Why Electric Vehicles Represent a Big Opportunity for Utility and Power Companies

The time is right to build electric vehicle (EV) charging stations and tap into this growing market

While the electric vehicle market represents barely a fraction of the estimated billion-plus internal combustion engine-based vehicles on the road today, those numbers are rapidly increasing.

At the current YOY growth rate of 40 percent, there will be in excess of 1.35m EVs in Europe by the end of 2018 and approaching two million by the end of 2019. Reach for some of the more bullish forecasts and it’s possible to believe that every new car sold in Europe will be electric inside twenty years. That last figure comes from the Dutch bank, ING. Its analysts believe a combination of economies of scale, falling battery costs and government support will drive electrification, so much so that EVs will soon become “the rational choice.”

Although its timescales may be more optimistic than most, the bank is not alone in its stance. National Grid, for example, predicts that 90 per cent of new cars in Britain will be electric by 2050.

For all of this to happen – for this nascent EV market to reach its true potential – infrastructure must match demand. If motorists cannot recharge batteries en route – or perceive that there’s a risk that they will not be able to complete a journey – then growth will stall.

The trend towards the electrification of road transport provides an exciting opportunity for the European utility sector. It allows power companies to fulfil a market need and to reimagine their services in an era of slowing growth, constrained by decentralisation and decarbonisation. This post explores the rationale for moving into the EV infrastructure space now and the steps utility companies must take to ready themselves for the move.

EV charging: why now

Electric vehicle infrastructure build is a pressing policy and commercial concern. The European Commission has set deployment targets for the next decade. It wants there to be no more than 60km between each highway charging station. It also wants at least one publicly accessible charging point for every ten EVs in use by 2020. Today just a third of charging points required are in operation, according to the International Energy Agency.

Electric car stock and publicly accessible fast charging outlets:

While public money and incentives have driven the EV market to date there is evidence that direct investment has declined over the past few years. That gaps needs to be filled and utilities should be the ones to do it.

EV charging comes at an opportune time for power providers still adapting to a decentralised model of energy production. Consumers turned producers are feeding increasing amounts of energy into the grid which in turn is undercutting revenues. The provision of fuel for a new generation of cars is the perfect counter to stagnating load growth.

Meanwhile, the rise of the EV is happening in concert with efforts to decarbonise economies around the world. Not only is the European Union actively promoting EV use, it has recently updated its carbon dioxide (CO2) reduction plan. It calculates that cars are responsible for around 12 per cent of total European CO2 emissions. One manifestation of decarbonisation is the steady closure of traditional petrol stations. In the UK these are shutting at a rate of around a hundred every year, according to analysts Wood Mackenzie.

EV charging: why utilities

There are a number of reasons why utilities and power companies are perfectly positioned to provide – and benefit from – EV infrastructure.

First, EV charging is a natural extension of the services they already provide. From residential charging to publicly-accessible stations offering fast charging – and even charging while parked – energy providers are an obvious choice for consumers. According to one survey, eight in ten consumers would prefer to buy charging services from their existing energy provider.

Second, charging stations and services would allow utilities to cross- and up-sell energy services. These might include smart home devices and new energy tariffs. It might even include car insurance and broadband. Additionally, power providers could offer reward schemes that incentivise domestic and vehicle-based energy usage which in turn would cement brand loyalty.

Thirdly, just as traditional filling stations have allowed oil and gas companies to create a retail space on the forecourt, so utilities can build a brand-new revenue stream serving customers as they wait for their vehicles to charge. Much like those filling up their cars with petrol, this is a captive audience. Unlike petrol car owners, EV owners will be waiting longer for their vehicle to charge. Today, to reach 80 per cent battery capacity can take almost hour even using a fast charger. Longer waiting times mean greater sales opportunities.

Next steps: a utilities action plan

Utilities that wish to enter this market will need to reconsider their business model from product delivery to pre- and post-sales customer experience. Why? Because the nature of the EV charging business is fundamentally different to what went before. Not only does it promise unprecedented scale, it will demand new levels of customer intimacy.

A scale EV infrastructure business will be, by definition, geographically dispersed. It will deal with millions of micropayments daily, and it will monitor, meter and bill consumption in real time.

Intimacy not only means more frequent customer contact – yearly or quarterly bills will soon feel anachronistic – it also means providing personalised tariffs and dynamic pricing. Power companies will need to be alert to peak and off-peak pricing but also offer bespoke services – a road journey or summer holiday package, for example – to deepen engagement and deliver greater customer satisfaction. 

Where once utilities were static, they will increasingly need to be dynamic. That demands a radical change in their collective DNA. More pragmatically, it will have implications for the way utilities deliver IT and how IT integrates with the operational technology such as on-vehicle sensors, Internet of Things and telematics. Customer Relationship Management (CRM) and transaction processing applications will need be reviewed, too.

And given the demand vehicle charging could make to the electricity grid – accounting for 5 per cent of global energy consumption by 2040, according to one forecast – power providers must find new ways to nudge and incentivise off-peak consumption habits. Indeed, owning EV charging infrastructure provides a level of control over usage that would be otherwise absent.

Utilities should think, too, about how EV charging could be integrated with domestic smart meter use, potentially by offering combined tariffs or at least metering and monitoring as a value-added service.

Finally, utilities will need to consider the make-up of, and relationship with, its ecosystem. An EV charging supply chain will include car manufacturers, providers of public transport, city planners, car sharing and ride hailing services, and traffic management specialists. Some of these relationships will feel familiar. Most will not. All will demand IT integration.

Future proofing

To ensure that EV market entry is worthwhile, power companies need to protect their investment. To that end they should be aware of emerging applications of technology that will continue to change the nature of charging infrastructure.

These include wireless charging and dynamic electric charging. Gartner suggests that the latter may provide a stimulus for the former, delivering a means of recharging as motorists drive along major roadways. The emergence of autonomous cars will also increase the need for more convenient wireless charging. In both examples, a charging plate would replace a power cable. So far, wireless infrastructure charges more slowly than wired but expect advances soon.

In parallel with emerging technologies there’s a determination to use open standards for vehicle-charge point communications and payment. Interoperability between charging networks should reduce costs, increase innovation and create greater competition.

How Conduent can help

At Conduent we deliver customer intimacy at scale. We process billions of dollars of payments every year. We manage transportation infrastructure on a city and regional scale. We manage vehicles and their parking needs including our demand-based pricing system that integrates with parking guidance services and multiple payment methods. And we manage large tolling operations.

To find out more about Conduent and explore how we can help your business become an EV infrastructure provider, contact Naveen.Mehta@conduent.com.