Four things fleet leaders should know about America’s grid and zero-emission trucks

Photo courtesy of North American Council for Freight Efficiency (NACFE)

The U.S. Environmental Protection Agency‘s proposed Phase 3 Greenhouse Gas Emission Standards are poised to add yet another spark to the medium- and heavy-duty truck industry’s acceleration toward low- and zero-emission trucks.

Whereas many of the incentives included in the Inflation Reduction Act are intended to spark demand for zero-emission trucks, EPA’s proposed truck rule, when finalized, could help to ensure there will be a robust supply of low- and zero-emission solutions for fleets. In EPA’s proposal for these technology-neutral performance standards, the agency projects manufacturers could meet the standards through increasing market shares for zero-emission trucks. For example, in 2030, this could help ensure that 27% of medium-duty vocational trucks – like parcel delivery step vans, and 20% of tractor-trailer day cabs will be ZEVs.

A key question that a number of stakeholders have voiced is: will there be sufficient charging infrastructure for this level of ZEVs? The short answer is yes.

The steps utilities and utility commissions need to take are clear. It is feasible to take these steps in time to achieve the level of adoption that could result from the EPA proposal. Long-term standards provide both a firm timeline and additional regulatory certainty that public utility commissions need to approve significant utility investments in order to ready the grid for fleet electrification. So, the finalization of strong emission standards can help further support the very investments that accelerate fleet electrification.

Developing the needed level of charging infrastructure to support wide-scale electrification of medium- and heavy-duty vehicles doesn’t need to be done overnight.  EPA’s proposal recognizes this by ramping up its proposed stringency level through 2032. This provides a significant window of time to build out the grid to support charging infrastructure, as well as implement smart solutions to get necessary charging energized in time to support manufacturers who choose to comply with this rule by selling ZEVs.

In fact, while some have identified certain near-term challenges to developing the necessary charging infrastructure for heavy-duty fleets, the steps needed to complete this build out in a timely manner are  well known. Here are four reasons fleets should be very optimistic about our country’s ability to meet this need over the timelines EPA’s rule will cover.

1. Record investment in public truck charging will make plugging in easier

Electrifying the industry will require significant infrastructure improvement and investment. Here, too, policy is already providing important market assurances. There are billions of dollars of charging related investments contained within the Inflation Reduction Act and the Infrastructure Investment and Jobs Act. These include the 30C tax credit that enables companies to recoup 30% of the cost of private infrastructure investments; National Electric Vehicle Infrastructure program — a $7.5 billion program that supports the buildout of public charging infrastructure, including for heavy-duty vehicles; and the Advanced Energy Project Credit allocates $10 billion for facilities manufacturing advanced energy technologies, which includes manufacturing of charging and refueling infrastructure for ZEVs as well as grid modernization components. States are also making investments. The California Energy Commission’s Clean Transportation Program announced a $2.9 billion investment plan to accelerate ZEV charging and refueling availability that includes $1.7 billion of funding for medium-and heavy-duty ZEV infrastructure. The CEC estimates the plan will result in 90,000 new EV chargers across the state. The state has also approved its three major-investor owned utilities to invest $686million over five years in medium- and heavy-duty infrastructure projects to support electrification.  Eight other states have already approved utility investments for medium- and heavy-duty charging infrastructure, including Illinois, New York, Colorado, Florida and Michigan.  There has also been a steady stream of announcements from the private sector to build charging infrastructure and other fueling infrastructure for zero-emission solutions. For example:

• Daimler Truck North America, NextEra Energy Resources, LLC and BlackRock Alternatives announced a $650 million investment in Greenlane – their joint venture “to design, develop, install and operate a U.S. nationwide, high-performance zero-emission public charging and hydrogen fueling network for medium- and heavy-duty battery-electric and hydrogen fuel cell vehicles.”
• CBRE, the largest real estate services company in the world, partnered with Forum Mobility on a $400 million joint venture to build depot charging infrastructure in California alone.
• Pilot and Volvo announced a partnership to build out charging infrastructure for trucks.
• Prologis and Maersk are demonstrating that fleets can find willing partners with facility owners to develop the depot charging infrastructure needed to support large vehicle deployments.

Long-term, protective EPA standards can help further accelerate this trend of massive investments by providing even more market certainty.

