Utilities Want to Provide EV Fleet “Advisory Services.” Should Regulators Approve?

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As the electrification of vehicle fleets goes mainstream, fleet owners are facing a gauntlet of challenges, starting with engaging their electric service provider. The utility response of providing “advisory services” is both creative and presents new challenges for utility and air regulators.

Advisory services, whether offered by utilities or third parties, are designed to educate and enable fleet managers. The goal is to fill the gap between what fleet managers already know about transportation and what they need to know about electric transportation.

RAP recently facilitated a conversation on this topic, inviting a representative of a school district, a utility company, and several third-party transportation service providers to discuss their perspectives and better understand the challenges.

In our webinar, “So, How Does This Work Again? The Role of Advisory Services in Fleet Electrification,” Timothy Shannon, transportation director at the Twin Rivers, Calif., Unified School District; Matt Stanberry, managing director at Highland Electric Fleets; Ann Xu, founder and CEO of ElectroTempo; and Jason Peuquet, strategy and policy manager of clean transportation with Xcel Energy, shared their perspectives with RAP’s Camille Kadoch.

From my perspective as a former utility commissioner, I was asked to serve as the “respondent” and identify the pertinent regulatory issues.

Reviewing Advisory Services Proposals

At first glance, the expansion by utilities from offering a commodity to offering professional services may seem unprecedented. But actually, advisory services are a more visible form of what utilities used to refer to as “marketing key accounts,” a focus that utilities regularly had that helped them stay in touch with sizable commercial and industrial customer segments, and for which they were allowed to recover reasonable expenses.

The point here for regulators is not that this is different, but instead that this is more overt, and coming at regulators in a more robust and comprehensive manner. Advisory services also have a component of market development, a similar quality found in demand-side management programs. Note that third-party support to help utilities better serve fleets is not so different than the energy auditing support that contractors provide energy efficiency programs.

So what have we learned from those experiences, and how do we apply what we’ve learned in this context? This history can help regulators understand how to proceed when a utility says it wants to engage in these ways, that it will incur costs for which it wants recovery, and possibly even that it seeks earnings on those costs.

What is the right regulatory construct to apply here and what needs to change? The slide below provided by Xcel’s Jason Peuquet, does a good job of illustrating the range of comfort to discomfort of the regulatory process in this context. On the right-hand side, regulators are comfortable with rate design. We’ve had a 100-year history with that. Advisory services the new phenomenon over on the left about which we are less certain. The pieces in the middle come with a different levels of comfort.

Meeting Fleet Customers' EV Needs

Source: Xcel

Costs and Benefits

Electrification means that a utility is creating new load. But the regulator still has a key role to determine the answers to two questions: Is the utility proposal creating the kind of load that is appropriate? And is the load being managed effectively from a system benefit perspective? The regulator needs to ask:

  • What is the utility aspiring to do or become?
  • How does this new service change the utility’s current role as a public service?
  • Does investment in advisory services align with existing regulatory principles — i.e., are these investments just and reasonable? And are they least cost?
  • How should costs be allocated — i.e., who pays for them, and why?
  • Do today’s costs deliver future societal benefits, however difficult they may be to quantify?

A narrow interpretation would focus on who is the cost causer and what they should pay. That would put all the burden back on the fleet services. That is fine, and internally consistent in a narrow framework.

But recognizing that we are working in a broader arena, we acknowledge that we are not just making investment to help fleets. We are doing “demand creation.” This puts the regulator in a position to look at today’s costs that are known and knowable, and at future benefits that are speculative and uncertain — although we know they are out there. How do we get comfortable matching today’s costs with future benefits? Those benefits range from consumer savings, to lower-cost grid management, to the many societal benefits like reduced air emissions and improved health outcomes.

21st Century Load Forecasting

At the same time regulators need to recognize that doing this work — letting utilities build load through advisory services — ushers in a new aspect of load forecasting. Fundamentally, the regulator-utility relationship will need to further evolve. Effective regulatory oversight of load forecasting requires greater engagement of the utility, with lines of inquiry such as:

  • Will advisory services requests be strategic and narrow, seeking only to develop certain types of load?
  • What kind(s) of load do you want?
  • Do you just want maximum growth, no matter where it comes from?
  • Where on your system do you want it?
  • At what time of day do you want it?

