Energy Intel - The EV Issue

AESP.ORG Third Quarter 2021

RECYCLE EVERY MERCURY THERMOSTAT EVERY TIME Always remember your obligation to properly recycle mercury thermostats during energy efficiency projects. Learn more at thermostat-recycle.org

ENERGY CONTENTS ENERGY I N T E L is produced by: INTEL 02 Association of Energy Services Professionals 04 07 15215 S. 48th St., Suite 170 Phoenix, AZ 85044 Demand Response and Transformative EV Rate Utility 101: Beneficial EV (480) 704.5900 Time of Use Rates Design Charging Infrastructure AESP.ORG Planning BY DONALD MCPHAIL BY MARGOT EVERETT, LAURA EDITORIAL TEAM VOGEL, KRISTINA STANFORD BY LAUREN KASTNER 11 AND NATASHA HERRING AND STACY NOBLET Ian Motley, Manager, Marketing & Communications 18 21 Chris Baggett, APS Jeff Ihnen, Michaels Energy Decision Optimization for Finding the Sweet Spot: Simply the Best Sherry McCormack, SWEPCO Dynamically Changing The Keys to EV Load Tracy Narel, ENERGY STAR® Electricity Markets Management BY IAN MOTLEY Greg Wikler, CEDMC BY ROBERT E. DANSBY, PH.D. BY GARY SMITH 29 GRAPHIC DESIGN 23 26 Angela Payton, Splash Printing & Marketing Energy Yoga: A Seven-Step Guide to Bringing It All Together: AESP STAFF Expanding the Market EV Infrastructure Planning How Virtual Power Plants for Demand Flexibility Address the Question of Jennifer Szaro, President & CEO BY WILL SCHERLE AND Supply vs. Demand Suzanne Jones, Chief Operating Officer BY CARMEN BEST JENNIFER ROSENTHAL Shannon Britton, Vice President, BY CLINT DAVIS Finance & Member Services 31 34 Amber Stewart, Director of Content Ashley Wilson, Director of Membership Smart Hybrid Heating Electric Vehicle Rate Design: Jennifer Lee, Program Manager Systems for a Lower The Biggest Problem and Ian Motley, Manager, Carbon Solution the Greatest Opportunity Marketing & Communications Amelia Hall, Training Manager BY OCTAVIAN GHIRICOCIU BY BILL LEBLANC Anastasia Claxon, Content Associate Kristi Hewitt, Member Associate/Executive www.aesp.org | third quarter 2021 1 Administrator BOARD OF DIRECTORS Marie Abdou, National Grid Ariana Arguello, FortisBC Dave Backen, Backen Consulting Chris Baggett, APS Peter Banwell, ENERGY STAR®, US EPA Raegan Bond, Dunsky Energy + Climate Advisors (BOARD CHAIR) Knox Cameron. DTE Art Christianson, The Home Depot Charmaine Cigliano, Orange & Rockland Sarah Colvin, Opus One Solutions William Ellis, Pepco Mark Gentry, CLEAResult Sue Hanson, Tetra Tech Jeff Ihnen, Michaels Energy James Linder, TVA Danielle Marquis, Franklin Energy Sherry McCormack, SWEPCO Tim Michel, PG&E Bill Norton, Opinion Dynamics Laura Orfanedes, ICF Quinn Parker, ENCOLOR Brian Pippin, JEA Laura Schauer, ILLUME Advising Katie Vrabel, Buckingham All rights reserved. Contents may not be reproduced by any means, in whole or in part, without prior written permission from AESP. The opinions expressed by the authors do not necessarily reflect those of AESP.

DEMAND RESPONSE AND TIME OF USE RATES: An Energy Optimization Combination by Donald McPhail Adoption of distributed energy resources In past summers, utilities have predominantly (DERs) – such as smart thermostats, smart water heaters focused on demand response (DR) programs to curtail and electric vehicles (EV) – are increasing rapidly, with Guidehouse load. TOU optimization programs offer another approach to the same forecasting a compound annual growth rate of 60-80% through 2027. goal, taking advantage of the customers with smart thermostats and For more than a decade, U.S. electric utilities have rolled out smart those already enrolled in DR programs. New software programs can meters for residential customers, with approximately 115 million smart finetune the utility’s ability to productively manage loads by combining meters expected to be installed by the end of 2021. The growth of time-varying rates with data on daily cooling optimizations provided by distributed energy resources and the widespread availability of an smart thermostats. advanced metering infrastructure has led to an increase in the option of time-varying rates for residential customers - commonly referred This summer, Uplight launched a Smart Home Rate pilot for to as Time of Use (TOU) rates – from electric utilities in order to help Consolidated Edison (ConEd). This pilot is part of New York's Reforming reduce peak demand and increase load flexibility. the Energy Vision (NYREV) initiative to test out innovative rate designs that increase the efficiency of the grid and make energy costs more TOU rates are commonly seen as a tool that can cut utility and transparent to the end customer. This pilot features both a dynamic consumer costs, reduce emissions, manage loads, and help adapt day-ahead TOU rate and a significant daily per-kW demand charge. to the impact of distributed technologies. When amassed, even a 5% From June 1 through September 30 this year, the pilot also includes reduction in U.S. peak demand has the potential to save consumers $3 demand response (DR) events. ConEd is leveraging our Orchestrated billion annually. This is undoubtedly a value likely to increase as climate Energy software and Emerson Sensi Touch smart thermostats to change leads to hotter and more extreme summers, like the one we’ve automatically lower customer bills and relieve pressure on the grid. been experiencing in much of North America in 2021. 2 Association of Energy Services Professionals

To show this in action, we simulated optimization of an enrollee’s household using hot summer weather conditions: Because demand charges encourage customers to spread out About the author their energy use, the program generates an individualized baseload forecast model trained on recent AMI data, as well as a new comfort Don McPhail is a Director of Product Marketing algorithm trained on historical thermostat data. The baseload and at Uplight. Donald has more than a decade of comfort models - along with several other models - feed into the core experience working with utilities in the energy Orchestrated Energy optimizer algorithm that chooses when to cool sector across the U.S., Australia, United Kingdom, each house each day. and Europe. He leads product marketing for the Orchestrate Product Line, serving as the nexus There are several things to point out here. The cooling runtime is between product, sales, marketing, and customer largely targeted outside the demand charge period and at times when success and crafts solution designs to ensure the TOU rate is low. While the optimization does expect a little cooling successful client outcomes. within the demand charge period, you can also see the cooling is targeted to avoid times with a high baseload. Lastly and perhaps most importantly, you see that the home temperature remains comfortable. These next level thermostat optimizations are just the tip of the iceberg. With customers beginning to adopt additional connected devices like water heater controllers and EV smart chargers, utilities can enable customers to automatically save money and reduce peak demand - without sacrificing peace of mind or comfort. Move over “set it and forget it” solutions. You were too much effort for most people anyway. “Enroll and forget it” is the new benchmark customers want. www.aesp.org | third quarter 2021 3

TRANSFORMATIVE EV RATE DESIGN Transformative EV Rate Design 2. Utility and Customer Objectives Introduction Two of the most important EV stakeholders are utilities and their customers. Both play a critical role in EV acceptance, adoption, and rate implementation. Electric vehicle (EV) adoption is growing rapidly, largely driven by the threat of climate change in addition to decreasing BWyheMnaitrcgoomtesEvtoerraetetst,,uLtialituiersaarVeocgoencle, rKnerdiswtiitnhareScotvaenrifnogrtdheaanpdproNparitaatesahmaoHunetrorfing costs and changing driver preferences. Electric load growth from this technology is expected to change the utility industry. revenue from EV customers and designing cost-reflective rates to do so. At the same time, EVs create significant opportunities for electric utilities to they are eager to attract EV drivers and EV charging infrastructure to their service territories generate revenue, funding needed capital investments in aging to increase electricity revenue and utilize EV charging for the benefit of their operations. To infrastructure, a low carbon supply portfolio, and increasingly utdhitsiislcitoeieunndst, mtuotiaeliytnieeosrgffmyeacryhEaoVrffgererasEt,eVwadraiivstiencgodiudscenomtusannstsdusccuhhcahargsaessa,apopprplloyytiihnneggr aaapddporloloalarlacphreeprsek. irlHokowiwaloettwv-heaor,tutr-hour complex grid operations. Therefore, EVs are an ideal solution dofifsecrionugnrattetodisecnoeurngtsymcahyarrugneasf,ouwl oafivcionsgt odf seemrvaicnedprcinhcaiprlgese.sU, toilitrieostthheatr satrpugpgroleatcohes. to improve electric grid utilization while offering customers Hjuostwifyervaeter,doisffcoeurnintsgforraEteV dcuissctoomuenrstsonmaacyosrtuonf saefrovuicleobfascisoswtillolifkeslyernveiecdetoperixnpcloipreles. an affordable fuel for clean energy transportation. They not TsUmuaeonstodirtlrvfhieetuiericepsrtnetrsahoungebmtdrhraebatsscehtsiroesivoismrweftcrEpruuilaVlslgitctelocgiakumdlteeseeetlsoyrtimmgonnneeaeejroutsdetpsesdcttirooaifsntnnyo,tsdiun.recuaTthixetolaiepstfriluegtoodrisntrihgesgmercoprmowuacuto.ostenmtrretupnslsnpic,fdraowoetrehgrisEcmrethVaasrtnestcedqivurusesti,rhteuorestaimiltriitteieeecrsrduastemsivtsoueoinsgmdtnaaetaorcprnoetevsioietendwossf. only increase load but also provide flexible load that can be aEnVdcucshtoamrgeirnsggepnaetrtaelrlynsp,riworihtiizcehcroenqveunirieenst iatendraatfivfoerddaablteaerleevctireicwityafsorthcheanrguinmg,bbeurt of EV controlled and targeted for periods with excess generation from cduiffsetroenmt etyrpsecsoonf ctiunsutoemsetros gharovewv.ery different profiles. Table 1 shows the four main low cost renewable energy and unused distribution capacity. classifications of EV customers and their charging preferences. These perspectives are an important input to a utility’s rate design for EVs. Creative rate design is a critical tool for utilities to realize the operational benefits of EVs, support their customers, Table 1. Overview of EV Customer Needs and ensure cost-reflective rates. Harmonizing stakeholder objectives, modern rate design principles, and cost of service EV Customer Needs requirements is important for designing EV rates that provide significant benefits to all. Home Charging These customers tend to prefer “set it and forget it” charging where they are Utility & Customer Objectives Residential customers charge a personal able to charge their car during off-peak vehicle at their residence through a separate periods. Two of the most important EV stakeholders are utilities and meter or their whole house meter. their customers. Both play a critical role in EV acceptance, Employers are looking to create charging adoption, and rate implementation. Workplace Charging services as an additional benefit for employees while encouraging green When it comes to rates, utilities are concerned with recovering Office buildings and other work locations commuting. the appropriate amount of revenue from EV customers and provide charging for their employees, either designing cost-reflective rates to do so. At the same time, they for free (as an employment benefit) or for an are eager to attract EV drivers and EV charging infrastructure hourly rate through separate meters or their to their service territories to increase electricity revenue and whole premises meter. utilize EV charging for the benefit of their operations. To this end, Fleet Charging Fleet operators are interested in 4 Association of Energy Services Professionals reducing carbon footprint and overall Fleet operators, including but not limited to operating costs while ensuring vehicles delivery and bus fleets, provide charging are charged and available during peak services for their fleet vehicles. hours. Public Charging These operators are focused on creating a satisfying charging experience for Like traditional gas stations, these customers customers by minimizing wait times and provide charging services to customers in offering competitive charging rates. neighborhoods and high traffic areas. Source: Guidehouse

Transformative EV Rate Design Table 2. Example Rate Structure Components and Alignment to EVs EV customers generally prioritize convenient and Home Workplace affordable electricity for charging, but different types of Rate Structure Description customers have very different profiles. Table 1 shows the Component Fleet four main classifications of EV customers and their charging Public Utility preferences. These perspectives are an important input to a utility’s rate design for EVs. • Definition: (per kilowatt-hour) independent of timing • Creates imprecise price signals (minimizes ability to charge EVs during low cost periods to reduce bills); EV Rate Design Principles Volumetric ○◑ ◔ ◔ ● value limited to efficiency investments Charge • Whole premises metering with tiered volumetric rates results in EV owners paying higher rates per kilowatt- Electricity rates are a critical driver of customer behavior Time-of-Use ◕◑◑◑ ◔ hour for all use because the EV load pushes their loads and can provide important signals for how customers can (TOU) into higher priced tiers manage their utility bills and monetize their investments Volumetric in EVs. When utilities design their rates with high levels of Charge • Definition: (per kilowatt-hour) prices vary depending on transparency, customers can see what actions are aligned time of day/week with which financial signals. Appropriate incentive design within rate structures can send signals to customers and • Incentivizes load shifting/shedding during peak hours operators that can translate to better participation and • Off-peak or super off-peak TOU charging can be used to better ROI for demand flexibility. incentivize EV charging at lower prices • Definition: (per kilowatt) independent of timing • Incentivizes peak load reductions, load shifting/shedding, and onsite energy generation when feasible and beneficial for the customer, not necessarily the grid Table 2 provides a mapping of key rate types and their Demand ○○○◔ ◕ • Difficult for public charging customers to manage costs applicability to different EV customers and their charging Charge due to varying customer loads (significant load during needs. For simplicity, the table describes the effect of each 1 hour in 1 month could create significant costs) rate component type in isolation, which is generally not the • Whole premises metering with demand charges based on customer’s peak demand results in higher bills for case in practice. For example, customers who are charged Time ○◑◑◔ ● premises operator unless the charging EV can be for peak demand are usually also charged for energy Differentiated controlled and targeted during hours where the consumption. Demand premises’ load is well below the expected peak Charge A progressive approach to rate design is needed to select • Definition: (per kilowatt) prices vary depending on time of among these rate components and align with customer day/week charging profiles. This approach consists of five key design features: product differentiation, cost allocation, customer • Incentivizes load shifting/shedding during peak hours • Definition: (per kilowatt-hour) prices vary each hour, reflecting wholesale variation segmentation, cost attribution, and incentive design. These Dynamic ◕● ◕◔ ◕ • Very effective and flexible in communicating load shifting features are linked and interdependent, forming a cohesive Pricing needs but does not always allow customers enough time new pricing framework. Progressive rate design generally to prepare (e.g., charging energy storage) follows the circular process shown in Figure 1. • Generally, only suitable for advanced customers willing to bear risk • Definition: (per month) prices fixed based on customer ○Subscription Ra● te characteristics REnataebsli(nTPgrluasnsform● at◕ive● EV • Provides predictable bills to customers while yielding Technology) Dseomsiegonperational or technology decisions to the utility • Coupling subscription rates with appropriate incentives for enabling technologies can create significant customer features: product differentiation, cost allocation, customer segmentation, cost attribution,reasnpodnse benefits for the utility incentive design. These features are linked and interdepeNonted: e● nFutl,lyfAolirgmneidntogEaV CcuoshtoemesrivNeeedn○ewNo Alignment to EV Customer Need pricing framework. Progressive rate design generally folloSowurscet:hGeuidcehirocusuelar process shown in Figure 1. A progressive approach to rate design is needed to select among these rate components Figure 1. Progressive Rate Design Elements: ThaendMaoligdnewrnithPcursictoimnegr Fchraarmginegwproorfikles. This approach consists of five key design ©2021 Guidehouse Inc. All rights reserved. Page 4 Source: Guidehouse Some utilities have implemented progressive rates that address many of the challenges inwww.aesp.org | third quarter 2021 5 EV rate design, but many jurisdictions still face significant hurdles. Table 3 provides an overview of key barriers and opportunities that utilities and other stakeholders must address to better support EV adoption with effective rate design.

