Plug-in Electric Vehicle Cost-Benefit Analysis: Florida

MJB&A has evaluated the costs and benefits of increased penetration of plug-in electric vehicles (PEV) in the state of Florida. The analysis projects societal costs and benefits for two different PEV penetration levels between 2030 and 2050. These include a “business as usual” scenario of modest PEV penetration that is based on the Energy Information Administration’s current estimates of future PEV sales (EIA), and a much more aggressive scenario based on the PEV penetration that would be required to get the state onto a trajectory to reduce light-duty GHG emissions by 70 – 80 percent from current levels by 2050 (80x50). The levels of PEV penetration in the high 80x50 scenario are unlikely to be achieved without aggressive policy action at the state and local level, to incentivize individuals to purchase PEVs, and to support the necessary roll-out of PEV charging infrastructure.

Compared to a baseline of continued gasoline car use, this study estimates the financial benefits that would accrue to all electric utility customers in Florida due to greater utilization of the electric grid during low load hours, and resulting increased utility revenues from PEV charging. In addition, the study estimates the annual financial benefits to Florida drivers from owning PEVs—from fuel and maintenance cost savings compared to owning gasoline vehicles. The study also estimates reductions in gasoline consumption, and associated greenhouse gas (GHG) and nitrogen oxide (NOx) emission reductions from greater use of PEVs instead of gasoline vehicles.

These benefits are estimated for a baseline vehicle charging scenario in which Florida drivers plug in and start to charge their vehicles as soon as they arrive at home or work. The study also evaluates the additional benefits that could be achieved by providing Florida drivers with price signals or incentives to delay the start of PEV charging until after the daily peak in electricity demand (managed charging). Managed charging avoids significant vehicle charging load during periods of high electricity demand and avoids potentially costly electricity grid upgrades. As such, off-peak PEV charging can increase the benefits to all Florida utility customers by shifting PEV charging to hours when the grid is underutilized and the cost of electricity is low.

The analysis indicates that the average PEV sold in Florida in 2030 will increase utility net revenue by $1,068 over its life time, if charging is managed. Under the High PEV scenario this could result in cumulative utility bill savings of more than $21.7 billion state-wide by 2050 (net present value), with an additional $84.5 billion in cumulative savings for Florida drivers due to reduced annual vehicle operating costs. The high PEV scenario would also reduce gasoline use in the state by more than 51 billion gallons through 2050. This projected reduction in gasoline use would help to promote energy independence, and would keep more of vehicle owners’ money in the local economy, thus generating even greater economic impact.

The full report of the Florida analysis is available here.

This study was conducted by M.J. Bradley & Associates for Duke Energy; it is intended to provide input to state policy discussions about actions required to promote further adoption of electric vehicles.