Utilities Can Help North Carolina’s Electric Vehicle Market Catch Up (Part 3)

As electric vehicles increasingly displace gas and diesel vehicles, the energy that fuels transportation shifts from petroleum to electricity. North Carolina utilities have accelerated transportation electrification investments to spur EV market growth.

Stan Cross | June 2, 2021 | Clean Transportation, Electric Vehicles, North Carolina

To explore how North Carolina stacks up against other states in the region, the Southern Alliance for Clean Energy (SACE) and Atlas Public Policy have collaborated on a recent report, “Transportation Electrification in North Carolina.” The report provides a snapshot of the state’s electric vehicle (EV) market, transportation patterns, policy environment, and opportunities to improve public health, meet climate change goals, and spur economic growth. This is the third in a series of blogs related to the report’s findings.

North Carolina Utilities Leaning In

Duke Energy, the major investor-owned utility in North Carolina, and the state’s Electric Membership Corporations (EMCs) and municipal utilities are upping their EV engagement. This is especially critical because North Carolina ranks #9 nationally in population but comes in at a lagging #17 in EV sales.

In terms of dollars and cents, Duke Energy’s recently approved the $25 million Phase 1 Electric Transportation Pilot program bumped North Carolina to #7 nationally for utility EV investment, and its freshly proposed $56M Phase 2 Pilot would boost the State’s ranking further. Meanwhile, North Carolina’s EMCs are implementing programs to bring the benefits of EVs to members statewide. EMCs and municipal utilities across the state are taking advantage of grants from the North Carolina Volkswagen Mitigation Settlement Program to expand public EV charging stations around the state. Combined, these investments will help meet multiple EV market needs, including filling fast charging gaps along highway corridors, providing home charging access to multi-unit dwelling residents, offering EV and EV charger rebates, electrifying school buses, exploring potential vehicle-to-grid charging benefits, and implementing supportive rate designs.

This engagement is necessary as North Carolina seeks to achieve Governor Cooper’s Executive Order 80 goal to increase EV registrations across the state to at least 80K by 2025, up from approximately 27K registered today.

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It’s Time to Go

Transportation emits more carbon in America than any other sector, making decarbonizing transportation by 2050 critically necessary if we want to avoid the worst impacts from climate change. The emerging target for transportation electrification is 100% of all new vehicle sales must be electric by 2035. If we reach this goal, then by 2050, 100% of all vehicles on the road will be electric (after the last internal combustion engines have reached their usable lives), helping to advert ever dire climate change impacts.

Rallying around the market opportunity and climate imperative, automakers like General Motors have committed to ending gas-powered car and truck manufacturing by 2035. As it prepares to release the F-150 Lightning, Ford will invest $30 billion to electrify 40% of its feet by 2030. And when it comes to medium and heavy-duty vehicles, the Biden Administration has proposed spending $20 billion to electrify 20% of school buses and $25 billion to electrify transit buses. Amazon, UPS, and Fed-Ex are electrifying delivery vehicles, and with battery prices continuing to plummet, electric freight trucks could soon be 50% less to own than diesel. All this activity adds to the potential for a rapid shift away from a transportation system dependent on oil to a system powered by electricity.

But getting from here to there is still a heavy lift. Automakers will need to back their commitments with technology investments and the production of desirable and affordable EVs. Policymakers from the White House to the State House will need to deliver bold and supportive policies. Consumers and fleet managers will need to buy electric cars, trucks, and buses. And utilities and utility regulators will need to test, plan and implement innovative grid solutions.

An Eye Towards Grid Impact

Today, at approximately 2% market penetration, EV’s electric utility grid impact is negligible. But as we look ahead, widespread car, bus, and truck electrification will place demands on the grid that utilities and regulators have not historically considered. Based on a National Renewable Energy Lab (NREL) study into future energy demand, as more of the economy electrifies (driven largely by the transition to EVs), the U.S. could see upwards of a 38% increase in electricity demand in a high EV adoption scenario.

Source: NREL, Electrification Futures Study

Today commercial, industrial, and residential customers mostly consume electricity to run building-related functions. Transportation electrification will add significant new demand that will need to be planned for and managed well. It is a complex future scenario involving the movement of people, goods, and services over distances that include crossings state lines and utility territories requiring additional cross-utility collaboration like the Electric Highway Coalition.

Currently, most EVs stay close to and charge up at home overnight when the grid has excess capacity. But as average EV ranges approach 300-miles per charge with faster recharge rates, more EVs will be driven further away from home, demanding high-output public fast chargers to get to and fro. This demand will be variable and less predictable than what utilities are accustomed to at the present. Imagine a future scenario when the majority of cars on the road are electric, and Thanksgiving, Fridays in the summer, Christmas, and Fourth of July become not only the most popular travel days but also electric utilities’ greatest peak demand challenges.

As the University of California Berkeley 2035 Report shows, increased demand from EVs is expected to grow at a manageable rate of 2% per year. But to satisfy this demand, utilities will need to invest in new electricity generation. Ideally, this increased capacity would be from renewable resources. Nationally, that would require installing on average 105 GW of new wind and solar and 30 GW of new battery storage each year, which is nearly four times the current deployment rate. Ramping up investment in both generation capacity and EV infrastructure to meet demand will be challenging and will provide multiple upsides for ratepayers, businesses, and the planet.

Utility Engagement Opportunities

Economic Benefits

With increased demand comes opportunities. Hence, utilities around the country, including in North Carolina, are implementing new ways to account for increasing EV adoption and maximize the potential savings for both themselves and drivers through vehicle-grid integration (VGI). Utility operating cost savings can be achieved when EV drivers charge their vehicles at off-peak times, increasing energy sales without requiring the utility to invest in new grid infrastructure.