2. America’s utilities are eager and capable of electrifying our nation’s fleet

Electric truck fleets translate to new electricity customers, and electric utilities recognize the opportunity to generate new revenue. EPA’s proposed rule would be a very modest driver of new net electricity demand. But utilities make money by recouping infrastructure investments, not on electricity sales. So, they are naturally incentivized to invest in the equipment and upgrades these new customers will require. And they have the capital; investor-owned utilities make nearly $170 billion in capital expenditures every year.  In its comments, the Edison Electric Institute, which represents all U.S. investor-owned electric companies, noted, “EPA’s Proposed Rule is of critical importance to EEI members as they continue to lead this clean energy transformation. A HDV Phase 3 rule that supports the continued electrification of the transportation sector and leverages the existing investment in the electric system and the electric sector’s ongoing clean energy transformation will provide both environmental benefits and send appropriate signals to support the continued buildout of infrastructure to support increased electrification.”

Moreover, utilities have to, by law, serve all their customers regardless of the rate of growth. State Public Utility Commissions require utilities to regularly forecast and plan for new loads and complete grid improvements necessary to serve future customer needs.

Utilities and utility commissions need to act with even more urgency. The clear timeframes contained in the EPA proposal will help to demonstrate that load growth from electric fleets will be coming over the next several years. This will both focus the attention of utility commissions on the needs of fleets and authorize utility investments as within the bounds of prudent expenditures.

3. States from coast-to-coast are starting to step up to meet the charging challenge

States and utilities have been proactive in taking actions to accelerate infrastructure deployment.  For instance, California, where most electric trucks have been deployed, has enacted legislation that addresses grid upgrades, training the workforce that will service the electric transportation sector, and providing cost recovery for any gaps that may occur between investments and utility rate cases.

Outside California, utilities are already adapting their procedures for forecasting, planning, and building out the grid to accommodate new charging. They are incorporating new data sources to better understand when and where truck charging will materialize, how much new capacity will be needed, and when.

Con Edison in New York, is using satellite imagery paired with targeted fleet outreach to identify the largest hotspots of expected fleet charging in their territory. CenterPoint Energy in Texas has focused on increasing the staffing of its fleet outreach team to better inform its planning efforts. In North Carolina, Duke Energy has identified a handful of fleet clusters within its territory and requested authorization to complete the grid upgrades needed to meet near-term charging demand at those clusters. The New York Public Service Commission recently began a standalone statewide proceeding to proactively complete grid upgrades alongside other policies needed to support truck and bus electrification. And there’s more – a lot more – happening at utilities, state houses and public utility commissions across the country to ramp up and spur electrification.

4. Fleet electrification boosts “utilization” and is a win for everyone

Fleet leaders know the value of asset utilization as well as anyone. And, when it comes to fleet electrification, asset utilization is the wind at the back that can be harnessed to accelerate the speed of this transition. The electric grid is designed to meet the load on the peak day of the year.  Demand, though, fluctuates across the seasons and over the course of the day.

Many fleets, especially those depot-based operations that have peak operations between early morning to late afternoon, will be seeking to charge at times when the demands on the grid ebb. Meeting this new demand from fleets will increase the utilization of the electric grid. This, in turn, helps everyone as demand from electric fleets could benefit all electricity customers through downward pressure on prices.

A real-world trucking data analysis by Synapse Energy Economics commissioned by EDF found that spreading the cost among all ratepayers of distribution grid and customer-specific site upgrades would have neutral to downward pressure on rates as added charging revenue meets or outpaces infrastructure costs. The watchdog group California Public Advocates Office reached a similar conclusion: “All ratepayers, even those who cannot (or choose not to) electrify, could financially benefit from electrification.”

Charging Forward

Already, we are seeing significant private, public and utility investments in grid and charging infrastructure necessary to electrify the transportation sector, including the country’s work truck fleets; and we are already seeing that clear regulations help drive further investment. The scale of further investment that is needed to support truck electrification is but a small fraction of the planned expenditures the utility sector will make over the next decade. States are already moving to address the development of charging infrastructure. It’s also clear that the development of charging infrastructure for heavy-duty trucks can drive significant benefits across society.

By finalizing a protective, long-term Phase 3 heavy-duty emissions program, EPA can help provide additional certainty that will drive further private investment and state action that help ensure there is sufficient charging infrastructure needed to meet these standards.