Scaling Up: Electric vehicles, distributed energy, grid modernization and the infrastructure debate
America’s transportation network is electrifying at an ever-increasing pace, from city buses to Amazon delivery trucks, personal vehicles and medium and heavy-duty trucking. This large-scale transportation electrification — coupled with net zero carbon emission goals — is driving the need for more distributed and non-carbon energy resources. What’s needed to make it happen? A huge investment in modernizing America’s electric grid – physically and digitally.
Congress and the Biden Administration are pushing to fund it and, most importantly, put the climate-oriented policy frameworks in place to do it right. As of September 2021, Congress is poised to act on the bipartisan $1.2 trillion Infrastructure Investment and Jobs Act. If it passes, it will provide significant funds to jump-start electrification and enable decisive movement toward a low-carbon electric grid. We are actively supporting many of our clients in operationalizing this exciting and challenging shift from vehicles powered by gasoline to an electrified future.
Why is modernizing the grid so important? The International Energy Agency expects the global electric vehicle fleet to reach about 130 million by 2030, and to increase electricity demand by 4-to-6 percent. Technological and policy developments could push these numbers much higher. What we do know is this: Electric vehicles will vastly increase the demands on our energy grid. We are working with our clients to plan and execute effective modernization strategies that take into account the specific grid-related needs and issues from the micro to macro level so that we can reliably power electric vehicles and boost user confidence. Recent severe weather-related U.S. grid shortages and outages have further highlighted the need to modernize the grid for resilience as well as effectively power our transportation infrastructure.
The electric grid, as we know it, needs to adapt. Once sourced solely from large power plants, modern grids need to accommodate increased supplies from renewable, distributed resources that enable power to flow more flexibly based on supply and demand. While some solutions will be shared, each utility and geographical region will have different grid resources and demands, so a one-size-fits-all solution won’t work. Physical infrastructure improvements coupled with digital smart grid management technology will enable distribution utilities to move energy from one part of the grid to another to avoid service interruptions. And innovation will play a key role in enabling these new-use requirements.
Electric utilities are poised to see a significant growth in demand for their services. Utilities, as well as the policy making community, must be proactive to support the effective transition to transportation electrification: modeling, developing, implementing and managing programs and incentives to advance energy infrastructure and grid modernization.
Enter the Infrastructure Investment and Jobs Act. With proposed federal investments to reenergize America’s power grid and transmission systems, resources will flow to states and municipalities to modernize the grid, producing jobs and strengthening communities along the way. As passed by the U.S. Senate in August 2021, this $1.2 trillion investment toward infrastructure initiatives would be spent in just five years – an average of $700 million dollars a day – and approval by the House of Representatives and President Biden’s signature are all that’s required to authorize the funding. The funds proposed for grid modernization and transportation electrification is significant, and AECOM is supporting our proactive clients in preparing to leverage these funding resources as they are made available.
As of this writing, Congress is also considering other funding proposals as outlined in the Administration’s Build Back Better Initiative that target electrifying our transportation infrastructure. Funding has targeted building out a national network of charging stations, subsidizing renewable energy development, incentivizing consumers to purchase electric vehicles, funding municipalities and states to convert their school bus fleets from diesel to electric, and many other investments that would fund the transition to a low-carbon transportation system.
New allies, new challenges. The transition to electrified transportation and distributed energy resources also highlights the need for collaboration between the U.S. Department of Energy (DOE) and the U.S. Department of Transportation (DOT). Their partnership can benefit utility companies and transit agencies by delivering roadmaps for electrification programs and incentive funding through existing loan programs and contracting measures. The DOT typically funds vehicles, such as new buses, but not the energy infrastructure needed to support electrified fleets. The DOE can help plan the modernization of the grid and provide technical expertise to expand advanced control systems.
The nation’s electric utility industry is grappling with the difficult challenge of powering up the nation’s vehicles as more people are buying electric cars, fleets are announcing conversions, manufacturers are responding to the demand and policy makers are encouraging the shift. The electric utility industry is highly regulated, and it’s designed from a regulatory standpoint to deliver the power needed when the customer wants it. How will different utilities meet the challenge, and mitigate the risks? How quickly will demand grow? How should utility rate structures be optimally designed? What are the reliability issues that need to be mitigated? How will be local distribution utilities fund grid improvements needed to effectively power all the new transportation-related needs? And what’s the right blend of private vs. public investment?
While the challenges are significant, the opportunity is greater. With the initial funding in the Infrastructure Investment and Jobs Act, innovative thinking from DOT and DOE, the private sector can and will respond with solutions. At AECOM, where we are deeply involved in all aspects of transportation, we can see that grid modernization is at the heart of transportation electrification. It’s an opportunity to create new jobs, power the transition to a lower-carbon use economy and deliver the future of infrastructure.
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