Predictions of utilities being in a "death spiral" were once the subject of past VerdeXchange Conference panelists. Yet today, Southern California Edison has submitted an elaborate plan for transportation electrification to the California Public Utilities Commission, and is pressing forward with host of new initiatives. While advances in energy efficiency, distributed energy, and smart grid technologies have left utilities with the challenge of a reduced demand for power, SCE has treated the pursuit of zero-emission electric vehicles as an opportunity to shift its focus to the transportation sector. SCE President Ron Nichols speaks to VX News about how he is approaching the need for electric transportation infrastructure across California, as well as battery technology and pilot programs designed to make EVs affordable, viable, and beneficial to state goals.
In August, you penned an op-ed for the San Gabriel Valley Tribune praising California cities' adoption of electric buses. Comment on how the proliferation of electric vehicles could shift the role of electric utilities to that of "the new gas station" of the 21st century.
Ron Nichols: In order to meet the state's goal of getting to 40 percent below 1990 levels of GHG emissions by 2030—now a state law, with SB 32 and the cap-and-trade measures that have gone forward—everything points to requiring some major changes in how we reduce GHG emissions. For a long time, the major focus has been utilities' power production and the power supply that we procure on the market. We've done a great job on that front: Today, power supply is only about 20 percent of GHG emissions statewide. That is a great accomplishment. Now, the next big piece is transportation.
Between tailpipe emissions and the refining of oil products to serve that need, transportation produces on the order of 50 percent of total GHG emissions in the state. If we're going to get to our goal, we need to make our way to zero-emission transportation. We've gotten a good start on autos; the other meaningful piece is transit. We've been excited to see how many cities and transit agencies have been stepping up and pushing to convert to electric buses in order to do their part in meeting our GHG reduction needs.
It's not just carbon, either; one of the things that people may not always grasp is that in reducing vehicle exhaust, you're also eliminating criteria pollutants that cause health issues. That's particularly important in Southern California Edison’s territory, where we have severe non-attainment in criteria pollutants.
Four years ago, VerdeXchange Conference panelists weighed the possibility that electric utilities were in a "death spiral." Today, SCE has just submitted an elaborate electrification plan to the CPUC and is pressing forward with host of new initiatives. Address the transition that utilities are undergoing with regard to distributed energy, energy efficiency, and the grid.
We're making a big transition. Southern California Edison is effectively a wires company at this point. We produce less than 20 percent of our own power; we purchase the rest in the market. We’re primarily the mechanism to deliver energy to our customers. That gives us a slightly different perspective from other utilities—certainly different from utilities outside of California.
As we have doubled down on energy efficiency, and a growing number of customers have provided their own solar, SCE has for the first time adopted an official forecast that shows declining load over the years. That's something that we're actually supportive of. We recognize the need to reduce the load because we recognize that that means reduced emissions and cleaner energy. That's a pretty material change from where even the California utility industry was just a few years back.
We're doing a lot of work with the Public Utilities Commission to define the role of even more distributed energy resources on the grid. We're also continuing to work with third parties, not only on how they can displace energy use, but also on the value of solar, batteries, demand response, and energy efficiency for the grid itself, particularly the distribution grid. There are some pretty exciting, major changes afoot.
Elaborate on the role that electric vehicles play in the implementation of the CPUC's Distributed Resources Plans and the state's efforts to electrify transportation.
First, we looked at what electric vehicles mean as strategic load. If we can work with our customers and give them the right incentives to charge their vehicles on an almost real-time basis, then we can shape that load to meet the changing needs of the grid.
As we increase use of renewables, particularly solar, California ISO studies have shown that we find ourselves long on energy during peak periods of the day, on an increasing number of days of the year. If we could offer good pricing incentives for EV owners to use that renewable energy to charge their vehicles at those times, it would be a win-win. It's a good opportunity to make economic use of that energy, and to displace fossil fuel use with renewable energy in those circumstances.
I think we've got a good start on the issue of electric vehicle charging. For two years now, we've been working with CPUC on our Charge Ready program, which is a two-phase pilot in which we provide charging infrastructure—right up to the charger—plus rebates, to displace the cost of the charger. It focuses on what we call "long dwell" locations: parking garages, shopping malls, multifamily dwellings, and the like that don't have electric vehicle chargers now. This helps to address the issue of range anxiety, but also, those tend to be places where cars are parked during the day, and where charging opportunities could benefit the grid and reduce carbon emissions.
