Are Time-of-Use rates the Key to managing how electric vehicles charge?

June 22, 2020

It took nearly a decade for the number of EVs on North American roads to pass the 1 million mark. But from here, the tally is expected to grow to about 12.5 million electric vehicles by 2030, according to Guidehouse Insights. That means, on average, more than 1 million North American car buyers will buy an EV every year for the next decade. And with each new EV, utilities face an urgent challenge: how to convince those electric-car drivers to avoid charging during peak periods.

Utilities are preparing for a future in which electric vehicles are commonplace and are used as an asset to manage energy load. Let’s consider two factors. First, an EV soaks up a lot of energy. Today’s electric cars commonly store between 60 and 100 kilowatt-hours, with the overwhelming percentage of EV charging taking place using 240-volt or 120-volt sources at home.

The second and more compelling factor is that consumers have a lot of flexibility about when to charge. Consider that the average commute in the United States is less than 40 miles. Using a 240-volt, Level 2 home charger, EV drivers can add about 25 to 30 miles of range for every hour of charging. While a “full charge” from empty to full might require eight or more hours, most drivers only need to pull juice for a couple of hours sometime between arriving home in the evening and the next morning before hitting the road.

In other words, there could be a 12-hour window (or longer) for an EV driver to add the 10 or so kilowatt-hours. The driver usually doesn’t care if those kWh are replenished immediately upon returning from work around 6 p.m.—or if it happens in the wee hours of the morning when the vehicle’s onboard scheduler or a smart meter is used to initiate the flow of electrons.

Spreading the load

An EV driver usually doesn’t care when his or her car charges, as long as there’s enough range available when needed. But utilities care a whole lot when millions of EVs charge. There are enormous economic and environmental consequences when masses of EVs all charge during a time of peak demand—for example, at the exact time when nearly every household starts flipping on the AC, big-screen TVs, and washer-dryers.

The key to spreading the load from all the electric vehicles is time-of-use (TOU) pricing. More than 50 North American utilities offer time-of-use or other special EV rate plans. They have learned through experience, and in survey after survey, that EV drivers will happily shift charging to hours when the price-per-kilowatt-hour drops, commonly during the middle of the night.

This approach is called “passive” because a utility gently persuades consumers to charge off-peak—rather than actively controlling when the charging occurs.

The technology for active charging management is in the works. The so-called Internet of Things revolution enables homeowners to control a network of connected household devices, such as thermostats, lights, and locks. And in a matter of a few years, highly connected cars, charging stations, stationary storage batteries, and home solar panels will be similarly connected in an “Internet of Cars” or “Internet of Energy.”

At that point, vehicle-to-grid technologies will enable consumers and utilities to control the charging of millions of EVs using AI-powered algorithms—and even to use energy stored in electric-car batteries to power homes and other buildings. When these technologies are ready for prime time, charging times for masses of electric vehicles will be managed with laser-like precision. In essence, EVs will become a part of grid infrastructure. But let’s not get ahead of ourselves.

Data is the new oil

The first step for both a utility and EV owner is to get real-world data about EV driving and charging patterns. The state-of-the-art solution to achieve that goal is FleetCarma’s SmartCharge Platform. By installing a simple plug-and-play device in their car, owners can log into a dashboard to see how much energy their vehicle is using, as well as review other data about their EV.

Here’s where that device, which takes one minute to install, comes in handy for utilities. Problems can occur with time-of-use plans when drivers sign up for cheaper rates to charge during off-peak hours—but then, they don’t charge when they should. Drivers end up neglecting those better rates and instead of reverting to old habits of charging when they get home, during peak hours when the prices are high.

FleetCarma’s SmartCharge Platform gives utilities the ability to monitor actual EV charging patterns. Thanks to a data link between the EV and the web, grid managers can follow all the real-world peaks and valleys of charging by individuals, as well as the cumulative impact from every EV in a territory.

Moreover, the “Rewards” part of the program gives utilities the ability to incentivize desirable charging behavior with better rates, perks, cash prizes, and social-media badges. Charging at a time that’s most advantageous for the health of the grid becomes gamified—with a set of reporting tools to let everybody know how much money and CO2 is being saved.

The importance of a dynamic tool like the one offered by FleetCarma is that EV ownership is changing fast. There can be unintended impacts from time-of-use EV rates. For example, you might shift hundreds or thousands of electric-car drivers away from charging between 6 p.m. and 9 p.m., only later to discover that many of those drivers initiate charging simultaneously at midnight, putting a strain on local transformers and the grid.

Flattening EV-related load profiles shouldn’t be a game of Whack-a-Mole—squashing a group of EV drivers from charging at one peak period only to create a different sudden rise at another undesirable time. Again, designing and implementing a successful TOU rate program requires ongoing data and a continuous effort towards enlisting drivers to become a part of the solution.

When done right, EV charging becomes a win-win-win situation. Drivers save money with rewards and cheaper rates. Utilities save on infrastructure. And everybody contributes to the use of greener energy because more EV charging takes place when wind, solar, and other renewable sources are abundant.