Last update: 10/27/2021
As city infrastructure gets smarter, utilities and electric vehicles face enormous potential for a symbiotic relationship.
Plug-in electric vehicles (EVs) are gaining ground. According to the International Energy Agency, in 2020 the global electric car fleet increased by 2.1 million from the previous year, showing 40% year-over-year growth of new EV sales. Despite EVs holding 2.6% overall share of total vehicle sales, their growth pattern is undeniable. This is especially true when considering the stage that has been set for the industry: favorable climate policies, EV cost reductions, and government incentives.
The growth of EV adoption brings with it a timely opportunity for utilities to boost revenue, build sustainable load growth, and increase customer engagement opportunities. As EV advances, the future of charging and vehicle-grid integration (VGI) are important factors for utilities to review. But time is of the essence. Utilities and electric vehicle manufacturers must act now to proactively confront impending policy issues, preclude future load-balancing concerns, and prepare to meet rigorous emissions-reduction mandates.
Promoting sustainable load growth
Gas and electric utilities are facing ominous revenue loss and load reduction forecasts. This is due in part to many governments enacting beneficial electrification policies, such as eliminating natural gas usage in both new and existing buildings. Another factor is consumers increasingly supplying their energy with distributed energy resources (DERs).
Enter EVs, which offer a golden opportunity for utilities to reverse declining revenue growth and counteract a variety of other threats to their business model. The fundamental idea is remarkably simple: EVs will increase customers’ electric usage. For example, the estimated annual energy use of a battery-electric Chevy Bolt is about 3,500 kilowatt-hours (kWh) per year. When compared to estimated energy use of a household of three—roughly 6,000 kWh annually—the revenue gains from EVs are evident.
Understanding the challenges of EV growth
Challenge 1: Charging vehicles at home
The U.S. Department of Energy estimates that 80% of EV charging is done at home. Assuming this pattern holds, utilities must take steps to ensure the sustainable growth of this important source of future revenue. Large-scale EV adoption would create a massive increase in the amount of energy pulled from the grid as people come home at the end of the day and charge their cars. In the worst-case scenario, a simultaneous EV charging surge could leave consumers in the dark. In a less severe situation, prevalent EV adoption would necessitate major grid and infrastructure investments to offset potential EV charging during peak energy times of day.
To confront this challenge, utilities can work to educate customers about the most economical time of day to charge their EVs. Utility rates can be confusing, as any DER or time-of-use customer can tell you. Utilities should clearly outline the financial benefits of charging vehicles during off-peak (i.e., cheaper) times.
Challenge 2: Accelerating equitable access to EVs
To fully realize the potential of utility and electric vehicle symbiosis, cities and towns need equal access to the supporting infrastructure.
New technology, incentive plans, and used EV markets can help lower the price of owning a passenger EV while increasing the opportunity of ownership for more communities. With an increase in electric transportation—both personal and public electric transportation—greenhouse gas emissions can decrease, and renewable energy can grow.
Simultaneously, more EV availability means charging stations need to be widely accessible. Many current EV owners reside in single-family homes with a charging station. Those living in multi-family housing developments do not have that option, especially those residing in lower-income areas.
If the state and local governments work with utility companies and local businesses to provide charging stations within all communities, more residents can own an EV. Owners can use a charging station at a local business, at the workplace, or in the parking lot of their condo complex.
Challenge 3: Educating consumers
The advancement of electrification relies on education. The government, businesses, and utilities need to educate themselves about the communities they serve and the needs of the residents. These policymakers and companies can then educate the community on the benefits of EVs while proposing certain incentives and programs to allow EVs to be attainable in all areas. Educating customers in the community can also enhance load balancing, which is the process of shifting nonessential energy usage to off-peak times to maximize grid stability. By adjusting customer behavior to charge EVs when energy usage is lower, the electrical grid can function properly without unexpected surges from large-scale EV charging during peak times.
