The allure of electric vehicles (EVs) has never been stronger. EVs have zero tailpipe emissions, offer lower operating costs than conventional gasoline-powered vehicles and now come in a range of sleek models. With the tailwind of private sector initiatives such as the international EV100 program and the Corporate Electric Vehicle Alliance behind them, electric vehicles are now being integrated into a range of fleet types — including urban delivery services, public school buses, ride-hailing companies and, most recently, the U.S. federal fleet.

This shift is in line with the Paris Agreement: alongside other measures, the global stock of EVs needs to grow by a factor of 22 through 2030 for global temperature rise to stay below 2°C. However, it’s not just more EVs we need but, critically, cleaner and more efficient electrical grids.

Over the next decade, electricity demand from electric vehicle fleets in the United States alone is expected to reach 230 terawatt-hours per year — more than 5% of net U.S. power generation in 2019. Without careful charging management, local utilities may be forced to match this new energy demand by introducing additional, and potentially dirty, power generation resources. Additionally, fleet operators may be left scrambling to cover costly upgrades to distribution infrastructure and hefty utility bills from vehicle charging.

Avoiding these pitfalls will require managed charging, also known as smart charging. The term broadly refers to any technology or policy designed to mitigate the impacts of EV charging on the electrical grid and minimize costs by controlling the time, power and location of charging. If managed charging is implemented correctly, EVs can even become energy storage assets to improve grid functionality and support the growth of renewable energy.

Here are three reasons why smart charging technology and policies are essential for an affordable and sustainable EV transition in the U.S.:

1. Making grid connection easier and cost-effective

The scale of electricity demand associated with transportation electrification has become relevant to near-term power grid infrastructure planning just in the last decade, with the release of mass-market EVs such as the Nissan Leaf and Chevy Volt. As a result, most of the distribution infrastructure that is installed today was not built to support mass EV charging.

Vehicle fleets, which commonly park and fuel at central depots, can potentially overload the local power distribution grid depending on how they are charged. Fleet parking facilities originally built to support the electrical load from lighting and office space will eventually need to accommodate additional power demand from fleet charging. And if the energy needed for EV charging exceeds the capacity of local distribution infrastructure, costly upgrades to that infrastructure could be required (replacing a small transformer alone could cost over $23,000 in hardware and labor). For fleet managers and utilities, smart charging can be a beneficial tool to help avoid or defer the need for these grid upgrades, reducing the complexity and cost of grid interconnection for EV fleets.

For example, when United Parcel Service (UPS) began to electrify the company’s Central London delivery fleet in 2013, efforts were constrained by the capacity of the local electric grid and pre-existing power demand at the facility. The company initially switched 10 of its delivery trucks to electric models and purchased an upgraded electrical connection from the utility to accommodate more electric delivery trucks at the depot. By 2018, the depot had reached this limit. To avoid another round of costly upgrades, UPS turned to managed charging to control when charging occurred and how much power each vehicle could use. This ultimately helped spread demand for energy throughout the night, avoiding the need for additional capacity upgrades.

Through managed charging, UPS found the depot had overestimated the scale of the distribution upgrades originally made, and a lesser upgrade could have been enough to accommodate the full fleet.

Had the flexibility of smart charging been considered from the outset, fewer distribution upgrades would have been needed, meaning even bigger savings on avoided grid infrastructure costs.

2. Controlling utility bills more effectively

Even if existing local distribution capacity can accommodate EV charging, managed charging can still provide considerable benefits by enabling fleet operators to control consumption throughout the day. This can help customers avoid demand charges — a utility rate structure determined by a customer’s period of peak energy consumption within a (generally 15-minute) interval over course of the month.

For direct current fast chargers, for example, which are necessary to charge heavy-duty fleets and use high power volumes, demand charges can be significant, especially for fleet operators who are accustomed to limited electricity demand at their facilities. In some cases, depending on daily usage patterns and local utility rates, demand charges can make up 90% of operational costs if charging is unmanaged.

