November 14, 2016…

November 14, 2016
Arielle Mayer
Senior Policy Advisor
Ministry of Transportation
Policy and Planning Division
Transportation Planning Branch
Environmental Policy Office (Toronto)
777 Bay Street, Suite 3000
Toronto Ontario M7A 2J8

Subject: EBR 012-8727, MTO Discussion Paper on Electric Vehicle Incentive Initiatives under the Climate Change Action Plan

To help guide the development and refinement of the Ontario Ministry of Transportation’s Electric Vehicle (EV) programs, the Ontario Society of Professional Engineers (OSPE) offers feedback on the following questions:

Electric Vehicle Incentive Program (EVIP)
Foreword:
Any attempts to answer the EVIP questions related to sales incentives invites speculation regarding the general public’s thoughts on the subject. It would be more practical/effective for the government to undertake detailed focus group sessions composed of both buyers and non-buyers of EVs. It is critically important for the government to understand the factors that prevent people from purchasing an EV. Is it a misunderstanding of the EV's capabilities, the capital cost of ownership, or some other risk factor such as concern about the longevity of expensive EV batteries?

If the most important barrier is, for instance, fear that the expensive batteries will not last, the most effective EV incentive program would be for the government to introduce a battery life guarantee program with a sufficient guarantee period to significantly reduce or eliminate the barrier to purchase.

Once the purchasing barriers are fully understood, the incentive programs can be designed to lower those specific barriers by setting the level of the various incentives (such as battery size subsidies, battery life guarantees, private and public charger subsidies, electricity subsidies, capital cost subsidies, sales tax discounts, etc.) to maximize EV sales. Consumers' needs should drive the incentive program rather than industry's needs.

What should the government tie the EV purchase incentives to (e.g., vehicle tailpipe GHG emissions, battery size, technology type, etc.) in order to support a significant growth in EV sales and GHG emissions reductions?

From a strategic policy perspective, it would be ideal if vehicle incentive amounts reflected vehicle performance as it relates to intelligent grid management. The current value of the incentive is based on the vehicle's battery capacity, seating capacity, and manufacturer's suggested retail price (MSRP). Ontario’s low emission power system has and will continue to have significant amounts of surplus zero-emission electricity. The program guide should include incentives for EVs that also feature user friendly charging systems that allow the vehicle to use surplus zero-emission electricity when it is available, to maximize the environmental benefits of that energy. Creating a "user friendly" or “grid intelligent” certification creates a new competitive advantage for automotive manufacturers to sell vehicles equipped with such chargers.

Understanding the unique characteristics of Ontario’s electrical grid is important, but so is recognizing the EV accomplishments of other jurisdictions. Canada and Ontario are not alone in attempting to capitalize on the opportunities EVs present. Within Canada, Quebec has experienced the most success. British Columbia has only recently introduced an incentive plan, but it shows promise as well. The United States has incentives that have encouraged more EV sales per capita than Canada. Norway is far-and-above a global leader in EV penetration.

Ontario needs to interact with other jurisdictions to better understand global best practices for EV incentives with an eye to like-jurisdictions that best align with Ontario’s consumer demographics, geography, electrical grid, and other key features.

Norway may be of special comparative interest to Ontario because it also has a very low emission power system and is working to overcome unexpected issues that are linked to rapid EV deployment/expansion. The Government of Ontario should liaise with Norwegian officials to better understand the challenges of scaling up, as well as best practices for incentivizing sustainable EV deployment.

How should the government adjust the current 30 per cent Manufacturer’s Suggested Retail Price (MSRP) incentive cap and the $3000 cap on vehicles with an MSRP greater than $75,000 in order to promote EV sales and GHG emission reductions in a fiscally responsible manner (e.g. remove the cap? Relax the cap?)?

The current MSRP was likely set based off of/for the original pricing of the Tesla, considering it to be a luxury car. This may have been a misplaced consideration. Regardless of its classification, new technology is initially expensive. It is unlikely that future EVs will fall within this elevated price range unless EV vans and trucks are introduced. In such a case, a separate incentive program would be in order. For the time being, it would make sense to increase this cap to permit more people to buy the Model S if the Model 3 is not acceptable. The grant/rebate should not exceed the maximum set for the program.

