Electric vehicle adoption is expected to continue growing, especially in delivery and service company fleets. That means load demand could surge, particularly around charging depots, and utilities must plan for the transition. Six actions that power companies can begin taking now to prepare for the electrification of transportation are detailed below.
Manufacturers continue to announce and display new models of electric passenger cars and trucks, vehicle chargers are becoming common in company parking lots around the country, and regulators and utilities are rolling out more programs to build demand for electric vehicles (EVs) and vehicle chargers. Utilities are also beginning to consider the impacts of EV charging on electricity demand, utility load, and energy pricing—at least at a macro level. But those effects will not be uniform across the country or even any city.
1. Hub locations, such as delivery truck overnight parking areas, could place heavy demand on the power grid as fleet vehicle electrification continues. Courtesy: PA Consulting
EV charging demand will naturally be concentrated at “hot spots” (Figure 1). Corporate and government fleets include millions of light-duty vehicles that will “live” and be charged—mostly overnight—at depots. Depot charging will place new stresses on the electric distribution grid, for which utilities must prepare.
Even without major technological disruption, the use of electricity to power transportation is likely to increase exponentially. Its impact on the electricity system will be exacerbated by the organization of many commercial and governmental vehicles in the form of fleets. Vehicles that are scheduled and managed centrally are dispatched from hub locations (depots) to which they return to recharge, often nightly. The concentration of charging at these depots will be intensified by depot clustering, because a location that is attractive to one delivery fleet is often attractive to others. Charging load will also have a different profile from other loads but may exacerbate other trends such as the “duck curve.”
E-Commerce Has Altered More Than Retail Business
Consider an example. E-commerce has upended the world of retailing and has been blamed for the decline and demise of traditional brick-and-mortar stores, but there is one traditional industry that has taken advantage of the explosion in digital retail: package delivery. Package delivery businesses such as FedEx, UPS, and the U.S. Postal Service have benefited greatly. According to Pitney Bowes, the volume of parcel deliveries in the leading economies more than doubled from 2014 to 2018. Furthermore, e-commerce vendors, such as Amazon, that previously relied on outsourcing deliveries are now building their own delivery networks to rein in costs and streamline delivery processes.
E-business is not only digital- and data-based, it is also increasingly electrified. The same applies to package delivery. Amazon began building its delivery network with 20,000 conventional vans, but in September 2019 it announced an order for 100,000 EVs—quintupling its earlier target. Other delivery companies are also exploring a shift to EVs and away from gas- and diesel-powered transportation. They are responding to changing regulations and seeking cost savings, but they are also addressing critical customer and employee desires.
So far, businesses like UPS and FedEx have run small pilot electrification programs, but the nature of operating large networks drives organizations toward interchangeability. It is expected that once these organizations settle on a model electric delivery vehicle, they will move rapidly toward a massive rollout, as they see value in converting their entire fleets by depot and geography. In fact, both the Postal Service and Amazon have announced just such plans.
Delivery vehicles represent a tremendous opportunity for e-commerce and package delivery companies to decarbonize their operations. However, electrifying current and future delivery fleets presents operational challenges for the distribution grid, which will require electric utilities to respond. Electric utilities can manage these challenges by acting now to identify key locations and impacts to their systems. They can get ahead of the market by creating programs that inform them of upcoming charger development and influence depot placement. Electric utilities will benefit from a stronger and more sustainable distribution grid, improved customer perceptions, and clear and justifiable system growth plans.
Rapid Growth in EV Charging Will Stress Distribution Systems
Widespread electrification of transportation (Figure 2)—even just the “low-hanging fruit”—is predicted to change the trajectory of load growth, which has been flattened over the last decade. The geographic pattern of that growth, not just regionally but also locally, may be quite uneven thanks to the electrification of vehicles in fleets, as well as the tendency of depots themselves to be clustered. This will create new stresses on the distribution system that will have to be considered in utility planning.
2. Electric vehicles are becoming more common throughout the world. This phenomenon will cause power demand to increase. It may be wise for utilities to start planning now for the surge. Courtesy: PA Consulting
No longer will utilities depend on analysis of coincident peaks to determine their system loading conditions—system load factors are likely to get worse, and peaks may increase, but local system usage patterns may become much less uniform geographically. Depot charging will provide one example, possibly the first, of a strongly geographically concentrated load with a characteristic idiosyncratic profile. Contingency planning and analysis may need to be more extensively analyzed on the distribution grid.
