American Economic Review: Insights
ISSN 2640-205X (Print) | ISSN 2640-2068 (Online)
Electric Vehicles and the Energy Transition: Unintended Consequences of Time-of-Use Pricing
American Economic Review: Insights
(pp. 550–66)
Abstract
The growth of electric vehicles (EVs) raises new challenges for electricity systems. We implement a field experiment to assess the effect of time-of-use (TOU) pricing and managed charging on EV charging behavior. We find that while TOU pricing is effective at shifting EV charging into off-peak hours, it unintentionally induces new and larger "shadow peaks" of simultaneous charging. These shadow peaks lead to greater exceedance of local capacity constraints and advance the need for distribution network upgrades. In contrast, centrally managed charging solves the coordination problem, reducing transformer capacity requirements, and is well tolerated by consumers in our setting.Citation
Bailey, Megan R., David P. Brown, Erica Myers, Blake Shaffer, and Frank A. Wolak. 2025. "Electric Vehicles and the Energy Transition: Unintended Consequences of Time-of-Use Pricing." American Economic Review: Insights 7 (4): 550–66. DOI: 10.1257/aeri.20240476Additional Materials
JEL Classification
- C93 Field Experiments
- D91 Micro-Based Behavioral Economics: Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making
- L62 Automobiles; Other Transportation Equipment; Related Parts and Equipment
- L94 Electric Utilities
- Q42 Alternative Energy Sources