Utility industry wants to promote EVs to ‘remain viable’

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Facing flat or declining electricity sales, electric vehicles are a path to growth for power companies.

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Greentech Media

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The Edison Electric Institute, the power industry’s main trade group, is calling on utilities to better promote electric cars in order to stimulate demand for electricity and help reverse trends that threaten the long-term viability of some in the industry.

Without a strategy to help connect more vehicles to the grid, utilities will continue to face slow growth and stagnant revenues, warns EEI in a new report. The organization calls electric vehicles a “quadruple win” for power companies looking to boost demand, find new ways to interact with customers, support environmental goals and mandates, and reduce operating costs through electrifying their own fleets.

“The bottom line is that the electric utility industry needs the electrification of the transportation sector to remain viable and sustainable in the long term,” conclude the authors.

Some leading investor-owned utilities have rolled out programs to support charging stations, created pilots to test integration of new vehicle-to-grid technologies and have supported studies to model how lots of electric vehicles would interact with the distribution system. But there hasn’t yet been a strategic, industry-wide effort to support the electrification of transportation as a way to boost demand.

To understand why EEI is now calling for more electric vehicles, consider where the industry is headed. As the chart below illustrates, growth in retail demand has come to a virtual standstill.

At the same time, the states with the biggest solar PV markets are seeing that technology slow electricity demand growth even further. This is adding additional pressure on utilities (creating borderline disruption in some markets), as third-party developers capture much of the value from developing solar.

“Stagnant growth, rising costs, and a need for even greater infrastructure investment represent major challenges to the utility industry,” writes EEI. “Today’s electric utilities need a new source of load growth — one that fits within the political, economic and social environment.”

Part of the answer is electric vehicles, which could both grow electricity sales and help balance a future grid made up of much more distributed renewables.

Thus far, utilities have had a conflicted relationship with electric vehicles. Although sales continue to grow, consumer demand has been relatively low compared to initial estimates. That has prevented power companies from investing heavily in charging infrastructure. There are also legitimate concerns about how electric cars and trucks will impact circuits on local grids.

However, the potential upside is enormous. If the two charts above have utilities worried, the chart below should have them excited about the future.

As Opower pointed out in a recent analysis, owners of electric cars use nearly 60 percent more electricity than the average customer. And customers who own both a solar system and an electric car consume roughly the same amount of electricity from the grid as an average customer — offsetting much of the excess solar that utilities must buy back through net metering.

If that’s not enough to get utilities thinking more strategically about electric cars, they should consider the technology’s influence on consumer behavior. According to data compiled by a utility member of EEI, consumers view their local power provider as the second-most trustworthy source of information about electric vehicles, just behind Consumer Reports. Utilities have double the credibility that auto manufacturers and dealers do with consumers.

And a 2010 study from the Electric Power Research Institute found that two-thirds of consumers wanted their utility to provide information on charging station locations and pricing. As the authority on electricity services, utilities have a unique opportunity to steer consumer adoption of EV technology.

In its report, EEI proposes that utilities boost rebate programs for residential and commercial customers, set up new information services for charging infrastructure, create new rate structures for charging, cultivate deeper relationships with auto manufacturers, and purchase more electric vehicles for their own use. The organization is calling on its members to invest 5 percent of their annual fleet purchases in plug-in vehicles to set an example.

“By developing our expertise in vehicle electrification now, we are more likely to be able to dictate our own compliance path,” writes EEI.

Last week, contributor Elias Hinckley wrote a piece for GTM that pondered why utilities have done so little to promote electric cars. He proposed some similar ideas, including the creation of financing options for home-charging stations or partnerships between utilities and manufacturers to develop lending services that could be integrated into a customer’s bill.

Electric vehicles are not yet a significant part of the grid mix. And until utilities figure out how to use their expertise to build demand, they likely won’t be for a long time to come. That, argues EEI, wouldn’t be just a simple missed business opportunity — it could be a deciding factor in the profitability of utilities as they enter an era of declining electricity demand.

Source: Greentech Media. Reproduced with permission.

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8 Comments
  1. Peter Campbell 5 years ago

    We have two electric cars and they consume about the same as we generate from a modest rooftop PV system. So, they roughly cancel out and leave us looking like an ordinary, reasonably efficient, not too atypical household. Just what the retailer would like us to be. With time of use metering we would even be shifting a big chunk of our load to the times that best suit the retailer. They should really like us.

    • Peter Campbell 5 years ago

      PS. the retailer does not really have to do anything much. Perhaps some help to install a 15A outlet in garage and encouragement to be on a TOU to make running the car even cheaper than it already is relative to petrol. While they are at it, they could offer to retire a few years worth of RECs to make the first few years of car driving effectively on renewable sourced electricity.

