Electric vehicle use is rising. But who should be at the wheel during the transition?

With new laws that aim to reduce carbon output from power plants now in effect, Virginia officials are laying the groundwork to tackle a much more complicated source of emissions: vehicles.

Almost half of the commonwealth’s carbon emissions can be traced back to transportation — trucks, airplanes and, of course, cars. But unlike the electric grid, which is controlled by a few big players, vehicular travel is intertwined with the lives and livelihoods of millions of Americans. That presents policymakers seeking to slow climate change with a daunting task: persuade the ranks of citizens to change their individual behaviors or attempt to fundamentally remake the contours of a geographically sprawling society that for decades has been reluctant to invest in mass transit. 

Electrification has proved a popular way to thread that needle. For drivers, electric cars can be swapped for gasoline-powered vehicles fairly seamlessly. Advancements in battery technology are driving prices steadily downward. And the prospect of a growing economic sector is particularly attractive at a time of looming recession. 

Most importantly, if the goal is to reduce carbon emissions, they work.

“An electric vehicle in Virginia is something like 75 percent cleaner than a gasoline-powered car,” said Chris Bast, deputy director of the Virginia Department of Environmental Quality. “Even in the very coal-heavy areas of the South, an electric vehicle, plugging in, is better than running on gasoline for the climate.”

More drivers are making the switch: In 2017, according to the Virginia Energy Plan, there were about 11,000 electric vehicles in Virginia; at the end of June 2020, that number had risen to more than 17,000, according to data provided to the Mercury by the Department of Motor Vehicles. A study commissioned by Dominion Energy, the state’s biggest utility, found the number of non-hybrid EVs in the utility’s territory alone could reach 26,000 by 2025 and 169,000 by 2030. The Commonwealth Transportation Board has estimated that by 2040, almost half of all vehicle sales in Virginia will be electric. 

But electrification itself can’t just be plugged into the existing system, and as Virginia officials prepare for an expected influx in electric vehicles, they will have to wrestle with who will take the wheel in the transition: utilities like Dominion and Appalachian Power Company, a competitive market of private companies and investors or some combination of both.

“What we’ve seen with respect to broadband is that competition has done a great job where it is profitable, and we have none in the rural, less dense areas,” said Judge Judith Jagdmann of the State Corporation Commission in an exchange with Sierra Club attorney Nathaniel Shoaff during a July 8 hearing on electric vehicle deployment. “Where do you see the line between competitive charging and perhaps utility charging?”

That question, Shoaff responded, “gets to a fundamental part of what states all across the country are wrestling with, which is how to balance that utility participation.”

‘Not a competitor’

The SCC, the powerful three-person body that regulates all Virginia utilities, doesn’t normally wade far into transportation issues outside of toll roads and car insurance. But this spring, the judges opened up a special case docket on electric vehicles, noting that their rising deployment “presents several issues that potentially could affect the affordability and reliability of electricity service delivered to consumers by regulated utilities.”

Among the 16 questions they sought to answer: How is demand on the grid expected to grow due to electric vehicle charging? What’s the current state of Virginia’s charging infrastructure? How can special electricity rates be designed to incentivize their use, particularly during off-peak hours? 

And, in a question that has sparked lively interest, “Is the market for providing public charging stations competitive or should it be considered a natural monopoly with service provided exclusively by regulated utilities?”

For most participants who filed responses in the case and took part in the July 8 hearing, the answer to the natural monopoly question was no. Today there are more than 600 public charging stations in Virginia, but with rising EV sales expectations, that number is expected to skyrocket.

“There appears to be a great deal of agreement among the parties that there is a role for utility ownership, whether that be in multifamily-unit housing, whether that be in underserved rural areas,” Carrie Grundmann, an attorney for Walmart, which has installed more than 100 EV charging stations at locations across the U.S., told the commission. “We think the best way to start is to look through where the pockets and gaps may be in competitive ownership.”

