Amid EV Surge, Austin Eyes a New Way of Doing Business — Episode 48 of Local Energy Rules Podcast

Improving battery life and safety standards place electric vehicles and self-driving cars closer than ever to the mainstream, and the City of Austin is laying plans to capitalize on the transition.

Experts predict a dramatic transformation of the U.S. transportation system will take hold in the coming decade. Karl Popham, who manages emerging technologies and electric vehicles at Austin Energy, expects major disruption too, fueled mainly by a distinct shift in how drivers view auto ownership.

For decades, the marketplace has nurtured a “single-car ownership” model, built around the idea that every adult driver wants to own a vehicle. But the popularity of carshare services like Zipcar and Car2Go, as well as ride-hailing services like Uber and Lyft, suggest a fundamental fracture in that longstanding framework.

“The American dream of having that house and the cars and the 2.1 kids and all those kind of things maybe doesn’t necessarily apply as a universal truth to younger generations,” said Popham, who works for the eighth-largest municipal utility in the nation. “We need to think more in terms of convenience and mobility, and less about owning something that is ultimately parked over 90% of the time.”

Electric and autonomous vehicle technology supports the change, said Popham, whose city-owned utility is a leader in conservation and renewable energy. He recently spoke with John Farrell, head of the Energy Democracy Initiative at the Institute for Local Self-Reliance, about changes already in motion and what’s yet to come.

Note: We published this podcast and post alongside a new, comprehensive report — Choosing the Electric Avenue — Unlocking Savings, Emissions Reductions, and Community Benefits of Electric Vehicles — that explores in-depth the influence electric vehicles can have in building clean energy economies at the community scale.

A ‘Next-Wave Mobility Plan’

Popham’s vision lines up with an innovative, wholesale push for electrification approved by the Austin City Council last year. The “next-wave mobility plan” prioritizes electric, shared, and autonomous vehicles in the city’s transportation plans. City leaders and staff, including Popham, are working together now to map out specific solutions that further the three-pronged approach.

“We want to be a proactive partner and leader with new and established companies to bring these revolutions sooner rather than later to the City of Austin, so it can be the new normal — and a roadmap and benchmark, quite frankly, for other cities,” Popham said.

Austin already supports a shared vehicle economy, including through ride-hailing services like Uber and Lyft. It’s also home to an autonomous vehicle program run by Google, currently in its pilot phase. But it’s farthest along in its strategy when it comes to electric vehicles, with a network of 550 public charging stations that drivers can access — as much as they want — for $4.17 per month.

More than 1,000 drivers have opted in to Austin’s public charging program, modeled after a gym membership. Electric vehicle owners can sign up for a six-month “membership” for $25 (which shakes out to $4.17 monthly) and enjoy unlimited access to the public charging stations. For some, especially those who also have workplace charging infrastructure, it’s all they need to keep their cars powered up. Others pair the public network with at-home chargers.

The Business of EV Charging

Austin Energy estimates the city’s drivers do 85% of their car-charging in personal garages and carports, behind the meter. The public network, however, provides another option. And the opt-in “membership” program encourages drivers to use it. Some auto dealers hand out a prepaid membership when they sell electric vehicles off the lot. But even drivers who don’t the six-month buy-in can use the public chargers anytime, for $2 per hour.

“We did it to encourage overall [electric vehicle] adoption,” Popham said. “We know the majority of charging happens at home. … But what the $4.17 does, it gets them to rethink the paradigm.”

The program bucks the typical utility model of hinging bottom-line performance on greater electricity sales, an increasingly outdated strategy as new technology — from energy efficiency to demand response — pushes it out of step with current market conditions. But creative sales models like this can be a smart move for utilities; these vehicles inherently boost demand for electricity.

Each electric vehicle currently represents an additional $400 in annual revenue for Austin Energy, Popham said.

Encouraging charging during off-peak times, when electricity demand is lower, enables electric vehicles to play an important role in managing the overall grid. Austin Energy doesn’t offer a full suite of incentives, like some utilities do, for drivers to charge at these times (such as overnight, when there is excess wind generation). But it has launched a pilot program that provides lower rates outside the peak-demand window.

The Austin program offers drivers unlimited charging at public stations for a $30 monthly rate. That covers at-home charging as well, as long as drivers plug in outside the peak demand period, which stretches from late afternoon to early evening. If a driver charges during that window, the cost ticks up.

