EV rate designs may be missing the mark, Berkeley Lab report says

Researchers at the Lawrence Berkeley National Laboratory looked at the EV charging rate from more than 215 electric utilities in 37 states and the District of Columbia and offered a handful of conclusions about those rates’ objectives and effectiveness.

The research addressed the “critical role” that rate design can play in EV adoption, and also suggested a near-term considerations for regulators and policymakers.

The report said that more than 1.7 million registered electric vehicles are on the roads in the US. This number is expected to grow to more than 26 million by 2030.

Given the nascence of the EV industry coupled with regulators’ and utilities’ limited experience with EV-specific rate designs, “substantial benefit” could come from providing insights into how EV-specific rates are actually being designed.

The report said that utilities and regulators may be “highly motivated” to promote EV adoption through simple rate designs while seeking to manage broad grid impacts from the additional electric demand associated with charging loads.

Second, the absence of “highly dynamic temporal or locational” rate designs suggests that achieving the greatest level of economic efficiency is likely “not as high a priority” at present as other issues, or may not be feasible or cost-effective due a variety of reasons.

Third, a “handful” of rate pilots suggests utilities may be motivated simply to gain experience with new customers and new electricity demand patterns, for example, third-party or utility charging stations, commercial or school bus fleets.

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First principles

Turning to rate design issues, the report said that a starting point is to consider implications of EV rate design objectives in the context of other distributed energy resources (DERs). This is important because state regulators typically have different rate designs and policies or goals for individual DERs. The importance of the specifics of any particular rate design in assessing the potential impact on DER deployment “cannot be overstated,” the report said.

It said that EV rate designs–and the more general trend toward rates that encourage load shifting–will likely benefit more flexible DERs as opposed to DERs like energy efficiency and distributed solar photovoltaic systems with largely uncontrolled load shapes

State regulators also tend to have more experience with rate offerings for more traditional forms of DERs than for EVs. This means that opportunities may exist to leverage that experience to design better and more effective EV-specific rates.

Second, regulators and utilities should consider the frequency with which EV-specific rate designs are updated or modified to reflect changing grid, economic and/or environmental conditions.

For example, many current EV rates encourage charging during nighttime hours, yet some power systems may not identify those hours as off-peak.

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Night or day?

The report warned that “greater EV charging during nighttime hours could conceivably result in a new peak.” That in turn could lead to establishing new peak and off-peak rate periods and price levels.

In addition, an increasing number of electricity systems have surplus renewable power supply during daytime hours. This would suggest that EV rates “might better achieve decarbonization goals by focusing on daytime charging,” the report said.

Third, as EV deployments increase, it will be important to revisit EV rate designs in terms of their effectiveness in achieving their objective. It said this approach is not unlike net energy metering reforms that occur as distributed PV deployments increase and their marginal system value changes.

“The value of EV charging may shift to different periods of the day and year, which would necessitate altering EV rate designs accordingly,” the report said.

The research said that although rates represent a critical component of achieving regulatory objectives, they are not the only tool available to regulators. Instead, rates are more often coupled with incentives and other programs, which are usually designed to establish an ecosystem of enabling communication and control technologies to promote managed charging or vehicle-to-grid initiatives, among others.

Originally published on Power-Grid International.