Cost of and Bottlenecks in Zero-Emission Medium- and Heavy-Duty vehicle Infrastructure Deployment

Executive Summary

According to new research collecting data from medium- and heavy-duty vehicle fleet operators and electric utilities across Canada, the current transmission and distribution system—and, in particular, interconnection policy— is one of the primary barriers standing in the way of greater zero emissions medium- and heavy-duty vehicle deployment.

But the good news is a coordinated plan between utilities, regulators and federal and provincial governments can:

• address cost and timeline uncertainty for fleets;
• increase utility capacity to manage a growing number of interconnection/electrification requests and;
• modernize how costs are allocated across actors.

This report, commissioned by Clean Energy Canada and authored by Dunksy Energy + Climate, provides an understanding of the state-of-play across Canada and recommendations for each actor to improve outcomes for potential adopters.

Current Challenges

1. Uncertain costs, timelines and financial risks facing fleet operators. Fleets can face huge uncertainty regarding the timelines and costs required to make the necessary upgrades in order to electrify. Interconnection processes can run from months to years, with costs varying unpredictably. These financial structures can leave fleet operators taking on a disproportionate amount of the risk.
2. Limited utility capacity to facilitate electrification in a net-zero world. Utilities are facing an unprecedented volume of service upgrade requests across all sectors, not just transportation, with staff capacity constraints on the utility side potentially leading to significant bottlenecks.
3. Cost structures that do not incentivize electrification. Service upgrade fees compromise a very important part of the total cost of implementing zero emissions medium- and heavy-duty vehicle charging infrastructure. They vary by jurisdiction and are often unpredictable and non-linear, often depending on the unique state of local distribution systems (e.g. the capacity of the upstream feeders and substations).

Solutions

1. Regional standards for utility service connections. Different provinces have different utility structures and this should be taken into consideration during their development.
2. More visibility into infrastructure cost rangesthrough mandating utilities to provide better customer visibility into infrastructure cost ranges. Opportunities to standardize costs across regions should be explored.
3. New dedicated funding to address utility capacity issues, which should focus on both transportation electrification expertise, as well as broader distribution and electrification workforce development.
4. Modernized cost structures to help incentivize the necessary investments.This should include updating rates to better reflect real-time energy prices and marginal costs of demand on transmission and distribution grids.
5. Revise utility tariffsto ensure customers are not required to cover a disproportionate share of costs associated with upstream system capacity increases that currently place an undue burden on “first movers.”