The effects of electricity pricing on PHEV competitiveness

Plug-in hybrid electric vehicles (PHEVs) will soon start to be introduced into the transportation sector, thereby raising a host of issues related to their use, adoption and effects on the electricity sector. Their introduction has the potential to significantly reduce carbon emissions from the transportation sector, which has led to government policies aimed at easing their introduction. If their widespread adoption is set as a target it is imperative to consider the effects of existing policies that may increase or decrease their adoption rate. In this study, we present a micro level electricity demand model that can gauge the effects of PHEVs on household electricity consumption and the subsequent economic attractiveness of the vehicles. We show that the electricity pricing policy available to the consumer is a very significant factor in the economic competitiveness of PHEVs. Further analysis shows that the increasing tier electricity pricing system used in California will substantially blunt adoption of PHEVs in the state; and time of use electricity pricing will render PHEVs more economically attractive in any state.