The UnXplained Opportunity of EVs and Renewables for Utilities

Synopsis

The EV initiative is real and progressing. Utilities are wise to understand the potential impacts and implications to their business. Despite initial concerns, there may be opportunities that avoid the need for massive grid capital expenditure. It is feasible to suggest that power providers can be players and revenue participants as an overall systems integrator while leveraging third party financing. This can facilitate adapting to and managing an EV functionality while mitigating expensive infrastructure upgrades that are likely to prove to be a moving target. A case study from a Utility that is being proactive with the EV situation illustrates how this approach works.

Introduction

A popular show, The UnXplained, hosted by William Shatner, is a one-hour, non-fiction program that delves into some of the world’s most compelling, peculiar, and seemingly unsolvable mysteries. Interestingly, the aggregate milieu of climate change, sustainability, global warming and how business can respond but, hopefully, thrive, is arguably even more mysterious, challenging, and, often times, bewildering. Consider the dilemma of EVs and sustainability. Narratives, particularly concerning the impact of EVs on utilities and on EVs in general, are often confusing that viscerally either highlight the negative or positive features without attempting to find a medium. Here is the key question.

"Are EVs an opportunity for utilities or do they only represent a costly problematic distraction?"

That's what can be elaborated, clarified, and quantified.

The current reality is that the impact of EVs on utilities is probably more acute and potentially more palpable than some may think. For example, Florida Power and Light (FPL) may likely typify the perspective of many utilities when it comes to EVs. They note in their FPL Ten Year Power Plant Plan 2022-2031 of 2021 that

"Projected increases in electric vehicle (EV) adoption and FPL’s current load forecast includes a higher projection of EV adoption than the load forecast that was used to develop the resource plan presented in the 2021 Site Plan and that both the higher MWh and peak hour MW impacts have resource planning implications."

Furthermore, insofar as the EV initiative is concerned, "The die is cast." as Julius Caesar famously said. It is a reality that is happening and progressing as evidenced by industry metrics such as companies aggressively jumping into the fray like Shell buying the EV charging network, Volta, and the proliferation of a number of other charging companies.

It is not a question of whether, or not, the EV revolution will occur. It will. As the saying goes, "Lead, follow, or get out of the way." The challenge and opportunity is how can utilities efficiently participate and prosper in this rapidly changing business climate.

Background

The background consists of what is the attraction or, even more cogently, the calculus, of the value proposition, both sustainably regarding climate change and economically that are potentially inherent with EVs. Another component involves the potential impact that massive deployment of EVs will have on utility grid operation and the need for massive capital improvements to accommodate EV energy requirements. Finally, there are potentially approaches that are feasible that can either economically ameliorate the potential impact of EVs on grid operations or even better, empower utilities to be proactive and participate and profit in this endeavor.

The EV Value Proposition

A key aspect that needs to be understood is that EVs are primarily an energy efficiency play.

Inman did a detailed analysis of energy needs for gasoline cars and EVs. It showed that gasoline vehicles need 263 BTUs per mile while EVs only require 146 BTUs per mile. Substituting EVs for gas vehicles potentially can achieve an 11% reduction in US energy footprint. It should be noted that other sources provide different values for both EVs and gasoline cars. Therefore, detailed analyses should have a range for these values.

It is difficult to find any sectors of the economy where such a large reduction in energy footprint for the US is possible with one focused and profitable initiative. Interestingly, the impact on CO2 emissions is even more dramatic, particularly if one uses a renewable energy source such as RNG as an energy source, the US can reduce US GHG emissions by a colossal 25%.

Monetization of CO2 credits even at modest pricing of $15/ton of carbon dioxide would potentially realize about $11 billion in revenue annually. And the rationale for these credits is solid in comparison to some other carbon credit scenarios.

