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EMobility: A $2 Trillion Market Opportunity for Utilities

*Courtesy: Accenture Strategy

Forecast to grow to 10 million in 2025 and surpass conventional vehicles by 2040, the market for electric vehicles (EV) present power utilities with a $2 trillion e-mobility market opportunity, according to Accenture Strategy.

Providing low-cost electricity for EV charging presents utilities with an opportunity to generate $1.7 billion in revenues. That's a low-margin business, however. There's another, prospective $250 billion market opportunity for utilities to provide a range of new, higher-margin e-mobility services, according to Accenture Strategy's Utilities: Lead the Charge in eMobility. These include remote charging apps, integrated EV-home energy management, payment processing and financing for EV purchases.

Utilities can optimize service delivery and system performance while helping improve the overall EV customer experience by combining these e-mobility services on a single, digital platform, Accenture Strategy says.

"Companies that can help make EV ownership easy and affordable for consumers will accelerate adoption and improve competitiveness across their industries," the market research consultancy states. "Utilities are uniquely positioned to play a significant role in the eMobility market by providing differentiated and meaningful customer experiences, while making critical ecosystem partnerships."

Four distinct market opportunities

Accenture Strategy sees four distinct opportunities across the eMobility value chain for utilities:

  • Commodity sales: Selling kilowatt-hours in the EV market represents a potential US$1.7 trillion market in Europe and North America by 2040. However, because such sales generate little margin, utilities should think of electricity sales as one component of a bundled set of services.

  • Charging stations: The value potential of home and public charging stations is estimated to be US$400 billion. Utilities are best equipped to address at-home charging requirements, but as with commodity sales, margins may be limited. Public charging requires substantial investments. In such a heavily contended space―with several oil and gas players exploiting this opportunity as well―data will be key in determining the highest value locations.

  • eMobility-related services: A US$250 billion opportunity exists for utilities that can orchestrate services across the customer journey—from facilitating charging station installation and maintenance services to offering platforms that support the delivery of seamless, more satisfying customer experiences.

  • Grid flexibility: Utilities can use EV charging to balance supply and demand—and optimize grid performance—much as they do to accommodate wind or solar energy sources. Alternatively, focusing on creating a more flexible grid for eMobility would enable utilities to better manage network congestion, reduce grid stabilization costs and optimize wholesale/retail portfolio spend. The value potential of grid flexibility is estimated to be US$100 billion.

Improving the EV, e-mobility experience

Helping improve and conserve the environment is the main reason people buy EVs today, according to Accenture Strategy, which surveyed 6,000 consumers worldwide to produce its report. Cost savings ranked second: 63 percent of respondents said they would switch to an EV so as to save money in the long term, according to the report.

The cost of EV batteries was $750 per kilowatt-hour (kWh) in 2010. It has dropped more than 80 percent in six years. That's the main reason the price of some EVs has dropped to the point where it's comparable to the cost of purchasing a conventional vehicle powered by an internal combustion engine, Accenture Strategy highlights. The real savings associated with EV ownership materialize over time, however, according to the company, as costs per mile driven for EVs are lower than for conventional vehicles.

The faster rate at which auto manufacturers are now shifting capital and other resources towards EV production adds to growing consumer interest, Accenture Strategy points out. "Currently, U.S. and European consumers can choose from between 30 and 50 EV models, respectively. It is estimated there will be 400 EV models available globally by 2025. At that time, Europe and the United States will have 10 million EVs on the roads, compared to 2.5 million today," according to the report authors.

    The comparatively high costs of EVs and concerns, the availability of charging stations, the length of time it takes to recharge an EV battery and persistent questions about their range all serve as barriers to EV purchases, however. "Many EVs still have a shorter mileage range than conventional cars, and charging takes time," Accenture Strategy points out. "Owners charging from their home will need to ensure their domestic energy systems are up to the task, schedule the installation of the home charging infrastructure, and determine maintenance requirements."

    Furthermore, more than 80 percent of respondents who said they intend to purchase an EV in the future said they plan to charge them at home. Just 55 percent have their own garage, however. All told, 39 percent of conventional car owners said they would never buy an electric car due to concerns about the availability of charging stations.

    Surmounting market barriers to capitalize on new market opportunities

    EV market barriers represent opportunities for utilities, according to Accenture Strategy, if they take action to accelerate EV adoption and find the ways and means of becoming market drivers. Accenture Strategy offers three suggestions:

    • Help Customers Make Right Choices: With the trust of their customers and the trove of customer insights they have access to – from consumption patterns to payment preferences and home-charging abilities – utilities are well placed to help customers make the right choices as they switch to EV ownership.

    • Create hyper-relevance through ecosystems: Creating ecosystem partnerships will be critical to establishing a platform approach for bundling highly relevant offerings that will enhance the customer experience. Utilities can select complementary partners that will boost the customer value proposition – from car manufacturers and dealers to fleet operators, charge point operators, ride-sharing companies and parking space owners. With the right incentives, joint offerings will benefit EV owners and multiply value to all ecosystem partners.

    • Outpace the competition: Leveraging real-time customer insights to rapidly improve or iterate customer services and experiences will be key to outmaneuvering the competition. Utilities should strategically invest in a portfolio of services aimed at simplifying ownership experiences and removing barriers to adoption.

    “There is tremendous value potential in the eMobility market, but utilities need to act now. Armed with a deep understanding of the energy market and its rules and regulations, and trusted customer and supplier relationships, utilities that invest smartly and deliver targeted offerings will thrive in this market,” said Greg Bolino, a managing director for Accenture Strategy.

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