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Electric Vehicles and the Energy Transition: Unintended Consequences of Time-of-Use Pricing

Author

Listed:
  • Megan R. Bailey
  • David P. Brown
  • Erica Myers
  • Blake Shaffer
  • Frank A. Wolak

Abstract

The growth of electric vehicles (EVs) raises new challenges for electricity systems. We implement a field experiment to assess the effect of time-of-use (TOU) pricing and managed charging on EV charging behavior. We find that while TOU pricing is effective at shifting EV charging into off-peak hours, it unintentionally induces new and larger "shadow peaks" of simultaneous charging. These shadow peaks lead to greater exceedance of local capacity constraints and advance the need for distribution network upgrades. In contrast, centrally managed charging solves the coordination problem, reducing transformer capacity requirements, and is well tolerated by consumers in our setting.

Suggested Citation

  • Megan R. Bailey & David P. Brown & Erica Myers & Blake Shaffer & Frank A. Wolak, 2025. "Electric Vehicles and the Energy Transition: Unintended Consequences of Time-of-Use Pricing," American Economic Review: Insights, American Economic Association, vol. 7(4), pages 550-566, December.
    • Handle: RePEc:aea:aerins:v:7:y:2025:i:4:p:550-66
    DOI: 10.1257/aeri.20240476
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    References listed on IDEAS

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    1. David Roodman & James G. MacKinnon & Morten Ørregaard Nielsen & Matthew D. Webb, 2019. "Fast and wild: Bootstrap inference in Stata using boottest," Stata Journal, StataCorp LLC, vol. 19(1), pages 4-60, March.
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    More about this item

    JEL classification:

    • C93 - Mathematical and Quantitative Methods - - Design of Experiments - - - Field Experiments
    • D91 - Microeconomics - - Micro-Based Behavioral Economics - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making
    • L62 - Industrial Organization - - Industry Studies: Manufacturing - - - Automobiles; Other Transportation Equipment; Related Parts and Equipment
    • L94 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Electric Utilities
    • Q42 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Alternative Energy Sources

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