Factors Impacting EV Deployment on Utility Grid Operations

The EV transition will undoubtedly bring a mixture of impacts that need to be addressed. However, it also provides opportunities for enhanced business that enables Utilities to provide more products and services to their customers and to generate revenue. Here are some considerations:

EV Adoption Will Vary Regionally and Locally

EV adoption will probably vary depending on region and locality. EV proliferation in specific geographies are contingent on EV sales. It makes sense for Utilities to coordinate with EV manufacturers on sales forecasts.

Integration of Renewable Energy into the Grid

First, it is important to note that, even though it seems obvious, Utilities SHOULD NOT simply

Do renewables for the sake of doing renewables.

It is essential that any deployment of renewables be effectuated so that Utilities efficiently integrate renewables into aggregate grid functionality probably using a semi-distributed resource model. Some areas of the service territory may be more favorable to renewables than others.

Charging Station Accessibility and Strategy

Charging stations get prioritized because they are the “tale that wags the dog” concerning the overall calculus of merging an EV platform functionality into existing grid operations.

It makes sense that Utilities utilize existing charging companies for devising both strategy and implementation while the Utility function as the overall systems integrator.

Third Party Financing of Initiatives Related to Grid EV Adoption

It was reported that Electrify America is investing $500 million in charging station infrastructure. More compellingly, however, they are creating a nationwide public EV charging network. Information on location of charging stations, pricing, how the charging network functions and other aspects of using their services are provided on their website.

Clearly, the issue of requirements for enhanced grid functionality and concomitant necessary upgrades must still be addressed. However, by tracking projected EV sales geography and charging station deployment, it should be feasible to glean reasonable insight into the needs for these upgrades.

Alternative Approach to Mitigate EV Impact on Grid Operations

According to Climate Nexus, "Regulators and utilities understand what’s at stake, and are transforming U.S. power grids to use electric vehicles as a two-way power resource." Despite this flowery and upbeat rhetoric, Utilities likely perceive that the transition scenario is in reality more of a fiscal and managerial Pandora's box. And it is essential that they avoid being at the whim of third parties.

Consequently, it is in the interest of Utilities to forge a path forward that positions them with greater decision-making control as an overall systems integrator in the EV adaptation process.

Systems Integration Approach - Example Case Study

The City of Fort Myers in Lee County in Florida Citizens living in Fort Myers has a population of approximately 760,000. Most of the electricity is supplied by the Fort Myers Powerplant operated by Florida Power & Light (FPL) (shown above). It is notable that FPL has taken a proactive posture regarding the emergence of EVs.

FPL is acting as a systems integrator and have astutely recognized the added value of using renewables, which in this case is solar, to generate the energy required for EVs. Similarly, it has also been shown that using RNG to generate electricity for EVs can profitably reduce US GHG emissions by 25% while cutting the Nation's energy footprint by 11%.

The next step is to quantify the potential impact of further EV proliferation on powerplant operations and/or the requirement for supplemental energy production to address EV energy demands and mitigate impact to main power plant. Using existing data and projections for increased EV activity in Lee County, one can assemble a graph that examines various EV propagation scenarios and estimated EV energy requirements as shown below.

The data for the graph shown above are generated by determining the number of people that are in the service area and making assumptions for:

• Number of drivers already using EVs, 3,297
• 10% of drivers with EVs, 66,048
• 20% of drivers with EVs, 132,096

FPL customers actually consume 8,922,360 MWh per year or 24,445 MWh. A simple analysis shows that the gross impact on base load powerplant demand. Assuming a case where the EV drivers are driving 100 miles per day results in a daily percent increase of:

• 0.06% for the current number of EV drivers
• 1.16% for 10% of all drivers using EVs
• 2.31% for 20% of all drivers using EVs

The above analysis is straightforward and provides a very preliminary quantitative indicator of the potential impact on grid energy base load requirements.

The challenge now is how to quantify the impact of EV energy on power plant requirements for various scenarios to facilitate the design and implementation of strategies for accommodating EV energy on a grid.

