Electric vehicles (EVs), which include both all-electric and plug-in hybrid electric vehicles, represent a bold new frontier for utilities—the opportunity to increase demand and potentially even reverse the trend toward lower electricity sales.
Here’s the situation: Most areas of the United States are suffering from slowing and even negative growth in electricity demand due to increasing energy efficiency and more distributed solar photovoltaic (PV) generation. But EVs offer solid purchase in a slipping market: According to a report by SmartGrid, “EVs offer utilities an entry into a sector of the economy that accounts for 28 percent of the country's energy consumption.” With their hyper efficiency, EVs’ advantages are two-pronged for utilities: They lower total energy use and emissions even as they increase electricity use.
And that’s just the tip of the benefit iceberg. Because most EV charges occur at home, each EV increases the average household's electricity demand by roughly 30 percent, according to the Energy Information Administration. Plus, EV charging tends to happen at customers' homes during the night, outside of peak periods of demand for electricity. It’s a time when most utilities have excess power available on the grid, which translates into large net economic benefits to the utility and its customers. The off-peak charging improves a utility’s load factor and boosts sales during low-demand times.
In the ultimate win-win, the additional revenue generated by the increased sales more than offsets the cost to generate and deliver the additional power.
Right now, EVs are in a transitional phase, slowly moving from early adopters to a wider customer base. There are many reasons for consumers to find EVs an attractive option. A switch to EVs cuts unhealthy air pollution that fuels and hastens climate change. EVs can also provide a boost to the regional economy and promote energy independence, two major feats. EVs have so much to offer, but only if they make up a much larger share of the market than they do today.
Electric utilities play an important role in growing and shaping the market for EVs. Here are four steps they can take to encourage EV adoption.