Requests for approval of advisory services will bring with them a new complexity about understanding load. So, this is not only an inquiry into costs and benefits (both short- and long-term); it is also a challenge into understanding how the utility is changing its relationship with certain customers — from the traditional provision of a commodity, a blended commodity and service-based relationship. The regulator is confronted with understanding that this service-based customer engagement is interwoven into utility decisions concerning capital asset investments in infrastructure. For it is through effective advisory services that these capital assets become viable and reasonable assets.

Finally, in this world where the utility has the onus to make and justify these proposals, it is the regulator’s role to ensure that the utility is clear in what it aspires to become. And this will require even more questions for regulators to raise:

  • How does this service fit in the utility’s portfolio?
  • What is the utility’s longer-term sense of itself as a commodity and service provider?
  • Is the regulatory called to assist them and nudge them on their way? Or on the contrary, is your task to “keep them in their lane?”
  • How am I going to manage the commission’s relationship with that utility into the future?

One way or another, transportation electrification represents a new set of evolutionary forces upon the utility-regulator relationship. Awareness and preparation will make the ride more enjoyable.

Electrifying last-mile delivery: A total cost of ownership comparison of battery-electric and diesel trucks in Europe

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Europe’s increases in online shopping and delivery over the last two years show no signs of waning. Parcel delivery vehicles make up one of the most significant heavy-duty vehicle segments by volume in Europe, recording a market share of 11% in 2020. Fortunately, their predictable schedules and relatively short routes make last-mile delivery vehicles a prime candidate for electrification. In fact, electric delivery trucks will soon be cheaper to use than diesel trucks.  

The International Council on Clean Transportation and RAP break down the various vehicle costs for electric trucks, the energy and network expenses for charging them, and the availability of purchase premiums in six major European cities. In some scenarios, electric trucks reach cost parity with diesel vehicles yet this year. Without the support of these premiums, parity is delayed until 2025 or even 2030 in some cities. 

Based on this comprehensive analysis, the authors conclude that battery-electric trucks are economically viable today, given the currently availability of purchase premiums. Other important aspects to consider when electrifying last-mile delivery fleets include choosing the appropriate battery size and reducing operational costs through smart charging of the vehicles. 

Policymakers have the ability to advance electrification of electric delivery trucks by: 

  • Implementing a national bonus-malus tax scheme to finance purchase incentives for zero-emission trucks. 
  • Imposing emissions charges on all diesel vehicles entering low- and zero-emission zones in city centres. 
  • Deploying ‘smart’ charging infrastructure in urban logistics depots. 
  • Requiring Member States to implement time-varying electricity and network tariffs to ensure affordability for logistics operators electrifying their fleets. 

Electrifying last-mile delivery: Battery-electric delivery trucks soon cheaper to use than diesel trucks in Europe

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Decarbonisation of the heavy-duty vehicle segment in Europe is crucial to curb greenhouse gas and pollutant emissions from the transport sector. Last-mile delivery trucks for city logistics are a promising application for electrification given their low daily mileages and the opportunity to recharge at depots when not in use. However, it is still unclear how these electric delivery trucks compare to their diesel counterparts from an economic perspective, considering overall cost of usage. Moreover, the large-scale deployment of electric delivery vehicles raises questions about how this additional charging demand can be integrated into local power grids and what it will cost. 

A joint study from the International Council on Clean Transportation and RAP quantifies the total cost of ownership of battery-electric last-mile delivery trucks in six European cities and compares it to existing diesel truck fleets. The analysis considers the cost of the trucks, purchase premiums, and a detailed breakdown of charging expenses, including power and network tariffs. The study also provides policy recommendations to overcome the cost difference between these two vehicle types and to foster the use of electric delivery fleets. This fact sheet offers a brief overview of the report’s results.

Securing Benefits from Transportation Electrification

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​In a presentation for the New Mexico Public Regulation Commission’s Transportation Electrification Summit, David Farnsworth discussed the value of electrification as a flexible grid resource as well as the benefits from data tracking and use of advisory services.

