The rise in EVs is a once-in-a-generation opportunity for utilities
Utilities are set to become the primary electricity source for passenger vehicles.
The number of electric cars on global roads is expected to skyrocket in the coming decade. The International Energy Agency forecasts the number of electric vehicles to expand from about 6 million in 2019 to a whopping 130 million by 2030. After that, EVs will shift into high gear, with Bloomberg New Energy Finance forecasting that electric cars could make up 57% of all passenger car sales worldwide.
Annual sales for passenger EV are expected to rise to 10 million in 2025, 28 million in 2030 and 56 million by 2040.
This is all great news for the fight to reduce greenhouse gas emissions and improve urban air quality. What is often overlooked, however, is the fundamental economic shift that will occur when utilities become the primary source of electricity for automobiles.
A 2019 study by the Boston Consulting Group estimates that the rise of EVs could create $3 billion to $10 billion of new value for the average utility. The opportunity goes way beyond generating and delivering more electricity. It represents an expansion of a utility’s relationship with its customers to include not only lights, the fridge, and big-screen television, but the home and car, as well.
The first task for utilities is to educate customers about the environmental benefits of an EV. EVs don’t have tailpipes, so there are no direct emissions, but critics often point out that the emissions just move upstream. Utilities must be able to explain clearly why electric vehicles are greener than ICEs, even in the most coal-dependent parts of North America.
EVs are greener everywhere — and getting greener
The Union of Concerned Scientists (UCS) recently studied the emissions related to producing gasoline for an internal combustion car and electricity for an EV. For a gasoline car, they looked at the emissions from extracting crude oil from the ground, transporting the oil to a refinery, making gasoline, and bringing it to a gas station. For EVs, the calculation included emissions from power plants and the production of coal, natural gas and other fuels used by power plants.
This study showed that EVs, on average, produced greenhouse-gas emissions equivalent to an 88-mpg gas car. That’s nearly three times more efficient than the average new gas car, which gets 31 miles per gallon.
In regions where the grid mix is cleaner, such as California, the EVs are even more efficient. In the Golden State, a gasoline car would need to get 122 mpg to have emissions as low as the average EV. UCS reports that 94 percent of people in the US live where driving an EV produces fewer emissions than what comes from the tailpipe of a 50-mpg gasoline car.
It is important to remember that the electric vehicles on the road will get cleaner over time if the grid continues to reduce their use of dirty fossil fuels.
The study also showed that emissions from EVs dropped on average by 10 percent between 2016 and 2018, because U.S. power plant emissions fell over 5 percent in that time.
Power plants are a new part of the transportation ecosphere
Utilities would benefit from thinking about EVs as a way of boosting their carbon-reducing efforts. As cities begin to invest more heavily in renewable energy, the benefits of electric charging will only become more pronounced.
There are many appealing factors for prospective EV consumers. EVs are quick, quiet and in many regions they can drive in carpool lanes even when occupied by a solo commuter. With fewer moving parts, they also cost less to maintain. But perhaps the most dramatic advantage of EVs is the lower cost of fuel, an economic advantage that utilities can play up by offering attractive EV rate plans and rebates.
Many utilities are also expanding their role in transport by funding and operating public charging stations. According to the Edison Electric Institute, investor-owned utilities in more than a dozen states operate stations. In some cases, the utility can fill in geographical gaps in EV charging and provide opportunities for people living in multi-family dwellings to gain access to charging.
In other cases, by establishing a pilot charging program, a utility can garner data and gain a better understanding of how EV charging impacts the grid — including testing and improving responses to the extra demand. The earlier a utility can learn about these impacts, the better it can prepare for the inevitable wholesale transition to EVs.
It’s essential for all players to understand that the majority of EV charging takes place at home, which makes refueling very convenient for EV drivers.
A new tool for load balancing
For the utility, the increase in demand from one EV is roughly equivalent to the grid usage of one additional home. By offering compelling time-of-use rates — lowering the price per kilowatt-hour at night hours when demand is low — utilities can use the grid’s untapped capacity.
This load curve, from Geotab Energy’s (formerly FleetCarma, a division of Geotab) EV Growing pains report, shows how an EV-specific demand-side management program (treated) is more effective at shifting load than a standard household time-of-use program (TOU).
Incentivizing EV owners to charge during off-peak hours reduces the need for peaker plants, which fires up less clean forms of energy, or requires new, costly infrastructure. Through smart rate plans, utilities can discourage millions of EV owners from charging during peak hours, when everybody gets home from work and starts flipping up on lights.
When a utility service area can stagger charging throughout the night, it raises the valley to meet average daytime uses. All it takes is for EV drivers to set their vehicle to start charging around 2 a.m., still giving the car plenty of time to fill up before the morning commute.
The emissions-reducing potential for both transportation and electricity generation is tremendous and the EV revolution is underway. It’s no longer a question of if the world will transition from internal combustion to electric vehicles — it’s a question of how fast.
With much of the world staying at home during the pandemic, we’re driving a lot less and cities are seeing a large drop in overall emissions. If utilities start preparing for the EV future now, they can be ready to implement the best strategies to provide the necessary extra gigawatt-hours at the cleanest and greenest time.
Learn how to profile and manage EV charging load with solutions for electric utilities by Geotab Energy.
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Chad Saliba is a Business Development Manager at Geotab Energy.
Geotab's blog posts are intended to provide information and encourage discussion on topics of interest to the telematics community at large. Geotab is not providing technical, professional or legal advice through these blog posts. While every effort has been made to ensure the information in this blog post is timely and accurate, errors and omissions may occur, and the information presented here may become out-of-date with the passage of time.
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