Interview by Elana Cole and Walter Schaefer, ERS, for Zondits
Zondits spoke with three industry influencers from different backgrounds who participated in an EV panel at AESP‘s Spring Conference in May 2019. Zondits sought to learn what’s needed to drive EV adoption and understand where the market is heading in our interview with Drew Frye (TVA), Marc Monbouquette (Enel X), and Zach Henkin (Forth).
Q: Several challenges have been identified in developing EV infrastructure, such as charging times and the need to engage with several different parties to get a charger in the ground. What do you see as the biggest challenge in deploying new infrastructure? Can you identify one policy challenge and one technical challenge you’ve encountered?
Drew: I believe the biggest challenge to deploying EV infrastructure is the cost of these assets. If it only cost $100 to install a charger, everyone would do it! This is particularly true for DC Fast Charging; DCFC can be expensive assets with complicated installation, ongoing management, and maintenance costs. In the early days of EV adoption, it is tough to justify these major expenses with limited utilization.
Any policy that restricts anyone (utilities or third parties) from installing, owning, and operating charging infrastructure is like having one arm tied behind our back. There is so much work to be done in building charging infrastructure for consumers, and anyone who is willing to do that should be welcomed.
On the technical side, knowing the best locations for infrastructure and where those “best” locations overlap with abundant (meaning inexpensive) electrical capacity is a challenge.
Zach: The largest challenge is building a successful “business case” for charging. The highest utilized sites, in many cases, already have stations installed. Network charging gaps are likely to remain until a stakeholder can install and maintain a charging station at a loss or under subsidy. This particular problem also addresses equity in low- and moderate-income areas and in more rural communities. In either case, the primary question is: Where do the O&M and initial capital costs come from? But the related components are determining how to offset these costs and support a stronger EV charging business model.
Marc: At present, the majority of all EV charging (>80%) occurs at the home, as early EV adoption has mainly been for light-duty passenger vehicles that can use a private EV charger. Residential charging occurs at relatively low power levels and is, in many instances, incentivized to schedule charging overnight through time-of-use (TOU) rates, smart charging programs, or otherwise.
The cost and complexity of EV charging rises for nonresidential charging applications, owing to the higher power levels and the impact that spot loads can potentially have on the grid. The biggest technical challenge that faces EV charging infrastructure deployment is the physical integration of large EV charging loads, while the biggest policy challenge is to address the high cost of doing so, which is key to spurring the nascent EV market. Identifying areas on the grid and existing buildings where adequate capacity exists to integrate new EV charging load can expedite the build-out and operation of charging infrastructure and reduce integration costs. Electric rate design can be crafted through policy updates to align utility cost recovery with grid conditions (i.e., cost causation) in a way that better accommodates the ongoing project economics of high-capacity charging. Solutions such as demand charge holidays (coupled with time-dependent, all-energy rates), coincident demand charges, and dynamic rates that pass through time-dependent delivery charges all send clear price signals that reflect cost causation. These solutions also provide favorable project economics for high-capacity, low-utilization stations that are otherwise imperiled by non-coincident demand charges. Policy solutions such as make-ready infrastructure programs can also address the high upfront costs of high-capacity charging.
Q: Much has been made of the potential for EVs to serve as distributed grid assets and improve grid operations. What opportunities and challenges do you see related to allowing EVs to “help the grid?”
Drew: I believe EVs can be electric grid “team players” helping to reduce consumer electricity rates and potentially pave the way for increased renewable energy generation. There are lots of “operations” these distributed assets can perform, but we must always think about cost and consumers when we consider managing EVs as grid assets. Is aggregating millions of EVs (and the complexity with communications and standardization) the most cost-effective way of providing grid services? Also, how would this impact consumers who are relying on these assets for transportation in their daily lives?
Starting small with low-tech, low-cost programs like time-of-use rates can help integrate early-stage EVs into the power system efficiently with limited issues.
Zach: The greatest near-term opportunity for light-duty vehicles will be V1G. A utility managing when a car starts or ends a charging session will lower peak usage and enable a more resilient grid, similar to how smart thermostats and other web-enabled devices help manage load. Long-term, school buses and transit buses may prove to be useful for other V2G uses – the battery size of these vehicles may be useful to energy providers for resiliency and other grid support.
Marc: The opportunity is large. The coming boom in electrified transportation means that people will increasingly be driving around on large batteries, which will add new load to the system that can also provide flexible balancing services.
