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Five Things Utilities Need to Know to Plan for the EV Boom in Residential Homes

Electric vehicles (EVs) will account for 35 percent of new car sales globally by 2040, according to Bloomberg New Energy Finance. In fact, EV sales grew 60 percent worldwide last year. The automobile landscape is evolving as EVs become more accessible due to cheaper batteries, longer-range models, and more frequent charging stations. In addition to current EVs on the market, such as the Nissan LEAF and the Chevy Volt, several auto manufacturers are developing longer range models that will be available to consumers in the coming years.  

This rapidly increasing availability and adoption of EVs has the potential to place stress on the distribution grid as more and more vehicles will need to charge on a regular basis. There is also the potential for a high concentration of EVs in certain neighborhoods across the country, creating higher electricity demand in various regions. As the grid recognizes this increased demand, there are five major insights that utilities should keep in mind as they plan for the EV boom.

1. Rebates and transportation incentives will drive more EV buyers

Auto companies frequently offer consumers rebates to encourage and drive the purchase of EVs. Additionally, there are state incentives such as free access to HOV lanes and toll roads or exemptions from sales tax or motor vehicle inspections that consumers can also benefit from. Some states, like Massachusetts, also include great rebates which offer up to a $2,500 kickback to customers purchasing or leasing an EV. As utilities become more interactive and consumer-focused, they can serve as a great partner in this space and offer even more incentives to drive EV adoption.

2. Demand response and variable rate structures will be critical for balancing bigger loads

Energy providers can begin to build a base of batteries in service territories using EVs that can be deployed for demand response as needed. Deploying batteries through service territories provides more flexibility and capability at the neighborhood level. This will be especially helpful in areas with high concentrations of EVs. Alternatively, variable rate structures will allow EV customers to pick and choose when they want to charge their vehicles based on the cost of electricity. For many utilities, demand is highest during the day, therefore pricing options that incentivize charging during the late evening and nighttime hours can help to offset peak demand times. Alternatively, in regions with a high concentration of solar energy, it might make more sense to charge vehicles during the middle of the day when system capacity is at its highest and utilities are looking for somewhere to direct surplus generation. These price signals will not only allow customers to save money, but it will also benefit utilities by helping to balance system loads.  

3. Car manufacturers will need to partner with utilities

Similar to partnerships between utilities and retailer manufacturers, EV manufacturers will need to consider partnering with utilities. Together, they could better promote vehicle purchases through “cash on the hood” incentives while delivering consistent messages around the value of off-peak charging, and even enrolling customers in variable rate structures at the time of purchase. Consistent messaging between both utilities and manufacturers can also help customers navigate utility-offered options for installing home charging devices. These partnerships will also help utilities predict peak load times and locational electricity needs to better prepare for infrastructure planning.

4. Utility infrastructure needs to support more vehicles on the road

EV sales are increasing, but the lack of charging infrastructure is still a limitation to broader adoption. As the number of EVs on the road rises, utilities will play a central role by building out public charging networks and facilitating the installation of home and workplace EV charging stations. As charging becomes more convenient and customers are presented with integrated ways to manage their charging habits, electric vehicles will move from the early adopter phase to a more mainstream purchase option.

5. Customers will closely monitor electricity prices

EV owners will closely monitor electricity prices, similar to the way car owners currently monitor gas prices. This will provide utilities with an opportunity to serve as a source of information for EV owners. For example, utilities can develop programs that offer a real-time look at electricity prices. They can develop tools that alert customers when charging prices are at extreme lows to encourage them to charge their vehicles, or when prices are at extreme highs to help customers avoid spending excessive amounts of money in order to charge their vehicles. These offerings will enhance the customer relationship with their utility, while also allowing utilities to manage EV loads in ways not available for most end uses.

Consider these trends in your distribution planning now to get ahead of the coming EV boom. Anticipating the needs of residential consumers and offering programs and services that help to streamline and integrate their electricity use, from the car lot to the garage, will position you more competitively to thrive in the next wave of energy demand. 

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