Dive Brief:
- Preliminary research from the California Public Utilities Commission’s Public Advocates Office indicates that the cost of upgrading the distribution grid across the territories of the state’s three investor-owned utilities to prepare for electrification could be approximately $15 billion to $20 billion by 2035.
- These estimates are much lower than the $50 billion price tag by 2035 that was identified by a similar study conducted by data and analytics company Kevala for the CPUC. The Public Advocates Office plans to complete its study by August.
- California’s energy sector is preparing for an expected influx of electrified end uses, including the transportation and building sectors. In 2020, Gov. Gavin Newsom, D, issued an order putting the state on a pathway to requiring 100% zero-emission sales of new passenger vehicles by 2035.
Dive Insight:
California’s electric distribution grid will need to be upgraded to handle the expected increase of electric vehicles in the state, and forecasting how much this will cost will help with distribution grid planning, the Public Advocates Office noted in a recent fact sheet about their research.
In 2021, the commission launched a proceeding to consider how to prepare the grid for the growth of distributed energy resources more broadly, and Kevala’s study was part of this proceeding. That study found that without any additional measures to reduce costs or manage load, it could cost approximately $50 billion to prepare California’s grid for the high adoption of distributed resources. System-level peak load, meanwhile, could increase 56% on average from 2025 to 2035, predominantly due to electric vehicles, according to the study.
The Public Advocates Office, however, thinks those numbers could be lower. The office’s research is based on taking the registered address of every vehicle in California, using this information to estimate where EV uptake is likely to happen, and then modeling what additional charging load the state can expect to see on the grid.
According to the office, the main difference between its preliminary estimate and Kevala’s cost estimate comes from the latter’s forecast of a larger increase in peak load, based on its own model and assumptions. The Public Advocates Office study is based on the California Energy Commission’s integrated energy policy report.
While Kevala predicts that EV charging will hit a peak at 9 pm – thanks to non-EV specific time-of-use rates that drop at that time – the Public Advocates Office’s research is based on forecasts that EV charging will occur much more evenly across the day, the office said.
“We believe it is of paramount importance to understand the operational and cost implications of increased electrification to ensure system planning is undertaken optimally and that the most cost-effective approaches are taken,” the office noted in its fact sheet, adding that studies on this should use robust data, be explicit about the assumptions used, and be vetted through stakeholder engagement.
“No single study or pair of studies, particularly this early in the electrification process, can definitively answer such a complex question as what the costs of distribution grid upgrades will be,” the office added.
Kevala is pleased to see that its study has spurred other analyses of the impact of electrification on the distribution grid, Trina Horner, the company’s vice president of professional and advisory services, said in an email.
“This conversation is critical to continue if we are to decarbonize the global economy in a way that is affordable and efficient. Kevala’s assumptions are unmitigated. Mitigations can take many forms and all of them, taken individually or collectively, can help to manage grid overloads and costs,” Horner said.
The Public Advocates Office and Kevala studies contribute to a continuous discourse on the costs and benefits of electrification, Amin Younes, utilities engineer, electric distribution planning and policy with the office, said in an email.
“In particular, the information provided by these studies should help policymakers understand what the cost impact of grid upgrades will be and, therefore, may help to inform how policymakers approach strategies for mitigating these costs,” such as incentives to influence the time when EV owners charge their vehicles, he added.
