Why Texas could be the next hot market for EVs — wind, competition and progressive utility programs

At a recent influential energy conference in Houston, a panel of leaders in the global oil industry pushed back on future visions of a U.S. transport sector dominated by electric vehicles (EVs). Their message was simple. EVs might be on the way, but it will be a long time before they supplant cars with gasoline-powered internal combustion engines.

Those leaders appear to have the stats on their side. Electric vehicles are still a small percentage of automobiles sold annually in Texas. By mid-2017, the state had about 16,000 EVs on the road, out of the nearly 24 million cars and trucks the Texas Department of Motor Vehicles registers annually.

But those numbers could be deceiving. Its long-standing reputation as an oil state notwithstanding, Texas could be ripe for a major growth spurt in EV adoption. Look beyond the oil and love of pickups, and the state has many of the elements necessary for rapid, large-scale adoption of electric transportation.

• It is super car-centric.
• It produces large amounts of wind energy, with excess supply at night.
• It has a deregulated energy market, especially on the retail side — which could provide a highly competitive environment for EV-friendly products and services.
• Which could, in turn, further enhance the low lifetime cost of EV ownership.

The lynchpin here is the development of electric utility products and services promoting EV adoption. An upcoming report from the Smart Electric Power Alliance (SEPA), “Utilities and Electric Vehicles: Evolving to unlock grid value,” will provide new insights into the current state and future development of utility programs across the country, including Texas.

According to Plug-in Texas, “While only in its nascent stages, preliminary studies show strong potential for electric utility companies to use new communications and control technologies, together with innovative tariffs and incentive structures from utility regulators, to tap the value of smart electric-vehicle charging . . . If utilities anticipate the load of charging EVs and plan for it proactively, they can not only accommodate the load at low cost, but also reap numerous benefits to the entire system.”

Cars, wind and competition

Texan commuters joke about “one man, one horse” and view their cars as a vital way to travel the state’s vast open spaces and large urban centers. Vehicle miles traveled per capita in the state grew 14 percent between 2011 and 2014, the third highest increase in the nation. A recent study listed Houston as one of the worst cities in the U.S. for urban transportation, citing its residents’ car dependency as a key factor. Thus, even as the millennial generation moves away from car ownership, Texans will likely still rely heavily on their automobiles.

Texas is the largest producer of wind power in the U.S., showing that the state is big enough for more than one energy source. However, much of the state’s wind blows — and generates electricity — during the overnight hours, when the demand for power is lowest. The result is low, or even negative, wholesale electricity prices, and the need for someone or something to soak up that excess power in the middle of the night. EV charging — especially if managed by a utility or other third-party aggregator — could store that power rather than curtailing the wind generation.

Texas has a restructured market that allows competition at the generation and retail levels. The state has more than 100 retailers, offering customers a total of 440 retail products, 97 of which come from 100-percent renewable sources. Some companies are even offering free electricity on nights and weekends.

Further, despite protestations of the influential petroleum industry, Texas first created renewable energy goals for electric generators in 1999. The state’s legislature has adjusted the goals upward regularly and the wind and solar industries have responded. According other National Council of State Legislatures, Texas has already achieved its 2025 renewable portfolio goal of 10,000 megawatts of renewable generation.

EV prices are usually a concern for consumers, with significant sticker shock when first approaching these cars. The manufacturer’s suggested retail price Chevrolet’s new 2018 electric Bolt is around $36,000. By contrast, a new Honda Accord with a gasoline engine goes for about $19,000. The choice for a budget-conscious car owner may seem obvious.

However, the Bolt qualifies for a $7,500 federal tax credit, taking off some of the sting of its higher price. Plus, once owners figure in the much lower cost of maintenance and the possibility of charging their car for free on nights and weekends, the lifetime cost of a Bolt makes it more attractive than its internal combustion competitors.

So what is keeping Texas from becoming a top EV market?