Do you think these caps influence an EV buyer’s decision to purchase an EV or a specific type of EV?

These caps may have influenced the purchase of a Model S, but all new EVs will likely be below $75,000 in cost. True EV sports cars may soon be introduced. Caps should be introduced based on the EV classification, not its price alone.

How can the government adjust the Electric Vehicle Charging Incentive Program (EVCIP) to benefit even more EV owners?

The government should take into account the infrastructure change required to use a high powered charger. Most residential customers will not have all 3 phases of a 3 phase utility supply. The cost to run a 3 phase line into every home is a major infrastructure change. Add an incentive program to assist with infrastructure upgrade.

Electric Vehicle Chargers Ontario Program (EVCO)
Foreword:
The consumer focus groups should be used to identify which type of charging infrastructure is most important in the short term to remove the EV purchasing barriers for an early adoption group that is large enough to achieve the short term sales goals.

Some consumer groups will not purchase EVs until the charging infrastructure is pervasive, the EV technology performance has improved and the capital costs are much lower. These are not the groups the program should be targeting in the early deployment period because those conditions will take too long and cost too much to meet the government's short term sales goals.

The government should use the focus groups to identify the early adoption consumer group and design the EIVP and EVCO programs to ensure the barriers to purchase an EV for this group are reduced enough to meet the short term sales goal. As the program progresses, incentives for the more sceptical or demanding groups can be added. In time, the incentives will not be needed because the EV technology will have improved enough and charging infrastructure will be pervasive enough that all groups will not have any major barriers to purchasing EVs (for the service duty they are able to provide reliably and economically).

Deploying charging infrastructure without understanding the consumer group being served will be expensive and ineffective with respect to improving short term sales. There can also be unintended consequences. When Ontario rolled out wind and solar generation across the whole province after 2009, it created serious problems for the distribution system that was never designed for two-way electricity flow through its transformers. That created a bottleneck in deploying wind and solar generation until the electrical protection and other equipment was redesigned and installed to handle the new distributed generation. It is important to avoid the creation of a similar set of overwhelming challenges for the distribution system once again, or the short term sales goals will not be meet. There are engineering and technical constraints on what the existing distribution systems can handle. Ignoring those constraints can potentially undermine the EV incentive programs and create unexpected higher distribution costs.

Once the consumer group that should be incentivized to create early adoption is identified, it will be easier to determine if the proposed budget is sufficient to achieve the sales goals the government has announced. It is critically important that the incentive funds are effectively spent and the short term sales goals are achieved or exceeded at reasonable cost, so as to avoid the same public scrutiny that resulted when electricity rates increased at a faster rate than predicted when the renewable energy program was launched in 2009.

What program features (e.g., eligibility requirements, evaluation criteria, technical requirements) should be considered in a program to deploy charging stations at workplaces, multi-unit residential buildings, downtowns and town centres?

The current state of EV battery technology and the rapid rate of advancement of these technologies suggests that most of the local public charging stations will not be needed. Residential buildings should be considered a separate category since they are where people live and park overnight. Current EV batteries already boast 400 kilometre to 600 kilometre range capabilities on a full charge. By 2018, most EV batteries will be capable of 1000 kilometre travel ranges. Essentially, a 10 to 20-minute charging period each night will sustain an EV for over a week of typical city travel.

It is of critical importance, however, that the government refrain from treating the abundance of charging stations in the same manner as petrol or ‘gas’ stations. Ontario’s transportation networks and economy exist in the middle of a Disruptive Technology period which will reveal new consumer demands and behaviours, and will necessarily impact the way we plan our communities.

For multi-residential and workplaces specifically:

It is important to separate multi-residential considerations from workplaces. These entities are fundamentally different in character and should thus be treated in distinct ways. Multi-unit residential entities will absolutely require charging stations and can likely support 3 phase charging.
Workplaces will only need minor charging facilities, primarily those firms with fleets of vehicles used in business operations (taxis, deliveries, sales people support etc).

Who are best positioned to implement the installation of charging stations?

