Scandinavian Working Papers in Economics
Working Paper Series,
Norwegian University of Life Sciences, School of Economics and Business
No 1-2019: Optimal policies for electromobility: Joint assessment of transport and electricity distribution costs in Norway
Paal Brevik Wangsness (), Stef Proost and Kenneth Løvold Rødseth
Additional contact information
Paal Brevik Wangsness: School of Economics and Business, Norwegian University of Life Sciences, Postal: Norwegian University of Life Sciences, School of Economics and Business, P.O. Box 5003 NMBU, N-1432 Ås, Norway
Stef Proost: Department of Economics-KULeuven, Postal: Department of Economics-KULeuven, Naamse Straat 69, 3000 Leuven, Belgium
Kenneth Løvold Rødseth: Institute of Transport Economics, Postal: Institute of Transport Economics – Norwegian Centre for Transport Research, Gaustadaleen 21, 0349 Oslo
Abstract: We observe a rapidly rising share of the passenger car fleet becoming electric as policy makers keep making the purchase and use of electric vehicles (EVs) more favorable in the pursuit of reducing pollution. The electrification of transport will make the transport and energy systems more intertwined: EV-friendly transport policies increase the demand for power, thus challenging the distribution grid’s capacity, while electricity policies immediately impact on the generalized costs of driving EVs. This paper develops a stylized economic model for passenger transport in the greater Oslo area where the agents’ endogenous choice of car ownership, transport pattern and EV home charging is determined jointly in equilibrium. If enough EV-owning agents charge during power peak hours, costly grid expansions may be needed. We examine how the distribution grid company can respond in order to mitigate these costs with different pricing schemes and how this in turn affects the transport equilibrium. We find that applying peak tariffs for the grid will help strike a better balance between investment costs and EV-owners’ disutility of charging during off-peak hours.
Keywords: electric vehicles; climate policy; urban transport policy; transport modeling; electricity distribution costs
JEL-codes: H71; Q41; Q48; Q54; Q58; R41; R48
30 pages, April 9, 2019
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