The impact of electric vehicle density on local grid costs: Empirical evidence

We observe a rapid rise in the number of electric vehicles (EVs) in Norway, and there exists a literature that warns that EV charging will cause substantial future costs to the local grid, unless measures are put in place. If indeed the aggregate uncoordinated charging by EV owners does induce higher costs to local grid companies (hereafter DSOs – Distribution System Operators), then Norwegian data would be the first place to investigate. Detailed data of all Norwegian DSOs and all registered EVs during the last ten years gives a unique opportunity to investigate this relationship. To our knowledge, such an empirical analysis has not been done before on real data in a country-wide analysis. Findings may have implications for how to regulate DSOs, how to price household power usage and how to assess the net social cost of achieving emission reduction targets through promoting EVs. We use a fixed effects regression model and find that increases in EV stock are associated with positive and statistically significant increases in DSO costs when controlling for other DSO outputs and applying year dummies. The point estimates also imply that the effect is economically significant. However, there is a lot of heterogeneity in these results, where the marginal cost estimates are a lot higher for small DSOs in rural areas, and a lot lower for larger DSOs in urban areas.