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Electric Vehicles

How EVs Could Help Lower Everyone’s Electricity Costs

Using more electricity when it’s cheap can pay dividends later.

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An EV charger ATM.
Heatmap Illustration/Getty Images

One of the best arguments for electric vehicles is the promise of lower costs for the owner. Yes, EVs cost more upfront than comparable gas-powered cars, but electric cars are cheaper to fuel and should require less routine maintenance, too. (Say goodbye to the 3,000-mile oil change.)

What about the societal scale, though? As the number of EVs on the road continues to rise, more analysts are putting forth the argument that EV ownership could lead to lower energy bills for everyone, even the people who don’t buy them.

The idea may be counterintuitive, given the prevailing narrative about voracious appetite for electricity. EVs do require a lot of energy. Electricity demand for EVs in the U.S. jumped 50% from 2023 to 2024 alone as more Americans bought electric, and the research group Ev.energy says demand could triple by 2030. Studies suggest that replacing every internal combustion vehicle in the country with an EV would eat up as much as 29% of American electricity.

Meanwhile, the grid is struggling to keep up — it is, after all, much more difficult to add more megawatts to the capacity of our power system than it is to put a few more EVs on the road. The obvious inference would then seem to be that a battery-powered car fleet could cause an energy crunch and spike in prices.

A new report from Ev.energy, however, argues that if we got smarter about how and when we charge our cars, their presence could actually cut costs for the average American by 10%. The gains could be even better if EVs reach their true potential as a way to give the grid a unique kind of flexibility and resilience.

Compare an electric car to a data center, the other application painted as a ticking time bomb for electricity prices. Worries about the energy-gobbling habits of AI-powering servers are well-founded, given their 24/7 appetite. An EV, however, needs to charge only once in a while. In fact, most people don’t need to charge every day, given the range of modern EVs and the driving habits of the typical American.

As we've covered before, it’s when you charge that matters. Optimizing EV charging can be a helpful way to ease pressure on the power grid and align EV charging with the availability of clean energy.

Here in California, which has far and away the most EVs in America, TV commercials remind us to use less energy between 4 p.m. and 9 p.m., when the state is dealing with rising residential energy use just as solar power is tapering off for the day. It would cause a grid crisis if every EV owner charged as soon as they got home from work. Having EV owners charge their cars overnight, a period of low demand, helps ease the pressure. So does charging during midday, when California sometimes has more solar energy than it knows what to do with.

When EVs charge in this mindful manner, using energy during times of day when it’s cheap for utilities to provide it, data suggests they can effectively push down electricity prices for everyone. Says one recent report from Synapse Energy: “In California, EVs have increased utility revenues more than they have increased utility costs, leading to downward pressure on electric rates for EV-owners and non-EV owners alike.” As the NRDC points out, California has revenue decoupling in place for its utilities, so “any additional revenue in excess of what was anticipated is returned to all utility customers — not just EV drivers — in the form of lower rates.”

Those rosy figures depend upon drivers following this model and charging during off-peak hours, of course. But with time-of-use rates giving them the financial motivation to charge overnight rather than in the early evening, it’s not an outrageous presumption.

And there’s something else that differentiates EVs from other applications that consume lots of electricity: Thanks to their ability to store a large number of kilowatt-hours over a lengthy period of time, electric vehicles can give back. EVs can be a cornerstone of the virtual power plant model because the cars — those equipped with bidirectional charging capabilities, at least — could feed the energy in their batteries back onto the grid to prevent blackouts, for example. In Australia, the Electric Vehicle Council recently crunched the numbers to argue in favor of incentivizing residents to install vehicle-to-grid infrastructure. Their math indicates Australia would reap more than the government invests because these connected EV would cut everyone’s electricity price.

It’s getting more expensive for the individual to own an EV — the federal tax credit for buying one disappears at month’s end, and punitive yearly fees for EV ownership are coming. Yet it seems that driving electric might be doing your neighbors a favor, and not just by clearing the air.

