October 14, 2022

How the Electrification of Transportation Will Change the Utility Business

5 Min. Read

EV adoption is accelerating rapidly as more consumers, commercial fleets, and public transport systems are embracing electric vehicles.  The Inflation Reduction Act extended the $7,500 tax rebate on new EV purchases, which could prompt more buying, and most automakers are rushing more models to market at lower prices to attract new customers.  Charging infrastructure will expand with the National Electric Vehicle Infrastructure Formula Program, which will provide funding for States to strategically deploy electric vehicle (EV) charging infrastructure networks. This increased electrification of transportation means higher demand for utility companies.

Now is the right time for utility companies to embrace this increased demand and, with the right strategies in place, become a driver of change and growth.

The state of EV adoption

EV registrations now exceed one million in the U.S. and continue to increase. Several factors are boosting EV adoption:

• Battery tech is more affordable and higher performing.
• There is a wide range of EVs available as most automakers now offer EVs.
• EV owners have access to fast and affordable charging at home.
• Federal tax credits help lower purchase costs.

Consumer demand is high, but this is not the only trend driving EV adoption. Commercial fleets and public transit systems are also turning to electrification on a major scale.

This trend will lead to an even higher grid load for utility providers, so they must proactively plan for this as their customers purchase EVs.

Transportation electrification is more than consumer vehicles

There is an increasingly diverse selection of electric mobility options available. Examples include e-scooters and e-bikes, and some cities are already offering e-scooter rentals. This trend could continue to gain momentum in more cities and these light electric vehicles could transform mobility with the right power infrastructure and urban planning.

Fleet electrification is another major trend shaping the future of mobility. USPS has established itself as a leader in this field as the courier has an ambitious plan to modernize part of its fleet. Forty percent of these next-generation mail delivery vehicles will be EVs. Car rental companies could also adopt EVs, with Hertz recently announcing EV expansion plans in a deal with GM.

Experts also believe commercial fleet managers will turn to electrification as this solution helps manage costs and reduce a fleet’s environmental impact. The market for electric trucks could be worth $8.99 billion by 2026. This market includes last-mile delivery vehicles, an important sector with eCommerce sales exceeding $1 trillion in 2022.

Some cities have already begun transforming public transit. Lancaster, CA, and Clemson, SC, are currently leading the way and these two cities have city bus fleets that include 63% and 55% of EVs respectively. The Biden administration recently announced $233 million in grants for rail projects. This measure could result in large-scale transit projects powered by electricity.

School districts in 38 states have also embraced electrification and there will be 12,000 electric buses on the roads this year.

The role of utility companies

Electrification is a challenge, but it also creates opportunities. Utility companies can adopt a leadership role and help build a cleaner future. Given that an estimated 80% of charging occurs at home, utilities are, in essence, going to become the EV driver’s gas station. This presents an opportunity for utilities to engage with customers in a completely new way and shift consumers’ perceptions of their utility.

Utilities can positively impact the electrification of transportation by offering rebates and incentives to offset the cost of installing charging infrastructure in homes and businesses; creating EV-specific rates aimed at helping customers manage their charging-related spending; providing managed-charging programs to ease the pressure on the grid during peak hours; and building greater generation and transmission capacity to increase energy availability. Transportation electrification will lead to a broader electrification trend as consumers and organizations focus on decarbonization. This in turn creates an opportunity for utilities to shape the electrification movement.

Forming new partnerships

Utilities can benefit from forming new partnerships with technology and service providers, local governments, fleet management companies, and community-based organizations. By forming new partnerships, utility providers can improve communication and anticipate the needs of consumers, businesses, and public transit systems.  Partners bring technology and solutions that can be connected to utility customers through specific programs, as well as various ways to position these programs through B2C connectivity.

This step is crucial for understanding and addressing the needs of their consumer groups and proactively supporting any challenges.

Taking a data-driven approach

Travel patterns and other data sources can help utility companies plan for the future. Projections can show how EV adoption will affect load increase. Data can shed light on the changing needs of a community. It can also help identify the projects with the best ROI.  Direct connectivity to vehicle OEMs and their partner network can provide access to this data, which benefits both the utilities and the vehicle manufacturers.

Investing in new projects

The electrification of transportation calls for increasing energy production.  As mentioned, the Inflation Reduction Act has provisions for funding a wide range of clean energy projects.

There is a strong need to produce more electricity. Storage solutions are also important, which is especially true at the local level. Now is the right time to start planning for clean energy projects. For instance, solar arrays and neighborhood-scale batteries can help build a strong grid.

Rethinking the grid management system

Electrification increases the energy demand and creates new energy usage patterns. Adopting a flexible grid management system is crucial in supporting these changes.

The average EV owner keeps their EV parked 95% of the time. These unused EVs can become a source of energy thanks to bidirectional charging. Given the proper incentive programs and appropriate infrastructure, entire fleets can become power sources during peak hours.

Additionally, utility providers can support the adoption of solar panels or whole-home battery systems. A community could reasonably produce and store a significant portion of the electricity needed for mobility with a supported network of residential and commercial customers using these technologies.

Start planning for the electrification of mobility

Qmerit can support your electrification efforts and charging station installation services with our unsurpassed network of certified installers throughout the US and Canada. Our mission is to make electrification accessible and affordable. We can help you manage the electrification of transportation and explore ways to establish yourself as a local electrification leader. Contact us today to learn more.