Some utilities have implemented progressive rates that address many of the cShouarcllee: nGguiedeshoinuseEV rate design, but many jurisdictions still face significant hurdles. TSaobmlee u3tilpitireosvhidavees imanpleomveenrvteiedwproogfreksesyivbeararrtieesrsthaatnadddorpespsomrtaunnyitoief sthtehcahtaulletinligtieessinand oEtVherartestdaekseighno,lbduetrms amnyusjutraisdddicrtieosnss tsotilbl featcteersisgunpifipcaonrtt hEuVrdaledso. pTtaibolne w3 pitrhoveidffeescatinve rate doveesrivgienw. of key barriers and opportunities that utilities and other stakeholders must address to better support EV adoption with effective rate design. Table 3. Overview of Key Barriers and Opportunities for EV Charging Conclusion Factor Barrier Opportunity for Action Rate design for EVs does not have a one-size- fits-all solution. EV adoption extends to a wide State policies Regulators in many states Support progressive utility variety of customer segments with different FFaacctotor r maintain utility business models business models with state charging preferences and load profiles. Designing that emphasize load growth and regulators with a focus on EV rate options that are cost-reflective and infrastructure buildout to improve resiliency, reliability, and considerate of specific EV customer needs is returns instead of supporting new TdTrearacnansrsfboformnrmiazatitviveoenEE(VeV.RgR.a, ateteDDeessigignn critical for utilities to support the acceleration technologies. de-coupling sales volumes of EV adoption (and benefit from growing load BBaarrrireier r frOoOmppprpoeotrutrurtnunsni)ti.ytyfofor rAAcctitoionn and more flexible operations). Doing so can also provide an appropriate and transparent InInccoonnssisistetennt tddeessigignnss CCuusstotommeersrsfafacceeddififfefererennt tpprirciciningg SSuupppoortrtddeevveeloloppmmeennt toof f pricing structure for EV users to maximize their mmooddeelslsbbaasseeddoonnwwhheerereththeeyy inindduusstrtyrybbeettteter rppraracctitciceessfofor r ROI in clean transportation. The modern pricing cchhaargrgeeththeeirirvveehhicicleless, ,ppaartritcicuulalarlryly EEVVrarateteddeessigignnaanndd framework shared in this article provides the ininaarereaasswwhheerereththeerereaarere imimpplelemmeenntatatitoionn, ,imimpprorovviningg foundation for this progressive rate design that nnuummeerorouussuutitlitliytyssuuppplieliersrs(e(e.g.g.,., ccoonnssisistetennccyybbeetwtweeenn fully unbundles costs, aligns rate components to ccitiytymmuunnicicipipaalitliteiessnneexxt toto uutitlitliteiess. . cost drivers and customer needs, and provides ininvveesstotor-ro-owwnneedduutitlitliteiessoor r transparent incentives. cchhaargrgininggsstatatitoionnsswwitihthaaltleternrnaatitvivee ssuuppplieliersrs).). OOuutdtdaateteddITITssyysstetemmssaanndd SsSsiumiumpppplpiofliorfctircatmatmitooioondndeoerofnrfnIiTzIiTzasatisytoiysonstPnetaaemganmensd5sd aannddbbilliilnlinggssyysstetemmss, , ©2Im0I2m1ppGleluemidmeeheonuntsaetatIintoci.onAnll rights reservienidnf.lfelexxibiblelebbilliilnlinggssyysstetemmssccrereaatete ppaartritcicuulalarlrylyfofor rreregguulalatotorsrs. . ccoommpplelexxitiyty/b/buurdrdeenn cchhaallellennggeessininaaddoopptitninggininnoovvaatitvivee raratetessaannddreressuultltininssigignnififcicaannt t ddeelalayyssininrarateteimimpplelemmeenntatatitoionn. . SSouorucrec:eG: Guiudiedheohuosuese About the authors Kristina Stanford Margot Everett Kristina Stanford is an Associate Director in Guidehouse’s Energy practice. She has experience in complex financial Margot Everett works as a Director at Guidehouse’s Energy analysis, rate design and performance improvement Practice, providing strategic and analytic regulatory consulting engagements for power and water utilities. Her financial services to investor and publicly-owned utilities, market expertise includes revenue requirement development, cost participants and regulators in the electric and gas industry. of service studies, rate design, and rate case testimony. She Margot has nearly 35 years of experience in the energy has developed, evaluated, and analyzed rates for NEM, EVs, and utility sector leading rate and regulatory analytics, and DER programs as well as traditional electric and water rate risk management, and wholesale contract structuring design for investor and municipal owned utilities. organizations. Prior to Guidehouse, Margot led Pacific Gas and Electric Company’s Regulatory Analytics and Rates Natasha Herring departments. Natasha is a Managing Consultant in Guidehouse’s Energy Laura Vogel PPagaege66 practice. With more than 7 years of experience evaluating utility residential and commercial evaluation programs, Laura Vogel is an Associate Director in Guidehouse’s Natasha shifted focus from engineering to economics, Energy practice, focusing on utility strategy, rates and supporting utility cost of service studies, utility rate case regulatory issues, and distributed energy resources. Laura’s testimony, utility program cost-benefit analyses, regulatory work spans much of the utility transformation, including benchmarking support, and utility rate design for solar, electric organizational assessments, technology roadmaps, and vehicles, and net metering. Natasha brings both evaluation financial planning. Laura works with clients at the highest expertise and rate design perspectives to complete client levels of utility and private industry organizations, bringing deliverables. strong communications, analytical, and creative skills to engagements. ©©20220121GGuiudiedheohuosueseInIcn.cA. lAl lrligrihgthstsrerseesrevrevde.d. 6 Association of Energy Services Professionals

By Lauren Kastner and Stacy Noblet The availability of electric vehicle (EV) charging options continues to A utility’s approach to transportation electrification may be influenced be a top concern for customers considering an EV purchase. Utilities by multiple factors including the local market, regulatory landscape, and utility regulatory commissions across the country are asking and complementary incentives such as state rebates. While each themselves if it is the role of the utility to support increased EV adoption utility must take a different approach to meet the unique needs in their through the deployment of infrastructure for EV charging. Many are territory, utilities should approach transportation electrification with the answering that question with a resounding “yes,” with more than 48 mindset of meeting the near-term needs of EV customers today while utilities in 29 states receiving approval for EV-related filings as of June planning for an increasingly electrified future. 2020.1 There are tangible benefits of transportation electrification and Establishing programs utilities are acting decisively to support the growth of EVs to ensure that these benefits are experienced by utilities, customers, and society. The first step to establishing a utility EV program is to define the scope, the customers your program wants to reach, and what tools you To date, regulatory commissions have approved more than $2.6B will use to drive the type of infrastructure development you want to of utility investment in transportation electrification, with $1.2B of that see. occurring in 2020 alone. As this investment accelerates, it is critical that energy professionals understand the benefits of EVs, the potential This planning should include infrastructure to meet the needs of impacts to the grid, and the various use cases and business models multiple types of EV drivers and their charging needs. Depending on the for EV charging to better serve and manage this significant new load. use case of the vehicle, EVs have different needs for different charging speeds. In some instances, Level 2 (L2) charging will be perfectly fine Utility action is central to the deployment of EV charging infrastructure for some drivers who can charge for multiple hours overnight. In others, and the support of EV adoption. Utilities play a special role as both the direct current fast charging (DCFC) must be available for drivers who fuel supplier and the energy expert for EV customers and are therefore need to get charged up and back on the road in less than 30 minutes. well-positioned to plan for EV adoption and reach customers with new EV offerings. In addition to the type of charger technology, utilities must consider where those stations will be located. Just as conventional gasoline Beyond it being the utility’s obligation to serve all customers, EVs vehicle drivers rely on ubiquitous gas station availability, a robust are an attractive proposition for utilities as beneficial new load that can network of charging should be available across the territory to serve offer new revenue and resource opportunities and can increase overall EV drivers. While most light-duty EV drivers can do the majority of utilization of the grid. Because EVs are mobile and can shift their time their charging at home, public charging at places like retail stores, and location of charging, EV charging can move load to off-peak hours workplaces, and along highway corridors are still necessary to alleviate when there is excess capacity. 1 Edison Electric Institute, “Electric Transportation State Biannual Regulatory Update: June 2020.” https://www.eei.org/issuesandpolicy/electrictransportation/Documents/FINAL_ET%20Biannual%20State%20Regulatory%20Update_June%202020.pdf www.aesp.org | third quarter 2021 7

range anxiety. Not all drivers live somewhere that they can plug into a Utilities commonly use rebates focused on helping to lower the cost garage outlet, so those customers need charging stations at multifamily of charging equipment, distribution system upgrades known as “make- units and in nearby public locations. Additionally, many utilities are ready” infrastructure, and in some cases, the vehicles themselves. aligning with state and local policies to prioritize the deployment While the incentive target may vary, it is important for utilities to consider of EV charging stations in disadvantaged or environmental justice whether the incentive level is sufficient to drive a commensurate action communities that bear a disproportionate public health and pollution by the customer. For example, all of the six investor-owned utilities in burden from transportation. New York are jointly pursuing make-ready programs that help cover infrastructure upgrade costs on both the utility side and customer Medium- and heavy-duty vehicles such as urban transit buses, side including the distribution system, transformer, meter, and panel. school buses, and commercial trucks are electrifying and will need Other utilities like the Salt River Project in Arizona offer commercial EV charging infrastructure at their fleet depots and at shared charging charging equipment rebates with a goal of incentivizing the installation plazas. Many utility EV programs may choose to focus on one segment of 3,000 demand response enabled L2 chargers per year at workplace, of the overall EV market, such as residential charging, to test the waters before growing into other segments while other utilities are more public, and multifamily dwelling locations.2 proactive about driving EV adoption across a variety of EV applications. Once the scope has been determined, the utility should evaluate the tools needed to attract customers and drive the right actions through the program. As shown in the graphic below, utilities are leveraging a variety of incentive structures and business models to stimulate EV adoption in their territory. EV time-of-use rates that are designed with the EV charging load profile in mind can help lower the fuel cost for EV customers and achieve load-shifting to more optimal times for the grid. Residential EV rates can be designed with a simple on- and off-peak period, while some commercial EV rates are designed with multiple peaks aligned with the unique profile of that type of EV, such as for transit buses. In some cases, commercial EV rates are designed to reduce or eliminate demand charges, which are often a major cost barrier to high-power DC fast charging. Some utilities are also pursuing an EV charging business model in which the utility owns and operates a network of charging stations, sometimes in addition to offering rebates to customers and private developers. In Maryland, Baltimore Gas & Electric’s EVSmart Program has issued 1,000 residential smart charger rebates while also deploying 77 L2 and 28 DCFC public chargers owned and operated by BGE. While not every service territory may need the utility to own EV charging assets, the benefit of this approach is that the utility can plan and strategically deploy chargers in areas that may be difficult for other market players to justify from a business case standpoint. Many utilities want to know at the outset where their EV customers are today and where they will charge in the future. While utilities have some ability to identify existing EV drivers without EV specific programs – either through direct outreach and surveys, existing time- varying rate enrollment, or AMI data – the ability to gather data on the location, usage, and patterns of EV charging is one of the most valuable opportunities that targeted EV programs can offer. In place of actual data, utilities may be able to use a combination of propensity modeling and direct outreach to customers and fleets in the territory to assess their likelihood of electrifying. The development of EV load forecasts can be helpful for ongoing system planning and future program design. 2 Edison Electric Institute, “Electric Transportation State Biannual Regulatory Update: June 2020.” https://www.eei.org/issuesandpolicy/electrictransportation/Documents/FINAL_ET%20Biannual%20State%20Regulatory%20Update_June%202020.pdf 8 Association of Energy Services Professionals

Supporting customers EV programs should consider not only how the load interacts with the grid today, but also how the infrastructure needs may grow and As utilities deploy incentives to support EV growth in their territory, change in the future. Many EV programs focused on make-ready it is important to remember that the EV and charging technology is still infrastructure investment also offer customers the ability to future- new for many customers and thus the utility should plan to play an proof their site so that the infrastructure capacity is sufficient to meet active role in assisting customers through the electrification transition. increased EV charging needs at that site. Additionally, many customers Among utilities with EV programs, it is a best practice to conduct may be interested in pairing other distributed energy resources with customer education and outreach to grow awareness of the benefits EV charging at their site. Customer-side energy storage systems and of EVs and the offerings available from their utility. Thoughtful planning solar generation can often be a lower-cost alternative to add capacity includes engagement with customers wherever they are on their and manage EV charging load at the site rather than upgrading the journey to electrification. Many customers are just starting out and will distribution system on the utility or customer side. have certain needs, while other more advanced EV customers require different assistance to go electric. Collaborating with stakeholders A wide range of marketing and education efforts including ride- Utilities are not alone in their pursuit of transportation electrification. and-drive events, websites and online tools, and informational A successful transition will require collaboration and mutual investment materials have all proven to be effective at reaching various customer by a variety of players cross the EV value chain. Automakers, EV segments. Some utilities are finding that engaging car dealerships is charging service providers, fleets, private capital, and state and local a great way to reach customers with information about EV charging governments must all contribute to the planned deployment of EV programs at the point of purchase. For larger customers like public charging infrastructure. Many states already have clean energy or and commercial fleets, a growing number of utilities are offering emissions reduction goals that include a plan for EVs. In those states, free fleet assessment services to help the customer understand the utilities should offer EV programs that complement and maximize potential costs and savings from going electric. For example, National the benefits of existing public funds. Recent commitments by the Grid in Massachusetts has a pilot to offer 100 fleets a full-service fleet Biden administration include a plan to spend $7.5 billion on EV assessment to help those customers build the business case for EVs. charging infrastructure across the country and an additional $2.5 billion on alternative fueling including EV charging in disadvantaged In addition to proactive EV customer outreach, utilities must also communities. Utilities that take proactive early steps toward supporting build internal capabilities to support their new programs and the EV infrastructure in their communities will be well-positioned to help expected load growth from EVs. Many utilities are establishing new channel those federal and state funds in a way that works for the teams focused on transportation electrification as well as working with service territory and EV customers. a range of partners to implement their programs and provide technical assistance to customers. About the authors Managing the infrastructure Lauren Kastner is a clean transportation and electric vehicle (EV) expert who advises electric utilities, In addition to supporting the development of EV charging cities, and states to design and implement EV infrastructure, utility EV infrastructure planning must also include charging infrastructure plans. Her more than eight strategies to manage the new load from EVs in a way that benefits the years of experience includes leading innovation, grid and customers. policy, scenario planning, and stakeholder engagement activities with a Fortune 150 Utilities can help manage EV load on the grid by using techniques automaker, the two largest U.S. cities, and cleantech known as managed charging to shift load off-peak. Managed charging start-ups. Current client work includes leading can incentivize the shift of charging to off-peak periods when the grid regulatory matters and implementation of EV charging rebates, rates, fleet is underutilized, which increases system efficiency, increases utilization assessments, managed charging, and EV education programs. Her expertise of off-peak capacity, and helps to mitigate the impact of EV-related in transportation decarbonization includes on-road light- and medium/heavy- demand. This can be done passively through customer education or it duty vehicles, micromobility, global port equipment, and marine vessels. can drive behavior change through the customer’s active management of their charging patterns through apps, programable chargers, or even Stacy Noblet leads ICF’s transportation electrification the vehicle itself. As EVs reach critical mass, utilities can aggregate EV efforts, leveraging more than 15 years working load and allow customers to participate in demand response events. in the clean transportation industry. Stacy is an This technique to manage system load goes hand-in-hand with the EV and charging infrastructure subject matter program design elements including rates to send the right price signals expert, working with public and private clients to and rebates to help the customer select charger technology capable plan for and meet goals related to transportation of these more advanced features. Underlying managed charging is the electrification and decarbonization. She partners necessity for the utility to collect, analyze, and respond to data from EV with utility clients across the country to design customers about how, when, and where they charge their EV. and implement cutting-edge programs that will support the growing EV market across the residential and commercial sectors. www.aesp.org | third quarter 2021 9

