A regulatory roadmap for Vehicle Grid Integration

SEPA, Dec 2020

As EV deployment expands, Vehicle Grid Integration will be essential to
providing benefits for all customers while avoiding unintended consequences. While EV penetration is currently low in much of the country, we know that the day is coming (and in areas of high penetration, may have already arrived) when a more sophisticated approach such as VGI will be required.

In order to prepare for that future, we need to start laying the groundwork today. Regulators are essential to enabling the necessary and appropriate investment, and providing incentives to utilities to experiment and test certain use cases, deploy technology solutions, and solve problems
related to standards and interoperability.

At a minimum, EV charging infrastructure deployed with the support of utility investments should consider a utility’s long-term VGI plan to ensure that devices installed today will support capabilities required in their lifetimes37 to avoid stranded assets or early replacement.38 This occurs through standardization and support for open 37 EVs have a comparable, if not longer, lifespan than internal combustion engines and EV charging equipment is designed for ten or more years. This occurs through standardization and support for open communication protocols.

Key Takeaways

  • Without a thoughtful approach to encourage grid-optimized charging, the predicted rapid growth in EV adoption could lead to costly distribution system impacts and infrastructure upgrades for utilities, while leaving significant beneficial load management value untapped.
  • Utilities’ major concerns with respect to regulatory approval of VGI are primarily due to benefit-cost analysis (i.e., the need and their ability to demonstrate that benefits exceed costs) and regulatory and stakeholder VGI knowledge.
  • Utilities and regulators often start the VGI journey with passive strategies, such as EV-specific time-varying rates, which are a way to encourage positive charging behavior. To avoid future impacts of timer peaks where numerous customers begin charging their vehicles at the start of the off-peak period, utilities could supplement time-varying rates with an active load management program (i.e., direct load control programs) to derive even more benefits, or switch to direct load management altogether.
  • Customer experience is essential to the future of VGI. People do not buy EVs to support the grid; they buy them to get from Point A to Point B. VGI programs must be easy to enroll in, painless to participate in, and deliver tangible financial benefits in order to maximize impact.
  • Numerous technical barriers remain to enable the full range of VGI capabilities, though regulatory hurdles can be addressed in parallel.
  • Developing a comprehensive benefit-cost analysis (BCA) framework that can be applied to transportation electrification could help overcome challenges with the disparate cost-effectiveness tests we see in some utility filing debates today.39
  • In addition to programmatic expenditures, regulators can enable rates / tariffs and wholesale market pathways so customers can realize net benefits which benefit the grid and do not compromise mobility.
  • A roadmapping process can help facilitate the development of regulations and policies and minimize the risks associated with VGI deployment.
  • The goals of a regulatory roadmap include: laying groundwork to enable increased capabilities and sophistication over time, increasing standardization and interoperability of EVSE equipment, reducing risk of stranded assets, encouraging better coordination among key stakeholders, providing policy and regulatory clarity, and identifying near-term valuable use cases.