IEEE Electrification - June 2019 - 49

TOU rates are the
most popular form
of time-varying rates
for both EV and
non-EV customers.

transformers, capacitor banks and/or
voltage regulators for voltage support,
and stationary storage. Table 1 provides the estimated costs for different
grid reinforcement measures. These
estimates must be considered with
caution because they vary significantly from country to country. Still, they
illustrate the order of magnitude of
the required expenditure.
Even though grid reinforcement is the traditional way
utilities deal with anticipated load growth, it is not necessarily the only way to manage the peak-demand increase
from EVs. Other measures include the use of advanced
distribution management systems and the deployment of
smart EV chargers with price signals to properly manage
EV charging and shift the demand to times when the grid
is under less stress. Measures based on TOU rates are discussed in the next section.

Financial Incentives Through TOU Retail Rates
Standard, fixed-price electricity rates do little to encourage
EV adoption or optimize charging times. In fact, such rates
may even discourage efficient charging practices because
customers are apt to charge when it is most convenient to
them rather than when it is most beneficial to the grid. In
contrast, time‐varying rates convey price signals that better reflect the cost of producing and delivering energy at
different hours. Time‐varying rates include TOU rates, critical peak pricing, peak time rebates, and dynamic hourly
pricing. In addition, some utility rates include a demand
charge, which is typically based on a customer's maximum power demand during a month.
TOU rates are the most popular form of time‐varying
rates for both EV and non-EV customers. To avoid increases in peak demands, large utilities in California offer retail
rates that encourage residential customers to charge their
EVs during off-peak hours, namely between 11 p.m. and
7 a.m. For example, PG&E offers TOU tariffs nonspecific to

EVs and two EV-specific rate plans for
residential customers, one combining
EV and household consumption and
the other separating the two and
using a dedicated metering system.
PG&E has enrolled 45,000 customers
in EV rate plans, which accounts for
25-30% of the registered EVs in PG&E's
territory. The current off-peak rate for
electricity is US$0.13/kWh, which is
equivalent to approximately US$1.30/gallon of gasoline.
This enables EV drivers to save a significant amount of
money, as current gasoline prices are around US$3.50/gallon. Hence, PG&E estimated that 80% of EV charging is
done during off-peak hours. Furthermore, customers on
EV rates consumed 10-25% less energy at peak hours
compared to standard residential consumers in PG&E's
territory. Although this might be the result of a small
number of already informed consumers, EVs have the
potential to influence consumption patterns toward more
grid-friendly behavior simply by educating and sending
price signals to consumers. Because managing peak
demand is a key challenge for electric utilities, they need
to provide EV customers with clear electricity price signals
to encourage charging during off‐peak periods. Electric
utilities can achieve high levels of customer enrollment by
defaulting customers onto an appropriate rate (through an
opt‐out design).

EVs as an Opportunity for the Grid
While studies have highlighted how integrating EVs in the
distribution grid affects operations, other studies have
also suggested using the flexibility of EVs to provide services to transmission system operators, utilities, and
renewable energy plants. EVs should not be considered
merely passive loads. Thanks to their energy-storage capabilities, EVs have the potential to provide services beyond
transportation, and these services can go beyond standard
TOU rates. EVs, generally idle more than 90% of the day

TABLE 1. The estimated capital cost for lines, cables, transformers, capacitor banks,

and stationary storage systems from a European study.

Components

Estimated Capital Cost

Medium-voltage overhead lines/cables

US$115,000-US$230,000/km

Low-voltage cables

US$80,000-US$115,000/km

Low-voltage overhead lines

US$35,000-US$75,000/km

Ground-mounted medium/low-voltage transformer

US$16,000-US$40,000

Pole-mounted medium/low-voltage transformer

US$6,000

High/medium-voltage transformer

US$2,000,000-US$6,000,000

Capacitor banks, fixed and switched

US$20,000-US$50,000/MVA reactive

Stationary storage

US$650/kWh

IEEE Elec trific ation Magazine / J UNE 2 0 1 9

IEEE Electrification - June 2019

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