JOIN US AT THE DEI TABLE! SEEL, LLC (Solutions for Energy Efficient Logistics) was the table is set, and everyone from their diverse first launched in 2009 in our hometown of Detroit, backgrounds has a seat at the table and a voice to be Michigan, with a guiding vision that everyone deserves a heard. And to be very clear, we have a lot to discuss! path to energy efficiency. Like any startup trying to find its footing, there were numerous obstacles before us in DEI in the Energy Sector 2009. However, even though we started in one of the worst economic recessions of the past one hundred DEI in the energy efficiency space is unique. According years, this paled compared to the challenges before us to a study done in 2019, the national workforce average as a minority enterprise. As any minority business owner shows 53% of the workforce was male, but in the energy can tell you, the hill is higher, steeper to climb, and goes efficiency sector, 75% was male. When we look at on longer. Nevertheless, for the past twelve-plus years, African Americans, for example, they represent 12% of SEEL has excelled in its role as a new entrant to the the national workforce. However, as it relates to the energy efficiency (EE) marketplace. We have developed energy efficiency sector, they represent only 8%. Even a portfolio of work of which we are tremendously proud when we look at people 55 years or older, 23% are that is ever evolving, growing, and making an innovative represented in the national workforce, but only 13% are and lasting impact within our industry. in the energy efficiency workspace. What are the most effective ways to tackle this problem and move the The Evolution of Energy Efficiency Work needle on diversity, equity, and inclusion in EE? What impacts need to be made? We must address these Energy efficiency programs have changed much in questions as we gather around our DEI table. recent years. Technologies and services previously unheard of have become prevalent, and in many cases, How SEEL Will Work to Increase EE DEI deemed essential. But unfortunately, many communities still stand on the fringes of participation and adoption of With SEEL’s unique history as a certified minority-owned these critical advances. As a result, these communities, and disabled veteran-owned business, we are well particularly those of color, cannot access proven poised to lead the conversation on diversity, equity, and programs to lower their energy usage and expenses. inclusion in the EE sector. SEEL has made a significant This situation will only intensify with increasing whole move and created a position that focuses on energy building electrification, including on-site renewable access and equity for clients, potential customers, and generation and electric mobility. employees. I am pleased to be the first Director of Energy Access & Equity at SEEL. I lead SEEL’s agenda As U.S. society has become more aware of the myriad to make lasting change within the energy efficiency of hurdles for historically disenfranchised communities industry by looking at new hiring practices, targeting and ethnicities, we have seen movements such as Black diverse communities, and what those practices should Lives Matter, Me Too, and DEI impacting all aspects of entail for success and equity. SEEL President & CEO life – from political and professional to social and Louis E. James has said in no uncertain terms, “We economic. This has brought our industry to a crossroads. must advocate for energy equity in our service to the As a result, the utility industry must address the many community.” Therefore, this is what we will accomplish. lingering questions on the path to providing meaningful We are excited to welcome our many peers to the DEI services to all customers, particularly those of color, table for a productive discussion on an equitable and traditionally considered “hard to reach.” inclusive energy efficiency sector. The meal promises to be healthy, abundant, and tasty. We will always have an What is DEI? extra chair waiting for you. So, what is Diversity, Equity, & Inclusion (DEI), anyway? ………………………………….. This framework describes programs and policies that encourage the representation and participation of Scott Alan Davis is the Director of Energy Access diverse groups based on gender and gender identities, and Equity at SEEL, LLC, a certified Minority races and ethnicities, and political stance. DEI is the Business Enterprise (MBE). Scott works out of antidote to dysfunctional, entrenched concentrations of SEEL’s Detroit Headquarters with a national focus. power and privilege that come at the expense of the He is a member of AESP’s inaugural DEI disenfranchised. It’s rooted in the concept that those in Committee and the DEI Committee of the Midwest power and who have privilege want to stay in control to Energy Efficiency Alliance (MEEA). Scott believes our best days lie maintain or expand their inherited privilege. ahead and deeply appreciates the many allies he has worked with in the energy efficiency industry at SEEL and its many utility clients and Imagine for a minute that you are seated for a fantastic implementation partners. You can learn more about SEEL’s work at meal. Your host has placed your dinner on a round table seelllc.com. graced with an ornate tablecloth. Diversity is about the graceful weaving that goes into the different fabrics that make the tablecloth come together. Equity is about ensuring that all materials have equal standing, ensuring the cloth is of equal strength. Finally, inclusion is where 10 Association of Energy Services Professionals

DECISION O P T I M I Z AT I O N FOR DYNAMICALLY CHANGING ELECTRICITY MARKETS with DER, Community Solar, EV Charging Stations and Virtual Net Metering By Robert E. Dansby, Ph.D. INTRODUCTION Problem Statement and Summary of Issues Recent advances in the New electricity infrastructure technologies, such as Distributed development and utilization of Energy Resources (DER), On Site Generation (OSG), and Distributed innovative electric industry infrastructure Energy Storage Systems (DESS), have unique cost and performance characteristics. As a result, we need to modernize methodologies for generation, transmission and for electricity infrastructure planning, investment, pricing and management of electricity supply are expected other strategic decision making. to change the profile of electricity supply costs. Equally important, rapid advances in, and adoption Public Utility Commission (PUC) authorized “Virtual Net Metering” policies create opportunities to deploy Hybrid Community Solar Infrastructure (HCSI) to supply clean of, new technologies that impact the characteristics energy to customers in the “Solar Divide” who do not qualify and temporal profile of “net” electricity usage by for residential roof-top solar programs. The deployment of electric vehicle charging networks, to serve non-stationary consumers are expected to create a sea-change in demands from the growing EV sector, requires PUC policies fundamental parameters of electricity demand. This that incentivize efficient connections to the grid. We describe technology induced market dynamics requires analytic methods and tools that have been architected and engineered for use in the design, development and operation significant adjustments in how we evaluate of the evolving delivery of energy to geographically distributed electricity capacity planning and pricing customers. The development of the technical foundations that address current challenges, associated with hybrid community strategies. This article begins to establish a electricity networks / microgrids and EV charging networks, “modernized” approach to the analysis are increasingly a focus of PUC policy analyses and rate making of electricity industry decision processes. Various state PUCs are seeking insight regarding the design and development of appropriate electricity service tariffs optimization. for DER and virtual net metering. We are responding to requests for insight by working with an interdisciplinary group of experts to create the theoretical analytic foundations and software tools needed. www.aesp.org | third quarter 2021 11

Locally homogeneous microgrids, that are connected to regional Traditional public utility rate cases are intensive multi-month grid networks, further complicate the development of policies and processes involving multiple stakeholders and decision makers. tariffs that will allow for the aggregation of distributed demand-side The rate making process results in the establishment of authorized resources. Review of central control vs distributed control of DER schedules of services, and their prices, with details regarding the terms networks must be factored into the tariff design process due to the and conditions of service delivery. As such, the authorized services and diverse interests, constraints and objectives of the partitioned decision prices reflect a snapshot of historical and forecasted profiles of supply makers. Stakeholders are generally aware of the integration challenges and demand. Prices (rates) are set at levels that are often in effect for posed by linking microgrids of renewables into the larger grid network several years. In an era when industry characteristics were stable over of traditional generating and distribution resources. Key considerations time, this regulatory process was responsive enough because it was in in the management of these hybrid networks are complexities of sync with supply and demand conditions. controllability and reliability in a de-centralized, distributed decision- making environment. New tariff policies must establish the right set of Various market forces have made electricity supply and demand incentives to encourage decision making that facilitates stable operation characteristics much more dynamic. As new technologies have been of an integrated hybrid network. Our work will produce technical and deployed in the electricity industry, many fundamental parameters empirical insights that support the implementation of efficient planning of electricity network supply and demand have undergone dynamic and operational strategies in this dynamic industry environment. changes. These changes occur at a pace that challenges the traditional regulatory process. There is a need for more temporally responsive REGULATORY ENVIRONMENT rate setting and rate adjustment processes that leverage the benefits of traditional rate making processes while facilitating more rapid Navarro1 provides a historical perspective on PUC regulation and how adjustments to dynamic changes in market conditions. At the same time, the financial community ranks regulatory climate in State jurisdictions. a modernized process governing price adjustments needs to embody regulatory and market-based factors that provide appropriate incentives Comnes2 advocates for Performance-Based Ratemaking (PBR), a form of and signals that can be incorporated into decision making by suppliers utility regulation that strengthens the financial incentives to lower rates, and consumers of electricity. lower costs, or improve nonprice performance relative to traditional cost- Parametric Characterization of of-service, rate-of-return (COS/ROR) regulation. Fremeth3 argues that Electricity Infrastructure the electric utility industry has considerable experience with incentive mechanisms that target specific areas of performance but that their To build the methodological foundations of a modernized approach implementation of mechanisms that cover a comprehensive set of utility for dynamic rate setting, we develop a set of tools to quantify critical costs or innovative services is relatively rare. Interest in PBR has increased operating and financial characteristics of electricity generation, because of: (a) growing concerns about COS/ROR; and (b) economic transmission, distribution, management and consumption resources. and technological trends that created a heterogeneous electricity industry, with pockets of imperfectly competitive and oligopolistic sub- Our approach builds upon methods described in Ferrario5 for battery storage planning. sectors. Matisoff4 reinvigorates discussions on the potential of reforming electricity rate design based on the further application of cost-causal FUNCTIONAL ATTRIBUTES OF INFRASTRUCTURE ASSETS principals to improve overall system fairness and efficiency. They argue Each asset or resource that constitutes a component of a grid or that one mechanism to move toward greater application of cost-causal rate design is dynamic pricing, which varies electricity prices across microgrid is described by a set of Functional Attributes (FA). The set time and location to reflect costs of providing electricity to consumers of FAs for a particular asset or resource characterizes all the relevant under specific market and grid operational conditions. Matisoff explains operational, maintenance, reliability, grid connectivity and other why the use of dynamic prices are more reflective of short-run marginal attributes of the asset. FAs are relevant for making decisions regarding costs of electricity supply than volumetric rates set by traditional PUC the use, configuration and management of assets as components of an rate case processes. electricity grid or microgrid network. The set of FAs provide all the data and information needed to engineer infrastructure that uses the assets We leverage these insights to invent a new approach that is in the design of electricity infrastructure. The collection of all assets or compatible with traditional PUC regulatory methods while enabling a resources that are available to build a particular electricity infrastructure more dynamically responsive process for decision making to account facility, indexed by [j] is described by the set of FAs for that collection of for changing market conditions. Our approach is expected to be useful assets SJ{FA1,……,FAN}. for addressing key questions that have arisen in regulatory proceedings regarding DER, Community Solar Microgrids (CSMG), EV Charging The data and information that characterize each asset are obtained Networks (EVCN) and Virtual Net Metering (VNM). from manufacturer’s specifications, historical operating data, engineering reports, maintenance records and other sources. These data should KEY ISSUES be sufficient to fully understand the properties of a particular asset Social and environmental impacts of electricity supply and that may be deployed in an infrastructure project. This comprehensive knowledge base includes: (A) electrical properties of each asset that usage, reducing impacts on climate change, carbon credits, carbon would determine how the asset could be used as a component of the sequestration, equity in the availability of clean energy to various engineered infrastructure; (B) capital and operating cost attributes of demographic sub-groups, are some ofthe importantissues thatelectricity each asset; (C) other Functional Attributes that would have an impact industry decision makers must address. Electricity policy analysis must on any other criteria that might be relevant to selection of the asset for a take account of financial Return- On-Investment (ROI) as well as Social- particular infrastructure project. The Functional Attributes are assembled Return-On-Investment (SROI) to achieve the proper balance between in databases that are interfaced to engineering tools, planning tools, and commercial capitalism, social equity, and environmental considerations concomitant with the aggregate supply of electricity by a modernized, diversified electricity industry. 1 Navarro, P. (1980).Public utility regulation and national energy policy, No. DOE/PE/70278-T1). Harvard Univ., Cambridge, MA (USA). John Fitzgerald Kennedy School of Government. 2 Comnes, G. A., Stoft, S., Greene, N., & Hill, L. J. (1995). Performance-based ratemaking for electric utilities: Review of plans and analysis of economic and resource-planning issues. Volume 1. 3 Fremeth, A., & Holburn, G. L. (2009). Information asymmetries and regulatory ratemaking: case study evidence from Commonwealth Edison and Duke Energy rate reviews. In Regulation, Deregulation, Reregulation. Edward Elgar Publishing. doi: https://doi.org/10.4337/9781848449282.00023 4 Matisoff, D. C., Beppler, R., Chan, G., & Carley, S. (2020). A review of barriers in implementing dynamic electricity pricing to achieve cost-causality. Environmental Research Letters, 15(9), 093006. http://dx.doi.org/10.1088/1748-9326/ab9a69 5 Ferrario, A. M., Bartolini, A., Manzano, F. S., Vivas, F. J., Comodi, G., McPhail, S. J., & Andujar, J. M. (2021). A model-based parametric and optimal sizing of a battery/hydrogen storage of a real hybrid microgrid supplying a residential load: towards island operation. Advances in Applied Energy, 100048. https://doi.org/10.1016/j.adapen.2021.100048. 12 Association of Energy Services Professionals

optimization tools. These aspects of our work build upon the research Spatial and Temporal Patterns of Electricity Supply and Demand of Mentis6 directed toward engineering a comprehensive system for infrastructure planning and management. Spatial and temporal patterns of electricity supply and demand, in connected grid networks, are especially relevant. We focus here on The design of generating capacity, energy distribution and two Case Scenarios that are front of mind for many constituents in the management infrastructure is modeled-based on the parametric data electricity industry: (A) Community Solar Microgrid Networks (CSMG); and information contained in the Functional Attribute data sets. One and (B) Electric Vehicle Charging Station Networks (EVCN). Ultimately, component of the design environment uses Energy Conservation we will use these Case Scenarios to address key regulatory issues Measures (ECMs) as FAs to evaluate alternative designs using state- regarding challenges and benefits of: of-the-art energy simulation software. All the collected FA data, which includes cost of use and ownership data, is used to calibrate the base 1. PUC requirements for community solar virtual net metering case of the existing grid and consuming resources. Our planning and arrangements; and decision support approaches should help to ensure access to affordable, reliable, sustainable and clean energy for all by 2030, thus eliminating 2. Incentives for companies that are deploying EV Charging Stations the “solar divide” / “clean energy divide”. Networks. MODELLING COMPLEX ELECTRICITY NETWORKS USING Utilizing communications and other IT technologies to support FUNCTIONAL ATTRIBUTES planning, coordination and management, are key factors in achieving more efficient utilization of modern infrastructure. Our consideration We will use Functional Attribute data and information to model the of CSMG and EVCN begins with planning decisions regarding the increasingly complex dynamics of electricity supply and demand. geographic locations and engineering specifications of these facilities in the electricity transmission and distribution “backbone” network. Fathabad7 says that one of the major issues with the integration of DER is the uncertain nature of such electricity resources. This uncertainty Cuffe9 shows a structural diagram of an electricity transmission can cause problems in the distribution system: (i) it makes supply- and distribution system, with interconnection between the different demand relationships extremely complex and requires complicated voltage levels represented by the purple, green and blue links. CSMG optimization tools to balance the network; (ii) it puts higher pressure on and EVCN infrastructure would typically be connected to such a the transmission network; and (iii) it may cause reverse power flow from transmission and distribution system. According to Randolph10 there is the distribution system to transmission system. Various technical and a need for electricity suppliers and consumers to work together to form economic issues must be addressed during the integration of innovative an integrated ecosystem that enables the planning needed to support technologies into a grid network. the “bi-directional” flow of electricity between traditional electricity generators and modernized facilities. This is a primary consideration To factor all these considerations into our analyses, we must have a for managing deployment of CSMG and EVCN facilities since each comprehensive database of all the production and usage infrastructure “end-point” of the distribution network is potentially both a consumer on all parts of the grid / microgrid being analyzed. It is necessary to and generator of electricity. Zhang11 and Chiu12 show that CSMG and have data on infrastructure costs to capture differences in production EVCN share the need for Demand Response (DR) and Demand Side utilization but also to understand cost tradeoffs. An example of this is the Management (DSM) resources. In these arenas, price signals and Levelized Cost of Energy, a Functional Attribute, of various generating incentive mechanisms are crucial for reliability and market efficiency. technologies. Figure 1 below shows the annual changes in Levelized Cost of Energy for key categories of electricity generating technologies. Figure 2 – Source: Cuffe It should be clear that such information is critical for decisions regarding the selection and use of the alternative technologies. Figure 1: Cost of electricity by source - Wikiwand8 6 Mentis, D., Howells, M., Rogner, H., Korkovelos, A., Arderne, C., Zepeda, E., Siyal, S., Taliotis, C., Bazilian, M., Ad, T., Yann, O., & Scholtz, E. (2017). Lighting the World: the first application of an open source, spatial electrification tool (OnSSET) on Sub-Saharan Africa. Environmental Research Letters, 12(8), 085003. https://iopscience.iop.org/article/10.1088/1748-9326/aa7b29 7 Fathabad, A. M., Cheng, J., Pan, K., & Qiu, F. (2020). Data-driven planning for renewable distributed generation integration. IEEE Transactions on Power Systems, 35(6), 4357-4368. doi:10.1109/TPWRS.2020.3001235. ISSN 1558-0679. 8 https://www.wikiwand.com/en/Cost_of_electricity_by_source – Figure 1 9 Cuffe, P., & Keane, A. (2015). Visualizing the electrical structure of power systems. IEEE Systems Journal, 11(3), 1810-1821. https://ieeexplore.ieee.org/abstract/document/7109118 10 Randolph, K., (2017).\"In order to integrate the grid, disparate industries need to work together\". Daily Energy Insider. 11 Zhang, Q., & Li, J. (2012, May). Demand response in electricity markets: A review. In 2012 9th international conference on the European Energy market (pp. 1-8). IEEE. https://ieeexplore.ieee.org/document/6254817 12 Chiu, W. Y., Sun, H., & Poor, H. V. (2012, November). Demand-side energy storage system management in smart grid. In 2012 IEEE Third International Conference on Smart Grid Communications (SmartGridComm) (pp. 73-78). IEEE. https://dro.dur.ac.uk/11756/ www.aesp.org | third quarter 2021 13