Local Distribution Companies (LDCs) are best positioned to implement the installation of charging stations because of their intimate knowledge of street loads and where capacity will require boosting. LDCs will need to be involved even if a new business of contractors who install and maintain chargers evolves. OSPE views government involvement and consultation with LDCs as being of critical importance to the success of the EVCO.

Note: this form of charging infrastructure poses a significant hacking and infiltration security risk that must be understood and insulated against. Chargers must be Smart Grid enabled to ensure the grid demand is spread to avoid a sudden demand impulse that disrupts our systems.
OSPE recommends that individuals who do this work must be licensed and adhere to a Code of Ethics. It is critical to establish oversight and defence mechanisms to mitigate the potential for backdoor access to Ontario’s power grid.

How should funding for charging stations be structured and/or capped? What value(s) of cap(s) should be applied?

A grant that represents a set percentage of the charger value would be the most straight forward and comprehensible solution. There is a natural cap on chargers based on the availability of 3 phase power and the size of the cables coming from the utility. Infrastructure enhancement is a separate consideration. If total infrastructure change is overwhelming at this point, then an incentive program to assist individuals with adding 3 phase power or heavier cables needs to be considered. These costs can, in fact, be higher than the cost of a charger and thus represents an important cost-factor that the government must take into account for policy direction.

How can government best engage workplaces, condos and apartment boards to participate in the EVCO program?

Multi-residential and workplace entities should be subject to different considerations. Incentives at workplaces could be tied to the number of EVs owned by the business to do work-related driving.
Condos and apartment buildings require more support given that those residents who own EVs will benefit most if they can charge their EVs overnight. Without this help, a significant segment of the population would have a disincentive to purchase an EV. Ontario would benefit most if residential EV charging systems use night charging to take advantage of off-peak power to flatten our grid demand. This fosters more efficient use of our capital equipment and will deliver value to EV owners, ratepayers and taxpayers more generally.

Electric car charging in multi-unit residential buildings will be in demand in the near future. Those developers, Condo Boards and Property Management Companies for existing properties that are prepared, will attract EV drivers as tenants, owners, and purchasers.

Ontario already offers three LEED points for the installation of EV chargers, and this incentive could be expanded to encourage these parties to achieve green/sustainable building standards by installing or expanding charging facilities.

OSPE acknowledges that the installation of charging in condos can present unique challenges, but planning and proper placement will eliminate risks and help lower/reduce costs. Legislative changes will be required if EV-enabled parking facilities in condominiums for EV owners do not align with parking spot ownership registration. In the case of multi-residential rental properties, legislative changes may be required to provide a minimum number (and charging level) for EV charging stations that should be adjusted upward with increasing demand by residents.

How should government ensure that Local Distribution Companies are involved in EVCO applications?

The LDCs must be involved to monitor the loads on any given feeder line. This is currently done for the installation of Solar PVs. A similar approval method can be used, which means the LDCs must be involved. Ontario cannot proceed with a charger roll out plan without LDC involvement. All together, a street full of chargers is a significant load increase, even if it happens at night and with Smart Grid control.

The LDC client databases must be mandated to include an entry for EV chargers with their size and type at all addresses.

Education and Awareness: EV Educational Campaigns
What are your current perceptions related to EVs? How can government help in improving perceptions related to EVs, and help consumers better understand the benefits of EVs?

The greatest barrier to EV sales at the moment is not cost but range and charging time anxiety. For most consumers in Ontario, lower priced EVs are not viewed as being viable as primary vehicles. Major misconceptions by consumers of how much time they will need each day to charge their cars for typical use and how far they can reliably travel on a partial charge if they fail to charge their EV batteries the night before will continue to limit sales. People with range anxiety generally fail to recognize that you have the equivalent of a gas station at home and can leave every morning with a full tank if they use the automatic charging features.

Addressing this problem with factual, real road data and compelling stories by EV owners can help eliminate that perception barrier.