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AM Briefing

Neutral, at Worst

On Chinese hydrogen, Fermi upheaval, and British offshore wind

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Current conditions: The Pineapple Express, an atmospheric river originating in the Pacific near Hawaii, is arriving in the Southwest laden with heavy rain that’s set to flood the region • Indonesia has the worst air quality in the world as forest fires rage along Sumatra’s southern coast • A cross-country storm will soak much of the United States on Tuesday’s Election Day.


THE TOP FIVE

1. Permitting bill’s worst-case climate scenario is still carbon neutral

The Senate’s grand compromise to simplify federal permitting on energy projects would likely drop emissions slightly as the benefits to accelerating deployments of clean energy infrastructure outweigh the boost the legislation could give to fossil fuels. Even under the worst-case scenario, emissions remain on the same trajectory as today. That’s according to a hotly anticipated new analysis by the Rhodium Group, the consultancy whose U.S. emissions estimates are among the most widely cited in American politics. The report, shared first with my colleague Emily Pontecorvo, found that provisions in the Bipartisan American Affordability and Jobs Act largely counteract each other on climate. The bill makes building transmission lines much easier, a key step to patching more renewables onto the grid. But it also makes new gas pipelines simpler to permit, clearing the way for a buildout of the infrastructure for the fossil fuel already dominating U.S. electricity and heating systems. Still, under the best-case scenario, the legislation could cut U.S. economy-wide emissions by 5% below where they would otherwise go in 2040. The bill could also slash energy bills by $78 per year and support construction of more than 200 gigawatts of clean energy capacity, as compared to a world where it didn’t pass. The Rhodium report is at least the second analysis yet to find that the bill could modestly lower emissions. The first, as I reported last week, came from the think tank Resources for the Future, which saw a slight drop in power-sector emissions relative to a world without BAAJA.

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Heatmap Illustration/Getty Images

The bipartisan permitting reform bill is likely to slightly cut greenhouse gas emissions and lower electricity bills by 2040 — or at worst leave emissions on the same trajectory that they are on today — as compared to the status quo, according to a new analysis of many of its provisions by the Rhodium Group, an independent research firm.

The analysis examines the policies in the Bipartisan American Affordability and Jobs Act, or BAAJA, that would have the most-clear cut effects on climate pollution and the energy system. It is the most comprehensive account of the bill’s effects on emissions so far, although it does not examine all of its provisions.

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And more of the week’s top fights around development.

The United States.
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1. Richland Parish, Louisiana – Gird your loins for the coming fight over the Meta Hyperion data center’s gas pipeline.

  • On Wednesday, the Federal Energy Regulatory Commission laid out plans for an environmental assessment of the Entergy pipeline for the Meta data center under the National Environmental Policy Act and stated it’ll be issued in early January 2027. Federal agencies have been ordered by the panel to complete any remaining decisions on authorizations by April.
  • The decision to do an environmental assessment under NEPA will be controversial. The Sierra Club filed comments to FERC stating they wanted an environmental impact statement instead that took into account the environmental impacts of the data center being fed by the pipeline, as well as a review of the project’s cumulative impacts, as the activist group said they’re explicitly linked to the data center’s operations. “The power stations and data center are not remote or speculative developments unrelated to the proposed action,” their comments read.
  • This is quite similar to what’s playing out with the Green Chile pipeline in New Mexico for Oracle and OpenAI’s Project Jupiter, which we recently explained could turn into litigation with high stakes for future gas pipelines linked to data centers. But to me, this conflict with Meta feels like it has more at stake for this individual project, as it’s playing out while construction on gas power plants for the data center has been underway for almost a year after earlier being blessed by state regulators.
  • I asked Sierra Club what could happen next. Eric Huber, one of their managing attorneys, told me on Thursday, “I heard the EA is expected in January, but we are in wait and see mode and will decide on further steps when it comes out.” Meta and Entergy did not respond to a request for comment.

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