Balancing centralized electricity generation, transmission and Figure 4 – Source: Mohammad distribution with DR and DSM considerations of multiple industry participants is a challenge and opportunity. Katz13 discusses the these insights and others previously cited herein to advance further inefficiencies that can arise when appropriate communication and development of our methodology. Our analysis is pursued using a information sharing is not available to industry stakeholders. It is well decision paradigm depicted in Figure 4 and characterized by a set of understood and acknowledged that this type of data and information Functional Attributes (FAs) for each network infrastructure component. sharing may engender privacy issues for suppliers and consumers. Yet We are pursuing further research to incorporate additional empirical it is important to find incentive mechanisms that will create a balance data and information that reflect electricity network infrastructure among private net benefits of each supplier and consumer while placement and properties. leading to socially optimal sets of operating conditions and price -cost relationships. Communications and IT infrastructure to support electricity network management ideally requires the free flow of information on supply and COMMUNITY SOLAR NETWORKS demand conditions from all operators to all other operators, Coughlin. Should regulatory commissions require that Community Solar Figuring out how to incentivize the sharing of operations affecting data among industry participants may be a major challenge. The analytic customers, on virtual net metering plans, be located in contiguous framework and tools we are creating are expected to help address areas adjacent to the serving solar farm? This type of PUC rule appears these issues. to unnecessarily limit access to clean energy supply by Lower Middle Income (LMI) demographic groups, thereby creating significant ELECTRIC VEHICLE CHARGING NETWORKS inefficiencies and inequality. Freedman14 highlights some of the adverse Should companies that provide charging stations for electric vehicles impacts of electricity regulations on Diversity, Equity and Inclusion (DEI). Coughlin15 summarizes community solar implementations that allow any pay a lower price for electricity supplied from the grid because of the customer, with a net-metered or virtual net metering system, to share positive environmental impacts they may produce? Should carbon “excess generation” credits (billing discounts) with other customers of credits be considered as key factors in the evaluation of alternative the same distribution company. We will use our methodology to find pricing strategies for grid electricity supplied to EV Charging Stations? optimal strategies for Community Solar infrastructure governance and deployment. We consider the four community solar business models These and other questions have become critical since the USA federal that are depicted in Figure 3 below. government recently announced goals to accelerate deployment of electric vehicle charging stations across the country. The goals include Figure 3 – Source: Feldman16 building a national network of 500,000 EV charging stations. This Mohammad17 reviews the literature on state-of-the-art modelling programmatic initiative will drive EV charging station deployment in a variety of locations and hosting environments including public and of grid-connected EV-PV (photovoltaics) systems. His paper provides private facilities. DOE and the Electric Power Research Institute EPRI18 insights to enable researchers to model a grid-connected EV-PV system also announced a national EV charging technical blueprint program. This for carrying out impact or implementation studies of EV integration initiative will examine and assess needs in terms of grid connectivity, into the distribution system. Figure 4 shows the analytical framework communications infrastructure and other technical and structural issues recommended by Mohammad for modelling aspects of grid-connected that need to be addressed. EPRI’s utility planning tools initiative will be EV-PV system. He concludes that more research is required for models useful for infrastructure projects planning. We are especially interested that incorporate dynamic price response and price elasticity. We utilize in using such tools to model the impacts of planned deployments on under-served communities. There is a role for public policy makers in creating an incentive structure that electricity and EV industry participants can factor into their decision making. The rapid expansion of EV Charging Stations Networks may require timely enhancement of the electricity network infrastructure to supply power to all EVCN locations. 13 Katz, M. B. (1992). Demand-side management: Reflections of an irreverent regulator. Resources and energy, 14(1-2), 187-203. https://www.sciencedirect.com/science/article/abs/pii/016505729290025C 14 Freedman, L., First Quarter, (2021). Four Big Developments from 2020 – and How They Impacted Our Industry. Energy Intel - AESP Magazine, First Quarter, 3 – 9. 15 Coughlin, J., Grove, J., Irvine, L., Jacobs, J. F., Phillips, S. J., Moynihan, L., & Wiedman, J. (2011). Guide to community solar: Utility, private, and non-profit project development. https://digitalscholarship.unlv.edu/cgi/viewcontent.cgi?article=1040&context=renew_ pubs 16 Feldman, D., Brockway, A. M., Ulrich, E., & Margolis, R. (2015). Shared Solar. Current Landscape, Market Potential, and the Impact of Federal Securities Regulation (No. NREL/TP-6A20-63892). National Renewable Energy Lab.(NREL), Golden, CO (United States). https://www.nrel.gov/docs/fy15osti/63892.pdf 17 Mohammad, A., Zamora, R., & Lie, T. T. (2020). Integration of electric vehicles in the distribution network: A review of PV based electric vehicle modelling. Energies, 13(17), 4541. https://www.mdpi.com/1996-1073/13/17/4541 18 EPRI, June 2020. Electric Transportation Infrastructure Program Support (ETIPS), https://www.epri.com/research/products/000000003002019575 and EPRI - Advances Electric Transportation with New Initiative, Consumer Guide and Blueprint 14 Association of Energy Services Professionals

Figure 5 Analytic Formulation Source: Datta of Optimization Problem Datta19 argues that Electric Vehicles (EVs) charging will require further Borowski22 has done extensive research on the structure of the expansion of DER to support automated metering infrastructure (AMI), electricity industry in the European Union. Though some of the details in houses communications devices, and smart building management differ, the contrasts that he points out between tradition regulated systems for smart grid-oriented power systems. EV infrastructure needs electricity markets and the transition to more imperfectly competitive to be factored into energy industry planning and management. Planning electricity markets are equally applicable in the USA market. Borowski for EV charging includes vehicle to home (V2H), vehicle to drive (V2D), observes that along with economic development and development of vehicle to vehicle (V2V), vehicle to grid (V2G), vehicle-to building (V2B), power systems, new more effective models of the energy market are and grid to vehicle (G2V) components as depicted in Figure 5. Each of needed. Traditional zonal models used for the electricity market have these EV charging modes will have an impact on the electricity grid, its proved to be poorly adapted to new circumstances occurring in and planning, operations, management and outcomes. affecting the industry. The main aim of Borowski’s research was to show the direction in which the energy market should move to meet The management of energy supply and demand is becoming more state-of-the-art technical, ecological and social challenges. Borowski’s challenging, especially in regions where the demand continues to grow recommended zonal / nodal models have great potential for improving rapidly, and more intermittent renewable supply sources are added to technical models of the functioning of the electricity market. Zonal the energy infrastructure. In this context, Demand Side Management market profiles are described in databases with data and information (DSM) can be employed to align supply and demand and improve on each zone including: (A) existing nodal infrastructure; (B) electricity reliability of the system under supply constraints and stretch the capacity services currently available from all entities; and (C) currently authorized limits of the existing grid infrastructure. A game theoretic approach prices of electricity services. for a DSM model incorporating storage components is provided in Chapman.20 Their research is focused on environments with energy ZONAL AND NODAL MODEL OF ELECTRICITY INDUSTRY supply constraints and dynamically changing usage patterns. We build upon Borowski’s zonal / nodal model, and other research The potential adverse effects of failures to adequately plan and cited in this article, to formulate a more robust and relevant model of the implement responsive strategies are illustrated by the estimated modern electricity industry. The deregulated, imperfectly competitive $130 billion of economic losses in Texas alone, as reported in Busby,21 USA electricity industry has pockets of locally effective monopolies that occurred during the outages in winter of 2021. They provide a sometimes enabled by patents on new technology. This environment comprehensive analysis of the causes of the Texas network outages. requires more complex models of industry decision making behavior They recommend various potential solutions including demand and “market clearing” conditions. The traditional Generation- response and expanded interstate interconnections that Texas should Transmission-Distribution-Retail (GTDR) segmentation of the electricity consider. industry is appropriate with refinements that reflect the impacts of state level regulation, ISO/RTO network management, DER integration and The literature cited in this section illustrate the interdependence of other market affecting dynamics. evolving CSMG and EVCN infrastructure. It also illustrates the need for collaborative planning, engineering and management of this The zonal/nodal model of the electricity industry allows us to capture infrastructure by interdisciplinary teams of experts. the role of CSMG and EVCN at a level of detail that is infeasible in previous models. In our model the zones are analogous to geographic areas where the rules governing the electricity market are homogenous. Locations that operate under different regulatory rules would be in different zones. In the USA this means that we model the industry with zones at the ISO/RTO level and a regional market consisting of multiple zones. Within a zone, the structure of the GTDR market has implications regarding where and how new entrants, such as CSMG and EVCN companies, can interconnect with the “locally regionalized” electricity grid. Within a zone, supply and demand transactions occur at distinctive node(s) in the electricity network such as depicted in Figure 2 by the blue distribution links of the electricity network. More detailed perspectives on this model of the electricity industry are built around engineering / economic / financial / regulatory details specific to a particular market zone and the electricity network within the zone. Additional consideration is given to details of the infrastructure project(s) being contemplated for deployment by companies in the local market zone. The essence of these details is codified in each stakeholder’s decision-making process regarding GTDR affecting capacity to be supplied and prices to be offered to their potential buyers/customers. 19 Datta, U., Kalam, A., & Shi, J. (2019). The Strategies of EV Charge/Discharge Management in Smart Grid Vehicle-to-Everything (V2X) Communication Networks. Advanced Communication and Control Methods for Future Smartgrids, 177. https://www.intechopen. com/chapters/66244 20 Chapman, A. C., Mhanna, S., & Verbic, G. (2017, August). Cooperative game theory for non-linear pricing of load-side distribution network support. In The 3rd IJCAI algorithmic game theory workshop. https://agt2017.net.technion.ac.il/files/2017/07/AGTIJCAI2017_paper_20_ChapmanMV.pdf 21 Busby, J. W., Baker, K., Bazilian, M. D., Gilbert, A. Q., Grubert, E., Rai, V., Rhodes, J.D., Shidore, S., Smith, C.A. & Webber, M. E. (2021). Cascading risks: Understanding the 2021 winter blackout in Texas. Energy Research & Social Science, 77, 102106. https://doi. org/10.1016/j.erss.2021.102106. 22 Borowski, P. F. (2020). Zonal and Nodal Models of energy market in European Union. Energies, 13(16), 4182. https://www.mdpi.com/1996-1073/13/16/4182 www.aesp.org | third quarter 2021 15

Decision Model in Zonal / Nodal Structure methodologies to determine socially optimal capacity and price levels. These traditional models for public-utility capacity and pricing decisions We envision the stylized zonal / nodal structure of the USA electricity were based on technical formulations that do not capture the full market in the context of Figure 2. A local electricity market is a zone richness and complexity of the electricity industry environment today. consisting of: (a) specific distribution links in the network; and (b) a Consequently, there is a need to develop “modernized” technical models set of companies that may be operating in sub-sectors of the GRDR that reflect the intricacies of today’s electricity market. In traditional supply chain. Companies make decisions about: (a) capacity levels; (b) technical models of a regulated, monopoly, electricity industry, the locations on the network for different types of infrastructure that they objective was to: choose capacity and prices to maximize Consumer may add to the supply chain; and (c) decide the prices at which their Surplus Plus Profits subject to the constraint that generating capacity is supply is offered to buyers. Each company in a zone is assumed to make decisions based on the rules that affect their position in the GTDR always greater than or equal to demand, see Dansby.25 This statement of supply chain with considerations of their constraints. Because there may be multiple companies operating at various GTDR nodes, the market the analytic formulation is insufficient to reflect the scope of factors that environment is very dynamic and imperfectly competitive. In a simple should be considered in today’s electricity decision making. We need a model, each company delivers electrons to customers and makes paradigm that reflects the roles of all primary industry decision makers. decisions concerning: In this way, we can model the implementation of market adjustment mechanisms that are less reliant on long cycle rate cases to facilitate • network locations {L} at which to deploy and interconnect; more timely management of crucial operational factors. • type {T} of capacity to deploy; Our analytic framework is codified in our SOLIX™ software platform that enables: (a) rapid production of simulations for various zonal / nodal • size {W} of capacity to deploy; market specifications; (b) generation of parametric results and visual insights that guide further analytic explorations; and (c) optimization • price {P} schedules for services offered to potential buyers; and of major decision variables. The SOLIX™ platform is foundational for a comprehensive system that is useable for real time modelling of market • service provisions {SP} contained in supply contracts for customers. dynamics including pricing adjustments. The ultimate objective is to use the SOLIX™ platform to support real time adjustment of incremental Each company seeks to make its decisions, based on its zonal market prices and other operating parameters. Such a system will empower profile, with the objective of maximizing returns (ROI) to its shareholders, decision makers to be more responsive in managing dynamic changes while operating within the constraints imposed by business, regulatory in supply / demand conditions. and environmental rules, and achieve acceptable Social Returns on Investment (SROI). In other words, each company’s decision problem Our zonal / nodal model framework incorporates some of the is to select a vector {L, T, W, P, SP} to maximize ROI while satisfying insights shared in Busby to accommodate a rich market planning and zonal rules and achieving acceptable SROI. For each company, this is a decision-making environment that can capture rapidly changing market multiple constraint, non-linear, stochastic optimization problem. As such, economics. Preliminary analysis shows that our zonal / nodal model the proposed model framework is a generalization and extension of the framework can accommodate a wide variety of electricity market Dansby23 analytic framework. scenarios that are of interest to decision makers and regulators. For model specifications that reflect traditional monopoly model settings, DECISION OPTIMIZATION as in Dansby, DAPSO optimization of the zonal / nodal model produces The solution algorithm that we use to derive alternative solutions at results that are consistent with traditional marginal cost pricing and avoided cost pricing strategies. For model specifications that reflect the company, zone and national levels is based on the “Particle Swarm more heterogenous market structures, with a mix of decision makers Optimization” (PSO) methodology. PSO is a stochastic, population- and market diversity, the DAPSO optimization of the zonal / nodal model based evolutionary optimization technique. Specifically, we use a novel produces results that are reminiscent of Shapley Value solutions. algorithm called Dynamic and Adjustable Particle Swarm Optimization (DAPSO). Technical descriptions of the DAPSO algorithm are provided Electricity generation and usage has several distinct Functional in Liao.24 The PSO solution methodology arose from research efforts to Attributes (FAs): quality, reliability, time of use, consumption (kWh) model the complex, seemingly coordinated, movement of bird flocks as they dynamically adjust their individual flight paths in real time to volume, maximum demand (kW), and environmental impact. Woo26 respond to changes in the flight paths of other members of the flock. Though movements of the flock may appear to be coordinated, the shows that differentiated electricity products can be formed by flight patterns can be described by decision models of each individual packaging its non-price attributes at a commensurate price. We bird flying according to a simple set of decision rules. In an analogous fashion, we model the decisions of each electricity company in the combine these insights, with fundamental principles from Dansby,27 to context of a few rules that lead to model behaviors that mimics actual market decision dynamics. build service design decision functionality into the SOLIX™ platform. Consequently, the SOLIX™ platform can be used to determine best Multi-dimensional parametric sensitivity analysis and DAPSO are prices for current services as well as the development of new services used to produce optimal {L, T, W, P, SP} configurations. The optimal based on available resources and their FAs. When existing service {L, T, W, P, SP} sets are calculated with the DAPSO method using data provisions are too inflexible to respond to market dynamics, new produced by parametric analyses. We use these methods to examine structured services can be designed to enable operationally dynamic planning decisions regarding energy infrastructure requirements that decision making that improve market outcomes. are responsive to local market conditions. Technical Properties of Optimal Solutions Marginal cost and avoided cost are well established as the key benchmarks used by electricity industry regulatory commissions to set A traditional general principle governing pricing strategy is that prices prices. The rationale for using marginal cost, or avoided cost, resulted should be equal to marginal cost. We are interested in discovering for analytic models that used economic and operations research modernized principles that can be used as guidance in electricity network resource management. As a result of our preliminary analyses using our Zonal / Nodal Model, several insights have emerged. We summarize some of those insights here. 23 Dansby, R.E., 1979. Multi-period pricing with stochastic demand, Journal of Econometrics, 9(1-2), 223-237. https://ideas.repec.org/a/eee/econom/v9y1979i1-2p223-237.html 24 Liao, C. Y., Lee, W. P., Chen, X., & Chiang, C. W. (2007, June). Dynamic and adjustable particle swarm optimization. In Proceedings of the 8th World Scientific and Engineering Academy and Society (WSEAS), International Conference on Evolutionary Computing, Citeseer (pp. 301-306). https://dl.acm.org/doi/abs/10.5555/1347992.1348005 25 Dansby, R. E., & Conrad, C. (1984). Commodity bundling. The American Economic Review, 74(2), 377-381. http://neconomides.stern.nyu.edu/networks/phdcourse/Dansby_Conrad_Commodity_bundling.pdf 26 Woo, C. K., Sreedharan, P., Hargreaves, J., Kahrl, F., Wang, J., & Horowitz, I. (2014). A review of electricity product differentiation. Applied Energy, 114, 262-272. https://doi.org/10.1016/j.apenergy.2013.09.070. 27 Dansby, R. E., & Conrad, C. (1984). Commodity bundling. The American Economic Review, 74(2), 377-381. http://neconomides.stern.nyu.edu/networks/phdcourse/Dansby_Conrad_Commodity_bundling.pdf 16 Association of Energy Services Professionals

