Current time-of-use rates encourage consumers to switch electricity use to nighttime whenever possible, like running the dishwasher and charging EVs. This rate structure reflects the time before significant solar and wind power supplies when demand threatened to exceed supply during the day, especially late afternoons in the summer. Today, California has excess electricity during late mornings and early afternoons, thanks mainly to its solar capacity. If most EVs were to charge during these times, then the cheap power would be used instead of wasted. Alternatively, if most EVs continue to charge at night, then the state will need to build more generators — likely powered by natural gas — or expensive energy storage on a large scale. Electricity going first to a huge battery and then to an EV battery loses power from the extra stop. At the local level, if a third of homes in a neighborhood have EVs and most of the owners continue to set charging to start at 11 p.m. or whenever electricity rates drop, the local grid could become unstable.
Another issue with electricity pricing design is charging commercial and industrial customers big fees based on their peak electricity use. This can disincentivize employers from installing chargers, especially once half or more of their employees have EVs. The research team compared several scenarios of charging infrastructure availability, along with several different residential time-of-use rates and commercial demand charges. Some rate changes made the situation at the grid level worse, while others improved it. Nevertheless, a scenario of having charging infrastructure that encourages more daytime charging and less home charging provided the biggest benefits, the study found. “The findings from this paper have two profound implications: the first is that the price signals are not aligned with what would be best for the grid — and for ratepayers. The second is that it calls for considering investments in a charging infrastructure for where people work,” said Ines Azevedo, one of the co-senior authors of the study.
“We need to move quickly toward decarbonizing the transportation sector, which accounts for the bulk of emissions in California,” Azevedo continued. “This work provides insight on how to get there. Let’s ensure that we pursue policies and investment strategies that allow us to do so in a way that is sustainable.”
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