Electric vehicle charging programs offer significant benefits to utilities
A general lack of convenient access to charging stations has historically been an impediment to electric vehicle (EV) sales in many parts of the country. However, the landscape is starting to change. According to September 2020 data from the Department of Energy, the U.S. has approximately 27,000 public charging stations with over 86,000 charging outlets for plug-in EVs – a 26% increase over 2019. While these numbers still lag behind the rising interest in EV adoption, they represent an encouraging trend towards cleaner transportation. To address rising EV interest, electric utilities across the country are focusing on investments in EV charging stations and incentive programs.
Utilities are developing beneficial electrification programs aimed at replacing direct fossil fuel use with electricity to reduce overall emissions and long-term energy costs. As a component of beneficial electrification, EV charging programs will provide a number of key benefits to utilities and stakeholders. These benefits include increased revenue growth for utilities, support of clean energy objectives, and accelerated EV adoption.
The rise of electric vehicles could create up to $10 billion of new value for the average electric utility.
Providing a new source of revenue growth
Utilities have experienced slower growth in electricity sales in recent years, in part due to the expansion of mandated energy efficiency and solar programs. EV adoption provides a potential opportunity to offset these decreases if EV sales continue to rise to a much larger share than today. As an energy supplier for electric vehicles, electric utilities play an important role in growing and shaping the market for EVs. The Boston Consulting Group estimates that the rise of EVs could create $3-$10 billion of new value for the average electric utility. EVs are also expected to provide utilities with enhanced flexibility in balancing power demand with supply and do so at a much lower cost than traditional energy storage. Among other opportunities, the revenue growth could allow utilities to invest in new innovation and further expand beneficial electrification investments.
Meeting aggressive clean energy goals
ACEEE's 2019 State Energy Efficiency Scorecard reported a string of legislation that set 100 percent clean energy targets in states including Nevada, New Mexico, Washington, New York, and Maine, which joined California and Hawaii in adopting that target. As more states adopt aggressive clean energy goals, legislators and stakeholders will look to innovative utility programs such as EV charging to help meet these environmental objectives. Environmental benefits are realized when the electric equipment has a lower carbon footprint than the fossil fuel equipment it is replacing. And, as the power supply shifts to low- and no-carbon resources, the environmental benefits of electrification increase. EV charging can also be an important source of flexible electricity demand to enable use of larger amounts of solar and wind energy on the grid. With the estimated number of future EV sales, it is important that both customers and utilities continue to explore new ways to charge EVs with renewable energy sources in order to maximize emissions reductions.
Supporting accelerated EV adoption
An important consideration with accelerating EV adoption is the creation of more access to non-residential charging options to adequately address the needs of EV drivers, with a goal of eliminating the ”range anxiety” that has been a persistent purchase barrier. Utility programs help overcome these types of barriers not only by educating customers, but also by providing incentives to assist in installing EV charging stations in commercial buildings, truck stops, residential complexes, and homes. Utilities will gain greater visibility as a champion of EV adoption, which will provide positive public relations and brand image among customers and stakeholders.
While EV programs offer significant benefits, there are also several hurdles and considerations that utilities must account for when developing their own initiatives. A 2019 study by the Smart Electric Power Alliance cited several challenges that can hinder the implementation of utility EV programs including the limited amount of information on EV program design approaches, the lack of available staff, and uncertainty about the financial and economic impacts for the utility. Additionally, locational analysis is an important consideration for utilities when designing and implementing an EV charging program. By analyzing existing grid infrastructure and peak load data points, utilities can select the most cost-effective locations for charging station rollouts – maximizing the available capacity while minimizing required infrastructure costs.
For more than 30 years, Leidos has worked with the utility industry to manage incentive programs, provide grid optimization expertise, and leverage the latest technologies to develop cost-effective energy solutions. Our team is uniquely positioned to deliver end-to-end services for EV charging programs – from stakeholder outreach and incentive fulfillment to locational analysis and construction management. To learn more about Leidos’ comprehensive EV implementation and support services, contact our team.