KEYTECHNICAL INSIGHTS REGARDING OPTIMAL STRATEGIES DISTRIBUTIONAL COST AND BENEFIT ASSESSMENTS We define Intertemporal Price Adjustment Mechanisms (IPAM) as The distribution of net benefits, among companies and consumers authorized percentage increments (decrements) to PUC approved Rate that accrue from the use of these more dynamic market clearing Schedules, for a PUC authorized duration of time, by electricity suppliers strategies, appear to be sensitive to the details of costs and usage in when demand and supply are becoming imbalanced. Authorized IPAMs each zone. Further insight regarding the distributional impact of these may also be specified as additional price charges (billing credits) that are strategies will be developed as we analyze each zone using very granular increments to PUC approved Rate Schedules. In this context: empirical data and information. There are several policy decisions that • Policies that authorize the use of Intertemporal Price Adjustment are likely to have differential distributional impacts, adversely affecting Mechanisms (IPAM) in response to rapid dynamic load changes that some companies and customers while improving the positions of affect load peaks, such as duck curve ramp ups, yield outcomes with others. To fully evaluate alternative policies, we need develop a better higher ROI and SROI as well as greater efficiency and equity. understanding of these distributional tradeoffs. Our SOLIX™ Platform can be used for these purposes if we have adequate empirical data and • Use of authorized IPAMs generally will yield beneficial impacts on information for each Zonal / Nodal market under consideration and its aggregate ROI and SROI, as well as greater efficiency and equity, various stakeholders. In future work, we will model and analyze policy though there will be differential impacts on individual companies and decisions that may have differential distributional impacts. Empirical data consumers. and information on zonal / tonal markets will be necessary to develop analyses of such distributional impacts of electricity policies. • Policies that permit a Community Solar Micro Grid Operator (CSMGO) to serve any customers who are located on a given local distribution network, and who choose to subscribe under terms of a virtual net metering program, yields outcomes with higher ROI and SROI as well as greater efficiency and equity than policies that restrict a CSMGO to provide its output only to potential customers located within a contiguous small radius of its solar farm. CONCLUSIONS • Policies that incentivize EV Charging Network Operators (EVCNO) by authorizing discounts on EVCNO’s In this article, we provided a purchase of power from Electricity Suppliers (ES) high-level overview of a new approach to to account for the positive environmental impacts modelling and analyzing capacity and pricing produced by EVCNO’s sales to mobile EV decisions in a dynamically evolving electricity owners, yields greater ROI and SROI as well as greater efficiency and equity than policies market. The new model paradigm accommodates the that do not factor in the environmental complexities associated decision making in electricity benefits of EV traffic. markets where DER, CSMG, EVCN, VNM and other innovative infrastructure are being deployed. Our model framework also These technical insights apply at the facilitates the incorporation of market dynamics that are driven aggregate level in a particular Zonal / Nodal by a heterogeneous mix of competitive, oligopolistic and monopoly market. Even though aggregate efficiency and equity are improved under the conditions stated, there may be individual sub-sectors within a zonal market. As a result, we can model the companies or consumers whose net essential features of a zonal market that are relevant to the analysis benefits may be adversely impacted. of decisions by key operators in the zonal market. We have created the fundamental foundations of a com- prehensive tool for analyzing electricity industry supply and demand conditions. These models can be used to recom- mend appropriate prices (rates) that will improve the effi- ciency and equity of electricity supply and usage. Work on the model and analytic framework will continue as we embed additional analytic capabilities in an enhanced, integrated software system. We invite other AESP members to join our interdisciplinary research initiative. About the author 17 Dr. Robert E. Dansby pioneered foundational analytic algorithms for electricity capacity and pricing optimization. He wrote seminal papers on peak load pricing. He is currently working on methodologies for use in planning and managing electricity networks that: (a) utilize innovative technologies for generating and controlling electricity supply and distribution; and (b) incorporate the impact of evolving changes in electricity usage patterns. He is a former researcher in the Mathematics Research Division of Bell Laboratories and has previously worked on electricity regulatory policy with collaborators at leading institutions. He is a former adjunct professor at Rutgers University School of Business and Yale University School of Organization and Management. He earned degrees in mathematics from UAPB (BS), and UCLA (MS) as well as a Ph.D. from New York University. www.aesp.org | third quarter 2021

Finding the Sweet Spot: The Keys to EV Lo d M n ement By Gary Smith As electric vehicle (EV) adoption grows, common programs fall short, and highlight data from more than 1,500 EVs not enrolled utilities nationwide are facing increasing how our approach avoids these common in any load shifting programs, shows a typical challenges from EV load, particularly pitfalls. peak contribution for a summer-peaking during peak times. There are a myriad of utility. Even in areas of the country with high program options to address this issue, but Before exploring the keys to success, external capacity costs – say $200 per kW per not all programs are created equal. EV load what does EV charging behavior look like year – the portfolio value of shifting 1 kW per management program success hinges on “in the wild,” without any programs or other EV is at most $200 per year. This means that three factors: load impact, market share, and interventions from the utility? While individual without highly scalable, low cost, high impact cost. Too often, the approaches utilities adopt EVs frequently charge between 7 and 11kW, load management, utilities may be better off will not have the intended outcome because the average contribution of a typical all-electric doing nothing at all! they do not adequately address one or more vehicle to peak is about 1kW. Of course, this of these factors. Using Sagewell’s experience depends on the time of year and specific EV LOAD MPACT designing and implementing EV load mix (charging rate and miles driven). The below management programs, we’ll explore how graph, taken from Sagewell’s analysis of AMI The first key to a successful EV load management program is load impact. Without the ability to effectively and reliably manage or shift EV load, an EV program has little chance of success. Intuitively, many utilities gravitate toward the two most common solutions– rate-based and hardware-based– which unfortunately can often have a significantly smaller impact on charging load than assumed. Each EV will not actually contribute a full 7kW on peak every single day, but many programs are designed around this assumption. The below chart shows the charging frequency of nearly 450 EVs in August 2021. While the average driver charges every 2.9 days, or about 10 times per month, there is significant variability. Those EV drivers that charge most frequently are the most valuable to include in load management programs, as they are more likely to charge during a critical peak time. We have found that we must ground our decisions in real data from AMI meters or other sources to ensure that our clients understand the true potential for impact among their customers. HOURS OF DAY 18 Association of Energy Services Professionals

Rate-based solutions create a pricing so hardware-based solutions feel familiar. any given time. This could be due to changed incentive, which utilities hope will shift The most common devices for EV load home router settings, poor WiFi connection, customers’ natural behavior. Unfortunately, management are networked chargers and or several other issues. SEPA highlights a rate design for a significant load impact OBD-II telematics hardware. Incidentally, case study in a different 2019 report where a requires striking a careful balance between telematics hardware cannot directly control utility found, “Some devices had more chronic higher rates at undesirable charging times charging, so any management still relies on issues than others, but on average 55% of and lower rates at ideal charging times. communication and monitoring rather than the residential systems were dependably Utilities also need to determine ideal off- direct control. peak windows based on local conditions online.” 3 While networked chargers will and customer satisfaction impacts. A recent When it comes to load impact for typically continue to follow their programmed analysis we completed of a specific utility’s hardware-based programs, the primary schedule when not connected to the internet, time-of-use (TOU) rate participants who drive two challenges are when and how often to they cannot be actively managed or report any an EV showed that only 50% of on-peak load call load management events, and device data. was shifted to off-peak hours, while others connectivity. For programs based on actively curtailing load during peak events, the utility While using event-based EV load report success as high as 90%.1 Even with needs to accurately predict the peak times– management to shave peaks or to intentionally relatively large pricing differentials between which consumes staff time and resources– charge during times of excess production on peak and off peak, some drivers continue while also being careful not to overly restrict is tempting, our experience indicates that in to charge during peak times. customers’ charging. For example, several nearly every case passively shifting EV load very hot days in a row often cause customers every weekday is more impactful. Our passive However, a Smart Electric Power Alliance to opt out of management events; customers load management program, Bring Your Own (SEPA) report from 2019 found that the most may feel annoyed by frequent alerts and Charger® (BYOC), has EV drivers use their common reason surveyed utilities offered a stop participating. Additionally, based on car’s built-in charging timer to program the time-of-use rate for EVs was to incentivize Sagewell's experience running some of the vehicle to charge during overnight hours and adoption (72%) or to gain real-world experience earliest networked charger programs for uses AMI disaggregation and over-the-air with the rates (45%). Only 34% developed the utilities, between 10% and 15% of networked OEM telematics systems to monitor customer rates to minimize grid impacts, which means chargers are not connected to the internet at behavior instead of actively managing load. many current programs did not have load Our programs see 90-95% of EV charging load during off-peak hours without the need shifting as the core principle of their designs.2 for active management or special rates. When rate-based solutions are not MARKET SHARE feasible due to regulatory requirements or other barriers, or utilities feel the need The second key to success is market share. to more actively manage charging, they If a program is able to manage load with often turn to hardware-based programs. a 100% success rate, but only 1 in 100 EV Many utilities have extensive institutional drivers participates, that program will fail. An experience with load control hardware on excellent customer experience and a simple water heaters, air conditioners, or thermostats, straightforward program design are core to success. Many customers find the extra time or work required for load management programs to be too burdensome, resulting in low participation. Voluntary time-of-use rates (whether separately metered or whole-home) have low participation rates – usually in the single digits. Synapse Energy Economics found that, “due to customer inertia, low levels of customer enrollment are common when customers are required to actively opt in to 1 APPA, “Exploring Electric Vehicle Rates For Public Power”, 18. 2 SEPA, “Residential Electric Vehicle Rates That Work”, 2019, 17. https://sepapower. org/resource/residential-electric-vehicle-time-varying-rates-that-work-attributes- that-incr ease-enrollment/ 3 SEPA, “A Comprehensive Guide to Electric Vehicle Managed Charging”, 24. https:// sepapower.org/resource/a-comprehensive-guide-to-electric-vehicle-managed- charging/ HOURS OF DAY 19 www.aesp.org | third quarter 2021

the rate”.4 Many customers do not want to change their whole-house Hardware-based solutions are expensive; there is no other way consumption patterns, and the process of installing a separate meter is to put it. Even if a customer installs a Level 2 networked charger, the often expensive, time consuming, or simply impossible for those who cost of subsidies for purchasing the type of networked charger model rent their homes. SEPA reported that more than half of surveyed utilities supported by the utility and yearly network fees paid to the manufacturers with a time-of-use rate for EVs (whole-home or separately metered) had are almost always greater than the capacity and transmission savings participation rates under 10%, and the average participation rate was earned. Typical incentives for networked charger programs are $250- 500 or more.10 Hardware telematics programs, with equipment costs of 21%.5 However, a recent survey we conducted of EV drivers in Florida $200 or more per device and monthly network fees, almost always cost revealed that many wanted their utility to offer TOU rates. As consumers more than any savings gained from load management. become more knowledgeable on varying rates, rate-based solutions stand to achieve greater market share. Some utilities, like DTE Energy Analytics-based solutions with high market share are often the and Consumers Energy, provide EVSE incentives that are tied to TOU only solution where the benefits of the program outweigh the costs. However, in some parts of the country, there is simply no economic case program participation.6 And opt-out TOU programs experience much to be made for load management. In other words, the cost of running a program, regardless of the type of program, can be greater than the higher market share than opt-in programs already– as much as 90%.7 benefits of shifting the load. This is particularly true for utilities without capacity or generation constraints, or those in regions without a capacity Hardware-based solutions have different barriers, but also struggle to market. meet enrollment thresholds. Our data suggests that networked chargers have a 10% market share nationwide. 90% of EVs sold in 2020 came CONCLUS ON with a 240-volt charging cable as standard, including Audi, Chevrolet, Ford, Porsche, and Tesla. Networked charger-based programs are also It is imperative that utilities (particularly public power and cooperatives) limited in the accepted brands and models, further restricting customer run the numbers to calculate the real-world costs and benefits of load choice. Significant market share is also difficult to achieve with OBD-II management. A simple method for calculating impact is to multiply the devices. For some makes and models of EVs, including all Tesla models, effectiveness (% of EV load shifted) and market penetration rate (% of EVs the process to install such a device includes removing factory-installed enrolled), giving the actual percent of EV load that is shifted. Solutions trim panels with a special tool, and moving or reconnecting factory- under 40% total impact are unlikely to meet peak reduction or cost installed wires. To shift a meaningful amount of load, EV programs need targets. Using AMI data, Sagewell is further able to model the costs and significantly higher market share than the 5-15% we see from hardware- benefits of managing an average EV to help individual utilities determine based programs. which management programs may be right for local conditions. To achieve market buy-in, load management programs must be In the real world, there is rarely a “one size fits all'' solution, and utilities easy and accessible for a large number of customers. The enrollment are increasingly offering multiple options for EV drivers. For example, process should be as straightforward and simple as possible. Ideally, DTE Energy offers networked charger, TOU rate, OEM telematics and customers should be able to complete the entire process at once. The BYOC program options for EV drivers. While Sagewell leverages existing eligibility requirements for participation should be as broad as possible, AMI infrastructure or OEM telematics, these solutions are not the right and program rules and incentives should not be overly complex. We fit for every utility or every EV driver. Additionally, load management is have found that simple, clear programs with flat incentives can see not the only motivation for launching EV programs, with many programs EV participation rates of over 50% and grow much more quickly than doing double duty to increase EV adoption and customer satisfaction. hardware- or rate-based programs that our partners have offered in the Even an imperfect EV load management program can be a net benefit past. Even with a well designed program that has the potential to reach for utilities if it gets more EVs on the road. many customers, utilities must also market the programs to customers. SEPA found a 3x increase in adoption for EV rate programs with active About the author marketing programs.8 Gary Smith is the VP of Programs. In that capacity, he is responsible for COST Sagewell’s electrification and EV load management programs. Gary has The final key to an effective load management program is cost. As worked at Sagewell since 2015, where previously mentioned, the maximum value of EV load management in he first worked administering utility high-cost markets is about $200 per year. In many parts of the country, weatherization and rebate programs. the value is even lower. EV load management programs need to be cost His role has since expanded to include effective, or utilities may be better off taking no action. Improper program management of all customer-facing design can result in a utility giving away the entire economic value of the programs, marketing, and business development. He works closely program. Because many programs have low adoption rates, utilities try with clients to design and implement all aspects of programs and to entice higher participation rates through more generous incentives, to coordinate with internal teams for deliverables. which only worsens the problem. A report from the Smart Electric Power Alliance in 2019 8 SEPA, “Residential Electric Vehicle Rates That Work”, 2019, 27. showed that over 60% of EV time-of-use rates provided an off-peak discount of over 60%, compared to the on-peak rate.9 But a properly designed rate-based program can prove cost effective, as there is not the additional expense of hardware devices. 4 Synapse Energy Economics, “Driving Transportation Electrification Forward in New York”, 2018, 24. https://www.synapse-energy.com/sites/default/files/NY-EV-Rate-%20Report-18-021.pdf 5 SEPA, “Residential Electric Vehicle Rates That Work”, 2019, 27. https://sepapower.org/resource/residential-electric-vehicle-time-varying-rates-that-work-attributes-that-increase-enrollment/ 6 https://www.consumersenergy.com/residential/programs-and-services/electric-vehicles/powermidrive, https://www.newlook.dteenergy.com/wps/wcm/connect/dte-web/home/service-request/residential/electric/pev/pev-res-charge-frwd 7 Synapse Energy Economics, “Driving Transportation Electrification Forward in New York”, 24. https://www.synapse-energy.com/sites/default/files/NY-EV-Rate-%20Report-18-021.pdf 8 SEPA, “Residential Electric Vehicle Rates That Work”, 2019, 27. https://sepapower.org/resource/residential-electric-vehicle-time-varying-rates-that-work-attributes-that-increase-enrollment/ 9 SEPA, “Residential Electric Vehicle Rates That Work”, 2019, 15. https://sepapower.org/resource/residential-electric-vehicle-time-varying-rates-that-work-attributes-that-increase-enrollment/ 10 https://clippercreek.com/evse-rebates-and-tax-credits-by-state/ 20 Association of Energy Services Professionals

