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Electric vehicles remain in many respects a fancy toy for the well-off.

EV Equity: Building an Electric Transportation Sector for Everyone

June 24, 2021
States and utilities consider what is needed to bring electric transportation to underserved communities.

The utility industry looks forward to a future where it can provide electricity not just for running homes, businesses and industries, but also for getting people and goods from point A to point B. Transportation electrification would lock utilities in as one of the most essential businesses around, but there is an issue. Electric vehicles (EVs) remain, in many respects, a fancy toy for the well-off. They are primarily a luxury item or at least near enough to one they remain out of reach for the masses. If they are going to be something on which the industry can build a grid for the future, this must change.

Several barriers get in the way of EV adoption today. Not only is there the expense of electric vehicles, which puts them outside the budget of many working families, but there also is the lack of charging stations — including in neighborhoods — which fills people with range anxiety. Many communities and workplaces try to make things easier for EV users, but many people still do not live where EV adoption is a consideration.

Surveys and studies paint the picture of an EV owner as a specific kind of person: They tend to make more at work, own houses and cars, and have more formal education. They have buying power, which is crucial when you are paying an average of US$55,600 for an EV compared with $36,600 for a typical gas-powered car, according to Kelley Blue Book data. EV fans will correctly point out these costs continue to fall over time, but the price gap today remains large. Enter the concept of equitable EV ownership, which aims to make electric transportation possible for those living in underserved communities.

The EV Market

According to a certain argument, the problem with price will be self-correcting. Greater competition and research coming to fruition will close the price gap, bringing more low-income drivers to EVs. “An expanding EV market will also lead to an expanding used EV market, which will mean greater affordability for low- and moderate-income drivers,” said Peter Huether, senior research analyst for Transportation for the American Council for an Energy-Efficient Economy (ACEEE).

According to Huether, the market itself — aided by the occasional policy tweak — may solve this problem.

“As EV prices continue to decline and governments push for greater electrification, most notably with California’s plan to phase out new gasoline vehicles by 2035, EV buyers will increasingly resemble the country overall,” Huether explained. “The Biden administration is also likely to update federal fuel-efficiency standards and spur greater EV sales beyond higher-income early adopters.”

How has the market operated thus far? Elon Musk, CEO of Tesla Inc., wrote in a 2006 blog that his “secret plan” for pushing EV costs down was to build an EV that catered to the luxury price point, and then use those profits to develop cheaper and cheaper electric cars. Many sources have told me over my past few stories on this topic that Tesla has been a prime mover in pushing down EV and energy storage costs.

Tesla’s delivery on this promise from the 2000s was supposed to be the $35,000 Model 3, but the company pulled this cheapest model from its website in April 2019, shortly after a February rollout and some production struggles. The company decided to produce more expensive versions of the Model 3 first, with Musk tweeting the company could “lose money & die” if the minimum-cost Model 3s shipped too early. This left people who had waited years for an affordable, mass-market EV wondering if one would ever arrive — even though it may be closer than ever. The standard, rear-wheel-drive Model 3 currently is listed on Tesla’s website at $39,990, with an estimated 8- to 12-week delivery and a $100 order fee.

Equitable Ownership

Communities that lack EV charging capacity also are less likely to see an EV as a wise purchase. Huether said the ACEEE found the top 20 ZIP codes nationwide with the most chargers had a median home value of almost $800,000 — more than double the U.S. median of $347,500 measured by the U.S. Department of Housing and Urban Development in the first quarter of 2021.

EVs offer a host of benefits to poorer communities, ranging from lower pollution to a lower cost of ownership. If the benefits of EV ownership do not naturally trickle down to working families on a lower income, the historically economically disenfranchised or both, then additional pressures may need to be applied. Enter the concept of equitable EV ownership.

“Even when accounting for household income, communities of color have higher pollution burden and worse access to reliable, frequent and safe transportation options. Policymakers need to ensure that investments in charging infrastructure, electrified transit, mobility solutions like car sharing, and personal EV incentives take these inequities into account,” Huether said.

The ACEEE looked at 36 states and found only six were considering equity in their directions for utilities. Beyond that, only a few of those six had mandates on how funds should be spent.

“California and New York have some of the strongest statewide policies and are where the vast majority of pledged investments by utilities in [low- to moderate-income] communities and communities of color have occurred to date. However, utilities in other states, such as Massachusetts and Washington, have also taken the lead in dedicated funding to underserved communities despite no statewide policy,” Huether said.

Investments & Incentives

States and utility commissions can encourage utilities to increase their levels of investment in underserved communities to ensure these communities can take part in the EV-enabled grid of the future, Huether noted. This will require thinking holistically about electric transport and engaging with communities to ensure the right spending in the right places.

