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Electric Vehicles and the Energy Transition: Unintended Consequences of a Common Retail Rate Design

Author

Listed:
  • Megan Bailey

    (University of Calgary)

  • David P. Brown

    (University of Alberta, Department of Economics)

  • Erica Myers

    (University of Calgary)

  • Blake Shaffer

    (University of Calgary)

  • Frank A. Wolak

    (Stanford University)

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 Bailey & David P. Brown & Erica Myers & Blake Shaffer & Frank A. Wolak, 2024. "Electric Vehicles and the Energy Transition: Unintended Consequences of a Common Retail Rate Design," Working Papers 2024-04, University of Alberta, Department of Economics.
    • Handle: RePEc:ris:albaec:2024_004
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    File URL: https://sites.ualberta.ca/~econwps/2024/wp2024-04.pdf
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    References listed on IDEAS

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    1. 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.
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    4. Tim Schittekatte & Dharik Mallapragada & Paul L. Joskow & Richard Schmalensee, 2024. "Electricity Retail Rate Design in a Decarbonizing Economy: An Analysis of Time-of-use and Critical Peak Pricing," The Energy Journal, , vol. 45(3), pages 25-56, May.
    5. Severin Borenstein, 2017. "Private Net Benefits of Residential Solar PV: The Role of Electricity Tariffs, Tax Incentives, and Rebates," Journal of the Association of Environmental and Resource Economists, University of Chicago Press, vol. 4(S1), pages 85-122.
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    1. repec:bon:boncrc:crctr224_2024_615 is not listed on IDEAS
    2. Dong, Zeyang & Liang, Jing & Linn, Joshua & Qiu, Yueming, 2025. "How Do Residential Greenhouse Gas Mitigation Technologies Affect Electricity Prices and Consumer Welfare?," RFF Working Paper Series 25-28, Resources for the Future.
    3. Pascal Heid & Kevin Remmy & Mathias Reynaert, 2024. "Equilibrium Effects in Complementary Markets: Electric Vehicle Adoption and Electricity Pricing," CRC TR 224 Discussion Paper Series crctr224_2024_615v2, University of Bonn and University of Mannheim, Germany, revised Jun 2026.
    4. Zhan, Xuhao & Guo, Bowei, 2026. "Electric vehicles to the grid: Costs, benefits, and pricing mechanisms," Energy Economics, Elsevier, vol. 155(C).

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    Keywords

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    JEL classification:

    • L94 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Electric Utilities
    • Q41 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Demand and Supply; Prices
    • R40 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Transportation Economics - - - General

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