A $30 flat fee shakes out to about $0.09 per kilowatt-hour, assuming the average electric vehicle uses 4,000 kilowatt-hours per year. That rate is higher than similar programs offered by other utilities that feature off-peak rates as low as $0.03 per kilowatt-hour. But for Popham, the cost differential between his utility’s program and others isn’t too concerning.

Austin Energy’s program is in its early stages, meant to generate data and driver feedback to inform more permanent solutions, he said. In addition, Popham noted grid benefits even when drivers charge electric vehicles at peak times — they help offset the afternoon influx of solar generation as more arrays come online.

Promising Demand Response

As part of its push to maximize the benefits of electric vehicles, Austin Energy has also tested demand response technology, methods that allow the utility to encourage or require drivers to charge during times when it’s best for the grid. The utility runs a similar program using smart thermostats, to regulate air conditioners when electricity demand ticks toward its peak.

While it harnessed similar technology, the electric vehicle experiment yielded even better results than the thermostat initiative, Popham said. No one opted out of the vehicle-charging pilot and drivers seemed willing to tweak their at-home charging habits to align with utility needs, where ceding control of their home-cooling systems was a tougher sell.

“What our study shows is people are much more comfortable with stopping their charging for a few hours on your EV,” Popham said. “We considered it a fairly good success and definitely could be part of our roadmap moving forward.”

Fleet Electrification

Austin’s transition to a more electrified transportation future doesn’t stop with its private customers. In fact, the city itself is at the center of the plan. Austin plans to integrate 330 electric vehicles into its municipal fleet between now and 2020, a move expected to generate $3.5 million in savings — including fuel and maintenance costs — over 10 years.

The transition places Austin alongside a slew of other cities turning to electricity to power their vehicles. Nearby Houston reported savings of $110,000 per year by replacing just 27 of its light-duty cars with electric models. In many of those cities, as in Austin, the change is as much about saving money as it is modeling the possibilities of electrification.

“It’s also important for us as a city to eat our own dog food,” Popham said. “We want people to see in the community city vehicles driving on electric just to demonstrate the technology and that they work, and get more people exposed to them.”

In addition, Austin’s transit authority is planning to bring between 10 and 20 electric buses into its fleet. Officials are working now to cobble together the funding they need to purchase the buses and build out required charging infrastructure. Though electric buses cost more upfront, Austin authorities say the cost of bus ownership over 10 years is less than that for gas-powered models.

Austin Energy has also helped airlines save money by transitioning their heavy-duty equipment, used to load and transport baggage, to electric models.

Down the line, Popham said, the city’s transit options could include a shared electric, autonomous shuttle, or food-delivery vehicle to run groceries from the store to people’s homes. Along with buses, those potential innovations will drive up electricity sales for Austin Energy.

“There’s a lot of different kinds of business cases and applications that we’re pretty excited about,” he said.

What’s Next?

The economics of vehicle electrification are increasingly compelling, especially as battery costs plummet (indeed, battery packs are expected to clock in at just one-quarter of their 2010 price by 2022, a reduction that on its own could cut the price of electric vehicles by 25%).

But in order to fully realize a modernized transportation sector, with widespread use of electric and autonomous vehicles, Popham said automakers need to help plug significant gaps in today’s marketplace — especially in Texas, where larger vehicles dominate the roadways.

For starters, he said, manufacturers need to boost production of electric trucks and SUVs — a high-demand segment nationwide. The Ford F-150 pickup has been the top-selling vehicle in the U.S. for more than three decades, and last year the Chevrolet Silverado and Dodge Ram ranked second and third.

A number of hybrid and electric SUVs have come online so far and achieved high satisfaction ratings, with more models expected to hit sales floors in the future. Electrifying the pickup truck has been a slower process, but not a stagnant one — electric vehicle mainstay Tesla is planning to manufacture one, while Workhorse Group (which built a hybrid delivery van) has already tackled it.

As consumers, municipalities, and companies alike tiptoe into the electric vehicle marketplace, auto manufacturers will face rising demand across vehicle segments. And with its new plans in place, Austin officials say the are confident they’ll be ready to adapt to near-inevitable changes in market dynamics.

“There’s a very good chance it won’t be the single-occupancy vehicle, single-car ownership model, which is the very inefficient model we see today,” Popham said. “It could be all electric and automated vehicles.”

Photo Credit: Karlis Dambrans via Flickr (CC BY 2.0).

This article originally posted at ilsr.org. For timely updates, follow John Farrell or Karlee Weinmann on Twitter or get the Energy Democracy weekly update.