When the Massachusetts Department of Energy Resources (DOER) implemented an electric school bus pilot to assess the feasibility of adding three electric buses in 2016, the charging equipment used wasn’t capable of managed charging. The inability to vary electricity demand and adjust when charging sessions occurred resulted in demand charges equivalent to 36% of the pilot’s total energy costs for the year — an additional cost that smart charging could have prevented altogether.

Such smart charging enables EV fleets to easily manage utility bills by optimizing power consumption while the fleet continues to operate on schedule. Charging infrastructure is also a more flexible asset, helping to future-proof for unforeseen changes and take advantage of reduced power rates available through a utility.

3. Supporting new renewable energy capacity and integration

Solar and wind energy are examples of intermittent renewable sources, meaning their generation output fluctuates during the day based on the availability of sunlight and wind resources. To better align charging and renewable energy generation, customers can take advantage of time-of-use rates — a behavioral form of charging that provides customers with electricity savings when charging happens when renewable energy is abundant.

In April 2018, customers of Pacific Gas & Electric and BMW North America agreed to delay EV charging for up to an hour each day to better align with times when renewable energy was available on the grid, as part of the ChargeForward managed charging program. In exchange, customers received lower electricity rates and consumed an additional 1,200 kilowatt-hours of renewable energy per EV per year — the equivalent of 3,500 to 5,000 miles of additional zero-carbon travel.

EV batteries can also help utilities and other system operators integrate more renewable energy resources onto the grid and address associated intermittency concerns. In areas with higher levels of renewable energy access, such as California, charging EV fleets at specific times can create an important source of flexible energy demand.

Instead of curtailing excess solar energy during peak generation periods, for example, it can be stored in EV batteries and used later — not only by the vehicle itself but potentially by other consumers through vehicle-to-grid (V2G) technology. This advanced form of managed charging technology allows electricity to be pushed from EV batteries back onto the grid at specific times, essentially enabling EV fleets to function as giant energy storage systems.

How to Incorporate Managed Charging into Fleet Electrification

As fleets electrify, managed charging should be incorporated by operators and utilities from the start to maintain low operational costs and support both grid flexibility and sustainability. Fleet operators can kickstart this process by:

Quantifying grid impacts: Charging loads will vary dramatically depending on operational requirements such as fleet size, vehicle class and operating schedule. Quantifying these impacts will allow fleet operators to compare electricity demand with local distribution capacity to identify how smart charging can help them avoid having to make distribution infrastructure upgrades.

Working with utilities: Involving utilities in the planning process can shed light on how fleet charging will interact with current electric rate structures. In some cases, utilities have proposed alternative rate structures that reduce or eliminate demand charges for EVs. Utility engagement also provides opportunities to explore how to support renewable energy integration, the potential for V2G and how other smart charging polices could be incorporated.

Engaging with manufacturers: Not all charging equipment has the right hardware and software to support managed charging. Fleet managers should identify potential charging system manufacturers that can enable smart charging and determine how that equipment can support the needs of their fleet.

Exploring EV fleet service providers: As interest in electrifying commercial fleets has grown, several companies provide charging as a service. These companies offer fleets a one-stop shop for navigating the electrification process, such as implementing managed charging systems and facilitating relationships with charger manufacturers, software vendors and utilities.  

With a massive uptick in electrification just around the corner, the range of benefits smart charging can enable for these fleets is vital for an affordable and sustainable EV transition, one that will require collaboration, planning and innovation.

To learn more about WRI’s work to decarbonize and electrify the transportation sector, visit www.wri.org/initiatives/electrifying-vehicles.

Editor’s note: UPS Foundation is a WRI donor. The company did not influence the content of this article.

This article was originally published on WRI’s Insights.

Emmett Werthmann is a Research Analyst in Electric Mobility at WRI Ross Center for Sustainable Cities.

Norma Hutchinson is a Research Analyst for the Energy Program at World Resources Institute.