Will Utilities Finally Take the Lead on EV Adoption?

EEI Report June 2014It should be no secret that several entities are particularly crucial to the successful proliferation of electric vehicles. Government agencies, automotive manufacturers, research centers, and even tourism play important roles in advancing what is still considered a fledgling industry. But perhaps no entity plays a more important role than electric utilities. Not only do they have the “power” to accelerate EV adoption but they stand to benefit greatly by doing so. One perspective goes so far as to imply EVs can be their savior.

This past May, Barclays downgraded the entire electric sector to underweight as it views long-term challenges from residential solar and power storage to be a big concern. This underpins a comment made last year by NRG’s CEO, David Crane, indicating that the days of the regulated and centralized business model of the utility industry are numbered as customers will move off the grid using rooftop solar among other sources of green energy for their home. Not coincidently, Edison Electric Institute, the trade association that represents all U.S. investor-owned electric companies, just released a report in June detailing how utilities can capitalize on the burgeoning EV market. Entitled “Transportation Electrification: Utility Fleets Leading the Charge,” the report puts emphasis on utility fleets shifting from being a cost center to more of a strategic investment and how electrifying them is a critical step to mainstreaming EVs. But the report delves into just about every facet of EVs and provides interesting unique perspectives to several. There are a few eye openers in this report.

The Executive Summary spells out the situation. Retail sales of electricity have declined 2% since 2007 but electrification of the transportation sector represents a huge, if long-term, opportunity as 93% of transportation currently gets its energy from petroleum. But with only 1.7% of the vehicles purchased by utilities over the last 5 years being plug-ins, they are hardly being leaders. Grid-connected vehicles such as electric Power Take-Off (ePTO) equipped service trucks offer savings and efficiency gains many have yet to reap. In addition, one game-changing benefit unique to utilities is exportable power from these vehicles to minimize planned outages and assist emergency response teams. The summary includes a comment that utilities have an opportunity not only to lead the adoption curve but to shape the market. It concludes with the statement that customers look to utilities to be experts on EVs.

Related: The Future of Electric Vehicles and the Smart Grid

The report discusses many of the EV facts, issues, and suggestions that we have heard many times. Utilities should spend some initial time and investment now to mitigate future expenses when, inevitably, they will be mandated to do so. Battery second life applications raise the possibility of being a viable asset for utilities. Any new utility construction should include EVSE readiness even if not installed initially. Fleet operators should look at total cost of ownership (TOC), of which EVs have an advantage in decreased operation and maintenance.

Among the surprises though is the fact that customers trust EV information from their local utility second only to consumer reports. It is no surprise that they trust car dealers the least. In addition, customers want the utilities to provide them information on available EVs in their area as well as charging locations. Customers also want a break on electricity rates for charging their cars at home. For instance, customers with tiering rates designed for conserving electricity can be negatively impacted when plugging in an EV. But since shifting from petroleum to electricity is desirable, customers should not be penalized for operating an EV.

Perhaps the biggest surprise in the report is mention of research conducted by Pacific Northwest National Laboratory that indicates 73% of all light duty fleet vehicles, passenger cars, pickups, and SUVs on US roads today can be supported by the existing grid if they were EVs (though some localities may vary). That’s the equivalent of eliminating 6.2 million barrels of oil each day or 52% of US oil imports. That same research indicated 160 million EVs can be powered solely from existing off-peak capacity. Armed with that capacity, why would utilities not aggressively pursue the electrification of transportation? If utilities take the recommendations outlined in EEI’s report and put their full weight behind transportation electrification, imagine the additional impact on the EV industry.

About Steve Yakshe

As President and CEO of a mid-sized technology company engaged in instrumentation to monitor the world’s water resources, I developed a passion for protecting and enhancing the environment we all share. Following the sale of that company, I’ve combined this with my passion for cars to research and promote the Next Generation Car that will transport us cleanly and without detriment to our world’s ecosystem.

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