Simply the Best By Ian Motley You can’t read about 2020 without coming across Innovation in Technology the phrase “unprecedented times” at least once. But for energy companies and professionals, we have been ecobee living in unprecedented times for quite some time now. To us at AESP, that is the entire point of having awards In 2020, ecobee released eco+, a free thermostat optimization that highlight contemporary energy projects and software that seamlessly integrates EE, DR, and TOU optimization in professionals who are simply the best at what they do, a revolutionary, customer-friendly way. eco+ supercharges ecobee in the hope that we can all learn from their success. smart thermostats to provide customers with deeper energy savings and enhanced comfort. Over 1.5M customers use eco+ to improve In the age of distributed energy, demand flexibility, their everyday lives. The effectiveness of eco+ can be demonstrated in and decarbonization, the pace of change can be ecobee’s third-party measurement and verification study, which found disorienting to some, exciting to others, and always ripe that customers across the United States and Canada who use eco+ with opportunity. This year’s winners of the AESP Energy save 5% more energy than those who use the smart thermostat alone, Awards have one thing in common: their willingness and up to 23% more on cooling costs in regions with time-of-use rates. to embrace the new and rise to the challenges in front of them through the power of collaboration and Commercial and Industrial Engagement technology. and Marketing Congratulations to Power TakeOff and ComEd this year’s winners. Your successes are an Power TakeOff developed the Community Assistance Service for inspiration to us all. ComEd in March 2020 to support organizations that were forced to close as a result of Illinois Stay-At-Home orders from COVID-19. Leveraging AMI data, facility consumption was analyzed; identifying fast, no-cost operational savings for businesses and schools whose data showed typical usage despite their closure. Power TakeOff virtually contacted these customers to provide remote efficiency support to transition the buildings into a closed operating mode. The impact was incredible; contacted organizations saved 13 GWh, equal to $1 million, over a 3-month period (not annualized savings, including confirmed and unconfirmed savings). www.aesp.org | third quarter 2021 21

Team Insight Beyond Energy Efficiency IESO Peter Widmer, Chief Business O cer at Power TakeO The IESO, with support from Natural Resources Canada and delivery “Relationships are critical to driving impact within the non- partner Alectra Utilities (the distributor in the demonstration area), is residential customer segment. Software, data analytics, and exploring market-based approaches to secure energy and capacity meter data can help scale and optimize overall project success; services from DERs for local and system-level needs while coordinating but, property managers, facility engineers, and energy managers across the electricity system. The IESO York Region Non-Wires want to work with qualified, trusted experts that can synthesize Alternatives (NWA) Demonstration project will leverage both existing the information into tangible process changes.” and new resources in the southern York Region, where electricity demand is growing and is expected to exceed system capability over Residential Customer Engagement the next 10 years, in order to understand the potential of DERs and a and Marketing local electricity market in place of traditional infrastructure. Ameren Missouri and Illinois Resiliency Award Ameren created a cross-state campaign building off of the insight FortisBC that customers are more satisfied when they are familiar with the variety of account options that help customers manage, track and FortisBC adapted their Energy Leaders school program to a distance save energy. Our objective was to raise awareness of the full suite of learning model proving resiliency in the face of COVID. Parents and options, drive adoption of offerings that were best suited to meet our teachers had to homeschool or provide education via distance customers' needs, and increase customer satisfaction. To meet these learning. FortisBC offers free curriculum-connected lesson plans for goals, Ameren ran a multiphase, integrated campaign resulting in 117M grades K-12. To support teachers and parents during the pandemic, media impressions, 600K website visits, a substantial lift in recall in J.D. 44 lesson plans changed to incorporate a new distance learning page Power, and increased enrollment across Missouri and Illinois within the to support home-based/virtual learning during COVID19. In addition, first year. FortisBC waived account sign-in requirements, allowing easy access for teachers and parents. 2020 Lesson downloads increased 188% Groundbreaking Commercial and Industrial over 2019 and the number of users to the site increased 124%. Program Design and Implementation Honorable Mention ComEd TVA for Resiliency Fix-It-Now Compressed Air (FIN CA) offering is a groundbreaking When COVID-19 hit the Tennessee Valley, on-site audits and approach to immediately fix industrial customer compressed air leaks inspections stopped for health and safety reasons. Although buildings as they are identified, which is a common need for almost all industrial were temporarily shuttered, TVA understood that businesses’ energy customers. The offering provides a fixed-price incentive for the Energy needs were still ongoing – and potentially even more critical in a Efficiency Service Provider (Service Provider) to survey compressed air financially challenging time. To adapt and fully support the needs of its systems and identify and fix as many leaks as possible at the same time. customers while also ensuring the safety of all personnel, EnergyRight The total incentives paid for 2019 & 2020 projects were $3,428,000 for began performing virtual inspections using a smart glasses technology an annual energy savings of 47,050,000 kWh for a total of 694 projects called Vuzix. With this solution, virtual audits and inspections are with an average incentive rate of $0.07/kWh. conducted remotely by qualified inspectors using Vuzix Virtual Glasses and a pair of headphones. While the customer wears this equipment, Groundbreaking Residential Program they can interact with up to 10 advisors at once and in real-time to Design and Implementation evaluate the facility, review the necessary documentation, and verify PG&E and equipment was installed correctly. Sonoma Clean Power About the author Destructive wildfires, including those that destroyed several thousand homes in 2017 and 2018, have plagued California in recent Ian Motley is head years. To help address some of the resulting challenges for the of marketing and affected communities, various organizations collectively designed communications at the a program to provide beneficial rebuild solutions. The Advanced Association of Energy Energy Rebuild (AER) program is a partnership across PG&E, Sonoma Services Professionals. Clean Power (SCP), and the Bay Area Air Quality Management District He has over 10 years of (BAAQMD), managed by TRC. In May 2018, the program started marketing experience helping homeowners rebuild more energy-efficient homes with lower in STEM industries greenhouse gas (GHG) emissions. As of March 2021, the program has including clean energy, served 625 dwelling units. grid management, and civil engineering. He possesses a Masters in International Marketing Management from Boston University and is an ardent advocate of the oxford comma. 22 Association of Energy Services Professionals

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lexibility By Carmen Best Take a deep breath. Now let it out slowly. the operations of a clean and stable grid. Flexing our data muscles is another Where do you see a space opening in the fast- Our siloed categories of budgets, rules, and opportunity. Today we have so much data we changing energy industry? For me, I see a wide expectations for resources are too limiting. can hardly figure out how to operationalize it or range of new and exciting companies with Value in this flexible future requires more than get it where we need it to optimize decisions. innovative solutions for meeting customers' just achieving annual energy savings goals or It can provide insights on optimization and needs. I see utilities and newly emerging shelling out rebates for the technology du jour. drive accountability when and where we have load-serving entities like Community Choice transparency and appropriate access. With a Aggregators taking demand-side resources Another stretch is that of possibilities. The clear value signal from regulators and utilities seriously in addressing system needs. Que demand-side energy industry of today is full and a straightforward means of demonstrating the bridge pose. We're in a unique position of innovation and qualified professionals. impacts that align with that value, we have a to stretch our expectations of the status quo Many energy efficiency programs of the chance to establish the weights and measures and build the right connections that enable a past have put great emphasis on recruiting foundational to any market. future teeming with demand-side solutions and training businesses to serve as conduits for customers and the grid. for incentivizing single technologies. Many Take another deep breath. Let's assume companies are skilled in implementing we're all on the same mat with acceptance One of the first stretches from the status program designs outlined in detailed of the term demand flexibility and appreciate quo is to understand and appreciate requests for proposals. In a winner-take-all that there is a universe of providers and data demand flexibility. Demand Flexibility is procurement model, they may be set to do it to enable this future. Que the headstand. Let's a class of resources that includes energy for a long time. While this may offer stability for take a hard look at new deployment models efficiency, demand response, electrification, some, it may be constricting innovation and to get to scaled investment in demand-side distributed generation, and storage. When enabling the right solutions from getting to the resources. The solutions necessary to drive these components can work together or right customers. It may also box out a lot of consumer demand, private capital, and actual independently to increase or decrease qualified companies that could be delivering grid and climate benefits exist but can only consumption, they support customers in their value. scale if we enable real market access. goals to manage energy and help support www.aesp.org | third quarter 2021 23

One example of expanding market access cost-effective value to the grid and climate market actors and ultimately aligns incentives is using a neutral procurement mechanism and settles directly with the customer on their across the system. The Demand FLEXmarket like the Demand FLEXmarket. The critical contribution. Costs to administer and measure gives local companies the freedom to develop elements of this market-access model are are taken out of the system value and the their unique business models, optimize the closely aligned with the core needs for aggregator has the complete flexibility to meet range and combinations of technologies that evolution and expansion of demand-side customers with a project value proposition resonate with customers, and demonstrate solutions. At the core, it enables: grounded in the system benefits. their value to the grid. • �Competitive markets based on One of the key assets of this market access It lowers transaction costs for all parties performance construct is that it provides a streamlined because utilities pay only for measured and procurement mechanism for both utilities and delivered demand flexibility (load shape • A� product, technology, and business service providers. It side-steps many of the impact to their grid). They do this at the exact agnostic pathway to deliver impacts central planning barriers and complexity that rate that makes each project cost-effective come with traditional efficiency programs. by definition and, aligns the payments with • L� ower transaction costs for all parties Prescribed incentives for single technologies regulatory guidance. The mystery of how focus on the average savings. Meter-based technology incentives align with system • �Payments for cost-effective metered grid performance models can recognize the value is laid bare. This enables demand-side values differentiated value of a kWh in relation to managers to get more of whatever they want the time and place it is delivered. It bridges (like savings from 4-9pm) and less of what • �Revenue-grading: transparent, open- the gap from the largely regulatory process they don't want (participants experiencing source, verifiable record of impacts of establishing value and makes it visible to increasing load). The DemandFLEX Market was born out of the opportunity to amplify the avoided cost system value already embedded in many traditional energy efficiency programs as a meta price signal. Focusing on the value instead of the program design market model enables a wide range of innovative business models and technologies to come forward. Rather than running complicated solicitations, picking winners, and taking the performance and business risk, the Demand FLEXmarket allows utilities to engage the broad market of solutions for their customers and focus on sending a price signal that appropriately values flexibility for their grid. It is that simple. Any eligible aggregator or implementer can sign up with a Flexibility Purchase Agreement (FPA). The utility or other load-serving entity pays aggregators for the maximum 24 Association of Energy Services Professionals

Since aggregators are paid based on the Demand FLEXmarket is based on Take another deep breath; we're almost system benefits delivered, and the customer open-source, transparent measurement there. The Demand FlexMarket may be one is only paying for the value they're gaining, using the CalTRACK 2.0 Methods and the of the most flexible ways to deliver flexibility it creates a much cleaner separation of the OpenEEmeter, which are part of Linux today. All the key elements are available value of these investments on \"either side.\" Foundation Energy. Code and methods are today in most markets. The barriers are If we continue only to track savings goals open-source and available for all parties to primarily the constructs of the status quo shared between participants and the system, review and utilize without restrictions. By using that have served us well but have also served it's much more challenging to parse out which these open-source methods and base code, their time. Moving to a new paradigm of parts of the savings are \"for the system\" and program administrators can have confidence resource procurement, local empowerment, which are \"for the customer.\" They're the same that the results are a reliable reflection of all grounded in accountability, is essential to electrons. the value. Aggregators also have visibility meet our multifaceted goals for a clean and to this common assessment performance sustainable energy system. If we adjust the paradigm to the utility of their portfolios to identify, optimize and and ratepayers buying system benefit, and accelerate the types of projects that deliver About the author participant customers buying their benefit, the greatest value and prospecting tools like many of the complexities of overlap can targeting assistance, a cost-effectiveness Carmen Best leads Recurve’s fade away. Other complexities undoubtedly value calculator for screening projects, and policy outreach and will emerge, but for resource acquisition co-branding opportunities with the utility development to enable programs, this model may be a promising market sponsor. demand flexibility as a one to reconcile the competing objectives of market-based procurable decarbonization and continued system value. This program model has been in action resource through the Focusing on buying system benefits also in MCE, a community choice aggregator consistent valuation of the better aligns utilities with their core purpose in California, since 2020. The Commercial impacts and accessible - reliable system operations and affordable Energy Efficiency Marketplace was approved analytics for all market actors. rates. Utilities can amplify and leverage the by the California Public Utilities Commission Carmen ardently supports the many other companies out ready to support and currently has seven active aggregators development of transparent methods and open-source customers in meeting their comfort and delivering projects in their service territory. software to revolutionize the way distributed resources energy management needs. California's The Commercial Energy Efficiency Market can contribute to the grid. recent adoption of the Total System Benefit program launched with about a $1M budget metric instead of savings goals is an excellent and expanded quickly to about a $5M annual Before joining Recurve, Carmen spent several years at example of this shift in orientation. budget, largely due to the ease of participation the California Public Utilities Commission. While there, and strong interest from aggregators. Much of she brought the findings and insights from evaluation the early interest in the program came from to statewide energy policy through demand forecasting, aggregators that are active in the demand integrated resource planning, and overall improvements response arena. However, to date, MCE does in the deployment of energy efficiency. In over ten years not have the means to pay for their demand with the CPUC, she led the Energy Efficiency Commercial flexibility with energy efficiency funds but Programs & Evaluation team and served as a senior wants to take advantage of demand flexibility analyst. She facilitated the Commission’s transition to impacts and resources (such as peak period standardized data and reporting, priority-based evaluation savings, managed electric vehicle charging, planning, and stakeholder engagement processes to energy storage systems). Current rules within manage its large-scale energy efficiency evaluation energy efficiency framing which measures portfolio. project value based on equipment useful life, measure load shapes, customer cost Carmen has done yoga a few times, but mostly just considerations, limit the opportunities to value admires others that have woven it into their lifestyle more and procure demand flexibility as a resource effectively than she has. from customers in a streamlined model. As a result, MCE expanded the program model to offer a complementary PeakFLEX market in 2021 as they were facing an urgent need to increase the load modifying resources that could offset their risk of purchasing power in response to extreme heat events. www.aesp.org | third quarter 2021 25