For utilities in at least 27 states, VGI programs have included EV-specific rate schedules to achieve EV charging demand shifts. Utilities like Pacific Gas & Electric (PG&E) and Southern California Edison (SCE) have used time-of-use (TOU) rates, which offer reduced pricing for charging during off-peak times. Research from Synapse Energy Economics found that EVs have generated more than $800 million in revenue above costs for the state’s two largest utilities. Con Edison in New York has implemented multiple programs to enhance VGI, including TOU rates, reduced demand charges for medium and heavy-duty vehicles, rebates for charging infrastructure, and participation in managed charging programs, driving fleet managers to increase EV uptake. This has also been applied to public DC fast charging by utilities like Florida Power & Light. The objective of these rates is to reduce the cost of supplying electricity for station hosts and improve the business case for owning and operating public fast charging.

Rate design is only one method utilities use to capture the benefits of VGI. Other methods include employing managed charging technology where the utility can directly control charging station consumption. EVs can also provide bidirectional power flow (V2G), where EVs act as distributed energy resources for grid operators. Utilities around the country are implementing VGI programs to maximize the cost savings potential of EVs. These savings are passed down to all utility customers in the form of lower rates, and savings on the utility side can be used to cover costs associated with investing in further transportation electrification programs.

Climate and Equity

Utility investment in EVs can help tackle climate change. Scaling North Carolina’s current 27K light-duty EVs to at least 80K light-duty EVs registered by 2025 and then all the way to the 100% of new vehicle sales electrified by 2035 will displace 700 million gallons of gas with 4.2 million megawatt-hours of electricity, reducing greenhouse gas emission by nearly 12 billion pounds annually based on the current utility resource mix. Add in electrifying medium and heavy-duty trucks and buses, and these reductions will be even greater. And if Duke Energy can achieve its goal to provide zero-carbon electricity by 2050, North Carolina’s transportation sector would go from a top climate change contributor to a celebrated climate solution.

EV Impact on North Carolina Electricity Consumption and Carbon Emissions

Source: Southern Alliance for Clean Energy

Utility investments can also be designed to increase equitable access to EV benefits, including lower-cost mobility, cleaner air, and quieter streets. Left to its own devices, the private sector will invest where the market is strongest, and profits are most plentiful. In the current EV market, that means predominately white, wealthy, and more urban communities. Without intervention, low-income, rural, and Black, Indigenous, and People of Color (BIPOC) communities will be left behind in the electrification of transportation. Because utilities are required to serve all customers, they are uniquely positioned to supplement the private sector by investing in electrifying underserved communities. Equity and access-related investments can include:

  • Creating stakeholder engagement processes to meet early and often with underserved communities to understand their needs and priorities;
  • Providing charging stations for multi-unit dwellings so people living in apartments can charge at home, a critical EV ownership barrier;
  • Providing public charging in underserved rural and urban communities;
  • Conducting education and outreach to ensure communities understand EV benefits.

Closing the Gaps

There are identifiable gaps in corridor fast charging across North Carolina, many in the more rural parts of the state. Filling these gaps now is important to support EV travel for both residents and EV-driving tourists. Duke Energy, North Carolina’s EMCs, and municipal utilities all play a role. Closing corridor charging gaps will become increasingly important as EV ranges increase and drivers travel from city to city and town to town needing charging along the way. More complete charging corridors will also help draw in EV-driving tourists from surrounding states with high numbers of EV owners (such as Georgia, Florida, and Virginia) to support North Carolina’s tourism economy. Additionally, adequate highway corridor fast charging supports storm evacuation needs, a safety concern for EV drivers living in storm-prone areas.

Closing corridor charging gaps will become increasingly important as EV ranges increase and drivers travel from city to city and town to town needing charging along the way.

Transit and School Bus Electrification

Transit agencies and school districts need support transitioning to electric buses, which cost more than diesel buses to buy but save money in the long term through reduced fuel and maintenance expenses. Most fleet managers do not have the time and expertise to procure and maintain charging infrastructure. Utilities are well-positioned to support fleet managers charging infrastructure needs. Furthermore, utilities AND ratepayers stand to benefit from bus electrification: Buses will consume a lot of electricity, increasing utility revenue, which at the same time helps place downward pressure on electricity rates; and emerging vehicle-to-grid technology will enable utilities to use the stored energy in bus batteries to improve grid performance and provide backup power during disruptions. Additionally, eliminating diesel emissions from bus tailpipes will improve public health, especially for low-income and BIPOC communities who experience the negative health impacts of air pollution first and worst.

No Time to Waste

Increased EV adoption across all vehicle classes is critical if North Carolina is to meet its transportation electrification and climate goals. The State’s cars, trucks, and buses are the leading source of greenhouse gas and air pollution emissions in the state, the public health impacts from which disproportionately harm marginalized communities. North Carolina can embrace a strong policy framework to spur investment in manufacturing, create clean jobs, and rapidly electrify public and privately owned vehicles throughout the state. Support from the State’s utilities will help ensure all North Carolinians have access to affordable charging infrastructure and rates that help maximize fuel cost savings associated with driving an EV. As the world emerges from a global pandemic and economic shutdown and the impacts of climate change worsen, the urgency to invest in a clean energy economy has never been greater.

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Electrify the South​ is a program of the Southern Alliance for Clean Energy that​ leverages research, advocacy, and outreach to promote renewable energy and accelerate ​the ​equitable ​transition to ​electric ​transportation throughout the Southeast. Visit ElectrifytheSouth.org to learn more and connect with us.


Stan Cross
Stan joined the Southern Alliance for Clean Energy in 2019. Stan leads SACE’s electric transportation policy, utility reform, and program implementation across the Southeast. Previously, Stan led and co-founded Brightfield…
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