Utilities’ Considerable Opportunity Amidst the Rise of Electric Vehicles
- Sep 13, 2019 6:15 pm GMT
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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