A Seven-Step Guide to EV Infrastructure Planning By Will Scherle and Jennifer Rosenthal The continually evolving landscape of transportation Step 1: Goal Setting electrification makes it very difficult to design the ‘perfect’ electric vehicle charging infrastructure. Plans No plan should be the same, as each program provides an opportunity include short-term and long-term objectives, countless to address the concerns and issues that are unique to each community. stakeholders with different motivations, and a variety Understanding key stakeholder concerns (both internally and externally) of EV adoption projections that could drastically and setting goals that directly address the needs of our partners is an vary one way or another. Each community is unique, early part of our process. Working with a variety of customers, success having its own resources, stakeholder concerns, and criteria can vary and may include any/all of the following: variables that will shape the current and future EV infrastructure landscape. It’s imperative to understand • Create affordable, convenient transportation solutions for currently disadvantaged why this infrastructure is being invested in, if there are populations any key stakeholders the infrastructure needs to be developed for immediately, and what will best serve the • Provide accessible charging for a wide range of customers, often quantified by a communities’ current and future needs. target number of charging stations to be installed by a certain point in time TRC partners with utilities, transportation agencies, • Help increase EV adoption and managed charging in single-family residences and municipalities to plan, implement, and evaluate transportation electrification (TE) programs. We work • Help multi-unit dwelling residences have easy access to affordable public charging with our partners to understand their motivations for developing infrastructure, creating a strategic • Create charging for fleets and employee parking territory assessment that highlights key demographics, funding mechanisms, emission reduction goals, and • Manage EV charging load to reduce negative grid impacts and maximize benefits market barriers. In this article, we will cover a series of pre-planning steps to ensure commitment from all • Help limit range anxiety by creating a network of fast charging stations throughout perspectives that will lead to achieving long-term EV the service territory adoption goals and ultimately, program success. • Generate revenue from public charging stations • Establish partnerships with public/private entities to provide easy and accessible charging 26 Association of Energy Services Professionals

Step 2: Stakeholder Engagement Step 4: Siting Strategy Speak with those directly and indirectly involved After this initial layer of public information has been early in the process to ensure the inclusion and gathered and input into the GIS, we work with our representation of all of those involved with the planned partners to understand their specific evaluation criteria charging infrastructure. While these conversations and help create a hierarchical rating system that helps are always a continuous dialogue, it’s imperative to us identify the ideal locations to install charging stations. involve community members that are closely aligned This can include, but is not limited to: with the goals. These could be customers, local and state governments, public agencies, private sector businesses, developers, • Traffic data indicating highly utilized transportation corridors equipment and software providers, contractors, etc. TRC often will hold either in-person or remote working group sessions to clearly explain • Business and residential areas topics of discussion and to document the wants and needs of those most intimately involved. • Commuter centers and/or transportation hubs Further, it’s just as important to understand your organization’s • Utility/authority having jurisdiction relationships and funding motivations and perspectives; workshops with company leadership and opportunities peer lines of business can help identify opportunities for collaboration or unintended impacts, which should be factored into planning. Program • Customer locations (if applicable) success can depend on how well you understand these views and factors. • EV sales and other locational information Step 3: Interactive Mapping • Key stakeholder input The TE charging infrastructure market is growing • Surveys, if applicable every day as private and public charging stations become increasingly prevalent. Open datasets like the Based on this data synthesis, we create a list of top sites for varying Alternative Fuels Data Center and PlugShare provide levels of EV charging stations, segmented by customer type including information on public charging station location, charging residential, public, fleet, or private charging stations. Understanding the station level, and network operator. TRC will combine needs of each site and how it applies towards reaching partner goals is numerous datasets, including information on local traffic, crucial. air quality, and business/residential areas. All this information is used to create a Geospatial Information System (GIS) map of proposed charging Step 5: Density Analysis locations where we can continually add information as it becomes available. Different filters and layers can be used to highlight specific Selecting preferred sites can be a long process, taking variables. We have found that creating an interactive GIS map helps the into account countless variables with varying importance planning team and stakeholders visually understand the service territory to each stakeholder. Preferred sites are chosen because and identify underserved and priority areas. they will have the greatest impact on achieving program goals. Determining the number of charging stations located at each site, as well as the type of charging station is often a contentious process, as different stakeholders have strong opinions as to what is needed today versus 5 years from now. Forecasting charging station utilization rates requires intimate knowledge of the community and insight from stakeholders. Frequency of use for the charging stations, type of charging needed (Level 1, 2, 3), when charging occurs, etc. are all factors in determining the number of charging stations that will optimally serve a geographic area. As an example from the field, TRC is currently working with a partner to install several publicly available charging stations throughout their service territory. The planning team’s initial assumption was that level 2 charging was needed for all stations, but subsequent demographic analysis showed that most of the customers lived within 20 miles of the charging stations, frequented these sites 4 days a week, and left their automobiles charging for 8+ hours. The most cost-effective solution, based on customer needs and driving habits, was to install level 1 charging, as this satisfied the customer needs, created a lower-cost solution for the customer, and allows them to install more charging stations to best serve the actual needs of their EV customers. www.aesp.org | third quarter 2021 27

Step 6: Future-Proofing About the authors The cost of retrofitting a parking space to an EV charging space is Will Scherle has over nearly 4x higher than installing make-ready infrastructure during new 11 years of consulting, construction. Upgrading transformers, upgrading electrical panels, development and project digging up concrete for conduit and electrical, etc. are extra costs that management experience, can be planned for in advance. Whenever possible, installing additional focusing entirely on energy make-ready infrastructure helps make future EV charging expansion efficiency, distributed much easier and less expensive. Future-proofing will also look at charging energy resources and space strategy, as more space is required to accommodate charging stations, signage, electric vehicles. Mr. bollards, and compliance with Americans with Disabilities Act (ADA) requirements. We Scherle has accomplished advise our partners to not only look at what the next year will bring but consider the a lot in his career, from long-term needs of their customers. completing over 1,000 small business energy audits in New York City, managing projects in commercial class A Step 7: Charging Management buildings and managing the design, construction, and installation of multiple energy storage systems across Creating a network of charging stations takes capital and planning the country. Will Scherle currently works on the Strategy but can drastically reduce operating expenses and create a much Team at TRC, focusing on advancing clean transportation more pleasant charging experience for customers. Actively managed in New York, the Northeast, and across the U.S. charging helps to schedule charging when electricity is less expensive, distribute power to multiple vehicles based on their charging needs, and Jennifer Rosenthal is utilize excess renewable power when it is available. Network-managed a passionate Business charging stations can also take advantage of time-of-use electric rates and Development Manager demand management programs, reducing costs operational costs. As electric vehicle in TRC’s Advanced Energy adoption increases and charging infrastructure expands, managing electric vehicle practice, with over 12 years charging during peak demand events will become increasingly more critical. We work of experience leading with our partners to bring all the planning data together and create a charging strategy teams, projects and that is designed to answer all the questions that will be asked, including: programs for utility energy programs across the country. • When do customers need their cars charged? She has supported utility clients in the successful design, implementation and • Are certain areas overloaded with EV charging during certain times? strategic direction of beneficial electrification programs, including non-road electric vehicles, and continues to • What is the dwelling penalty for public charging? support clients in their efforts to develop and implement on-road transportation electrification offerings. • What is operation and maintenance strategy? • Are you providing charging for ADA? • What is the pricing structure? • How do you communicate policies and procedures to EVSE users? EV charging infrastructure requires extensive planning to incorporate both short- and long-term needs and engagement with stakeholders throughout the process to be successful. It is important to have a thorough plan for execution that brings in all relevant stakeholders. Each community is unique, and care should be taken to address the specific needs of the customer base. 28 Association of Energy Services Professionals

BRINGING IT ALL TOGETHER: How Virtual Power Plants Address the Question of Supply vs. Demand By Clint Davis Virtual Power Plants (VPPs) are a smart, hundreds or thousands of batteries can be clean and cost-effective way to manage optimized to provide multiple grid services electricity supply and demand in an such as demand response, capacity and evolving grid. As carbon-intensive power frequency regulation. These grid services plants are retired and states race to meet enable utilities to meet energy supply and net-zero emission targets, some utilities are demand without building new physical calling upon renewable energy resources infrastructure. such as solar to meet demand. VPPs are an emerging option to help utilities better While VPPs serve utilities through smart integrate resources like solar, along with grid services, they also provide individuals other customer-sited resources, to bring and communities a unique opportunity to flexibility to the grid while minimizing participate in shaping their clean energy traditional investment. future. Through the contribution of their DERs like energy storage, VPP participants A VPP is an aggregation of Distributed earn incentive payments from utilities or Energy Resources (DERs)—such as solar third-party aggregators and benefit from power systems, batteries, EVs, smart plugs back-up power and potential bill savings. and thermostats—that can be controlled When utility needs align with customer by the grid operator in place of a large, incentives, electricity demand can match central power plant. VPPs that aggregate supply with greater benefits. www.aesp.org | third quarter 2021 29

VPPs leverage distributed energy resources to meet a variety of grid needs including demand response, capacity and frequency regulation, all without the utility needing to build new physical infrastructure. The benefits of VPPs for the grid and consumers About the author The traditional electricity industry model relies on utilities to either generate the electricity needed Clint Davis brings through their power plants or purchase electricity directly from a wholesale market or other utilities, over fourteen power marketers, and independent power producers and ensure that power meets both the current years of global and future demand of their customers. VPPs flip this model on its head, enabling everyday customers energy and to participate in the market as both a suppler and demand manager. Aggregation companies sit at utilities leadership the nexus of customers and utilities to bundle resources and grid services previously supplied by experience serving the utilities. startups, utilities and Fortune 500 For participants, the value of being a part of a VPP varies greatly according to state tariff Global companies structures, utility rates, permissible grid services and personal usage. Participating customers in to his role leading certain markets are able to eliminate their utility bill entirely, while others may achieve significant Swell Energy’s grid services group. Prior to cost savings or pay about the same as their previous electric bill. Moreover, customers adopting starting Swell Energy, he was Senior Vice solar plus storage systems located behind the meter (at their home or business) have the potential President at the distributed energy hardware to lock in predictable electric bills, as well as gain satisfaction in knowing that they are doing their and software provider Sunverge Energy part to protect the planet and make their communities more resilient. where he led the product management, sales engineering, customer support, program For utilities, the benefits of leveraging distributed energy resources in aggregate include: management, and field engineering functions • S� ustainability Improvements: VPPs address load growth without building new carbon-intensive of the company. Prior to his role at Sunverge, Clinton was at global industrial giant ABB infrastructure, allowing for the decommissioning of fossil-fuel infrastructure and supporting where he was most recently Vice President of sustainability targets. Generation and Renewable Industry Solutions. • Frequency Response: VPPs can also manage reliability during grid disturbances by stabilizing Previous positions include Vice President frequency following the sudden gains or losses of generation or load. of Transmission and Distribution Industry • R� eliable Supply: Distributed energy storage can enable the use of low-cost solar power to Solutions, Director of Smart Grid Product deliver the reliability that end-use customers are seeking. By coupling renewable generation Strategy and Industry Solutions Executive. with energy storage, VPPs can store and dispatch power during hours of critical need, adding Clinton holds a bachelor’s degree in physics reliability to renewables and filling a critical gap in the move toward a renewable energy future. from Wittenberg University and a master’s • Load Management: As a demand response solution, VPPs can balance the supply of electricity degree from The Johns Hopkins University. on the network by adjusting or controlling the load during periods of peak demand. • R� enewable Energy Balancing: A network of distributed energy storage assets can balance the overall intermittency and variability of renewable energy generation, to include excess production. • Non-wires Solutions: Distributed energy resources can reduce the strain on distribution and transmission infrastructure and enable utilities to defer or avoid infrastructure upgrades. 30 Association of Energy Services Professionals

Smart Hybrid Heating Systems for a Lower Carbon Solution By Octavian Ghiricociu In cold clim te, reducing greenhouse g s emissions (GHG) while providing cost-e ective nd reli ble residenti l he ting is possible with hybrid he ting system nd sm rt controls. Hybrid he ting systems deliver the benefits of home he ting comfort nd lower energy costs with sm ller c rbon footprint. How does hybrid he ting system work? A hybrid heating system provides the consumer with two energy sources for heating: natural gas and electricity. The equipment used for delivering that heat includes a traditional natural gas heating system (furnace or combi system) and an electric air-source heat pump (ASHP). The natural gas provides reliable and affordable heating. During the colder winter months, natural gas offers uninterrupted service while providing a low- cost advantage. Heat pumps are a proven technology widely used in parts of Canada and around the globe. An electric ASHP extracts heat (or thermal energy) from one space and moves it to another. When the heat pump is in cooling mode, extracted thermal energy is removed from the home and released outdoors, working the same as a typical home air conditioning (AC) system. The difference with a heat pump is the added internal reversing valve. When in the reverse mode, the heat pump extracts thermal energy from the outside air and releases it inside the home. This means an ASHP, unlike a typical AC unit, can provide both heating and cooling from one unit. Since the ASHP moves existing heat, rather than creating heat from a combustible fuel (which has a theoretical maximum efficiency of less than 100%), the ASHP can reach efficiencies of 100-500%, making it a highly efficient heating system. www.aesp.org | third quarter 2021 31

Heating a home with a highly efficient available for the colder winter months. Hybrid heating systems with smart heat pump sounds ideal, but in colder This allows the existing ducting system controls provide an enhanced solution climates, existing homes with central to accommodate both heating systems for cold climate homes designed to heat ducting often presents a practical challenge. without extensive retrofits. with a natural-gas furnace. The system Residential ducted ASHP systems are activates the ASHP to heat the home in typically inadequate for year-round heating To tie both heating systems together, milder temperatures when the electric in most areas of Canada unless extensive a smart control thermostat can analyze grid has surplus capacity, and time-of-use air distribution retrofitting is done, or electric influencing factors on an hour-by-hour costs are low enough to make financial resistance backup is installed. The ductwork basis to determine the ideal energy source sense to run the ASHP for heating. Hybrid for a gas furnace is designed to carry a to deploy. The smart control uses intelligent heating systems offer advantages over the certain volume of higher temperature air, cloud computing to continuously monitor all-gas model by alternating energy sources while an ASHP delivers lower temperature and evaluate factors including outdoor for optimal efficiency and reduced GHG heat to the air distribution system, delivering temperature, current fuel costs and emissions, without increasing total energy less heat to the home. The solution is to operational efficiency of the system. Based cost to the consumer. create a hybrid system that takes advantage on this custom evaluation, the system of the higher efficiency ASHP during milder alternates between the energy sources to weather with the natural gas furnace obtain the most cost-effective and efficient energy use, while reducing GHG emissions. Fe tures nd benefits for residenti l customers Advancements in technology with smart control thermostats are leveraging the benefits of fuel switching for a cost-effective and reliable home heating solution. The hybrid heating system offers several benefits to the consumer. Effortless nd convenient Smart controls automatically switch between natural gas and electric heat, based on which is the most efficient at any given time. The consumer benefits from the results of highly sophisticated decision-making, without the need to manually adjust the thermostat. Hybrid heating offers the benefits of efficiency and carbon reduction, without compromising home comfort on the coldest days. Efficient nd resilient home he ting The dual-fuel heating system establishes cost resiliency with the option to heat with natural gas or electricity. By optimizing the energy selection to the most cost- effective energy source on an hourly basis, the consumer benefits from reduced long-term energy costs regardless of variation in fuel costs. Lower c rbon footprint Engaging the ASHP during the shoulder months takes advantage of the electricity grid when demand is low, and the supply is considered clean. This scenario creates a lower carbon footprint for the consumer. The smart control responds to price signals to achieve up to 30% GHG reductions without increasing energy costs. A more reli ble grid As electric heating becomes more prevalent in the push for decarbonizing electrification, transmission and distribution systems will be stressed in cold weather. Hybrid heating systems offer tremendous load-shedding capacity to maintain a reliable grid. In support of energy commitments nd objectives Hybrid heating supports Canada’s aspirational goal of transitioning to a low- carbon economy and reducing GHG emissions. Incorporating hybrid heating systems supports several key approaches to achieving this goal, including decarbonization, electrification, energy affordability and electricity grid resilience. Dec rboniz tion nd electrific tion A key component to current decarbonization strategies is to transition to full electrification. Incorporating ASHPs as part of a residential heating system transfers a portion of the energy source to electricity. A hybrid heating system with smart controls deploys the electric ASHP, using low-carbon electricity to heat homes at times when the electric grid is clean. 32 Association of Energy Services Professionals

