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

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  • Wangsness, Paal Brevik

    (School of Economics and Business, Norwegian University of Life Sciences)

  • Halse, Askill Harkjerr

    (School of Economics and Business, Norwegian University of Life Sciences)

Abstract

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.

Suggested Citation

  • Wangsness, Paal Brevik & Halse, Askill Harkjerr, 2020. "The impact of electric vehicle density on local grid costs: Empirical evidence," Working Paper Series 1-2020, Norwegian University of Life Sciences, School of Economics and Business.
  • Handle: RePEc:hhs:nlsseb:2020_001
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    References listed on IDEAS

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    1. Azadfar, Elham & Sreeram, Victor & Harries, David, 2015. "The investigation of the major factors influencing plug-in electric vehicle driving patterns and charging behaviour," Renewable and Sustainable Energy Reviews, Elsevier, vol. 42(C), pages 1065-1076.
    2. Barton, John & Huang, Sikai & Infield, David & Leach, Matthew & Ogunkunle, Damiete & Torriti, Jacopo & Thomson, Murray, 2013. "The evolution of electricity demand and the role for demand side participation, in buildings and transport," Energy Policy, Elsevier, vol. 52(C), pages 85-102.
    3. Decker,Christopher, 2014. "Modern Economic Regulation," Cambridge Books, Cambridge University Press, number 9781107024236, February.
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    Cited by:

    1. Iliana Ilieva & Bernt Bremdal, 2021. "Utilizing Local Flexibility Resources to Mitigate Grid Challenges at Electric Vehicle Charging Stations," Energies, MDPI, vol. 14(12), pages 1-15, June.

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    More about this item

    Keywords

    Electric vehicles; Distribution System Operators; local grid costs; local grid capacity; fixed effects regression; peak power tariffs;
    All these keywords.

    JEL classification:

    • Q41 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Demand and Supply; Prices
    • Q48 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Government Policy
    • Q52 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Pollution Control Adoption and Costs; Distributional Effects; Employment Effects
    • R48 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Transportation Economics - - - Government Pricing and Policy

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