All three of California's investor-owned utilities made a pretty significant filing at the request of the CPUC in January to detail the next step of what can be done in transportation electrification. Our proposals are still under review by the commission, but some of the more significant items include moving ahead on two big pieces of electrification: transit and medium- and heavy-duty truck charging.
When electric vehicles started coming out, we encountered a problem where the vehicles were out there but there wasn't any charging infrastructure in place. We want to get ahead of the curve and avoid that problem with medium and heavy trucks. We're proposing to work on charging infrastructure with the truck manufacturers that are starting to put out prototypes for electric trucks—similar to our Charge Ready program for autos and light-duty vehicles—so that we can have the infrastructure ready for the trucking industry to use as new electric vehicles start coming into use in the market. We're pretty excited about that opportunity.
Address the challenge of financing and scaling the state's charging infrastructure, as well as the role of Veloz and the $2 billion VW settlement, in accelerating California's EV market.
On our side, Southern California Edison has proposed a two-phase pilot for autos on the order of $250 million that supports electric vehicle charging infrastructure, as well as rebates for chargers. Within our service territory, we think that that's probably 30 percent of the overall market.
The idea is that that level of penetration and implementation, combined with the growth of the number of electric vehicles on the road, ought to be enough that beyond that point, there’s a pretty good likelihood that the market will start providing electric charging as something that the customer puts in without rebates, or certainly with lesser rebates. That's the purpose of this pilot: to prove that out.
The VW settlement provides some significant additional dollars—yet another mechanism for funding that, combined with what we’re already doing, should help accelerate the implementation of EVs in California.
Frankly, we have to do this. When CARB adopted their 2030 carbon reduction targets, they estimated that there would need to be something like 4.2 million electric vehicles on the road in California to meet that goal. In fact, in our own analyses, we think it might take as much as double that number. And 2030 is not even 13 short years away. We need to ramp up both infrastructure and the availability of affordable EVs across a broad sector of our customers in California if we are going to meet those 2030 targets.
On the subject of charging infrastructure, a recent Utility Dive article suggests that utility control of smart-charging would benefit the grid more than time-of-use rates. Your thoughts?
There are certainly opportunities for traditional time-of-use. But historically, time-of-use was focused on trying to encourage people to use electricity at night. The world has changed in the last five years, and we're finding ourselves long on energy at times during the day. As a result, having more real-time pricing signals is something that I think we're going to have to get more accustomed to doing as an industry. That's going to require more flexibility by the utilities, and more flexibility on the part of the Public Utilities Commission to allow these types of changes to happen a little more quickly than they have historically.
Your parent company holds a stake in electric bus company Proterra. Does this investment portend a trend in the utility sector to vertically integrate?
Edison International's ownership in Proterra is just a 5 percent ownership. It comes from a desire to learn the industry and the needs of different types of vehicles. We've learned a lot—enough to know that, between the cost of an electric bus and its fueling requirements over time, electric buses are now cost-competitive overall. That exposure to electric bus transit helps us to understand more about what we need to do as a utility to enable those types of opportunities and be part of the GHG emission reduction strategy.
I don't know that there is likely to be a big shift among utilities to be vertically integrated, if you will; the minority position that we have in this one bus company is certainly not for that purpose. It is simply for the purpose of understanding more about how the market works, and how it needs to work.
Lastly, elaborate on SCE's energy storage initiatives aimed at further enabling the integration of renewable energy.
Our efforts in energy storage—particularly battery storage, although we have also done some thermal storage—are nation-leading. In fact, Edison received an award from Energy Storage North America regarding our leadership in that area. We’re excited and proud of that role.
It started back in 2014, when we did an all-source solicitation for power supply on the west side of our service territory, where we have our urban and high load centers. We did a head-on-head competition among gas-fired resources, storage, energy efficiency, demand response, and distributed energy. We were surprised when we ended up awarding contracts for over 260 megawatts of battery storage—160 of which, between batteries and a bit thermal storage, was all behind the meter—as a way to meet our overall system load requirements.
Following that, we've had numerous other applications for battery storage. Now, either under operation or under contract are 450 megawatts of new energy storage, the vast majority of which is battery. The prices have been coming down, and it's become an increasingly flexible resource. It is going to benefit the integration of renewable energy, particularly solar, in our service territory and, we think, beyond.