Many factors could be affecting why Texas has not seen more EV adoption; for example, the availability and number of vehicle models on the market. The types of EV models that are available — such as smaller, compact cars — may not meet the needs of Texas drivers. Better driver education and public outreach to inform consumers about options may also be needed.

However, in the next few years vehicle options will multiply, and as vehicle prices continue to decline, market momentum is expected to build.

Electric utilities will be key stakeholders in consumer education and can provide the necessary tools to inform and align EV charging to match excess generation. As detailed in SEPA’s upcoming report, a recent survey of nearly 500 U.S. utilities found that 75 percent were in the earliest stages of developing programs and activities. Further, the upcoming study, found that larger, investor-owned utilities were more likely to offer customers more EV programs or activities than smaller municipal or electric cooperatives.

In Texas specifically, of the 11 utilities included in the survey, six were in the earliest stages of EV development, classified in the report as the Early Stage. The other five had programs and activities that indicated a more advanced understanding of the technology and consumer outreach needs, and were classified in the reports Intermediate and Late Stages. The figure below illustrates the evolution of this development in utilities’ EV programs as more vehicles are deployed.

One of the study’s key recommendations is to encourage more cross-industry information sharing and collaboration. For example, utilities with better-developed EV programs could exchange best practices with those just starting out, to cut down on the time and cost of program development. Such information-sharing could also help utilities quickly iterate and revise business models and plans, based on results in other regions, the report says.

A critical question for Texas will be whether this high level of collaboration and cooperation can take root in its highly competitive, deregulated market? Certainly, EV adoption could increase the demand for power, and industry innovation, that would drive benefits for all competitors.

Overcoming range anxiety

One problem common across all of the United States is range anxiety. Drivers are worried they will run out of power before they get to their destinations. Recent advances in battery technology and declining battery costs mean that some of the newest EVs have enough range for a drive between Houston and San Antonio or Austin and Dallas in one charge. According to the Department of Energy’s Alternative Fuels Station Locator, Texas now has 960 EV charging stations with over 3,500 charging ports, many owned by in-state utilities. These stations are largely concentrated in urban centers, but can also be found along interstate charging corridors.

Currently, much of the charging infrastructure exists where people live and should be adequate for the current number of EVs registered in the state. However, under a fast EV-growth scenario, charging infrastructure expansions will need to keep pace.

Texas utilities will have a major role in this transition

Though many Texas utilities have been less active to date, a number of utilities in the state have begun to lay the groundwork.

As noted in the SEPA study, Austin Energy offers incentives of up to $4,000 to customers installing multi-family residential EV charging ports. Austin also owns and operates over 500 charging ports throughout the city, where, for a low monthly fee, consumers can charge their EVs with 100-percent Texas wind power.

The utility also has an innovative time-of-use rate for home charging that also allows customers to use Austin’s public charging stations for a flat fee. Most recently, Austin Energy also announced a major collaboration with Maven, a division of General Motors, to have 20 Chevrolet Bolts within its carsharing fleet.

In addition to including EVs in their fleets, these three Texas utilities also have launched other outreach efforts.

• CPS Energy owns approximately 120 publicly-accessible charging stations in and around San Antonio.
• El Paso Electric participates in many public outreach events each year, including school visits, Earth Day events, and STEM fairs where it exhibits and educates the public on some of the EVs in its fleet and talks about EV options available on the market. El Paso also has an EV time-of-use rate that incentivizes off-peak charging.
• Entergy Texas installed chargers at Texas A&M University and the Lamar Institute of Technology. Entergy allows students and faculty at Lamar to use these EV chargers at no cost as part of a research effort to understand the chargers’ impact on consumers and the electric grid.

Want to find out more? To receive a copy of the “Utilities and Electric Vehicles” report, email [email protected].

SEPA’s upcoming Utility Conference, April 23-25, will feature a half-day workshop on EVs. SEPA members can also join our electric vehicle working group.