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Electric Vehicles and the Energy Transition: Unintended Consequences of a Common Retail Rate Design

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Listed:
  • Megan R. Bailey
  • David P. Brown
  • Erica Myers
  • Blake C. Shaffer
  • Frank A. Wolak

Abstract

The growth of electric vehicles (EVs) raises new challenges for electricity systems. We implement a field experiment to assess the effect of time-of-use (TOU) pricing and managed charging on EV charging behavior. We find that while TOU pricing is effective at shifting EV charging into off-peak hours, it unintentionally induces new and larger “shadow peaks” of simultaneous charging. These shadow peaks lead to greater exceedance of local capacity constraints and advance the need for distribution network upgrades. In contrast, centrally managed charging solves the coordination problem, reducing transformer capacity requirements, and is well-tolerated by consumers in our setting.

Suggested Citation

  • Megan R. Bailey & David P. Brown & Erica Myers & Blake C. Shaffer & Frank A. Wolak, 2024. "Electric Vehicles and the Energy Transition: Unintended Consequences of a Common Retail Rate Design," NBER Working Papers 32886, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:32886
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    References listed on IDEAS

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    1. Tim Schittekatte & Dharik Mallapragada & Paul L. Joskow & Richard Schmalensee, 2024. "Electricity Retail Rate Design in a Decarbonizing Economy: An Analysis of Time-of-use and Critical Peak Pricing," The Energy Journal, , vol. 45(3), pages 25-56, May.
    2. Matteo Muratori, 2018. "Impact of uncoordinated plug-in electric vehicle charging on residential power demand," Nature Energy, Nature, vol. 3(3), pages 193-201, March.
    3. Lucas W. Davis & Catherine Hausman, 2022. "Who Will Pay for Legacy Utility Costs?," Journal of the Association of Environmental and Resource Economists, University of Chicago Press, vol. 9(6), pages 1047-1085.
    4. Matthew Harding & Steven Sexton, 2017. "Household Response to Time-Varying Electricity Prices," Annual Review of Resource Economics, Annual Reviews, vol. 9(1), pages 337-359, October.
    5. Severin Borenstein, 2017. "Private Net Benefits of Residential Solar PV: The Role of Electricity Tariffs, Tax Incentives, and Rebates," Journal of the Association of Environmental and Resource Economists, University of Chicago Press, vol. 4(S1), pages 85-122.
    6. Matthew Harding & Steven Sexton, 2017. "Household Response to Time-Varying Electricity Prices," Annual Review of Economics, Annual Reviews, vol. 9(1), pages 337-359, October.
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    Cited by:

    1. Heid, Pascal & Remmy, Kevin & Reynaert, Mathias, 2024. "Equilibrium Effects in Complementary Markets: Electric Vehicle Adoption and Electricity Pricing," TSE Working Papers 24-1589, Toulouse School of Economics (TSE).
    2. Pascal Heid & Kevin Remmy & Mathias Reynaert, 2024. "Equilibrium Effects in Complementary Markets: Electric Vehicle Adoption and Electricity Pricing," CRC TR 224 Discussion Paper Series crctr224_2024_615, University of Bonn and University of Mannheim, Germany.

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    More about this item

    JEL classification:

    • L94 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Electric Utilities
    • Q41 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Demand and Supply; Prices
    • R40 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Transportation Economics - - - General

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