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Smooth Operator? Managing Electric Vehicle Integration in Constrained Distribution Networks

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Abstract

Electricity distribution network constraints may ultimately limit the pace of transportation electrification. This paper examines the underappreciated challenges that electric vehicle (EV) adoption poses for the distribution grid. While prior research has focused on bulk power and private service upgrades, we emphasize how local distribution capacity is strained by reduced load diversity at small aggregations. We highlight two alternatives to costly infrastructure expansion: (1) demand-based tariffs that allocate scarce distribution capacity more efficiently, and (2) managed charging programs that coordinate EV loads within local limits. While managed charging reduces transformer overloads and smooths load profiles, consumer participation remains a barrier. Economists can play a key role by designing rate structures that align user incentives with local network constraints and by evaluating consumer acceptance of these solutions as electrification advances.

Suggested Citation

  • David Rapson & Blake Shaffer, 2025. "Smooth Operator? Managing Electric Vehicle Integration in Constrained Distribution Networks," Working Papers 2540, Federal Reserve Bank of Dallas.
    • Handle: RePEc:fip:feddwp:102283
    DOI: 10.24149/wp2540
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    References listed on IDEAS

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    1. Andrea La Nauze & Lana Friesen & Kai Li Lim & Flavio Menezes & Lionel Page & Thara Philip & Jake Whitehead, 2024. "Can Electric Vehicles Aid the Renewable Transition? Evidence from a Field Experiment Incentivising Midday Charging," CESifo Working Paper Series 11386, CESifo.
    2. Matteo Muratori, 2018. "Impact of uncoordinated plug-in electric vehicle charging on residential power demand," Nature Energy, Nature, vol. 3(3), pages 193-201, March.
    3. Roger E. Bohn & Michael C. Caramanis & Fred C. Schweppe, 1984. "Optimal Pricing in Electrical Networks over Space and Time," RAND Journal of Economics, The RAND Corporation, vol. 15(3), pages 360-376, Autumn.
    4. Marten Ovaere & Mark Vergouwen, 2025. "Mind the Peak: The Role of Peak Demand Charges and Real-Time Pricing in Residential Electricity Flexibility," Working Papers of Faculty of Economics and Business Administration, Ghent University, Belgium 25/1115, Ghent University, Faculty of Economics and Business Administration.
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    Keywords

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    JEL classification:

    • L94 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Electric Utilities
    • Q40 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - General
    • Q50 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - General

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