chargers.

With larger EVs, there are multiple challenges that might strain the distribution system. One is determining the location of where the new load will be since it’s much harder to determine than something stationary like a house or a place of business. This is going to be a challenge for utilities since they will need to do proactive distribution planning and implement upgrades to stay ahead of electrification needs. Customers electrifying a fleet of M/HD vehicles may not be able to delay the installation of chargers and delivery of vehicles to wait multiple years for utilities to perform upgrades specific to their project. If that becomes the norm, it will significantly delay the electrification of these vehicles.

Utilities will need to forecast electrification at a very granular level, perhaps down to the feeder or circuit level, and will likely need to account for multiple possible electrification scenarios at different time scales to identify pain points across their systems and begin to make upgrades.

The Big Picture: Recommendations

Without proper distribution planning and implementation of managed charging, utilities could unwittingly become a roadblock to electrification of medium- and heavy-duty vehicles, instead of benefitting from it. To avoid that situation, we have the following recommendations for electric utilities, electric utility regulators, and policymakers:

  • Institute proactive distribution planning and implement upgrades to stay ahead of electrification.
  • Include both passive and active managed charging programs for fleet customers.
  • Accelerate the deployment of carbon-free generation resources to further increase the emission reduction potential of EVs.
  • Continue to focus research into the climate, public health, and grid impacts and benefits of specific medium- and heavy-duty electric vehicle types in the Southeast and beyond.

Take a closer look at our analysis in our latest whitepaper, “Assessment of Medium- and Heavy-Duty Vehicle Electrification.”

Heather Pohnan
In her role of Energy Policy Manager, Heather supports SACE’s regulatory strategy through policy research, and data and geospatial analysis. Her work will focus on projects that support the inclusion…
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