Distribution System Investments to Enable Medium- and Heavy-Duty Vehicle Electrification

Reducing greenhouse gas emissions from medium- and heavy-duty vehicles-including tractor trailers, delivery trucks, buses, refuse trucks, and large pickup trucks and vans-will be necessary for the United States to meet its climate goals and will involve electrifying the majority of these vehicles. However, large-scale medium- and heavy-duty vehicle (MHDV) electrification will require distribution system and site upgrades to support higher load on the grid and accommodate installation of charging stations. Currently, the costs of these upgrades fall largely on individual fleet owners. This may hinder electrification, especially for fleet owners who already face challenging economics to electrify their fleets. One way to support the rapid adoption of electric MHDVs would be to socialize certain distribution system and site infrastructure upgrade costs through an electric vehicle make-ready program. The net impact on electricity ratepayers from such a program will depend on whether the increased distribution revenue from MHDV electricity sales can offset the costs of distribution system upgrades (including make-ready programs). In this analysis, we examine the impact on rates of a MHDV make-ready program in two areas of New York: Con Edison’s service area in New York City and the western part of National Grid’s service territory in upstate New York. We calculate the cost of the distribution system upgrades necessary to support 100 percent electric MHDV sales by 2045, consistent with state targets, as well as make-ready program costs. We then compare these costs to the expected revenues generated from MHDV electrification under existing utility tariffs. We find that a make-ready program would have a neutral-to-beneficial impact on rates in both utility service areas for the period 2023-2045. With unmanaged charging and a 3 percent discount rate, the net revenues in Con Edison’s service territory total $820 million, potentially reducing costs for all ratepayers. In National Grid’s territory, we find that unmanaged charging results in close to zero net revenue ($320,000) during the same period. These net revenues remain positive under a higher discount rate of 7 percent. Under a managed charging scenario that decreases each vehicle’s peak load by 20 percent, the cumulative net revenue totals $690 million for Con Edison and $89 million for the western part of National Grid at a 3 percent discount rate. Again, the net revenues remain positive under a higher discount rate of 7 percent. These positive net revenue results imply that socializing the costs of make-ready and distribution system upgrades necessary to meet New York State’s MDHV electrification targets are unlikely to cause ratepayer bills to increase in either of the utility service areas studied, due to being offset by the revenues contributed by MHDVs over the same period.