Economic & Grid Impacts of Plug-In Electric Vehicle Adoption In
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Economic & Grid Impacts of Plug-In Electric Vehicle Adoption in Washington & Oregon March 2017 Economic & Grid Impacts of Plug-In Electric Vehicle Adoption in Washington & Oregon March 2017 Authors: Lucy McKenzie Dr. Jonathan Donadee Brendan Schneiderman Eric Cutter Dr. Nancy Ryan Study Sponsors: Chelan County Public Utilities District Puget Sound Energy Snohomish Public Utilities District Tacoma Power Avista Seattle City Light © 2017 Copyright. All Rights Reserved. Energy and Environmental Economics, Inc. 101 Montgomery Street, Suite 1600 San Francisco, CA 94104 415.391.5100 www.ethree.com 2 1 Executive Summary Study Aims and Methods: Energy and Environmental Economics, Inc. (E3) modeled the economic and grid impacts of electrified vehicles adopted in Washington and Oregon over the next twenty years. This work aims to support the sponsoring utilities and other stakeholders in understanding: • the costs and benefits of plug-in electric vehicle (PEV) adoption, from both the Ratepayer and broader Regional perspectives, • the sensitivity of these results to key economic and utility cost assumptions, • the potential value of systems or programs that manage the timing of PEV charging, • potential carbon dioxide reductions from electrified transportation, and • potential impacts of electric vehicles on utility planning, specifically electricity consumption and planning loads, plus distribution costs. To fulfill these aims, E3 used our EVGrid Model, which captures key interactions between drivers, vehicles, chargers, utility costs, incentives and gasoline costs. In this study, we (E3) consider the impacts of PEV adoption over a 20-year time horizon. This means that we include all direct costs, benefits and CO2 reductions attributable to PEVs sold in the years 2017 to 2036. We consider all costs and benefits that were incurred over each vehicle’s useful lifetime. We also include pro-rated costs and benefits for vehicles placed on the road prior to 2017 The investigation focused on five geographic areas: The combined states of Oregon and Washington, plus the service territories of four utilities; Snohomish County Public Utility District (‘Snohomish PUD’), Puget Sound Energy (PSE), Tacoma Power, and Chelan County Public Utility District (‘Chelan PUD’). The four case study utilities provided data for the analyses. These four utilities, plus Avista and Seattle City Light, also provided feedback on the publicly-available datasets used to model Oregon and Washington states. 3 We studied five electrified vehicle segments in each geographic area, selected based on utility interest and availability of electrified vehicle models: personal light-duty vehicles, taxis and transportation network company (TNC) vehicles, forklifts (both light-duty and heavy-duty), buses, and parcel delivery trucks. For each vehicle segment, E3 defined a Base Case using the best available industry data for each input. Since it is impossible to predict the actual adoption rate of PEVs in the future, a range of Low, Base, and High-level adoption rates were developed by E3. Given the uncertainty associated with each of these inputs, we also defined a number of sensitivity cases to show how each scenario would impact the overall economic results. The table below summarizes the cases we analyzed. Cases Run Using E3’s EVGrid Model Case Region studied (Modeled for both Regional and Snohomish Tacoma Chelan Ratepayer Perspectives) OR + WA PUD PSE Power PUD Personal Light-Duty PEVs: Base Case ✓ ✓ ✓ ✓ ✓ Personal Light-Duty PEVs: Sensitivity Cases ✓ ✓ ✓ ✓ ✓ Personal Light-Duty PEVs: Managed Charging Case ✓ ✓ ✓ ✓ Taxis + TNC vehicles: Base Case ✓ ✓ ✓ ✓ Forklifts: Base Case ✓ ✓ ✓ ✓ Buses: Base Case ✓ ✓ ✓ ✓ Parcel Delivery Trucks: Base Case ✓ ✓ ✓ ✓ Transmission & Distribution Case with all vehicle types: Base Case ✓ ✓ ✓ ✓ Adoption Transmission & Distribution Case with all vehicle types: High Adoption ✓ ✓ ✓ ✓ 4 Cost-Benefit Perspectives: E3 measured costs and benefits from the Regional and a Ratepayer Perspectives. The components of each are shown in the Figure below. • The Regional Perspective considers all directly monetized benefits flowing in and out of a region due to PEV adoption. It includes costs incurred by electric utilities to serve the added load, the incremental cost of the vehicles over a conventional model, and home, workplace and public charging infrastructure. On the benefits side, this perspective includes federal PEV incentives, and avoided gasoline, carbon, and operations and maintenance (O&M) costs. Subtracting these costs from benefits on a per-vehicle basis results in the net benefit (or net cost) to the region for each PEV that replaces a conventional vehicle. Scaling the per-vehicle figure