Electric Vehicle Cost-Benefit Analysis: Minnesota

MJB&A has evaluated the costs and benefits of increased penetration of plug-in electric vehicles (PEV) in the state of Minnesota. The study estimated the benefits that would accrue to all electric utility customers in Minnesota due to greater utilization of the electric grid during off-peak hours, and increased utility revenues from PEV charging. In addition, the study estimated the annual financial benefits to Minnesota drivers from owning PEVs–from fuel and maintenance cost savings compared to owning gasoline vehicles. The study also estimated the societal benefits resulting from reduced gasoline consumption and associated greenhouse gas (GHG) emissions, as well as reduced emissions of nitrogen oxides (NOx).

Two different penetration levels between 2030 and 2050 are utilized to estimate costs and benefits. These penetration levels bracket the near-term (2025) Zero-emission Vehicle goals that have been adopted by states that collectively comprise about one third of the automotive market, and Minnesota’s long-term policy goal to achieve an economy-wide 80% reduction in greenhouse gas (GHG) emissions (from 2005 levels) by 2050.

If Minnesota PEV adoption follows the moderate trajectory set by near-term ZEV goals, the net present value of cumulative net benefits from greater PEV use in Minnesota will exceed $4.6 billion state-wide by 2050. If PEV adoption is high enough to meet the state’s long-term economy-wide GHG reduction goals, the net present value of cumulative net benefits from greater PEV use in Minnesota could exceed $30 billion state-wide by 2050.

A large portion of the direct financial benefits to Minnesota drivers derives from reduced gasoline use - from purchase of lower cost, locally produced electricity instead of gasoline imported to the state. Under the High PEV scenario, PEVs will reduce cumulative gasoline use in the state by more than 10.6 billion gallons through 2050, helping to promote energy security and independence, and keeping more of vehicle owners’ money in the local economy, thus generating even greater economic impact. In addition, this reduction in gasoline use will reduce cumulative net GHG emissions by more than 110 million metric tons, which would provide a societal benefit of $10.4 billion, from reduced pressure on climate warming. Under the High PEV scenario, by 2050 the replacement of gasoline vehicles with electric vehicles will also reduce annual NOx emissions in the state by over 825 tons.

This study was conducted by M.J. Bradley & Associates for the Natural Resources Defense Council, Charge Up Midwest, and Fresh Energy; it is intended to provide input to state policy decisions about actions required to promote further adoption of electric vehicles. Charge Up Midwest is a partnership of environmental and clean energy organizations actively working to increase electric vehicle deployment throughout the region in Illinois, Missouri, Michigan, Minnesota, and Ohio. Fresh Energy is a non-profit organization that works to speed Minnesota’s transition to a clean energy economy – including putting Minnesota on the pathway to being a national renewable energy leader, and promoting clean transportation options for Minnesota’s growing economy.