Electrification of transport has gained significant momentum in the United States, especially in the state of California. The state, reputed for its commitment to clean and renewable energy has taken several initiatives over the past decade to move towards carbon neutrality. As a part of long-term climate commitments, several large fleet operators have also announced plans to ramp up their investments in electrification. However, to achieve the transport electrification goals of the future, the state needs structured investments and development of proper infrastructure to support electric vehicles. As part of the virtual conference on Fleet Electrification in the US organised by Global Transmission Report, with support from REGlobal, a keynote presentation was made by Clifford Rechtschaffen, Commissioner, California Public Utilities Commission on March 4, 2021. Edited excerpts from the presentation and his remarks are as follows…
California has very ambitious climate goals, including the goal of reaching a net zero emissions economy by 2045. Transportation electrification is a key component of California’s climate change strategy. The transportation sector is a crucial area, since it is the largest source of greenhouse gas emissions (GHG) in the state, contributing to about 40 per cent of the total greenhouse gas emissions. In terms of emission reduction, there has been significant progress in the electricity sector in California as well as elsewhere in the United States. California has reduced GHG emissions by about 50 per cent over the last decade, however progress in transport sector has been slow. This is challenging since vehicle miles travelled have been inching up in California.
As per an executive order issued last year, all new light-duty cars must be zero emissions vehicles (ZEV) by 2035. Further, 8 million light-duty cars are expected to be on the road in 2030. In terms of infrastructure, there will be a need for about 1.5 million public charges for light duty vehicles by 2030. In the medium and heavy-duty segment, the state already has many mandates in place. All new transit buses must be ZEV by 2029. The increasing amount of new Class 2-8 trucks must also be ZEVs. All off-road vehicles and drayage trucks must be ZEV by 2035, wherever feasible. Additionally, all new medium and heavy-duty vehicles are supposed to be ZEV by 2045, wherever feasible. As per projections, there will be 180,000 medium or heavy-duty vehicles on the road by 2030. On the infrastructure side, 157,000 public chargers will be needed for medium or heavy-duty vehicles.
Electric vehicle sales continue to increase. In California, they make up around 9 per cent of new sales. Despite the challenges related to Covid, the sale of EVs continued to grow in the last two quarters of 2020. California represents almost half of the total EV sales across the United States. The cumulative national sales from 2011-2020 have been 1,786,258, while the cumulative sales for California during this period were 803,816. A similar trend has continued since. In the fourth quarter of 2020, there were 88,889 electric vehicles sold throughout the country, of which about 40,000 were sold in California. In 2010 when the ZEV mandate was started in California, there were only three models of electric vehicles on the road in California. Currently, there are over 60 models. There are big companies such as General Motors and Volvo have proclaimed that they are going to become entirely electric by 2035 and 2030 respectively.
In order to meet the ZEV goals, there is a need to set up proper infrastructure for electric vehicles. Instead of single charging homes. That dynamic needs to change for broader penetration of EV charging in California. Almost half of the consumers either rent or reside in multi-unit buildings. There are about 188,000 public chargers that are either installed, are in process or planned along with about 5,000 DC fast-chargers. Thus, there will be a need for considerable investment to achieve the set goals.
Currently, EV adoption is not equal among Californians. It is higher among higher income drivers. Among many factors is the higher up-front cost of EVs currently, as well as the lack of sufficient charging infrastructure in the neighbourhood. As per a study, there are fewer chargers in higher density urban neighbourhoods. California must ensure that benefits from transportation electrification are received by all.
The governor’s 2020 executive order prioritizes transportation electrification accessibility for disadvantaged or low-income communities. As per CPUC’s Environmental and Social Justice Action Plan (February 2019), CPUC-approved programs direct investment to disadvantaged communities as defined by CalEnviroScreen, which considers pollution levels, income and other socio-economic factors.
Utilities play a key role in fleet electrification. Infrastructure investment is very important. There has been a focus on getting the utilities to upgrade the distribution grid to support EV charging. This particularly includes make-ready infrastructure for EV chargers. This includes wiring and conduit on the utility side of the meter as well as panel upgradations, additional wiring and conduit on the customer side of the meter. It is also crucial to get the rates right and minimise impact on the grid.
The energy commission in California estimates that uncontrolled charging just from light-duty vehicles could add 15 per cent to the electricity load in 2030. The commission has authorized over $1.5 billion in utility investments over the past three years with a large part of it being in the light, medium, and heavy-duty segments. GHG reduction and air pollution benefits that come from the San Diego Gas & Electric (SDG&E) programs and the Pacific Gas & Electric (PG&E) and Southern California Electric (SCE) programs for which $107 million and $600 million respectively were invested to electrify transport. Further, emissions for medium and heavy-duty vehicles represent a very significant portion of the state’s NOX and particulate matter emissions. Both the programs also targeted 25 to 40 per cent of the investment in disadvantaged communities.
Rates are going to play a very significant role as fuel saving can be a big factor for choosing an EV. Medium and heavy fleet owners are especially price-sensitive as they manage big fleets and fuel costs are a big part of their operating expenses. These groups often are very calculative about whether it is viable to switch to electricity. There is a statutory directive to reconsider demand charges that commercial and industrial consumers face that are designed to compensate the utility for the cost of designing the grid. For some consumers, however, these charges can be prohibitive and deter EV adoption.
Over the years, the commission has adopted different EV rates to mitigate or eliminate the impact of demand charges and it has done that for the three major investor-run utilities. For PG&E and more recently, for SDG&E, the commission adopted a subscription-based rate which is similar to what is on cell phone bills. Rather than have demand charges, there is a block of load and for anything over that, there will be volumetric charges which are based on use. These charges escalate because it has to ensure that operators minimise their load so that they don’t have to use too much on the grid and impose charges on it.
More generally, the California Public Utilities Commission is focused on making EV cheaper than gas and it is being done through time-of-use rates in California. In most of the states, if one charges the vehicle during off-peak, one can fuel the car at an equivalent of $1.12 or $2.07, which is cheaper than the price offered by conventional gas station in California.
Lastly, vehicle grid integration is an umbrella term for a host of measures and behaviours that integrate EV charging with the electric grid in a better way. It is a crucial step in transportation electrification, and it is important for us to affordably manage the impacts of electric vehicles on the grid. The benefits include the reduction of grid impacts or even creating grid benefit from an additional load, delivering grid services by providing power back to the grid, reducing customer cost of charging, and reducing customer cost of ownership. It will be interesting to see how it progresses going forward.