by forecasted PEV adoption yields the net benefit (or cost) to the region as a whole.1 • The Ratepayer Perspective considers the impact of PEV adoption on all electric utility customers. It compares the utility’s cost of serving PEV charging load with revenue from charging PEVs. The difference between these costs and benefits is the Ratepayer net benefit (or cost). If utilities’ costs to serve PEV customers are lower than the revenue that is collected from PEV drivers’ electric bills, then ratepayers as a whole benefit: utilities can reduce electricity rates, spend funds on programs that reduce electric vehicle ownership costs for all ratepayers, or make other grid investments. The net benefit represents the amount that a utility can spend on PEV adoption programs or other investments without increasing electric rates. This Ratepayer Perspective analysis is intended to provide a starting point for rate and program design by calculating net benefits under current rate definitions and rate projections. Ratepayer net benefits will change if rates applied to PEVs change, or if utilities implement PEV-specific rates (for example in response to this analysis or other public policy goals). 1 For those familiar with utility cost tests, this perspective can be thought of as the Total Resource Cost test plus the avoided cost of carbon that results from electricity emitting less carbon than gasoline (assuming that there is some future monetary price applied to all carbon emissions). 5 Cost and Benefit Components Included in Each Cost-Benefit Perspective Cost-benefit analysis of plug-in electric vehicle (PEV) adoption: Regional Perspective The results suggest that PEV adoption is likely to bring significant net economic benefit to Oregon and Washington, and to each utility’s service territory. For example, the figure below, shows that across the entirety of Oregon and Washington, Regional net benefits are $1,941 (NPV) for each personal light-duty PEV, or $1.4 Billion total with Base Case adoption assumptions. The key drivers of costs are energy, 6 generation capacity, chargers and incremental vehicle cost. By far the biggest benefit is savings on gasoline ($7,056 per vehicle), followed by O & M savings ($1,368) and the federal tax credit ($1,053).2 Regional Perspective Costs and Benefits Per Personal Light-duty Vehicle, OR + WA Base Case, NPV 2017 - 2036 Costs Benefits Results for the individual utilities are not strictly comparable because they are based upon data specific to their systems that was developed using their internal planning methodologies. Nonetheless, it is useful to observe high-level ranges to understand overarching trends and differences between vehicle types. For personal light-duty PEVs, all four case study utilities show per-vehicle Regional net benefits of a similar magnitude to the OR+WA case discussed above. Other vehicle types also show significant per vehicle net benefits from the Regional Perspective: $7,000 - $9,000 for forklifts, taxis and TNC vehicles, $21,000 $28,000 for parcel trucks, and $100,000 to over $200,000 overnight-charging buses. The high mileage for these vehicle classes magnifies their fuel and maintenance cost savings relative to conventional counterparts. Note that these net benefits do not include the cost of any programs that the individual 2 Note that the Federal Tax Credit shows as far less than the $7,500 currently offered per vehicle. This is because we assume the credit is only applicable to vehicles purchased in 2022 and earlier, and our results are shown as a net present value for the full set of vehicles sold by 2036. 7 utilities may implement to incentivize PEV adoption. Rather, they are net benefits that accrue from vehicles adopted in the utilities’ service territories. This is true also for the Ratepayer Perspective results. Cost-benefit analysis of plug-in electric vehicle (PEV) adoption: Ratepayer Perspective Ratepayer Perspective results show more variation among the utilities studied, with some showing net benefits and others revealing net costs. Across Oregon and Washington (taken as an entire region), ratepayers stand to benefit $387 (NPV) for each personal light-duty PEV added to the road during 2017 – 2036. That is, the cost to serve the energy that a PEV requires over its lifetime is $387 less (in net present value terms) than the revenue that flows to utilities from that PEV driver’s electric bills. These results are shown in the figure below. The key cost drivers are energy ($1,368 per vehicle), and generation capacity ($1,143). The costs of RPS compliance, ancillary service cost, and electric carbon are very small, as is the costs of T&D upgrades (an average of per-vehicle T&D costs from the four case study utilities). For this OR+WA Case, utility bill revenues ($3,035 per vehicle) are based upon EIA projections