Turn Down for Watt: EVs May Lower Power Rates – Report

In what is – for this addled author, at least – a mind-bending concept, a recent study by an outfit called Synapse Energy Economics suggests the adoption of electric vehicles may actually lower the cost of electricity.

That sound you hear is the B&B tripping over seized engine blocks and rusty Panther chassis cross members as they race to the comment section.

As with all studies, it’s worth noting a few caveats. In this case, a few huge caveats. The study was paid for by an environmental group called the Natural Resources Defense Council and focused on data collected in certain parts of California. In that state – and some others, apparently – a law can force utility companies to enact rate cuts to pass some of their profit to customers if the utilities suddenly start making more money. This has historically been the case in some jurisdictions to help prevent nefarious businesses from jacking up power rates, making everyone’s lives unaffordable, and making off to Tahiti with the cash.

Another key part of the study? Off-peak rates. Also called the time-of-use (TOU) structure, it differs significantly from so-called tiered rates which bump users into different price brackets as their electricity use increases. The study estimates EV owners in Cali will increase their consumption by about 260 kWh per month, which does seem on the low side but we’ll roll with it for the purposes of this analysis. Since it has been found that the vast majority of EV owners charge at home overnight, the study points out that EV customers on TOU rates o􏰁en hit their monthly maximum demand when the system is least taxed— typically between 11:00 p.m. and 2:00 in the morning

Here's where the switch flips (pun intended). Architects of the study say EVs have increased utility revenues more than they have increased utility costs, leading to downward pressure on electric rates for EV owners and non‐EV owners alike. Over a 10-year stretch at a trio of California electric companies, electric car owners have apparently contributed $1.7 billion more than associated costs (in 2021 dollars). The eggheads say a key reason why revenues from EVs outweigh the costs is that EV customers, particularly those on TOU rates, tend to charge during off‐peak hours. By charging when the grid is relatively quiet, it is suggested EVs impose minimal costs on the grid and help to utilize resources more efficiently.

In other words, the study is implying that power companies are raking in far more money from supplying power for EV charging than they are spending on system upgrades and maintenance. If hewing to the profit-sharing decree mentioned at the top of this post, customers as a whole could enjoy bigger rebates. 

Of course, anyone plugging in an EV every night is going to spend more overall on electricity every month than if they weren’t. And there is obviously some tipping point at which too many cars are plugged into the grid and the place makes like planet Melmac on ALF.

Still, it’s an interesting take. The entire report is available here.

[Image: Hyundai]

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