Brattle economists released a whitepaper that shows the potential for U.S. utility sales to nearly double by 2050 while energy sector carbon dioxide (CO2) emissions could decrease by 70 percent or more through the electrification of transportation and heating.
The Brattle whitepaper provides an alternative paradigm for the U.S. utility industry where electricity sales break out of the often-cited “utility death spiral” through beneficial electrification. Their analysis of the technical potential for electrification finds that full electrification of land-based transportation could increase total electricity demand by 2,100 terawatt hours (TWh), or 56 percent of 2015 electricity sales, if battery electric vehicles (BEV) were to become the exclusive mode of transportation. Additionally, full electrification of heating would involve an increase in electricity demand by 2050 of about 1,500 TWh, or 40 percent of 2015 electricity sales.
The whitepaper also finds that coupling electrification of heating and transportation with significant decarbonization of the power sector (e.g., through the adoption of clean power generation sources such as renewables, hydro, nuclear, or carbon capture) could lead to more than a 70 percent reduction in U.S. energy-related greenhouse gas (GHG) emissions relative to 2015 levels. This will be an important and likely critical step towards overall economy-wide emissions reductions targets.
“The extent, pace, and form of electrification that is achieved will significantly depend on utilities leading the sector towards deep decarbonization and taking facilitative and preparatory actions early and along the way,” notes Jürgen Weiss, a Brattle principal and co-author of the whitepaper. “The positive outlook outlined in our analysis is not likely to occur without utilities playing a leading role to set the path forward for modernizing and decarbonizing sectors in which it has not traditionally been involved. This will also require collaboration with other civic and regulatory agencies to establish complementary incentives in those parallel sectors.”
According to the Brattle whitepaper, utilities can increase the chances of electrification becoming the primary path towards economy-wide decarbonization efforts with actions that lower the barriers to electrification. The authors outline several elements of a potential utility electrification strategy, which includes the following:
- Regulatory outreach: Effective communication of the benefits and complexities of electrification to regulators and policymakers will be critical.
- Infrastructure deployment: Utilities can play an important role in promoting the deployment of charging infrastructure.
- Rate reform: Utilities should explore how modified retail rate designs could help remove disincentives for electrification.
- Program development: Utilities could be proactive in enabling (and incentivizing) the provision of new services that can be provided from behind-the-meter electric devices.
- Resource planning: The implications of electrification will need to be carefully incorporated into utility planning activities.
The whitepaper, “Electrification: Emerging Opportunities for Utility Growth,” is authored by Brattle Principals Jürgen Weiss and Ryan Hledik, Associate Michael Hagerty, and Senior Research Analyst Will Gorman. It is available for download here.