Article by Abbas Ali.
Over the past decade, electric vehicle (EV) usage in Southern California has soared — much of which is attributable to strong preferences for clean energy and incentive programs initiated by the state. Southern California has also experienced difficulties with its power grid, with rolling blackouts occurring during the summer of 2020 and electrical equipment playing a role in recent wildfires. Are EVs to blame for Southern California’s electricity troubles?
California has sought to pioneer sustainable energy and policy solutions to combat climate change. Politicians and activists have long pushed the state to limit fossil fuel consumption and curb vehicle emissions. According to the Environmental Protection Agency, the transportation sector contributes approximately 28% of US greenhouse gas emissions. Thus, California has turned to EV incentive programs to help combat climate change, as EVs produce no direct emissions. One such program is the Clean Vehicle Rebate Project (CVRP). In 2011, California launched the CVRP, allowing Californians who purchase or lease an electric vehicle from an approved list to apply for a rebate of up to $7,000 per vehicle. Businesses could also take advantage of the CVRP and receive a rebate of up to $4,500 per vehicle. This successful program has offered over 380,000 rebates, amounting to over $880 million in funding. Using annual data from the Clean Vehicle Rebate Project (CVRP) and the California Energy Commission, we explore the relationship between EVs and electricity consumption in the 10 southernmost California counties from 2011 to 2018. Electricity data is divided into residential and non-residential gigawatt-hours (GWh) totals, allowing us to disentangle business and household usage. Further, we use the total dollar amount of EV rebates issued annually at the county-level to proxy for the presence of EVs. Figure 1 shows the amount of residential and nonresidential electricity consumed, displaying wide variation across the counties but little variation over time. On the other hand, Figure 2, displaying the amount of EV rebates, demonstrates large differences across counties and over time.
Figure 1: Southern California Electricity Consumption 2011-2018
Figure 2: Southern California Electric Vehicle Rebates 2011-2018
How can electricity consumption be fairly static when more Californians are using EVs? The state sets higher efficiency standards than most of the country and invests in research programs to make buildings and homes more energy efficient. In 2020, California implemented new building regulations that reduced the wattage allowance for lights and added dimming requirements for outdoor lighting. Further, California offers appliance rebate programs so that homes have more energy efficient appliances, such as washers, refrigerators, and heaters. Los Angeles (LA) County, the largest county in California, explained the static consumption phenomenon in its 2018 Energy Briefing. While the county improved energy efficiency over the past decade, population growth and the construction of larger, expensive homes offset these gains. Like LA, San Diego County experienced population growth and had similar plans to improve efficiency.
Motivated by Figures 1 and 2, we conduct a statistical analysis with the annual data on the 10 counties from 2011 to 2018. Using a fixed effect panel data model, regressing electricity consumption on EV rebates, we find that EVs indeed have a positive and statistically significant effect on residential electricity usage. Economically speaking, the effect is quite small — a 1% increase in EV rebates is associated with a predicted increase of 0.012% in residential electricity consumption. Alternatively, we find no relationship between EV rebates and non-residential electricity consumption. These results suggest that those participating in CVRP rebates primarily charge their vehicles at home, increasing residential energy consumption. Most businesses do not rely on a fleet of company vehicles, so EV energy usage may not make up a meaningful amount of overall non-residential electricity usage. Further, the lack of public charging infrastructure in large California cities likely makes at-home charging more convenient. Los Angeles County’s energy briefing calls for more EV charging infrastructure, noting that there was only one charging station per 195 EVs. San Diego County also recognizes the problem and will be offering businesses rebates to install EV charging stations.
With so many EVs being charged at home, one way to offset this additional electricity consumption is for households to have more solar panels. Solar power has become significantly cheaper and more efficient in the past decade, and Southern California’s climate is ideal for rooftop solar. But, given that solar still imposes mechanical stress on the power grid and that most EVs are charged at night, solar alone may not be the best solution. As emphasized by Elon Musk, battery storage is important for reaping solar power’s benefits. Governor Newsom recently signed an executive order that would ban the sale of gas cars by 2035. Thus, EVs will continue to fill California’s highways. While this policy solution will assist in combating climate change, it should be met with solar and energy storage incentives so as to not overwhelm the power grid and lead to other climate related concerns (e.g., wildfires). Solar initiatives and the Self-Generation Incentive Program, which offers rebate to qualifying Californians to install batteries at home, are steps in the right direction.