When it comes to charging stations, the utilities themselves seem amenable to playing a role in the market but not controlling it. 

“We see our role as not being a competitor in that market but being complementary to that market,” said Nathan Frost, Dominion director of new technology and renewable programs, at the July 8 hearing. 

Competition should remain a feature of charging station development, Virginia, Maryland, and Delaware Association of Electric Cooperatives attorney Sam Brumberg agreed. But, he added, “utility ownership is not inappropriate and should be allowed, especially in rural or remote areas where vehicular traffic may not support numerous charging stations.”

An opportunity for the electric grid

Instead, utilities are focusing primarily on what rising EV use means for the broader electric grid — a development that Dominion said in a filing it does not see “as presenting ‘issues’ in a negative sense, but instead as presenting opportunities.”

As electric vehicle use increases, so too does demand on the grid. Nevertheless, many electrification advocates and the utilities themselves say that when EV use is coupled with electric rates that encourage drivers to charge their cars during hours when demand is low, the whole system sees benefits.

“Just as importantly, additional off-peak usage allows Appalachian Power to make more efficient use of the existing grid, placing downward pressure on overall rates to the benefit of all customers,” said Daniel Francis of American Electric Power, the parent company of Appalachian Power. 

Regulators have already approved pilot programs for such rates, broadly known as time-varying rates, for both Dominion and Appalachian Power, although neither focuses specifically on electric vehicle use.

More promising for the future is the role electric vehicles may one day play in storage. 

Among the many goals of the recently enacted Virginia Clean Economy Act is a significant bump in the state’s storage capabilities — an increasingly important component of a clean energy future that relies more heavily on intermittent energy sources like wind and solar that can’t be turned on and off in response to customer demand. Storage can help fill gaps in supply, providing energy during renewables’ down times and avoiding the need to fire up gas and coal plants when there are shortfalls.

Increasingly, electric vehicles are being seen as part of this picture. Technology known as “vehicle-to grid” is under development that could allow utilities to store unused energy in electric vehicle batteries and then draw it back into the grid at times of peak need. Dominion, following other school districts around the nation, last year announced a similar plan involving electric school buses, although legislators struck down several proposals that would have given the utility a broad mandate to pursue the program. 

Still, the “bidirectional” use of electric vehicles to both charge from and charge the grid are years out. And some remain skeptical about how much of an effect they will ultimately have.

Vehicle-to-grid technology may prove of “extremely limited” use and could face resistance from drivers, Brumberg wrote in comments on behalf of the electric cooperatives.

“Individual residential EV users may not want the battery drained by the utility, leaving the customer needing to charge at a different time,” he said. “Drivers want to have the freedom to leave at a moment’s notice. To extend this analogy, would we today consider having gas siphoned from our individual cars unilaterally? Likely not, though perhaps.”

Early days

Regulators won’t have to answer all of their questions about electric vehicles immediately. But the docket opened this spring indicates their belief that sooner rather than later they will face a host of policy issues related to EVs. 

“I think it will be helpful next legislative session when there’s bound to be more questions related to utility involvement in electric vehicles and electric vehicle infrastructure,” said DEQ deputy director Bast. 

The 2020 session saw only small movement on electric vehicles, with legislators devoting most of their attention to power generation and utility companies. Among the laws that did clear the General Assembly was one ordering a study and working group on the feasibility of an electric vehicle rebate program. This spring also saw regulators approve Dominion’s “Smart Charging Infrastructure Pilot Program” that, among other things, offers rebates for charging station infrastructure as a way to encourage their development; another EV pilot has been proposed by Rappahannock Electric Cooperative and is under review.  

Still, electric vehicles are coming down the highway in ever-increasing numbers, Philip Jones of the Alliance for Transportation Electrification warned the SCC last week. 

“You should get ready for that,” he said. “Because I don’t think you want to be in a position where you don’t have the infrastructure in place, people are buying electric vehicles in the commonwealth and you’re not ready.”