Vehicle grid integration (VGI) spans both smart charging, or V1G, and bidirectional EV charging, or V2G. VGI can provide different types of grid services and benefits to utilities, grid operators, wholesale energy and ancillary service markets, and drivers depending on the time and location of expected EV charging and how that EV charging or discharging aligns with certain economic, environmental, or operational command/control signals.
For instance, V1G demand response dispatches can be utilized to move charging off-peak and avoid peak-time generation needs. Or, V1G can be used to schedule EV charging to coincide with the highest availability of surplus renewable energy. V2G, though not commercially widespread today, promises to greatly expand on the types of VGI services that EVs can provide, as it looks and functions virtually identical to standalone energy storage.
VGI can provide flexibility services at great value relative to standalone energy storage systems, as EVs and EV charging stations are purchased and installed by drivers, transit agencies, fleet managers, etc. – not ratepayers. However, one of the largest challenges behind unlocking this value lies in properly valuing VGI services against traditional solutions in utility procurement decisions for distribution capacity and system balancing. Another challenge is the lack of rates, tariffs, programs, procurement frameworks, and wholesale market participation pathways that enable the provision of VGI services – e.g., tariffs for dynamic rates or critical peak pricing for EVs, or wholesale market participation models for aggregated EV charging to provide energy and ancillary services. Though many utilities across the country are piloting smart EV charging programs for residential customers, these represent a first-order VGI offering, and much work remains to unlock the wide range of benefits that VGI can provide.
Of course, in many markets the biggest near-term challenge to implementing VGI is having a critical mass of vehicles on the road to provide services in the first place! Once that threshold is reached, it is then important to remember that EVs first and foremost are used for mobility. In Enel X’s experience, however, we see that many drivers are responsive to the additional value they can generate by signing up for VGI program offerings, when they know that their pre-set mobility requirements are always honored.
Q: Electrification of the U.S. fleet and transportation is becoming a top priority for city officials and utilities. What initiatives or plans have you seen to promote the electrification of municipal vehicle fleets, including heavy-duty vehicles such as buses and refuse trucks?
Drew: Pretty much every major municipal fleet that operates buses has heard the benefits (and costs) of electrification. It is a major topic. Grants from the FTA have promoted alternative fuels like electric for many years and many states have allocated portions of their Volkswagen Settlement dollars toward buses, including transit, in the coming years. Some states are targeting electric buses (like Tennessee), but other states are being more inclusive of all alternative fuels including natural gas and hybrid diesel. The high upfront costs of electric buses and their charging infrastructure give many transit agencies “sticker shock” until they start to think through the total cost of ownership benefits from electric buses. Despite savings over time, the high upfront cost is still a tough pill to swallow for most. As the costs continue to come down, these deployments will rely less on grants and more on simple business decisions.
Zach: The American Cities Climate Challenge funded by Bloomberg Philanthropies (and others) is one example of cities making bold commitments to reduce their GHG emissions by the end of 2020. This challenge, and the related work that this project has resulted in, is just one of the ways I’ve seen cities take initiative in fleet electrification.
- Laws or initiatives at the state or county level that set mandatory phase-in dates for government fleet electrification
- Utility programs for make-ready infrastructure and Electric Vehicle Supply Equipment (EVSE) rebates allocated specifically for fleet or bus charging
- Medium- and heavy-duty vehicle purchase incentives/tax credits through state government
- On-bill financing from utilities to cover the cost premium of e-buses over diesel buses
- School bus V2G pilots
Q: What policies and programs have been established in your area to promote EVs?
Drew: In the Southeast (and Tennessee, in particular) electrification policies and programs have been a collaborative effort. For years, EV stakeholders like state agencies, utility companies, local automakers, research institutions, and others have joined together to encourage EVs. Whether it is a state rebate or collaborative infrastructure planning for future funding sources, it will take a team effort to promote EVs more than any one organization can handle.
Zach: Forth has led in policy at both the state and local level to establish programs and provide funding that is supportive to EV implementation. Examples include the Oregon Clean Car Rebate, the Washington State EV Incentive, electric vehicle building code, and other related pieces of policy.
Marc: Too many to list – I live in California 😉
Q: There are a lot of benefits to owning an EV, such as emitting lower GHGs and lower cost of ownership. What do you see as the biggest selling point for prospective EV buyers?
Drew: EVs have to be sold on “I like that vehicle” before anything else. Tesla’s success has been their willingness to sell feature-rich vehicles that people actually want to drive (based on looks, tech, performance, etc.).