No community is alike, which means education strategies can vary. Stakeholders need to engage with the local community to determine the best course of action. For example, Austin Energy takes an interactive approach with its Plug-In Austin campaign, providing EV education to the community along with information on cost and charging stations. Educational resources need to be easily accessed so all residents can learn about the benefits of EVs and what is available to them.
Communities must be aware of their EV options and the benefits of electrification. Providing community outreach helps educate and engage all populations, including lower-income, so everyone has the opportunity for EV ownership while learning about better air quality and reducing greenhouse gas (GHG) emissions for a healthier environment.
Launching a customer engagement strategy
Overcoming all of these challenges starts with engagement. Progressive utilities can support EV growth by exploring, developing, and pioneering methods that are mutually beneficial to customers and their own business model. Potential advantages for utilities include increasing customer engagement while simultaneously balancing the grid load and growing revenue. Additional features could include:
- Testing managed charging programs that automatically send signals to businesses to charge EV fleets at the cheapest times of day, allowing them to stay below costly electrical load thresholds.
- Offering an EV-specific electric rate to engage customers—both residential and commercial—and encourage load shifting.
- Piloting innovative uses of EVs, such as vehicle-to-home programs that allow an EV’s battery to act as an energy storage system for a home during blackouts.
- Covering partial or full costs of EV charging infrastructure (in residential and multi-family homes, businesses, retail centers, and public venues) to help customers overcome concerns about charging their cars.
- Assisting with the upfront infrastructure costs of large-scale adoption of EVs in transit and business fleets to address concerns about electric bus reliability and integration to the grid.
Utilities that aren’t yet working with EV customers can start by learning from others that are, including Baltimore Gas and Electric (BGE), which offers incentives for its customers such as rebates and special rates through its EVsmart program. Along with this program, BGE is creating an accessible system of public chargers within its territory.
Other programs are taking similar action too. Fleet Advisory Service Program for the National Grid in Massachusetts helps assess new electrification possibilities within the community (helping to reduce costs and emissions). And our recently launched Decarbonizing Planning Platform, Co₂Sight, pilots various energy and emissions possibilities by analysis and comparisons for the most effective results.
Meeting climate mandates
The impacts of climate change become more apparent each day. Local and state governments are increasingly enacting stringent greenhouse gas (GHG) emission- and energy-reduction mandates to combat these effects. According to the U.S. Environmental Protection Agency, 29% of GHG emissions in the U.S. come from transportation, the highest percentage of any sector.
By supporting EV growth, utilities can meet their own mandated reductions and be a valuable partner to local governments that need to hit decarbonization goals. They can also realize numerous benefits by promoting the electrification of vehicles in their service territories, such as:
- Marketing and public relations opportunities for utilities to show their commitment to the local environment.
- Business and job growth in local communities.
- Getting ahead of anticipated climate mandates that may require more aggressive—and costly—future investments.
Next steps for advancing EV growth with utilities
While federal, local, and state governments are key players in the advancement of EVs, utilities are also a big part of the game. Together with the right stakeholders, utilities can create new approaches for better results, provide more funding for enhancement, and determine the many benefits of DER on the grid. For example, the City of Fort Collins collaborates with stakeholders to expand the need for EVs with its EV Readiness Roadmap, while several Western states organize a charging network specifically for EVs with the Regional Electric Vehicle Plan for the West (REV West). And the Federal Highway Administration (FHWA) has a charging network directly along the corridors of the national highway.
Such collaboration is also important to help understand targeted EV access and advancement. Utilities should bring in local leaders who know the community best and understand the policies best suited within the demographic. The Disadvantaged Communities Advisory Group in California is one such example, ensuring underserved areas benefit from clean energy and emission reduction while learning how these specific impacts can help others in the community.
Despite their silent motors, the arrival of EVs has been anything but quiet. But there’s no need for utility executives to fret about this disruptive technology. Progressive utilities can work together with the EV industry, technology providers, local governments, and community stakeholders to create innovative strategies that mutually benefit customers, the environment, and their bottom lines.