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Utilities’ Considerable Opportunity Amidst the Rise of Electric Vehicles

The adoption of electric vehicles (EVs) is gaining speed—it will likely surpass conventional vehicle adoption by 2040, according to Accenture Strategy research. As the number of EVs being regularly charged grows, they will have a broad, transformative impact both on transportation and on energy infrastructure and the electric grid.

Utilities are uniquely positioned to take advantage of a US$2 trillion opportunity as the electric transport market takes shape. This includes bundling a range of energy services for EV owners and acting as an orchestrator for other market players. Utility companies are the natural player to enable this market ecosystem, and to provide customers with renewable energy, EV-related services, and to leverage the value of grid flexibility. By combining EV services on a platform, utilities can help make EV ownership easy and affordable for consumers, and make it easier for OEMs, transportation companies, and fleet operators to electrify as well. This will accelerate EV adoption, improve competitiveness and drive sustainable growth.

Energy Sales – Renewables Reign

Selling kilowatt-hours to fuel EVs is a natural extension for utilities. Some utilities are already encouraging EV business by introducing time-of-use tariffs for EV owners. Residential charging will matter, as more than 80% of consumers surveyed in our recent research on EVs and utilities plan to primarily charge their vehicles from home. Charging for fleets will also offer important growth, as numerous companies have set ambitious carbon-reduction targets. For consumers, a top barrier to choosing an EV is an ability to gain access to renewable power, so growth in renewable sources is required. Overall, EV energy sales may reach $1.7 trillion in Europe and North America by 2040. For regulated utilities, these additional sales provide important load growth to justify continued increase in asset investments. But for utilities, energy sales are just one component of a bundled set of services.

Charging Stations – Partnerships Prevail

While utilities are best equipped to address at-home charging requirements, public charging is also key to meeting customer expectations. According to our research, another major barrier to EV adoption is expected charge times away from home—wait times of fewer than 30 minutes are the current expectation. For this reason, utilities have started expanding opportunities to deploy public charging networks. Such expansion will require substantial investments, estimated at $150 billion, according to our recent research. Utilities are not alone—several oil and gas players are also making investments in public charging companies. As private networks have so far proven to be unprofitable in most cases, public/private partnerships are seen as preferred models for deploying charging infrastructure.

EV Services – Bundles Abound

Utilities are also well-positioned to provide a host of services spanning the EV lifecycle and customer experience. To pursue this $250 billion opportunity, utilities could facilitate charging station installation and maintenance services, or installation and service bundles provided at the time of purchase that could include pre-purchased energy. Platforms that enable other services designed to create a seamless and satisfying customer experience would be valuable to consumers and serve to help lower barriers—services such as smart charging, warranty and protection services, integrated home-EV energy management, charge point navigation, charging reservations, battery management or payment processing. For enterprises and municipalities, utilities could provide transportation as a service—including managing charge infrastructure, battery lifecycle and optimization of fleet energy use.

Grid – Flexibility Forever

Residential consumers are likely to do most of their charging in the early evening, between 5 p.m. and 10 p.m., placing an extra load on the grid at an already peak time. There is a significant opportunity and imperative for utilities to help actively manage EV charging to balance and optimize grid and portfolio performance. Customers agree—more than 80% of potential EV owners want their EVs to be “smart,” meaning able to operate more optimally given the state of the energy system. By creating a more flexible grid to accommodate EVs and a platform for others to leverage, utilities could better manage investments, reduce grid congestion, reduce grid stabilization costs, and optimize wholesale and retail portfolio costs.

Powering Growth – Performance, Practicality and Purpose

The bundled opportunities described above create a new value equation for utilities: Commodity + Services + Flexibility = $2 trillion in value.  Consumers are becoming aware of the advantage EVs are achieving in performance and operating costs in comparison to combustion engine cars. For consumers, the top reason they would consider buying an EV is that it is good for the environment.

With 10 million EV sales forecasted by 2025[i], utilities must act now to create new EV-related experiences. Companies that can help customers make EV ownership as easy as any other type of vehicle will bend the adoption curve upward—further accelerating the transition to EVs and unlocking more potential growth.