Depot charging load will drive the installation of new distributed technologies on the utility system such as:
- ■ Additional utility storage and distribution system upgrades to help manage the electrical stresses on the grid and store energy locally to smooth local load spikes.
- ■ Additional monitoring equipment to provide grid operators situational awareness of the demands on the systems.
- ■ Local reactive compensation for direct-current charger loads.
- ■ Behind-the-meter storage for depot owners in deregulated states to take advantage of low-priced “belly-of-the-duck” energy and to manage demand charges.
- ■ Advanced distribution management systems to help manage distributed renewables and distributed energy resources—rooftop PV or rooftop wind—to fill the storage and provide the additional green electric supply that customers particularly desire in growth pockets.
Utilities will also be able to adopt new operational practices that have been under discussion for other purposes but have had limited traction. Vehicle owners may be leery of the impact on battery life of “vehicle-to-grid” programs, using them as system bulk energy storage, but more willing to allow curtailment of their charging load for short-term operational needs. They may even be willing to allow more frequent low-intensity discharge/recharge of partially charged batteries if the focus is on mitigating grid issues that affect the depots.
It will also be important for utilities to update their outage restoration plans and maintenance procedures to factor in these new large load centers and their particular load shapes. For example, outage planning for system upgrades, or even tree trimming operations, will need to take into consideration delivery vehicle charging points, which may have very specific charging needs during certain parts of the day. The hours when utilities are planning to do work with minimal disruptions to the customer will likely be during different parts of the day than traditional hours.
Changes to operational practice will lead to the use of even more new technologies. The geographic concentration of depot charging load—and the possibility of enlisting the help of depot owners—could create a need for decentralized and cooperative distribution management systems. These systems would be able to autonomously manage to the level of a single substation or feeder while communicating with a depot’s charger management system to anticipate load and request mitigation.
A Change in Plans
Therefore, it is important for utilities to actively change the way they plan their distribution systems. Utilities will benefit from taking the following actions:
- ■ Identify Current and Potential Depot Locations in Service Territories. Electric utilities have detailed information about their commercial and industrial customers. Between their own customer records and mapping tools, such as Google Maps, they should be able to locate current delivery depots that may be electrified as well as areas in their systems that are likely to host new depots.
- ■ Study and Project Depot Charging Behaviors and Delivery Operators’ Operational Needs. As chargers are introduced, utilities can learn how they tend to be used and the difference in use patterns between different locations. They can work with customers to understand their behavior, so as to better serve those customers.
- ■ Develop Programs to Support and Manage Charger Development. Policymakers are generally supportive of vehicle electrification to improve air quality, control carbon emissions, and reduce reliance on fossil fuels. Utilities can support this by facilitating access to chargers. In so doing, they can gain information about charger locations and have the opportunity either to protect the grid by influencing charger siting or ensuring that the distribution system is reinforced to anticipate local needs.
- ■ Forecast Locational Electrification Potential and Timing of Charging Load Growth. This is just the development of quantitative projections based on information gathering described in the previous three bullets.
- ■ Identify Interconnection and Distribution Upgrade Requirements. This is fundamental distribution planning but aimed at specific reliability and system security issues associated with concentrated charging loads.
- ■ Estimate Cost Impacts. Utilities can design rates to collect costs imposed by depot charging while not impeding growth.
Revving Up Toward a Brighter Future
The time to start planning is now, as once this shift to wide-scale EV adoption occurs, there will be a large effect on utility load, grid topology, and ultimately, investment, as concentrated demands will be placed on distribution system networks. Utilities should not wait for regulators to order changes to distribution planning, as some did to accommodate distributed energy resources.
Utilities should take the lead in preparing the distribution grid for EV charging in depots and retail charging stations, as well as homes and workplaces. EV charging can provide significant upside for utilities. Many are facing load loss and struggling to grow, and thus, vehicle electrification stands to be an opportunity for utilities to revitalize their grids and maintain their long-term financial health. ■
—Jonathan Jacobs is an energy and utilities expert at PA Consulting.