Mid-Atlantic and Northeast Plug-in Electric Vehicle Cost-Benefit Analysis Methodology & Assumptions December 2016 Acknowledgements Authors: Dana Lowell, Brian Jones, and David Seamonds M.J. Bradley & Associates LLC Prepared by: M.J. Bradley & Associates LLC 47 Junction Square Drive Concord, MA 01742 Contact: Dana Lowell (978) 405-1275 [email protected] For Submission to: Natural Resources Defense Council 40 W 20th Street, New York, NY 10011 Contact: Luke Tonachel (212) 727-4607 [email protected] About M.J. Bradley & Associates LLC M.J. Bradley & Associates LLC (MJB&A) provides strategic and technical advisory services to address critical energy and environmental matters including: energy policy, regulatory compliance, emission markets, energy efficiency, renewable energy, and advanced technologies. Our multi-national client base includes electric and natural gas utilities, major transportation fleet operators, clean technology firms, environmental groups and government agencies. We bring insights to executives, operating managers, and advocates. We help you find opportunity in environmental markets, anticipate and respond smartly to changes in administrative law and policy at federal and state levels. We emphasize both vision and implementation, and offer timely access to information along with ideas for using it to the best advantage. © M.J. Bradley & Associates 2016 December 2016 Mid-Atlantic and Northeast Plug-in Electric Vehicle Cost-Benefit Analysis Table of Contents Executive Summary ...................................................................................................................................... 5 1 Methodology ......................................................................................................................................... 5 1.1 Utility Net Benefits ....................................................................................................................... 5 1.2 PEV Owner Net Benefits .............................................................................................................. 6 1.3 Societal Net Benefits ..................................................................................................................... 6 2 Assumptions & Sources ........................................................................................................................ 7 2.1 PEV Penetration Scenarios ........................................................................................................... 7 2.2 PEV Charging Scenarios ............................................................................................................... 7 2.3 Vehicle Characteristics ................................................................................................................. 9 2.3.1 Vehicle Type ......................................................................................................................... 9 2.3.2 Vehicle Purchase Cost ......................................................................................................... 9 2.3.3 Vehicle Maintenance Costs ................................................................................................ 12 2.3.4 Average Vehicle Energy Use .............................................................................................. 13 2.3.5 Vehicle Miles Traveled ....................................................................................................... 13 2.5 Energy Costs ............................................................................................................................... 15 2.5.1 Gasoline .............................................................................................................................. 15 2.5.2 Electricity ............................................................................................................................ 15 2.6 Utility Costs ................................................................................................................................ 16 2.6.1 Generating & Distribution Costs ......................................................................................... 16 2.6.2 Peak Capacity Costs ............................................................................................................ 17 2.6.3 Infrastructure Upgrade Costs .............................................................................................. 17 2.7 GHG Emissions .......................................................................................................................... 18 2.7.1 Gasoline .............................................................................................................................. 18 2.7.2 Electricity ............................................................................................................................ 18 References ................................................................................................................................................... 20 Appendix A ................................................................................................................................................. 23 3 Mid-Atlantic and Northeast Plug-in Electric Vehicle Cost-Benefit Analysis List of Figures Figure 1 Distribution of Assumed PEV Charge Start Times in Massachusetts ............................................ 8 Figure 2 Projected PEV Battery Costs ........................................................................................................ 10 Figure 3 Assumed Purchase Costs of Cars (2015$) .................................................................................... 11 Figure 4 Assumed Purchase Cost of Light Trucks (2015$) ........................................................................ 11 List of Tables Table 1 Projected Vehicle Maintenance Costs ($/mi, nominal$)............................................................... 12 Table 2 Projected Average In-use Vehicle Energy Use .............................................................................. 13 Table 3 Projected Growth in Annual Light-Duty Vehicles and VMT, compared to 2015…………………….….. 14 Table 4 Projected Gasoline Costs ($/gallon, nominal $) ............................................................................. 15 Table 5 Average Residential Electricity Rates ($/kWh, nominal $) ........................................................... 16 Table 6 Generating & Distribution Costs (% of residential electricity price) ............................................. 16 Table 7 Peak Generating Capacity Rates ($/kW-month, nominal $) .......................................................... 17 Table 8 Electricity Generation CO2 Emissions (g/kWh) ............................................................................ 18 4 Mid-Atlantic and Northeast Plug-in Electric Vehicle Cost-Benefit Analysis Executive Summary MJB&A estimated the costs and benefits of increased use of light duty plug-in electric vehicles (PEV) in five mid-Atlantic and northeast states including Connecticut, Maryland, Massachusetts, New York, and Pennsylvania.1 This document summarizes the methodology, assumptions, and data sources used by MJB&A to conduct these analyses. The results of the analysis for each state are reported in separate documents. The analyses include costs and benefits to PEV owners, costs and benefits to electric utilities that deliver the energy required to charge PEVs and to their customers, and net economic and environmental benefits (GHG reductions) from greater use of PEVs instead of gasoline vehicles. For each state MJB&A developed two different scenarios of PEV penetration for 2030, 2040, and 2050 which bracket the states’ short and long-term goals for PEV adoption and economy-wide GHG reduction. In addition, for each PEV penetration scenario the analysis includes two different vehicle charging scenarios, representing “business as usual” charging and “off-peak” charging. Costs and benefits are estimated at the county level, but are summarized at the state level, and by the service territory of each major electric utility in the state. 1 Methodology This analysis evaluates the costs and benefits of various levels of PEV penetration through 2050 in each of five states, compared to a baseline scenario with very little PEV penetration. The baseline scenario for each state is based on vehicle miles traveled (VMT) and fleet characteristics (i.e. cars versus light trucks, average fuel economy) as projected by the relevant State Department of Transportation and/or the U.S. Energy Information Administration (EIA), in their 2016 Annual Energy Outlook. For each level of PEV penetration the analysis projects potential net benefits to the state’s utilities and their customers, net benefits to PEV owners, and net benefits to society as a whole. 1.1 Utility and Rate Payer Net Benefits Based on assumed future PEV characteristics and usage, the analysis projects annual electricity use for PEV charging (megawatt-hours, MWh) in 2030, 2040, and 2050 at each level of penetration , as well as the average load by time of day (megawatts, MW) from PEV charging. The analysis then projects the total revenue that the electric distribution utilities would realize from sale of this electricity, their costs of providing the electricity to their customers, and the potential net revenue (revenue minus costs). The utilities’ costs of electricity production include the cost of generation ($/kWh); the cost of transmission