 


[i] Bloomberg News Energy Finance, Electric Vehicle Outlook 2019

https://www.eenews.net/assets/2019/05/15/document_ew_02.pdf

Greg Bolino's picture

Thank Greg for the Post!

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Discussions

Matt Chester's picture
Matt Chester on Sep 13, 2019 1:46 pm GMT

Thanks for sharing, Greg. 

Residential consumers are likely to do most of their charging in the early evening, between 5 p.m. and 10 p.m., placing an extra load on the grid at an already peak time. There is a significant opportunity and imperative for utilities to help actively manage EV charging to balance and optimize grid and portfolio performance. Customers agree—more than 80% of potential EV owners want their EVs to be “smart,” meaning able to operate more optimally given the state of the energy system. By creating a more flexible grid to accommodate EVs and a platform for others to leverage, utilities could better manage investments, reduce grid congestion, reduce grid stabilization costs, and optimize wholesale and retail portfolio costs.

I'm curious if you could share how you think these managed charging programs would look from the customer perspective. Would they get some sort of rebate for charing more flexibly/smart? Or would the benefit just be reduced non-peak pricing? Or something else?

Greg Bolino's picture
Greg Bolino on Sep 19, 2019 7:53 pm GMT

Matt - thanks for the question. First, most industry leaders agree that we can only make the transition to electrified transportation effectively if we use a managed framework for charging – to reduce the size of potential investments required, to minimize capacity or reliability issues, and to use energy optimally.  In fact, customers also agree – over 80% of customers we surveyed around the world want their charging to be “smart”. The key to change customer behavior is to make it easy – which means that vehicle management systems or charging infrastructure needs to be capable of intelligently modulating the start and stop mechanism and speed of charging (V1G) and to modulate energy to the building or the grid (V2G). The actual mechanics of programs will vary based on whether you are in deregulated or regulated markets and by jurisdiction, because the program designs are managed by state policy and legislation.  Features of these programs could include incentives or special tariffs, or may simply boil down to transparency on how the car is being fueled and choices (e.g. cost per mile, etc.).

Matt Chester's picture
Matt Chester on Sep 19, 2019 9:44 pm GMT

It's interesting you bring up the convenience and ease of adapting for the programs, since those seem to be the hurdles still to overcome to get EV adoption more widely in the first place. The people who've already adopted EVs have made the conscious decision that they are OK with the potential inconvenience of driving EVs in a world still built for ICE cars, so they are likely the ones to be willing to go the extra mile, so to speak, to enable managed charging. But much like with EV adoption, you need to start planning for the people more put out by the inconvenience and the change in behavior required.

Thanks for the reply and for your insights!

Gary Hilberg's picture
Gary Hilberg on Sep 17, 2019 7:33 pm GMT

Greg - As an EV owner for many years, the issues mentioned are all valid.  Looking at it from a energy transformation position, the ability of the EV to be a generation sink and an energy source must be considered.  Already in Texas we are getting offers for free charging during a portion of the night, this is a fixed period now due to lack of dynamic communications and pricing, but that should be available in the near future.  A large benefit of EV's is the oversized battery and the availability of several hours of discharge that should be considered in the various solutions.  Has Accenture looked at the value add of the EV's energy discharge potential?

Greg Bolino's picture
Greg Bolino on Sep 19, 2019 7:54 pm GMT

Gary – yes, we have looked at the overall value per vehicle in markets throughout the US, including commodity sales, managed charging (V1G) and V2G.  We will publish more on this value analysis and our perspective on how to capture it soon.  Generally, we value managed charging (V1G) by understanding capacity costs in each market (which is based on constraints and the potential value of capital deferrals, much like demand response programs). For two way energy management, the value is based on a prediction of how likely it is that times when the vehicle’s energy subsystem could be utilized for services on the circuit, and an estimate of the value of those events based on capacity and energy charges in each market.  Potential value of V2G is complicated by many factors, including the changing value of grid services in each market, the capabilities of the vehicle energy subsystem, and battery warranty practices.

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