“[U]tilities need to be more flexible and a little bit more innovative,” said Commissioner Maria Bocanegra of the Illinois Commerce Commission. “That doesn’t mean that commissions are going to allow everything to pass and to happen, but we have to have things for consideration and regulators need a suite of options to help us thread that needle.”

Utilities need to have equity as a foundational part of their thinking and include working-class communities and communities of color in the conversation about electrification, Bocanegra observed.

“I would venture to guess that every community is always interested in better respiratory health and access to cleaner energy and, of course, provided it’s more affordable,” Bocanegra said. “I continue to be a proponent that these communities need better access to these conversations.”

For example, the Federal Energy Regulatory Commission recently opened a new Office of Public Participation that is intended to foster these kinds of conversations, Bocanegra said, adding this would be a good thing to emulate at the state level to help bring low-income communities into policymaking discussions.

Bocanegra also served on an EV working group at the National Association of Regulatory Utility Commissioners, where she learned about what utilities can do to work toward economic and racial equity in electrification.

“I think from what we’ve seen in the [NARUC] EV working group, 90% of the utilities have some sort of equity component,” Bocanegra said. “It’s different for every utility. It’s different for every state. So, depending on what is approved at the commission level or at the state level, it can range from charging station rebates; it can also be on the [original equipment manufacturer] side tax incentives for both charging stations and the vehicles themselves. States are also enabling equity via their own state-level rebates, again for both charging stations and the vehicles themselves. But, it really belongs in the DNA of the utility first and foremost,” Bocanegra said.

Illinois, for instance, has pending legislation that would cover 90% of the cost of installing charging stations and require the Illinois Environmental Protection Agency to reward an additional $500 per port for every charging station installed in an equity-eligible community. However, the approach does not have to be limited to rebates, Bocanegra points out.

“One option we’ve seen locally and even nationally are incentives for parking codes and enforcement in low- to moderate-income areas, or [environmental justice] communities as they are sometimes called. These prioritize free or nearly free charging,” Bocanegra explained.

Another approach is EV-friendly building codes that cut through wait times, high costs and red tape to realize quicker EV fast-charging adoption. Where rebates are not an option, low- to no-interest loans can finance installations and some jurisdictions are enabling utilities to manage charging programs.

“Some of those states and programs are enabling on-bill financing, meaning the charging station owner would have an opportunity to divide up those payments on their utility bills,” Bocanegra said.

Customer Involvement

Education and awareness programs also may help customers to understand the benefits EVs offer to both individuals and communities. Aside from environmental and cost-of-ownership benefits, customers should realize there are other reasons to want their end of town to be electrified, she said.

“One piece I think is being left out a little bit in the conversation is this idea of job and workforce development,” Bocanegra explained. “We are coming out of this, or seemingly we are coming out of this, global pandemic, and there’s a lot of chatter about this green recovery… we have to look at the jobs that are so-called lost to electrification. There are certainly folks out there, including myself, who truly believe there are opportunities for new training. I think there is also an opportunity to create a pipeline for new workers, a new type of workforce.”

Vocational training could help to develop the workforce needed to build out charging infrastructure and keep it running — while ensuring those workers live in and benefit from the EV infrastructure they build and maintain in their own communities.

Puget Sound Energy (PSE) delivers electricity to about 1.1 million electric customers from 10 western Washington counties. Its low-income customers are very interested in electric transportation.

“PSE has heard resoundingly that our low-income and underserved customers want to participate in the clean energy transformation, and that includes EVs,” said Mackenzie Martin, community projects manager at PSE.

The utility currently is developing its Clean Energy Implementation Plan, which will include input from the Equity Advisory Group. PSE also is planning EV-focused feedback sessions within its low-income and underserved communities to inform its next round of transportation electrification tariff filings.

For the utility’s charging station build-out, Martin said PSE wants to install stations where they can do the most good.

“That means not just looking at neighborhoods with high EV ownership, but also placing those chargers in the neighborhoods where EV drivers are likely to drive, along the major roads they’re likely to use, and in neighborhoods that aren’t otherwise being served by charging networks,” Martin said. “It also means investment in charging for multifamily dwellings, where people who may want to drive an EV otherwise would not have access to reliable charging.”

In Washington, Martin said, equity mandates have encouraged companies to slow down and ensure no one is left behind in the clean energy transformation. Policies of this kind have fostered an increased level of community dialogue and diversity, equity and inclusion within EV products and services likely not seen in the past.

Education Is Key

Martin agrees with Bocanegra that education is a critical component when facilitating market transformation in low-income and underserved communities.

“Ensuring that programs and products are designed directly for these communities, that the marketing of the programs reaches these communities and addresses their barriers and increasing familiarity with [EV Supply Equipment] and EVs alike can all help improve adoption,” Martin said. “PSE is planning to scale and expand our transportation electrification offerings to our low-income and underserved customer segment in the coming years.”

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