On Monday, the U.S. Department of Energy (DOE) reported that it is much cheaper to drive an electric car any distance than it is to drive a comparable car fueled by gasoline.
The DOE says “The average fuel cost savings for all states was 60%.” But, in reality, the savings are going to be much, much larger — probably 80 percent or more.
That’s because the actual price most electric vehicle (EV) owners will be paying for electricity to charge their vehicles will be much lower than the DOE assumed.
Here’s how DOE did their calculation of fuel cost savings by state.
As the DOE explains, while EVs are much more efficient than internal combustion engine vehicles, comparing fuel cost per mile can be tricky “because the price of gasoline and residential electricity vary considerably by state.” So, years ago, the DOE “developed an eGallon tool,” to calculate the relative electricity and gasoline costs for every state.
They found “all states showed cost savings for electric operation,” with an average saving nationwide of about 60 percent.
As the DOE notes, “Residential electricity rates … greatly influence the level of savings.”
But here’s the key point: Residential electricity rates are pretty much the absolute maximum you could pay to charge your car — and it is very unlikely most people are going to pay that much.
The average retail price for electricity nationwide is 13.3 cents per kilowatt-hour. In California, the state with the most EVs, it was 19.2 c/kwh as of March.
But most EV owners in California don’t pay that rate. The basic EV rate for PG&E (Pacific Gas and Electric ) is 12.5 c/kwh — and that doesn’t include any rebates for using a clean fuel. It just requires that you do your charging between 11pm to 7am during the week or anytime during the weekend except 3pm to 7pm.
New York offers an even better rate just for EV owners. Even though the residential price for electricity is 17.5 c/kwh, “In 2017 Consolidated Edison in New York started offering a 5 c/kWh ‘reward’ for charging between midnight and 8am, even for customers already on off-peak rates then.”
A key reason utilities offer special low rates for EV charging is that electricity demand has been flat for a decade — and that trend is projected to continue for the foreseeable future. In some places, total demand is actually projected to decline.
So utilities have a lot of excess capacity sitting around making them no money, especially at night when demand is low. That’s why they have always offered attractive rates for charging EVs.
Indeed, these days, places like California are starting to get excess power during the daytime from all the cheap solar panels. As solar gets even cheaper — and penetrates more of the market — many places will end up with a lot of excess low-cost carbon-free power during the day.
As a result, daytime charging will become cheaper and cheaper.
Nissan and Denmark’s largest utility (Enel) have been partnering on EV charging trials as part of an effort to integrate more renewable energy sources into the grid. Already, EV owners have earned as much as $1,530 a year — more than a typical EV owner would pay for all of its charging during a year — by plugging in when they park and selling excess power back to grid when it is needed.
A video from Nissan helps explain how this works:
Ultimately, by 2025, using such technology with California’s EVs could be “the equivalent of $12.8–$15.4 billion in stationary storage investment,” according to a Lawrence Berkeley National Laboratory study from May.
The bottom line is that the price of fueling your electric car in the coming years is going to be quite cheap — much cheaper than fueling a gasoline car.