  2. Miles Harding 5 years ago

    In the absence of any government assistance in purchasing EVs, they are currently priced somewhere near to twice the equivalent petrol vehicle, giving the petrol alternative something like a $15,000 to $20,000 advantage at the time of purchase. This makes the EV impossible to sell on purely economic grounds, leaving social and environmental factors to make up the shortfall. Hence, there are less than 1000 EVs in the entire country.

    While it may be true that EV owners are more affluent and big electricity consumers in the USA, I don’t believe that the same can be said in Australia where purchase decisions must be made on non-monetary grounds. A large proportion of EV owners in Australia are also members of the AEVA (Australian Electric Vehicle Association), may have converted an existing vehicle to electric, are independent thinkers and very often environmentally minded.

    In Australia, EVs are associated with solar power systems that cover the household and vehicle needs, making many net energy exporters, despite the fact that the car is consuming *some* electricity**.

    While there remains no purchase support for EVs, I can’t see this changing in the medium term. Fuel prices are not likely to rise much without triggering a recession, which ill make it impossible to sell an EV against a much cheaper petrol equivalent.

    ** Electric cars don’t actually consume very much energy, relative to most households. An average EV that drives 10000km a year will consume about 1500kwh, or about 1/3 of the household’s non-EV consumption. Why does the house consume so much?

    • Malcolm Scott 5 years ago

      ‘a large proportion of EV owners in Australia are also members of the AEVA (Australian Electric Vehicle Association)’

      Are you sure of this for the current run rate of EV sales? Last year was about 300 units, and this year with Mitsubishi, Tesla and BMW more than 1,000 units are practical possibilities. What had to be done in the past re conversions has very little to do with the future for volume sales that de-carbonise our transportation system.
      That AEVA membership will have much to do with the next 1000 units sold is very doubtful, or for that matter association with any other automotive or automotive related technical focused group.
      Good EVs are simply better cars with a better driving and ownership experience that justify their price for early adopters. Everyone could drive a Cherry that seems to have the emissions of a Commodore, but some choose to buy a BMW instead for a variety of reasons.
      BTW, we are in the same space, focus on the positives.

      • Miles Harding 5 years ago

        It’s becoming increasingly less true, but at the end of 2013, there were only 700-odd EVs registered on Australian roads from a total car population of more than 17 million. Cripes! More car than people, no wonder the aliens got the dominant species wrong 🙂
        It may take a couple of years to sell that next 1000! It’s no wonder that EVs are a rare sight on the roads.

        Decarbonising of the transportation system is essential, the problem is pace. When hydrocarbon fuel supplies fail to keep pace with demand and expectation, the effects are likely to be felt immediately and with serious consequences. ASPO estimates ‘almost certainly before 2020’, which is only about 5 years away.

        The state of awareness is appalling, the rocks scraping the hull could be plainly heard in 2007, but no action has been taken since. Heavy transport remains almost entirely by (imported) diesel truck and dopes are still buying huge SUVs to haul their sorry backsides to and from shopping centres.

        If electricity industry wants to promote EVs as a way to sell electricity, they have to make it attractive to the petrol addicted population.

  3. BenN 5 years ago

    Just one hitch here. For there to be widespread EV uptake, storage would need to be significantly cheaper. When this happens it will presumably also be viable for households to install storage and store their solar energy generated during the day to use at night. Given enough solar and storage households can be basically autonomous, at which point it’s game over for utilities regardless of how popular EVs turn out to be.

  4. Malcolm Scott 5 years ago

    I’m also surprised that electricity companies have not taken a strategic position to compete with oil and gas companies in the transportation sector, and especially for imported finished product where the electricity company misses out on the revenue of 6 kWh/litre at the refinery.
    We hear nothing from the electricity companies in support of environmentally sustainable high speed rail to compete with airlines and displace aviation fuel, and this should be done to mitigate the need to have a second Sydney airport on congestion justifications.
    We hear nothing from electricity companies about promoting or incentivising EV purchases and home charging – much greater revenue to kill the death spiral and duck problem, and to create sticky customers
    Victoria has a very different market from QLD, SA, NSW & QLD, and yet the do nothing approach reigns supreme here as well. Perhaps that 6 kWh lost at the refinery is not hurting enough yet.
    The Victorian electricity regulator at a recent conference commented that the elements are in place for an effective market, but it’s not quite working out as an effective market system.

  5. Rob G 5 years ago

    In the short term electric cars appear to be a very good thing for coal/gas power utilities to encourage. Possibly their last life line. But there is a funny parallel here to Kodak and Agfa’s dying days. Remember how 1 hour photos came out, you send your film in and hey presto 1hour later they were done. We all know how this ended with digital cameras and film becoming obsolete. I’d suggest that electric cars would, in fact, accelerate the renewable energy shift.

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