December 1, 2022

How Does EV Adoption Impact Utilities?

6 Min. Read

As electric vehicle (EV) adoption continues to increase, utilities face a number of new challenges alongside new opportunities. Advances in EV technology have reduced range concerns as a major roadblock to expansion of the EV market share, but concerns remain about the impact of electric vehicles on utilities, particularly when it comes to power grid capacity and reliability.

The ability to charge EVs easily and quickly in urban and rural settings is driving massive federal funding to install the much-needed vehicle-charging electrical infrastructure. A total electric transition will require standardized, reliable utility connections across state lines (and adequate charging facilities).

What is the Grid Impact?

Fears that increased electrical demand on the outdated power grid can lead to a strain on resources are a valid cause for concern and a need for proactive action. Some experts report that a total transition to EVs will require 1.25 trillion kilowatt-hours of electricity annually while others cite higher numbers. While high, the impact is not as serious or critical as was first theorized. EV adoption is growing, but the power grid impact remains relatively low, and gas-powered cars will remain on the roads for at least the next 20 years during this transition to auto electrification.

There are lessons to be gleaned from European EV adoption efforts. Based on experience and statistics from countries with more EVs already on roads, it is now estimated that the electrical demand for EV charging will only require roughly 10% of the U.S. power demand in 2030 and a mere 2.4% of the Canadian power demand.

Why are these numbers so low? When estimating demand, people often calculate how much electricity each car will require for charging and then multiply that quantity by the number of EVs expected to be in use during that time. This is flawed thinking as not all electric cars will be charging at the same time and demand will be staggered throughout the day and across time zones and various utility providers.

It was recently determined that if all cars in the United Kingdom were EVs and charged simultaneously at home, they would need three times the country’s grid capacity. Additionally, if the same quantity of electric vehicles were all plugged into more powerful DC fast chargers, it would require more than 20 times the current U.K. grid capacity. After evaluating actual needs and usage, they estimated that the all-electric U.K. auto model would only need about one-fourth of the country’s current grid power. Utilizing this same method of energy calculation, researchers estimated that if all cars in the U.S. were EVs, annual charging consumption would still only consume 27.6% of the grid power produced in 2020.

A Boon for Utilities

The EV evolution is actually a golden opportunity for utilities, which have seen declining revenue growth with the continued expansion of solar power technologies, energy-efficient appliances, and even LEDs. EVs will reverse the trend and increase utility customers’ electric usage. One example equates the impact of electric vehicles on utilities with the advent of air conditioning in homes. Few homes had air conditioners in the early 60s; 20 years later, it was a ubiquitous fixture for homes in many parts of the country.

Some utilities are adopting new business models with additional services such as assistance in planning electrification projects or even vehicle procurement. California’s largest utilities have led the way for many years, installing infrastructure to support over 12,500 charging stations across the state. At this time, a majority of the 3,300+ American utilities are encouraging EV adoption.

Many of these utilities are also implementing grid integration strategies to help EVs charge in ways that will benefit the electrical grid so utilities can utilize EV batteries to provide power when needed. To further minimize stress on the grid during maximum usage periods, many utilities have established off-peak EV charging rate programs to encourage drivers to charge at optimal times.

Power Partners

Utilities are forging partnerships with homeowners and businesses to help them leverage solar power, battery storage, or bidirectional charging to create energy reserves. These partnerships provide low-cost solutions for utilities needing to manage demand peaks and provide financial benefits to those with excess power to spare.

Load management solutions are also keys to managing peaks in energy demand. Many utilities established programs to alert consumers to reduce air conditioning use when demand is high. In exchange for avoiding or minimizing their energy usage during high-demand times, these customers receive lower rates or even rebates from the utility provider. Similar programs are being adopted to help manage EV charging loads.

Additionally, smart homes and other facility-wide load management tools allow users to manage energy use by turning off and on devices. This can ensure that high-current loads, such as an EV charging station or the washer and dryer, are not running simultaneously. Management tools also control thermostats, lights, security systems, and other devices. Such solutions increase the stability of the grid.

Strategic Use of Capital

Conservative estimates call for boosting grid capacity by 30% over the next two decades to address the electric vehicle impact on utilities. This growth is believed to be feasible, particularly with increased capacity from solar, wind, and other renewable power sources. Regardless of whether or not you believe the current grid is adequate for future EV demand, the aging infrastructure needs massive updating in general, as increases in population will also lead to an increased demand for grid capacity.

The U.S. has currently budgeted $7.5 billion in direct funding and incentives for grid upgrades, as well as plans for installing 500,000 charging stations by 2035. Utilities will also need to invest resources and expertise to deliver effective improvements.

For example, DC fast chargers can only be placed in areas that are capable of supplying the required power. Utilities can strive to implement fast-charging networks that will make charging an EV a quick pit stop on the route rather than an hours-long effort that requires drivers to go out of their way. One study suggested 3 million charging stations, mostly DC Level 3, are needed in the U.S. to meet driver needs for convenience and satisfaction.

Decentralizing energy production can also help to manage costs while increasing production capabilities. This method allows utilities to manage electricity not generated on the grid, such as from energy storage options. Traditionally, utilities have relied on large, central power stations and transmitting loads along miles of power lines, causing power to be lost along the route. This inefficient approach forced grid operators to make do with limited options during major outages.

Conversely, decentralized energy systems use power sources that are spread across a region and often closer to end users. Sourcing energy in a decentralized manner can reduce reliance on inefficient transmission and distribution systems, offering more solutions during an outage.

A Leadership Role

Utilities can become leaders and support electrification with an improved grid, investments in energy production projects, and through incentive programs. Now is the time to invest in our infrastructure to ensure a more resilient power grid that is ready for the impact of electric vehicles on utilities.

As an industry leader in the move to electrification and trusted by leading automakers and EVSE brands, Qmerit is accelerating the shift away from fossil fuels toward a more sustainable, electric-powered future. We work with homeowners and businesses on the installation of EV chargers, battery storage, and other electrification technologies, and have recently begun to partner with utilities to make their customer’s electrification journey easy. Our vetted, trained electrical contractors deliver the highest quality service at competitive prices to make going electric easy for all.

For more information about our services and how you and your customers can benefit from a partnership with Qmerit, contact us today.