Can the electric vehicle (EV) market and power industry mutually benefit from one another?
Powering the Future of Mobility
Andrew Slaughter | Deloitte Center for Energy Solutions
In your report, “Powering the future of mobility: How the electric power sector can prepare for its critical role in the new transportation ecosystem,” you present the idea that the electric vehicle (EV) market and power industry can mutually benefit from one another. Can you please explain how this symbiotic relationship between the two works and how they are working together?
Electricity demand from EVs can provide a new source of revenue growth for utilities; also opportunities for smarter load management on the grid by using EV charging to balance supply and demand at times of surplus wind or solar power; utilities can also seize the opportunity for customer engagement around EVs, using smart tariffs and apps to manage the charging load and provide other, related services. EV owners, either individuals or fleet operators, might be able to benefit from being compensated for providing balancing services to the grid, i.e. allowing utilities to manage reverse power flows from vehicle batteries at times of peak demand. These benefits will in many cases need greater development and deployment of appropriate tariff structures and technology.
Why do the projections for EV growth differ so much from one projection to another?
What are the market drivers for EV growth in the U.S. and globally? EVs are an emerging sector, very early in the adoption curve. As such, there is naturally quite a lot of uncertainty about pace and scale of adoption. Projections depend on a mix of assumptions around, costs, technology advances, policy support and consumer preferences, so are likely to cover a wide range. The drivers for growth are falling prices for EVs (associated with declining costs of batteries), increasing range between charges, the pace of charging infrastructure build-out, and policy support such as tax credits for EV purchase and non-monetary incentives, like preferential access to parking and access to HOV lanes.
How can utilities embrace EVs and support consumer adoption?
It will be important for utilities to proactively communicate with consumers about rate plans and other programs that are adapted for EVs. Utilities are also well-positioned to play a large role in building out charging stations if they can agree with regulators on the basis for and returns on the investment – particularly if they can make the case that the potential for improved grid operations can benefit all consumers. Utilities can also work with car manufacturers and dealers on tracking EV sales so that targeted communication initiatives can be more effective.
In your report, you mention that utilities can develop EV rate plans for customers. How can rate plans be effectively implemented? Can you provide an example of a utility doing this well and why it is working?
It is still early days for EV-specific rate plans, led by utilities in California, and it is still unclear over whether the most effective tariff models have been developed. There is likely to be a period of experimentation as the market grows to establish best practices in this regard.
What will it take to get other utilities on board?
The regions where EV sales are the strongest will likely see the most utility attention to developing tariffs and program which are adapted to this new source of demand.
How can EVs help integrate renewable energy and stabilize the grid?
Incentivizing EV owners to charge vehicles at certain times can align well with wind power output (highest at night) or solar output (mid-afternoon), absorbing excess power from these sources. Conversely, EVs could be a source of power to the grid at peak demand times, thus avoiding utility investment in additional peak-load capacity.
From the research can conclusions be drawn as to the future development of EVs and the infrastructure necessary to support them?
Adoption of EVs appears to be taking off because of reduced costs and increased driving range. For growth to accelerate, charging infrastructure needs to be more widely available, although the extent of this also depends on whether ride-sharing fleets significantly displace individual ownership, and also whether widespread wireless charging becomes technically and economically possible.
About Andrew Slaughter
As executive director for the Deloitte Center for Energy Solutions, Deloitte Services LP, Andrew Slaughter works closely with Deloitte’s Energy & Resources leadership to define, implement, and manage the execution of the Center strategy, develop and drive energy research initiatives, and manage the development of the Center’s eminence and thought leadership.
The content & opinions in this article are the author’s and do not necessarily represent the views of AltEnergyMag
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