Zach: Electric cars are simply better cars. Of vehicles on the road today, EVs are the most fun to drive, the safest, and the highest performing. Additionally, they have the lowest cost of ownership. When all of these benefits combine, the harder question becomes: Why wouldn’t you own a plug-in?
Marc: I believe that early adopters have primarily responded to the environmental narrative and the low price of fuel vis-à-vis gasoline – not to mention the joy of never having to go to the gas station (though this also follows the environmental narrative).
Q: Conversely, what do you see as the single biggest barrier to spurring more widespread EV adoption in the U.S.?
Drew: Lack of consumer awareness. In a completed survey of 400 consumers across our service territory, 75% of people selected “None” as their level of awareness when it came to EVs. None… never heard of it. Therefore, current marketing/educational channels (or lack thereof) are not reaching the general public.
Zach: Awareness. The majority of individuals do not purchase new vehicles, and those who do are often not aware of EV availability. In general, we need more widescale awareness on the viability and applicability of EV. In many cases, under normal driving conditions, the cost to move to EV is very small.
Marc: Increasing the number of states signed onto California’s zero-emission vehicle (ZEV) mandate is probably the most straightforward and impactful way to expand the EV market and enable customer choice of EVs. If you don’t live in a “ZEV state,” it’s unlikely that you’ll be able to easily pop over to a local dealership and buy an EV off the lot.
Once an increased supply is in place, consumer preferences really need to swing to increase demand. In practical terms, this means that we need more e-pickups and e-crossover SUVs, which should be coming over the next approximately 3–5 years.
Increased consumer outreach, education, and awareness is also paramount. The Audi e-tron commercial that aired during the Super Bowl was groundbreaking in my estimation, and it aimed to dispel many of the fallacies associated with going electric. Aside from this, though, the airwaves are still dominated by pickup truck commercials. We need more mass media campaigns (and other cultural cues) to help create widespread EV demand.
We must focus on auto dealer education (and incentives). Dealerships mainly make money through warranties for ICE vehicles and, thus, have little enthusiasm for pushing EVs.
In addition, we need to stop the war on corporate average fuel economy (CAFE) standards and ZEV mandate. Validating the legality of the CA exemption to federal CAFE standards under the Clean Air Act will go a long way toward cementing the EV transition within the auto industry.
Q: Global EV sales passed 4 million in 2018, indicating marked growth in the EV market over the past several years. How have you seen the market change over the past few years, and where do you see it in the next five years?
Drew: For us, 2018/2019 market growth is a function of just how many EVs Tesla can manufacture and sell. In our area, the “other” automakers produced and delivered essentially the same number of vehicles in 2018 as they did in 2017. In the next five years, we hope to see more automakers producing, marketing, and selling compelling EVs that consumers want, such as small, medium, and large SUVs as well as pickup trucks. Overall, I see a much more competitive marketplace in the next 5 years, and consumers (and EV sales) will benefit.
Zach: We are approaching the hockey stick of exponential growth that will take EV into a normalized vehicle for the masses. The uptick in interest over the last several years has been fantastic, and I expect more “general” interest will continue to build for the new and used car market in years to come. Similar to the way legacy hybrid vehicles are considered today, fully electric and plug-in hybrid vehicles will likewise become the norm.
Marc: The industry had humble beginnings with the Leaf, Volt, and Model S – then the first mass-market breakthrough with the Model 3. We will see “hockey stick”-esque growth in EV sales over the next 5–10 years as auto OEMs increasingly offer new EV models. Twenty million EV sales are predicted in 2030 alone, according to Bloomberg New Energy Finance.
Meet the interviewees:
Drew Frye leads the evaluation and demonstration of grid edge technologies and electric vehicle strategic research at the Tennessee Valley Authority (TVA), a federal utility company. His research informs utility program development and engages local utility partners and other stakeholders across the Southeast to spark innovative thinking and encourage electric transportation.
Marc Monbouquette leads Enel X’s North American policy engagements pertaining to EV infrastructure investments, smart EV charging, demand response programs, wholesale market integration, and low carbon fuel credit markets. Marc is a certified LEED Green Associate.
Zach Henkin is a Deputy Director at Forth, a nonprofit determined to promote, support, and increase access to clean transportation options throughout the United States. Zach is a certified Project Management Professional and volunteers his time helping cities and nonprofits reach their goals.