Surf’s Up: Catching the IIJA Wave

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I’m learning how to surf. For my birthday, my kids got together and bought me a surfboard. One day last summer I spent about three hours in the waves off of Popham Beach in Maine trying to figure things out. After about 60 attempts — no kidding — trying to catch a wave, I finally caught one. But I had help. I got tips from my kids, and from other surfers about things, like when to paddle hard and where to place myself on the board. When I finally caught that wave, all that paddling and the soreness in my neck and shoulders faded away. I was lifted and carried forward at easily three times the speed while the others alongside me and I were effortlessly propelled forward toward the shore by the energy of that wave.

I was recently reminded of my first day surfing as I read an order from the North Carolina Utility Commission (NCUC) in which it recognized that it too could use a little help better understanding the implications of the wave of federal funding — $1.2 trillion over eight years) — that is about to reach the states.

The Infrastructure Investment and Jobs Act of 2021 (IIJA) makes available billions of dollars for investment in utility infrastructure, including support for electric vehicle charging, smart distribution grid improvements, energy storage, and water system resilience and security. Referring to the IIJA, the NCUC opened its order with a “preliminary conclusion”:

It is in the public interest for the public utilities of this State to fully and carefully consider taking advantage of these available federal grants and loans, in order to promote adequate, reliable, and economical utility service to the citizens and residents of the State.

The order poses basic questions like:

  • Which federal programs could assist utilities in meeting their obligations?
  • What actions does the NCUC need to take to facilitate access to the funds?
  • What other organizations will utilities need to coordinate with?
  • What actions are other state agencies taking or considering?

More than a dozen utilities and others provided comments to the NCUC in this docket. The order not only brought together these parties, encouraging their insights and testing their ideas, but it also created a larger public conversation about the best ways to spend federal dollars for utilities in North Carolina.  It is the Commission’s role to ensure that the power sector develops in a manner that promotes the public good, and the NCUC recognizes that responses to the questions posed in the three-page order will enhance its expertise to best promote that public good.

Other states should consider taking a page from the NCUC’s playbook. It will create the opportunity to be more informed and better positioned to make decisions you very likely will need to make. Why wait until you are constrained by limitations associated with having to review a filing in a contested case? After all, who would be better situated to render a decision: a commission that has reviewed diverse comments and participated in discussions regarding the best ways to use federal dollars for the benefit of its state prior to having to review an actual proposal, or a commission that hasn’t?

Riding a wave requires help. Adopting the North Carolina approach will better position your utility commission to ride the oncoming wave of federal funding for the benefit of your utility sector and state economy.

The time is now: smart charging of electric vehicles (Webinar)

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European policymakers and car manufacturers are increasingly committing to the phaseout of internal combustion engine vehicles. With this shift to electric transport, tariffs and services for so-called smart charging of EVs bring significant value to consumers and the power sector. Now is the time to build a robust regulatory framework to expand the markets for these offerings consistently across the entire continent. 

On 25 May, the Electrification Academy welcomes Jaap Burger and Julia Hildermeier of the Regulatory Assistance Project (RAP) to share the findings of their study The time is now: smart charging of electric vehicles. The authors, who analysed 139 smart charging tariffs and services across Europe, will share: 

  • A brief overview of the benefits of smart charging for users and the power system. 
  • Innovative approaches and best practice examples of dedicated EV tariffs and services. 
  • Recommendations to accelerate the use of smart charging.

For an introduction to smart charging, check out our earlier Electrification Academy webinar with Frank Geerts and Michael Hogan, Smart charging puts the pedal to the metal on emobility. 

We will allow ample opportunity for participants’ questions following the presentations.  


Transit Electrification: Challenges and Opportunities

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In recent years, states embracing transportation electrification have come to realize that different parts of the transportation sector come with their own challenges and needs. Electrifying the transit sector is no different. Here we focus on the electrification of public transit and highlight some of the major topics that both transit agencies and public utility commissions can expect to confront as they endeavor to electrify transit services. The goal of this paper is to help utility regulators begin appreciating some of the fundamental challenges faced by transit agencies as they start to use electric buses, this relatively new electric end use. The paper also seeks to help transit agencies better understand electrification opportunities. Sharing these perspectives should be useful as states seek to secure the benefits of electrifying public transit fleets.

