Worth The Investment: Report Finds Utilities, Fleet Owners, Consumers Benefit When Utilities Cover Infrastructure Costs to Support Charging

New analysis commissioned by Environmental Defense Fund finds that U.S. utilities covering the cost of infrastructure upgrades needed for fleet charging can increase utilities' revenue without raising consumers’ electricity rates.

Reducing emissions from medium- and heavy-duty vehicles is essential for the U.S. to meet its climate goals and reduce deadly air pollution. Large-scale electrification of these vehicles requires grid upgrades to support the added load from charging. The cost of upgrading the electrical infrastructure required to make both a commercial site ready for EV charging, called “make-ready,” can account for up to 30% of the total cost of charging for fleets. To date, most U.S. utilities and regulators have been wary of financing these grid upgrades for fear of needing to raise everyone's electricity rates to pay for them. EDF's new study debunks this myth. 

The analysis, conducted by Synapse Energy Economics, uses two New York State utilities as case studies and finds that if utilities cover the “make-ready” cost for both private and municipal fleets, the investment will pay off for utilities and have a positive to neutral impact on ratepayers in both utility service areas. 

“Investing in make-ready programs can benefit fleets, utilities and consumers,” said Pamela MacDougall, Director, Grid Modernization at EDF. “When paired with clear targets, like the Advanced Clean Truck rule, make-ready investments can help states achieve their climate goals and accelerate the transition to a zero-emission future.”

The analysis findings can be applied to states across the country due to the nature of the utilities studied. The report profiles Con Edison and National Grid, two New York utilities at opposite ends of the spectrum in terms of grid costs, electricity demand profiles, and region; Con Edison serves New York City, while National Grid provides electricity to upstate New York which includes more rural demography.

The study finds that with “managed charging,” Con Edison’s make-ready program generates $1.1 billion in net revenue between 2023-2045, while National Grid’s program generates $141 million in the same time period. Managed charging is the practice of aligning EV charging during times when clean, affordable electricity is most abundant, reducing stress on the larger grid and mitigating pollution from power plants. 

Even without managed charging, investing in make-ready programs was shown to have a positive to neutral impact on ratepayers in both utility service areas. As more fleets are incentivized to plug in - and therefore pay for more electricity while saving on diesel - utilities can invest a portion of their returns on grid upgrades elsewhere that would have otherwise been paid for by all ratepayers.

“Con Edison stands ready to accelerate the transition to clean transportation,” said Raghu Sudhakara, Con Edison’s vice president, Distributed Resource Integration. “Infrastructure and make-ready investments not only allow for customers to choose electric transportation and reduce pollution and noise in our communities, but will also help in moderating electricity rates in the longer term”.

Currently, large national fleets are choosing to prioritize buying electric medium- and heavy-duty vehicles in areas where they don’t have to pay for grid upgrades, underscoring the role smart utility policies can play in accelerating EV deployment and helping to deliver the pollution reduction and economic benefits these vehicles offer.