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EV Managed Charging Incentives and Utility Program Design

The intersection of growing electric load from electric vehicles (EVs) and rapidly advancing charging technology creates opportunities for utilities to optimize the grid and accelerate carbon-reduction progress.

One of these opportunities is managed charging, a strategy carried out by utilities and/or third-parties to influence or directly control EV charging patterns. Managed EV charging can be a powerful tool to better align and balance flexible demand with a power supply that is increasingly diverse, decentralized, renewable and intermittent.

Why Managed Charging?
EV electricity demand without managed charging is unpredictable because customers charge their vehicles at their convenience. As shown below, EV aggregate demand may fluctuate significantly, requiring investments in additional energy generation and transmission and/or distribution system upgrades.

Fluctuations due to uncontrolled EV charging behavior. Data generated using the DOE Electric Vehicle Infrastructure Projection Tool (EVI-Pro) Lite.

Utilities have two options for managed charging: passive and active.

Passive managed charging (also known as behavioral load control) relies on customer behavior to affect charging patterns. One common type, EV time-of-use (TOU) rates, sets predetermined price signals to influence when customers charge their vehicles. An EV owner may manage their charging costs by delaying when they connect their vehicle to the charger or by setting an automated charge start time using software enabled options on the vehicle or charger.

Many utilities have implemented whole home or EV-only TOU rates because they are relatively simple to implement. However, since the customer is solely responsible for participating, the impact on shifting EV load to optimal times of day for the grid varies. Customer errors can also reduce the effectiveness of TOU rate programs.

Due to these limitations, utilities are beginning to add active managed charging programs to their portfolio to better alleviate grid stress.

Active managed charging (also known as direct load control) relies on communication (i.e., “dispatch”) signals to control charging. These signals originate from a utility or aggregator, and are sent to a vehicle or EV charger. Active managed charging can be events-based to control load during a limited number of events in a given time period (season or annually), or use continuous management to control load when the vehicle is connected to the charger.

Active managed charging programs enable utilities to realize more consistent and larger grid benefits. Through advancements in technology and real-time data, utilities can match EV load to grid conditions at a more granular level. In return for giving utilities control, customers often receive incentives and rewards that reduce the cost of EV ownership. As long as their charging needs are met, customers are becoming more comfortable with vehicle automation and utility control. This creates further opportunities for utilities to implement active managed charging programs.

Guide to Utility Program Development
Designing a new managed charging program can be difficult for utilities, especially if they do not have any previous relevant experience. To assist utilities in their efforts, SEPA recently published a report entitled, Managed Charging Incentive Design: Guide to Utility Development. The research includes:

  • Six-step managed charging program design process
  • Detailed case study featuring Baltimore Gas and Electric (BGE) and Potomac Electric Power Holdings (PHI)
  • Analysis of forty managed charging programs and insights from twenty utility interviews
  • Actionable recommendations

 

Six-step Design Process in Action
BGE and PHI used the six-step process illustrated above to develop their EV active managed charging programs.

  1. BGE and PHI initially discussed their customers’ unmanaged charging behavior, and identified a goal for optimized charging behavior in single-family residential, public charging, and fleet charging applications. BGE determined that typical customers in their service territory connect their personal vehicles overnight at home for approximately 12 hours. Fleet operators also charge overnight while vehicles are not in use. Customers using public charging stations connect when it is most convenient.
  2. The teams then identified technical and customer behavior program objectives, as well as available tools (incentives, customer outreach, software, vendor capabilities, etc) to achieve those objectives. The residential program aimed to evaluate the technical feasibility of managed charging, alongside customer willingness to let the utilities control their vehicles, ultimately leading to effective EV load shifting to decrease grid stress.
  3. Next, the utilities reflected on their state’s regulatory decision-making history to identify bounds of experimentation for their program.
  4. BGE and PHI subsequently built an incentive structure to best meet their program objectives by placing emphasis on enrollment incentives and participation incentives.
  5. The utilities then identified a program size of 1,000 to 3,000 participants that allowed them to effectively test the impact of managed charging on the grid while remaining within their budget.
  6. Finally, BGE and PHI began to formulate their marketing and recruitment strategies, which prioritize customer engagement, education, and experience.

While BGE and PHI have yet to finalize their program plans, their work highlights the value of the six-step process to streamline the design process for a new utility managed charging program.

Managed Charging Incentives
Managed charging programs may offer one or multiple types of incentives. SEPA categorized incentives into categories:

  • Electric vehicle supply equipment (EVSE) rebate
  • Enrollment
  • Participation
  • EV TOU Rate

 

 

EVSE rebates are used in approximately one third of the programs SEPA assessed as part of the study, and are most useful to new EV owners and fleet owners who have not yet purchased a charger or charging stations. The median charger rebate for residential program participants with a single-family home is $600. EVSE rebates are an effective tool for encouraging enrollment by reducing the upfront cost of EV ownership.

Enrollment incentives do not need to be applied toward EVSE, and therefore are beneficial for both new and existing EV owners. 30% of programs (active and passive) offer an enrollment incentive, with a median of $125.

Participation incentives ensure that customers participate once enrolled in the program. Utilities may choose to offer customers a per-event incentive for demand response events, or monthly and/or annual incentives to encourage continued participation. SEPA found that 40% of active managed charging programs offer a monthly (ranging from $3 to $25) or annual incentive (ranging from $20 to $250).

When designing a managed charging program, utilities can choose to offer events-based or temporal incentives depending on how they are asking customers to participate. For example, a program that throttles charging a few times per year versus a program that continuously manages EV charging may offer different types of incentives.

Utilities can use these average values as a starting point for their own managed charging programs

Utilities can use one or multiple different types of incentives to achieve their program objectives, though SEPA recommends using the minimum number of incentive types to reduce cognitive burden on the customer. While an individual incentive can achieve multiple objectives, multiple incentives should not be offered to address a single program objective.

Actionable Recommendations
While utilities have many options for incentivizing participation in a managed charging program, simplicity is important.

Rebates and incentives can serve many purposes. When designing the incentive structure of a managed charging program, utilities must consider their desired outcomes. It is also advantageous to design programs with scalability in mind. Focus on incentive structures that make economic sense for the program’s budget and long-term goals.

To maximize the impact of their marketing efforts, utilities should leverage at least four different marketing channels. Marketing messages that emphasize a program’s ability to reduce the upfront cost of participation, provide a positive customer experience, and uphold customer choice in participation and technology will encourage enrollment.

Utilities that focus on marketing, educating customers prior to large-scale program implementation, and building a program that prioritizes customer needs are likely to succeed.

For more context and additional recommendations, view the full report.

Download the latest SEPA report, “The State of Managed Charging in 2021” to discover how utilities can optimize managed charging programs based on survey results, 7 case studies, and a guide to solution providers.

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