The Impact of Electric Vehicle Density on Local Grid Costs: Empirical Evidence from Norway

Abstract

While a rapid shift towards electric vehicles (EVs) will contribute to reducing carbon emissions from the transport sector, there are concerns that uncoordinated charging of EVs might impose challenges for the local electricity grid. Our study is the first to investigate this empirically in a country-wide analysis, using data from the country with the highest market share of EVs, namely Norway. We present the regulatory framework in which Norwegian grid companies operate and discuss the possible impact of EV charging. Using panel data on 107 grid companies over the period 2008-2017, we then estimate the effect of local growth in EVs on local grid costs. We find that increases in EV stock are associated with increases in costs which are both statistically and economically significant. However, there is a lot of heterogeneity in these results, where the effect on grid costs are higher for small grid companies in rural areas.