While much of Ontario’s electricity supply is relatively clean with minimal GHG Conclusion emissions, full electrification can be prohibitive for several reasons. A recent study, The Future of Home Heating, conducted by MaRS Advanced Energy Center in Hybrid heating is a low carbon solution collaboration with Enbridge Gas Distribution Inc., demonstrates that a smart, that consumers can take advantage of today. hybrid dual-fuel option for home heating in Ontario is more beneficial than full When homeowners are faced with a decision electrification.1 to replace an aging AC unit, replacing the unit with an ASHP and smart control will provide From the practical perspective, the current ductwork in most homes in Canada reliable and resilient home heating, reduced is configured for use with a furnace and is not adequate from an economic long-term energy costs and a lower carbon perspective to support heating from an ASHP alone. Sizing a heat pump to provide footprint. 100% of the home heating is typically not reasonable without a major renovation and therefore requires a backup heating system which could result in high energy As governments and utilities develop costs. programs around hybrid heating systems, emphasis should be placed on information A massive increase in electricity consumption could potentially overwhelm the that further explains how ASHPs work, existing electrical infrastructure, especially with the oncoming electric vehicle identifies the benefits compared to a loads. A heavy electrical increase with residential heating has potential to cause traditional AC unit and presents the a strain on the distribution grid, cause a rise in electricity generation costs, and investment outcomes of a hybrid heating potentially initiate the use of high-emitting fuel sources to generate electricity to system. In addition, training and education meet the demand. To ensure reliable and cost-effective heating for the consumer, for the HVAC industry is essential in ensuring a hybrid heating system (instead of all-electric) is the better option for transitioning success in the near term. toward a low-carbon economy and reducing GHG emissions. The overall benefits of hybrid heating To further evaluate the solution and better understand the market barriers, systems to the consumer and the alignment Enbridge Gas is conducting a pilot project with homeowners, HVAC manufacturers, with low carbon commitments, establishes contractors, electric utilities, and municipalities. Addressing these barriers are key hybrid heating systems as an opportunity for to accelerating market adoption of the technology into new residential construction gas and electric utilities to collaborate and and the retrofit markets. offer a low-carbon solution to consumers. V lue proposition for utilities, policy m kers About the author nd the HVAC industry Octavian Ghiricociu, a graduate of In addition to the direct benefits to the consumer, transitioning the market to the Ryerson University (Toronto, using hybrid heating systems adds value for utility program developers, policy Ontario, Canada), is a Professional makers and the heating, ventilation, and air conditioning (HVAC) industry. Engineer with more than a decade of energy efficiency experience. For utility program developers, demand-side management (DSM) requires new Since 2019, Octavian has been higher efficient technologies to offer customers. Up to now, higher efficient furnaces working with manufacturers, have been available as an option to meet or exceed current code. Recent code utilities, and government entities to changes have raised the minimum efficiency of gas furnaces to such levels that evaluate, pilot and determine a way DSM programs are slowly phasing out furnace upgrades. Hybrid heating systems to shift the Ontario heating market operate at an efficiency level above 100%, allowing for further DSM opportunities to a lower carbon solution. His most recent work involved for utilities. launching a large-scale hybrid heating pilot program with five HVAC manufacturers and their contractors in London, Ontario. For policy makers, promoting a hybrid heating system for residential heating aligns with and supports the Canadian government’s aspirational goals for space heating by 2035. For the HVAC industry, hybrid heating systems increase opportunities for business development by retrofitting existing homes with ASHPs. This opens a new market in a sector that was previously overlooked in Ontario and other parts of North America due to the higher cost of electricity and the more economical choice of a natural gas heating system. With natural gas as the backup fuel source, HVAC contractors can install electric ASHPs with greater confidence that sufficient heat will be always be delivered. 1 MaRS Discovery District. Enbridge Gas Distribution Inc. “Future of Home Heating.” April 2018. Available at: http://heatpumpingtechnologies. org/ www.aesp.org | third quarter 2021 33

ELECTRIC VEHICLE RATE DESIGN: The Biggest Problem and the Greatest Opportunity By Bill LeBlanc Electric vehicles (EVs) may be the single greatest option we have to Let’s take a high-level look at residential, business, and fleet rate quickly reduce greenhouse gases from the transportation sector. But designs, as well as the more complicated topic of public fast chargers. EVs also create new pressures on the electric grid, and if charging is done in an unmanaged manner, peak loads will grow rapidly, requiring Residential EV Rates expensive infrastructure spending and putting upward pressure on rates. The good news is that we already have many of the tools we need Time of use (TOU) is the most common approach to residential EV to use EVs to optimize grid management, and rate design is one such rates. And we’ve been using this strategy for decades. Sometimes tool. these rates are applied to the whole house; other times they’re just for EV charging. Either will work. The E Source EV Pilots and Programs One of the key benefits of EVs is the ability to store electricity in Database contains 44 residential EV TOU rates from all types and sizes their batteries. EV drivers can “fill up” their cars during times that are of utilities across the US and Canada. convenient to them and use that energy later. We can’t do that with most other most appliances or equipment. Storage is also the key to TOU rates have proven the ability to shift load, especially in whole- keeping rates low for all utility customers. A simulation study conducted house programs. Electric pricing expert Dr. Ahmad Faruqui sums up the by business strategy consultancy BCG, The Costs of Revving Up the evidence in the 2019 Utility Dive article An emerging push for time-of- Grid for Electric Vehicles, highlights the massive difference between use rates sparks new debates about customer and grid impacts. Based unmanaged charging and managed charging in rate impacts for on the data presented, it demonstrates a rapid increase in TOU shifting customers. According to the study’s authors, “At 50% EV penetration when the ratio of on- to off-peak rates is more than roughly 2.5:1, and is … the rate impact in a nonoptimized charging scenario is roughly 4.75 further enhanced by using enabling technology to assist or automate cents per [kilowatt-hour (kWh)]—almost 20 times the rate impact of 0.25 shifting. cents per kWh under an optimized charging scenario.” But TOU rates also have significant downsides as market conditions But which rate designs are right for EVs? It depends on what the top are changing rapidly due to expansion of distributed energy resources objectives are, such as: and non-dispatchable renewable energy, primarily wind and solar. Arguments against TOU as a panacea include: • Minimize cost-shifting from one customer group to another • It can be hard to cost-justify an on- to off-peak ratio of 2.5:1 or more, • Accelerate carbon reduction and lower ratios aren’t that motivating for consumers to shift their charging times. • Allow utilities to recover investments for increased loads • �TOU rates are still a blunt instrument because they apply to so many • Promote equitable access to EV charging hours of the year that don’t have high costs. Critical peaks are usually concentrated in just a handful of days and hours each year. Local • Accelerate EV growth and adoption distribution constraints are also difficult to manage with general TOU rates. • Design rates that consumers can easily understand • The quickly shifting electric supply landscape makes TOU less • M� ake sure charging is done during off-peak times attractive as a universal solution because time periods are likely to shift rapidly as more renewables come online. This will lead to These often-conflicting objectives make for a complex set of confusion if the utility needs to frequently reeducate customers. decisions for policymakers, regulators, and utilities. And solutions will vary by market. 34 Association of Energy Services Professionals

The key is to add dynamic pricing options and active managed Public EV charging and fast charging charging to the pricing selection and put a portion of customers on those types of rates. Dynamic rate design can include options such as E Source recently held an in-depth workshop with 20 utilities in peak-time rebates, peak pricing, or real-time pricing. Active managed Colorado and by far the most difficult and controversial topic was charging can be a powerful grid solution because the utility itself can public DCFC. This issue isn’t unique to Colorado, and there are several make decisions in real time about charging for thousands of vehicles at questions that typically arise: once, and customers don’t have to participate in this communication. This will allow the utility to also manage charging based on location- • Can and should the consumer at the public charger see a time- specific costs—for example, where transmission and distribution (T&D) differentiated or dynamic rate based on system costs? congestion is high. • How can more remote locations, especially those in key highway Using data science, we can identify those customers who are most corridors for long-distance travel, create fast public chargers when likely to provide the best results under managed charging, dynamic the business model shows it’s not a viable way to make money? rates, or TOU. Utilities can best manage grid loads if they actively And if that’s a vital function, who’s responsibility is it to supply those engage as many EV customers as possible, as soon as possible, on chargers? these options before they form charging habits. It’s difficult to gain consumer acceptance of complex rates, but EVs will provide a much Most public EV charging stations are owned and operated by third- easier managed load due to their electric storage capabilities. party charging station operators (CSOs) such as ChargePoint and EVgo. Tesla operates proprietary charging stations for Tesla owners. Some A challenge that hasn't yet been explored much to date is the utilities operate their own networks of charging stations. pricing or compensation for customers who are in managed charging programs. The E Source database contains six smart charging programs, When a CSO owns and operates the charging station, there are at least four of which are pilot programs. Con Edison uses customer-managed two different pricing designs in play. First, the utility rate—and in some charging, where the utility provides key information but gives customers cases the retail provider—applies to the electric load at the charger and the control. Con Edison offers the highest customer incentive in our would typically be large enough to qualify for one of the utility’s business database: for an EV that travels 150 miles per week, the utility estimates rates. Then, the CSO determines what to charge the driver. Most CSO a rebate of about $500 per year. pricing provides a fairly straightforward per-minute or per-kWh price, but we haven’t seen a set pattern emerge in the market. Commercial EV Rates and Fleet Vehicles One of the more complex rates for the driver is being tested by EVgo Existing commercial business rate designs tend to already be more in certain markets in California.1 In addition to a three-tier TOU rate, EVgo complex and cost-based compared to residential rates, often including also includes a location-based price signal that can be influenced by demand charges—which are sometimes time-differentiated—as well local pollution levels, T&D congestion or high use of the EVgo network, as time-differentiated energy rates. Whether demand charges are or even social justice considerations. Whether customers shift charging hindering the development of fleet EVs is a key question that’s being loads for these price signals in the public charging environment is yet to studied and tested, especially among the larger California utilities. A be fully evaluated. And whether drivers have a positive experience with 2020 study sponsored by the Natural Resources Defense Council such an uncertain cost of charging is still unknown. (NRDC), described in the NRDC blog post Reforming Rates for Electric Trucks, Buses & Fast Chargers, outlined several options to reduce How much does public charging cost the consumer, and does it make demand charges for EV charging in order to lower barriers to adoption. business sense in the short run or the long run for a CSO? The recent Whether this is a short-term patch or a long-term trend isn't clear. It's Reuters article Factbox: Five facts on the state of the U.S. electric vehicle certainly possible through active managed charging to include demand charging network does a nice job of showing when a CSO’s charger charges in calculations to minimize costs for the user while optimizing would make money, or not, depending on utilization. Basically, at 10% grid management. In the meantime, utilities can play an important role in utilization (the percentage of time where someone is actively charging), ensuring that customers are on the correct rate and managed charging a CSO would need to charge about $1.00/kWh to make a profit. That’s option for their growing EV applications. compared to a typical energy rate of $0.10 to $0.15/kWh at a home or business. At 50% utilization, which may be achievable at places like Utilities also have an important role in helping commercial businesses airports where an attendant is swapping out EVs, public charging will still grow their EV fleets. Here are some key commercial and fleet rate cost more than twice that of home or work charging. design factors to consider: While some drivers might prefer the speed of fast chargers, • Small businesses are most likely to struggle with managing complex E Source market research shows that the next generation of EV buyers rates for their EV charging and may incur unusually high bills if will be much more price sensitive than the first generation of buyers demand charges are in place. (figure 1). Figure 1 also shows consumer willingness to pay for Level 2 public charging compared to Level 2 home charging, along with an increasing ladder of pricing for the public option. • Large EV fleets will require upgrades for electricity Figure 1: Willingness to pay for public Level 2 charging service, particularly for DC fast-charging (DCFC) applications. Utilities will need to determine whether businesses pay for these upgrades up front in the form of hook-up charges or whether they’re included in rates over time. Utilities have used both approaches. • Similar to the residential side, peak-time or dispatchable rates will be an important adjunct to standard commercial rates as more EVs hit the road. And larger businesses often have the sophistication to work with the utility on managed charging solutions that can take into account real-time constraints as well as periods of high renewable energy production. 1 MaRS Discovery District. Enbridge Gas Distribution Inc. “Future of Home Heating.” April 2018. Available at: http://heatpumpingtechnologies.org/ www.aesp.org | third quarter 2021 35

We asked respondents what the most they’d be willing to pay for Where do we go from here? public charging is, assuming they had Level 2 charging available at their home for $0.75 per hour. Only 12% of EV owners would pay $4.00 per EV rate design will continue to be an extremely important issue as hour for public Level 2 charging. adoption expands. We must continue to evolve with the market, using pilot programs and experiments to determine which rate designs are Are drivers willing to pay more for fast charging? We asked study effective in managing the grid while creating an excellent consumer participants, “In a nonemergency situation where you had the choice experience. Here are our next steps. of Level 2 [public] charging, taking 4 to 10 hours to fully charge an EV, or a fast charger that would fill your car in 30 to 60 minutes, how much Solve the issue of public charging in remote but important areas. more would you pay for the fast charger?” Figure 2 shows that most Public charging—especially DCFC stations—in remote areas or low- people will pay the same or a little more. They’re unwilling to pay a large utilization locations poses a particular challenge for electricity pricing. premium for speed. Consumers are unlikely to pay very high prices for charging unless they have no other options. Passing electric system prices on to customers In the survey, we asked how much more respondents would be in public charging situations is likely to meet with negative sentiment. willing to pay to use a public fast charger compared to a public Level Governments, and in some cases utilities, will likely need to step in and 2 charger. Those who answered this question either have an EV or are provide public charging in important geographic areas where CSOs considering purchasing one and are willing to use a fast charger. won’t build. Figure 2: Willingness to pay for public DCDF Build policies for managed charging. Managed versus public Level 2 charging charging, and the creative pricing that goes with it, is critical yet still in its infancy. Pricing for For CSOs, typical demand charges could be a deterrent to charging managed charging may be as complex as that for station development, especially for DC fast chargers, which have such solar net metering, but we don’t expect it will be a large electricity demand component, typically 50 to 350 kW. Roughly as politically challenging. speaking, a Walmart might have a 350-kW demand whereas a Trader Joe’s might have a 75-kW demand. These are significant loads, and Include grid-responsive strategies. TOU rates DCFC stations usually have more than one portal or plug. for residential customers are likely to be the dominant method of EV pricing, but don’t neglect Another confounding factor with public charging is that CSOs will grid-responsive strategies. Include peak pricing, naturally build their charging stations in locations that are likely to return peak rebates, and different forms of real-time the most profit to them. This has frequently led to building plenty of pricing in the design mix. public charging facilities in cities and suburbs, but not in rural areas or on remote but important long-distance corridors. Who will build, own, and Be smart with targeting. Using data from operate these remote stations? Is that the state or local government’s utility smart meters and excellent datasets on role or the local electric utility’s role? How will the entity recover costs? consumer and business profiles, behaviors, and These important policy questions are being addressed in a wide variety actions, data science can help predict which of ways across the US, but there’s no perfect solution yet. specific customers are most likely to want and benefit from alternative pricing and managed charging programs. EVs can be seen as either the biggest challenge facing utilities today or the biggest opportunity to improve grid management, keep rates as low as possible, and reduce pollution and the carbon output of the transportation sector. Our view will be determined by our industry’s actions in the coming years. About the author Bill LeBlanc draws on his experience in the energy industry to provide insight into where the industry is going and help create E Source products that will serve its members. Bill has more than 20 years of experience in strategic marketing, new product development, pricing, market research, demand-side management, and social marketing. He focuses on helping utilities understand how the their products and services can help customers. He specializes in maximizing marketing effectiveness, electric vehicle marketing, and design thinking. Before joining E Source, Bill worked for six years as a director at Barakat & Chamberlin, a national consulting firm. He also founded and served for several years as president of the Association of Energy Services Professionals. Bill was a project manager at EPRI from 1988 to 1991. He also had stints at Apple and Disney in his early days. Bill holds a BS and an MS in mechanical engineering from Stanford University and a BA in management economics from Claremont McKenna College. 36 Association of Energy Services Professionals