Peak Load and Base Load Considerations

For power plants, it is common to think in terms of based load demand and peak demand. It is sometimes convenient to think in terms of a peak load factor which is the product of the highest peak load divided by the base load. Consider the graphic below.

This figure is courtesy of Latest Trends in Electrical Engineering. For the above graph, the peak load factor is approximately 2.94 (53/18). An additional analysis that calculates the resulting peak load factor when EV energy requirements are added to the mix and compare it to the value shown in the figure above.

Estimated EV energy requirement are shown in the figure titled, “Impact of EVs on Fort Myers, Fl FPL Plant.” For example, if one conservatively assumes that:

• The FPL Fort Myers plant is a 1,721 MW gas plant with a base load of 24,445 MWh based on recent customer consumption and with a total production capacity of 41,304 MWh.
• 10% of drivers have EVs & drive 60 miles/day, EV energy ~ 290 MWh/day
• EV energy plus base load = 290 + 24445 = 25,025 MWh/day
• The peak load factor with these assumptions is 41,304/25,025 = 1.65

Peak load factor analyses will suggest that the Fort Myers is potentially operating with a lower peak load factor which is exacerbated with increased EV energy drawing on the grid. Consequently, it is useful to consider other operating scenarios that can enable the facility to proactively address the EV situation.

Renewables Production in a Peaking Plant Role

Conceptually, the Utility-EV scenario may be somewhat analogous to a peaking power plant or peaker plant that generally runs only when there is a high demand. The reality is that the power plant has a base load while the EV energy demand represents an assortment of energy draws of peak loads that were not factored into the original power plant design. Similarly, EVs were barely realizing commercialization when many power plants were being designed, installed, or upgraded. If it is assumed that renewables are the preferred energy source for EVs, then renewable energy production can be primarily geared to meeting EV energy requirements.

It was previously noted that FPL is looking at solar as the renewable energy source for EV energy. However, there are several renewable options that are also worth considering. The table below shows a comparison of solar, wind, RNG made using biomass feedstock, nuclear, and hydro. It is interesting to note that obtaining rigorous financial and economic data for most renewable technologies is quite challenging. Solar, Wind, and Hydropower all have challenges with egregious land requirements, while Nuclear is much more favorable in this regard.The data in the table clearly show that RNG (50% < IRR) that is manufactured using biomass as a feedstock offers a compelling alternative to other renewable platforms. This technology architecture is capable of 90% conversion rates and leverages the use of existing infrastructure that are in wastewater treatment plants, either existing anaerobic digester operations, tanks,

TABLE 1. Comparison of Various Renewable Energy Technologies

Key Links for Table 1: Solar (10% ROI) , Wind (EU Comments), RNG (50% < IRR), Nuclear (Nuclear economics),and Hydropower (No CAPEX data)

and/or both to process biomass to generate RNG or renewable natural gas with robust conversion rates in the 90% range.

It is notable that RNG can also be blended in a 50:50 mix with natural gas to effectively double the aggregate renewable energy output. In addition, value-added products such as green ammonia, other green fertilizers, and the production of large amounts of water creates additional revenue streams.

Summary and Path Forward

The looming reality concerning the impact of EVs on utilities is the latest entree to the aggregate milieu that encompasses climate change, sustainability, global warming and how businesses can best respond, and, hopefully, thrive. The writing is clearly on the wall. The key question is:

"Are EVs an opportunity for utilities or do they only represent a costly problematic distraction?"

There are two key components for the calculus of assessing and mitigating the impact of EVs on utilities. First, it is essential to understand, track, and hopefully predict EV market penetration and associated energy consumption requirements. Secondly, utilities and other associated business entities need to formulate efficient strategies to meet EV energy demands that ideally minimize or eliminate impacts to existing grid operations. One approach is to think of the Utility-EV scenario as a peaking power plant or peaker plant situation that is utilized to address excessive demand. This situation presents an opportunity to utilize renewable energy to meet EV energy demands which enables utilities to bundle renewable initiatives as an integral part of addressing the solution.