The time is now: smart charging of electric vehicles

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The transition to zero-emission mobility and a decarbonised energy system are best planned in tandem, and electric vehicles will play a key role in both shifts in the coming years. Automakers are already committing to phasing out internal combustion engine vehicles, making Europe’s transport future electric. EVs are more than a cleaner vehicle; they are a powerful resource for consumers and power sector actors. It is critical, therefore, to draw the most value from charging electric vehicles through so-called smart charging. Smart charging means charging a vehicle flexibly to lower costs for EV drivers and grid companies, to accommodate the integration of renewable energy sources and to minimise EVs’ collective impact on the power system.

Now is the perfect time to lay the groundwork for a robust regulatory framework that fosters a market for smart charging tariffs and services. By designing policy measures in a consistent manner across Europe, legislators can help ensure that the EV services market can prosper and capture the benefits smart charging offers. To this end, RAP analysed 139 tariffs and services available across Europe that specifically involve smart charging to highlight best practices and innovative approaches.

To ensure that all Europeans can charge smartly wherever they are on the continent, RAP recommends that policymakers:

  • Make smart charging the default everywhere.
  • Make public charging smart too.
  • Empower consumers to make informed choices.
  • Improve rewards for consumer flexibility.
  • Stack multiple services for smart charging to increase individual and system benefits.
  • Make local grids ‘smart charging ready.’

So, How Does This Work Again? The Role of Advisory Services in Fleet Electrification

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Suppose you are a fleet manager, in charge of your organization’s efficient transportation of people and goods. By necessity, you must be an expert at planning, budgeting, financing, purchasing, operations, scheduling, and the maintenance of vehicles that use fossil fuels. Now, suppose you have an opportunity to electrify your fleet. How can you effectively assess the economics and the complex logistical challenges of such a transition?

The answer is advisory services, assistance offered by utilities or other companies to educate and enable consumers — whether fleet managers or individuals — to make informed decisions. This webinar explores the various needs that advisory services meet and elevates considerations for states as they further electrify their transportation sectors.

We heard the story of fleet electrification from the varying perspectives of a school district, a transportation services provider, a technology company, and a utility:

  • Timothy Shannon, transportation director, Twin Rivers (Calif.) Unified School District
  • Matt Stanberry, managing director, Highland Electric Fleets
  • Yanzhi (Ann) Xu, co-founder and CEO, ElectroTempo
  • Jason Peuquet, strategy and policy manager, clean transportation, Xcel Energy

Regulators, meanwhile, will increasingly encounter advisory service program requests from utilities and a greater presence of third-party providers offering these services. How can they approach these requests and make sure that they are consistent with state policies? RAP’s Jeff Ackermann, a former utility commissioner, acted as respondent to address some of these questions. David Farnsworth and Camille Kadoch moderated the session.

Europe needs smart charging of all EVs now

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A recent pan-European survey found that consumers prefer electric vehicles (EVs) over conventional cars. Last month’s EV sales surpassed those of diesel models in Europe for the first time. Charging the growing number of EVs at our homes, workplaces and public parking lots ‘smartly’ is essential to lower the cost of integrating electric vehicles into the power system and capture the numerous benefits EVs offer.

Smart charging of an electric vehicle means shifting charging to a time when it is cheapest for consumers and best for the grid. This managed charging unlocks broader benefits, such as efficient grid operation and integration of increasing shares of renewable energy, by adjusting the demand for charging to the actual supply. Europe is also seeing a growing market for digital smart charging services — services that will improve its use of power systems.

By contrast, without smart EV charging, millions of euros will be lost in costly, unnecessary power system upgrades, as recent studies from France and Germany suggest. Several legislative proposals in the Fit for 55 package have opened a critical window of opportunity to ensure smart charging is the default choice, thus saving money, energy and emissions.

Without smart EV charging,
millions of euros will be lost in costly,
unnecessary power system upgrades.