Public awareness is unlikely to be championed by automotive dealerships as their entire business model (built on service intensive Internal Combustion Engine [ICE] vehicles) is threatened by EVs. Ontario will need fewer gas stations, car dealers, and repair shops. Because of this, Ontario must engage with EV owners and impartial scientific authorities as the best sources of information.
Educational campaigns to focus on the environment benefit of EVs as well as the health benefits, quiet operation, dramatically lower operating costs, and other major benefits should be executed. Further, Ontario should seek support from insurance associations and their membership companies to dispel myths that EVs are costly to insure. These campaigns will help to overcome American media that constantly tells viewers that EVs emit as much carbon dioxide as ICE vehicles on account of the coal generation in the grid. Ontario’s grid has overall emissions less than 1/10th of that of the average USA power system. And intelligent charging systems can preferentially charge when there is surplus zero-emitting electricity available from Ontario’s very low emission power system.

Who should the government be partnering and collaborating with to deliver an EV educational campaign?

To enable the realization of EV program objectives and the broader success of the Climate Change Action Plan (CCAP) that informs them, OSPE is available to develop and deliver an engineering fact-based education program that would satisfy the needs of two (2) identified and critical audiences:
1.Ontario’s consumers, retailers, and the business community all need to understand how the EV programs will function and how they can maximize their involvement and take advantage of available incentives. OSPE has conducted literature reviews and collected survey data that indicate that a) few plain-language informative guides exist to instruct stakeholders, and b) that plain-language guiding documents would encourage program participation.

2.Public awareness campaign targeted at consumers to overcome misconceptions about EVs that threaten to undermine the purchasing decision for the full spectrum of potential participants.
Engineers understand that the way to forecast and realize outcomes is to conduct detailed technical and economic analyses combined with appropriate simulation studies. Whether the province is planning to achieve increased electric vehicle market share or operate a cap-and- trade program, it makes sense to collect data, develop models, run trials or simulation studies, and consult with experts to establish a plan and oversee its execution. Given the overall importance of the CCAP for Ontario's future, of which the EV programs are a critical part, it is pivotal that government engage engineering specialists in their existing organizations (i.e. Ministries and Agencies) and as third-party advisors and reviewers to ensure proposed policies are robust, optimized, and affordable.

Matters of complex science, functionality, and design are areas that demand the expertise of engineers to inform public policy decision-making. There is an absolute need for engineers to be at the table within virtually every division and at every stage of the CCAP, and the EV programs are no exception. Engineers hold a variety of senior management positions in government and across industry, and in the recent past the province has underutilized their expertise with respect to climate change initiatives.

Ontario is home to more than 250,000 engineering graduates and this community is a tremendous potential resource for government to leverage to ensure the success of its bold plan. Ontario’s CCAP would be best served by including not only Professional Engineers, but also engineering degree holders from a wide variety of disciplines: medicine, computer design, arts, and social fields, for example. Ontario’s engineering graduates have expertise in pertinent areas of transportation, smart grids, electronics and information technologies, power generation, distribution and consumption modeling, economic modeling, and the social factors that govern consumer behaviour, adoption, and sustained behaviours.

These experts stand ready to help the government achieve its environmental goals at the lowest practical cost, each bringing a unique and valued lens to engineering problem solving. At OSPE, we too stand as a willing partner. We are an organization that understands how to mobilize and leverage Ontario’s engineering talent, and it is critical that the province realize the potential of these partnerships.

About the Ontario Society of Professional Engineers

The Ontario Society of Professional Engineers (OSPE) is the voice of the engineering profession in Ontario. We represent 250,000 members of the engineering community, including engineers, engineering professionals, graduates, and students who work or will work in several of the most strategic sectors of Ontario’s economy.

OSPE elevates the profile of the profession by advocating with governments, offering valued member services, and providing opportunities for ongoing learning, networking, and community building. OSPE was formed in 2000 after members of Professional Engineers Ontario (PEO) voted to separate regulatory and advocacy functions into two distinct organizations. PEO continues to conduct regulatory activities and OSPE focuses on advocating for issues that impact engineering

Acknowledgements

OSPE would like to thank its Task Force and Subject Matter Experts for contributing to the development of the recommendations in this submission, which will assist government in creating thoughtful, evidence-based policies for the benefit of all Ontarians.

For further discussion, please contact Patrick Sackville (Lead, Policy & Government Relations) at (416)223-9961 ext. 225 or patrick@ospe.on.ca via email.

[Original Comment ID: 196593]