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The Costs of Revving Up the Grid for Electric Vehicles
Article

The Costs of Revving Up the Grid for Electric Vehicles

Anshuman Sahoo, Karan Mistry and Thomas Baker
Boston Consulting Group, 2019
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Editorial Rating

9

Qualities

  • Analytical
  • Eye Opening
  • Overview

Recommendation

Electric vehicles (EVs) are surging. New estimates predict that by 2030, EVs will overtake internal combustion–powered vehicles in market share. And battery-powered and plug-in hybrids will account for half those sales. To meet the demand of millions of new EVs hitting the road, utilities will need to boost their capacity, and ratepayers will shoulder most of the cost. To help utilities and policy makers in planning for grid capacity upgrades and expansions, Boston Consulting Group project leader Anshuman Sahoo, principal Karan Mistry, and managing director and partner Thomas Baker modeled power demand and rate impacts for various scenarios of EV penetration and charging behavior. Utility executives and policy makers will appreciate this informative white paper.

Summary

To provide adequate power for electric vehicles through 2030, utilities will need to upgrade the grid.

By 2030, electrified vehicles (EVs) could represent more than half of new-car sales, and plug-in hybrids and battery-powered models could account for one of every five cars on the road. When electricity begins to eclipse fossil fuels as the primary fuel for cars and trucks, utilities must upgrade and enhance the power grid. At first, utilities will need to upgrade and expand distribution circuitry and substations between the transmission system and EV chargers. Later, as EV penetration increases, utilities must also beef up transmission lines and substations.

The costs of upgrading the grid will fall mainly to ratepayers.

Utilities will face cost impacts from two sources: 1) necessary investments in transmission and distribution capacity, and 2) increased costs of generating or purchasing electricity. However, providers will also enjoy increased revenues as customers switch from fossil fuels to EV charging. At low EV penetration rates...

About the Authors

Anshuman Sahoo is a project leader in Boston Consulting Group’s San Francisco Bay Area office. Karan Mistry is a principal in the Los Angeles office, and Thomas Baker is a managing director and partner in the San Francisco Bay Area office.

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