First on the agenda is a regulation that will establish a European framework for electric vehicle charging infrastructure on public roads, the Alternative Fuels Infrastructure Regulation. The EU Parliament and Council will soon vote on the proposal. By providing a public charging network Europe-wide, this regulation can boost the market for smart charging services, keeping pace with the benefits created by rapidly growing shares of EVs. For this to happen, the regulation needs to require smart charging capabilities at all charging points as well as retrofits of older ones.

Smart tariffs to complement technology and infrastructure

Being able to shift EV charging to cheaper hours can help consumers save hundreds of euros a year through a growing selection of smart tariffs and services. And smart charging is easy: Based on time-varying price signals, smart charging devices and apps determine when and at what speed EVs charge. Drivers do not need to compromise their mobility needs, as they can override these settings at any time. One powerful grid benefit of consumers charging at least cost is the use of renewable energy that might otherwise have been curtailed, thereby boosting the use of clean resources. Europe’s recent electricity reforms have recognised this correlation by mandating that Member States offer more smart tariffs to consumers. Transport legislation needs to follow: The time is now to build on the benefits of more dynamic tariffs and require smart charging infrastructure to be the default, so that smart charging services can prosper.

Transport legislation needs to make charging smart, wherever you go

To make sure smart charging is the default option for all EV drivers in Europe, all charging points need to be ready for smart charging services with smart meters, digital connectivity and third-party access. These requirements should apply to all public charging points covered by the new Alternative Fuels Infrastructure Regulation, including high-power chargers and not only the ‘normal,’ lower speed chargers as the EU Commission suggests in its legal proposal.

All chargers, slow and fast, for cars and for trucks, are easier to use and integrate into the grid if they are smart. This allows charging vehicles to adapt to varying grid conditions, the actual available grid capacity and local renewable energy production. As the charging market grows, intelligent fast chargers will also make it easy to share available power among groups of chargers in hubs. As a recent study on truck charging along motorways shows, managing power flows smartly is key to reducing costs without affecting service levels. Setting smart charging requirements through the Alternative Fuels Infrastructure Regulation for all chargers lays the foundation for market growth for these and other innovative solutions.

The EU Commission rightfully proposes that existing chargers also need to be retrofitted accordingly. Ensuring existing chargers can also deliver the value of smart charging services offers consistency across the pan-European charging network.

A coherent framework for a smart clean transport eco-system

The importance of equipping charge points to deliver smart charging services also extends to private infrastructure and buildings, as most EV drivers will charge at home or at work. By increasing ambition in the Energy Performance of Buildings Directive and the Renewable Energy Directive, decision-makers can help complete the smart charging landscape.

European decision-makers will soon consider requirements in Europe for equipping buildings and homes with charging points or, at the very least, pre-cabling them for upcoming infrastructure needs. Sufficient ambition in the upcoming Energy Performance of Buildings Directive can extend this obligation to all home parking spots, making all charging equipment smart and, therefore, future proof.

A solid definition of what smart charging can offer to Europe’s future energy markets, grids and consumers is crucial to make smart charging the default choice. The Renewable Energy Directive proposal makes a fair start, but an earlier version of the Directive’s Article 20 offered greater recognition of the potential of smart charging to create societal benefits.

Harmonising smart charging at work, at home and at public charging stations creates an EU-wide digital market for smart charging services. That makes it easier to reap the benefits of smart charging, not just for EV drivers, but also for energy markets and for grid operators that can use the inherent flexibility in EV charging to run their grids more efficiently. While revising these files, it is important for lawmakers to pass on the benefits of smart charging to the actual end user, the EV driver. Focus on the user’s interests is crucial. This means increasing customer choice through market mechanisms and building trust, as opposed to models where EV charging is fully controlled by grid operators, such as it is currently the case in Germany.

The time is now

E-mobility should be accessible to all, wherever one is in Europe. Members of Parliament and other stakeholders have the chance to amend the charging infrastructure laws under review to make sure benefits of smart EV charging reach all, at minimal cost, and thus accelerate the energy transition. Creating a European market for smart charging services and matching user preferences to energy system needs will drive down costs for all. These developments will, in turn, persuade even more consumers to switch to electric, turning petrol and diesel vehicle sales into relics of the past.

A version of this article originally appeared on Euractiv.

Photo: Ivan Radic via Flickr.