With climate change in full effect, the decarbonization of all sectors has become a necessity around the world. This effort is prominent in the electrification of the transportation sector and the move to renewable energy sources in the electricity generation. Both developments cause challenges for electricity distribution systems by introducing new load peaks. I demonstrate that these challenges can be managed jointly and overall system cost can be reduced significantly with controlled plug-in electric vehicle (PEV) charging. Controlled PEV charging allows the vehicle’s battery to be used for secondary applications such as energy trading, frequency and load control. I uncover that load leveling and secondary frequency applications provide the highest economic benefit. This benefit grows with increasing charging power and efficiency; and discharging capability through vehicle-to-grid (V2G). I further show that load leveling with controlled PEV charging can significantly reduce distribution grid expansion needs across various levels of generation from variable renewable energy sources (VRES) and PEV penetrations. Finally, I develop a policy that combines controlled PEV charging and VRES curtailment based on real-time grid parameters with the cost optimal share of distribution grid and controlled charging investments. This allows significant savings in investments and operational cost for distribution grids. Contrary to the often made assumption of controlling the charging of all PEV, the cost optimal solution requires only a small share of PEV chargers to be enabled with controlled charging. My findings provide direction for PEV automakers, expand the tools of distribution grid operators and researchers alike; and support policy makers in their efforts to foster decarbonization.