How Power Companies Can Ride the EV Wave for New Revenue

Have you noticed more electric vehicles (EVs) driving around your neighborhood? According to Kelley Blue Book’s “Electric Vehicle Sales Report Q3 2023,” EV sales volume in the U.S. set a new record in the third quarter (Q3) of this year, as total sales of battery-powered vehicles surged beyond 300,000 for the first time ever in a quarter. Year-to-date EV sales through September were more than 873,000, putting the market firmly on track to surpass a million vehicles sold this year. Cox Automotive, parent company of Kelley Blue Book, predicted the milestone would be achieved in November.

Cox said most analysts expect a flood of new EVs in the coming three years, with the number of available EV products likely to double by 2027. While Tesla still accounted for half of all EVs sold in the U.S., more traditional auto companies, such as Ford and General Motors (GM), are gaining ground. In fact, both Ford and GM achieved greater than a 6% share of the EV market in Q3. Ford’s best-sellers are the Mustang Mach-E and F-150 Lightning, while the Chevy Bolt led the way for GM. Notably, GM added new Blazer and Silverado EV models to its lineup late in Q3, so it seems poised for more growth going forward.

Correlating EVs with Electric Demand Growth

In the U.S. Energy Information Administration’s (EIA’s) Annual Energy Outlook 2023 report, it says the residential sector purchased 5.1 quadrillion Btus (quads) of electricity in 2022. The EIA predicts residential consumption of purchased electricity will increase between about 14% and 22% from 2022 to 2050 across all cases, reaching between 5.9 and 6.3 quads. “Electricity purchased for transportation reaches between about 0.6 quads and 1.3 quads in 2050, from 0.1 quads of purchased electricity in 2022, an increase of between 892% and 2,038% across all cases,” the report says.

Yet, the EIA based its estimates on a projection that EVs, including both battery-electric vehicles and plug-in hybrid electric vehicles, will account for between 13% and 29% of new light-duty vehicle sales in the U.S. in 2050, and between 11% and 26% of on-road light-duty vehicle stocks. That seems like an incredible under-estimation of future EV growth in my opinion. In Q3, EVs accounted for 7.9% of total industry sales. Is the EIA seriously thinking EV sales will only double or triple from these currently modest levels over the next 25+ years?

Furthermore, the commercial vehicle market offers an interesting load-growth story. In a report authored by Dr. James Edmondson, principal technology analyst at IDTechEx, a research consultancy, it says although commercial vehicles are deployed in smaller volumes than automotive, they are heavily electrifying also. “These markets are at an earlier stage of electrification but are making significant progress,” Edmondson wrote.

Edmondson suggests electrification of light commercial vehicle (LCV) fleets is an effective way to “demonstrate green credentials to customers.” He says it also provides a strong total cost of ownership reduction for fleet operators. “Significant adoption has been seen from operators like Amazon and UPS. In Europe, the average van [original equipment manufacturer] has 8% of its new registrations coming from electric LCVs,” Edmondson reported. Combining the markets for two-wheelers, three-wheelers, vans, microcars, trucks, marine, construction, buses, air taxis, and trains, IDTechEx’s report predicts a market of just over $1 trillion in the year 2044.

Utilities Stand to Benefit

Driivz, which markets an end-to-end EV charging and smart energy management software platform, claims power companies are perfectly positioned to capitalize on the growth in EVs. In a white paper published by the company, it says, “Utilities have an opportunity to ride the EV adoption wave and become EV service providers (EVSPs). The potential for monetization is huge, and delivering user-friendly EV charging apps presents an opportunity for them to reforge relationships with their customers.” Among the advantages Driivz believes power companies possess are:

■ Utilities don’t have to build their market from scratch. They already have a wide customer base, and insights into their customers’ behavior around usage of electricity, enabling them to target customers who are ripe for EV adoption.

■ Utilities already have the customer service infrastructure in place with open channels of communication with their subscribers, field technicians, and support centers.

■ Since utilities “own the electricity,” they are in a great position to offer incentives for EV charging and can implement initiatives to promote smart energy management that will relieve localized strain on the grid.

■ Utilities also have infrastructure in place with ongoing upgrade plans. With a stake in EV charging, they can get direct insights into usage and future needs to plan out those upgrades over the next decade.

■ Utilities can form strategic partnerships with other players in the EV charging ecosystem, such as charge point operators, site owners, fleets, and more.

“By embracing change and becoming a part of this evolution, power utilities open up the opportunity for loyal subscribers, enjoying a seamless EV charging experience, and the ensuing billions of dollars in new revenue from installing, operating, and maintaining EV charging points and providing software services such as energy management, fleet electrification, V2G [vehicle-to-grid] solutions, and more,” Driivz told POWER.

The ability of power companies to own and operate charging networks is often up to state regulatory commissions. Because utilities are accustomed to working with these agencies, they should be able to navigate local regulations to operate EV charging networks efficiently and reliably, benefiting customers and the grid. “While still in nascent stages in the U.S., these markets have proven to be an effective source of new revenue in Europe,” said Driivz.

—Aaron Larson is POWER’s executive editor.