Reforming electricity rates to enable economically competitive electric trucking

Abstract

The imperative to decarbonize long-haul, heavy-duty trucking for mitigating both global climate change as well as air pollution is clear. Given recent developments in battery and ultra-fast charging technology, some of the prominent barriers to electrification of trucking are dissolving rapidly. Here we shed light on a significant yet less-understood barrier, which is the general approach to retail electricity pricing. We show that this is a near term pathway to $0.06/kWh charging costs that will make electric trucking substantially cheaper than diesel. This pathway includes (i) reforming demand charges to reflect true, time-varying system costs; (ii) avoiding charging during a few specific periods (<45 h in a year) when prices are high; and (iii) achieving charging infrastructure utilization of 33% or greater. However, without reforming demand charges and low utilization of charging infrastructure, charging costs more than quadruple (to $0.28/kWh). We also illustrate that a substantial share of current trucking miles within select large regions of the United States can be reliably electrified without constraining electricity generation capacity as it exists today. Using historical hourly electricity price and load data for last 10 years and future projections in Texas and California, we show that electricity demand is at least 10% lower than yearly peak demand for at least 15 h on any given day. In sum, with electricity rates that closely reflect actual power system costs of serving off-peak trucking load, we show that electric trucks can provide overwhelming cost savings over diesel trucks. For reference, at diesel prices of $3.16/gal and charging costs of $0.06/kWh (inclusive of amortized charging station infrastructure costs), an electric truck’s fuel cost savings are $251 000 (NPV), providing net savings of $61 000 (18% of lifetime diesel fuel cost) over the truck’s lifetime at battery price of $170/kWh, or up to $148 000 (44% of lifetime diesel fuel cost) at a battery price of $100/kWh (figure ).