Transit Bus Electrification Holds Opportunities and Challenges for the Electric Grid
As transit agencies and electric utilities plan for the zero-emission bus transition, policymakers should consider how rate design can both support fleet electrification and minimize strain to the grid.
In recent months, concerns about grid strain and electricity prices have proliferated following projections of rising electricity demand. This has produced a growing public consciousness of the importance of large electricity users being properly charged for their impact on the grid, whether for infrastructure upgrades or new generation sources.
As of 2024, 13 of the 25 largest U.S. public transit agencies–including the nine largest–had targets for 100% zero-emission bus fleets. As agencies implement fleet electrification plans, bus garages and facilities are set to become much larger electricity users. The Washington Metropolitan Area Transit Authority (WMATA), for example, estimates that once converted to support all-electric fleets, its bus garages could have peak demand loads of 12 – 22 megawatts (MW) of power each, totaling 108 – 198MW across all nine facilities.1 For contemporary comparison, hyperscale data centers are considered to be those with a power draw of over 100MW.2
The increased power demand for electric bus fleets will require upgrades to electrical infrastructure at most bus facilities and across nearby distribution systems. Transit agencies should pay their fair share of the extra costs. However, as large users with time-flexible loads, transit agencies can also provide grid benefits. Their ability to charge buses overnight or during other off-peak hours can help use grid resources more efficiently, and their additions to electricity sales can help lower rates by spreading fixed costs across a wider base. The structure of electric rates for these users, if designed intentionally, can help manage the system-wide impacts of increased load while also supporting transit decarbonization.
This summer, I talked with staff at transit agencies across the country as I compiled research on this topic for the District Department of Energy and the Environment (DOEE). The top features of electric delivery rates that transit agencies identify as important levers for cost-effective operations are demand charges and time-of-use pricing.
Demand charges appear on electricity bills as per kilowatt charges based on the maximum 15- or 30-minute power draw per month. These are used by utilities to recover the nonfuel costs of transmission and distribution, and can incentivize large customers to avoid overloading the system at any one time. Electric vehicle (EV) charging produces a surge in power demand, and for small fleets, demand charges can dominate the energy bill.
Some utilities, such as Southern California Edison, are addressing this challenge by waiving or discounting demand charges for EV charging until stations have sufficient utilization. Others, such as Hawaiian Electric, have demand charges that only consider maximum demand during peak hours. Pacific Gas & Electric offers a rate that eliminates demand charges entirely and instead includes a fixed monthly charge to recover system costs.
Time-of-use (TOU) pricing, widely recognized as a mechanism to better align electricity prices with the time-varying costs of electricity delivery, can help incentivize bus fleet charging during off-peak periods (especially overnight, when fewer buses are running). As of May 2025, over 50 utility members of the Edison Electric Institute (EEI) had implemented electric rates or programs with a time-of-use component relevant for electric transportation. While most transit agencies won’t be able to charge all their buses during off-peak hours, time-of-use rates can still provide substantial savings.
Very few utilities currently offer transit-specific EV rates. However, a growing number of transit agencies are taking advantage of large user rates with TOU pricing (such as ConEd’s PASNY Delivery service rate and Seattle City Light’s Large General Service rate) or rates broadly designed to support EV charging.
System-wide electrification, warming weather, and growing data center demand are pushing electric grids into new territory, and regulators are awakening to the need for new types of electricity tariffs and policies. As regulators and policymakers work to support zero-emission public transit, it is important they see the full scope of what bus electrification entails beyond just the financial comparison of filling a tank with gas versus charging a battery.
Transit agencies are planning full facility upgrades, new facility management schemes, route rescheduling, and complete fleet procurement. All of these bring new costs and challenges, and unfortunately, the current funding environment is pushing several agencies to delay their targets and pause or shift their zero-emission plans. Transit agencies are likely to need continued financial support, including appropriate rate design structures, to make zero-emission bus fleets a success.
Naomi Cohen-Shields
Research AssistantNaomi Cohen-Shields is a Master of City Planning student in the Weitzman School of Design and a research assistant with the Kleinman Center.
