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Most utility companies see electric vehicles as a threat to their business model, but a few see the potential for enormous profits and are positioning themselves to leverage the EV revolution.


How Utility Companies Can Lead The Electric Car Revolution & Still Make Money

Most utility companies see electric vehicles as a threat to their business model, but a few see the potential for enormous profits and are positioning themselves to leverage the EV revolution.

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utility companies and electric cars

In 1914, Thomas Edison said, “The electric motor will be universally used for trucking in all large cities and … the electric automobile will be the family carriage of the future.” It has taken more than 100 years for his prophesy to become a reality, though. Gasoline and the internal combustion engine came along and pushed Edison’s dream onto the back burner.

Over the last century, utility companies have forgotten about powering electric cars, concentrating instead on delivering electrical energy to homes, businesses, and industry. But as more electric cars take to the streets, utility companies are having to rethink their business model. Many in the industry see electric cars as a threat because they don’t fit nicely into the existing electrical grid structure they have so carefully crafted over the decades.

What If Everyone Charges At Once?

What if all the families who live on a sleepy little street in the suburbs suddenly decide to get an electric car? What if all the owners of those cars decide to recharge them at the same time? What if the local gas station decides to replace all its pumps with high power DC chargers? Utilities make money selling electricity so they should welcome the arrival of more electric cars, shouldn’t they? After all, if Amazon sells sneakers and suddenly the demand for sneakers soars, Jeff Bezos would be a happy man, wouldn’t he?

Actually, the utility industry is known for being the most risk adverse of all. Its leaders think in terms of 30 to 50-year timelines. Anything that interrupts those carefully laid plans is not necessarily welcome. The first thought is that utilities will have to rush out to build expensive new generating stations to meet the demand.

Then they will have to upgrade all their substations and distribution infrastructure to handle the extra burden electric cars will place on the grid. Pretty soon, industry executives are seeing the need to spend billions of dollars to meet the challenge posed by electric vehicles.

Efficiency Is The Key

But it doesn’t have to be that way. The key is to use the electricity we already have more efficiently. “The broad answer is actually yes, the grid can handle the introduction of large amounts of EVs,” Matt Stanberry, vice president of Advanced Energy Economy, tells Yale Climate Connection. AEE is a business association dedicated to development of clean and affordable global energy systems. “The capability is there. The question is how do you get there.”

The key, according to the Edison Electric Institute, is designing strategies that encourage electric car drivers to recharge when the supply of electricity is high, not during periods of peak demand. What’s best in one part of the country may not be best in another region.

For instance, California has a surplus of electricity from solar farms during the day while Maine has the lowest demand for electricity overnight between midnight and 4 am. New York’s Consolidated Edison is in phase 2 of a program that rewards drivers for plugging in at the best time for the utility company. Participants get Amazon gift cards worth up to $200 just for signing up. ConEd supplies them with an internet connected charger that tracks when they recharge.

For every month they keep the device installed and charge at least once in Con Ed territory, they earn $5. They also save 10 cents on every kilowatt-hour they use between midnight and 8 a.m. In  the summer when air conditioners lead to peak demand between 2 and 6 p.m., customers can earn another $20 if they don’t charge during those hours.

Sherry Login, EVs programs manager at Con Ed, tells Yale Climate Connection that someone who drives about 10,000 miles a year and only charges between midnight and 8 a.m. could earn $500 a year in rewards and bonuses over and above the sign-on bonus. The intent is allow Con Ed to manage its electric load so it doesn’t need to add additional power stations. “This is why we’re getting ahead of this,” she says. “We don’t want to be caught off guard in a few years when all the manufacturers are coming in with plug-in electric versions of all their vehicles.”

Bi-directional Capability

Vehicle to grid technology is another key area that allows utility companies to save money by using their grids more efficiently. Dan Bowermaster, program manager for electric transportation at the Electric Power Research Institute, agrees. “Cars sit around 20, 21 hours a day. There’s plenty of time to charge — so quite a bit of flexibility,” he says.

Once again, Con Ed is at the leading edge of this technology. The city of White Plains now has 5 electric school buses, each with a 75 kWh battery. They sit idle much of the day, but the utility company can tap the energy stored in their batteries when needed to meet temporary increases in the demand for electricity. Vehicle batteries may not ever replace the need for grid scale storage but they can play an important role in stabilizing the grid and reducing the amount of money utilities have to spend on battery storage installations.

Smart Charging

Southern California Edison now has 150,000 EVs in its service area and is providing many customers with smart chargers that allow the company to control when they charge and at what rate. When demand peaks, SCE can turn off the chargers or set them to charge at reduced power. The experience should be seamless for the customers, who will have at least an 80% SOC when they are ready to drive again. No one really cares how quickly their car is charging in the garage or out in a parking lot as long as it is able to be used as intended when it is needed.

That’s what Eversource, a utility with customers in 3 New England states, found when it gave 100 smart chargers to customers with EVs. The company was able to control the charging time and charging rate but customers had the ability to override the signals from the company. The vast majority never did, however, according to Charlotte Ancel, its director of energy strategy and policy. “The pilot has the promise that people will just plug it in and forget about it,” she says.

Judith Judson, head of the Massachusetts Department of Energy Resources, says the goal is is to increase EV usage without increasing peak demand. While doing that, the state is also planning to increase energy storage and renewable energy resources. “It really requires a combination of policies,” she says. “We have a lot of capability to utilize our existing networks and then combine them with innovative new technologies as well as a real focus on efficiency. It really does enable us to integrate many, many more electric vehicles into our system.”

Lowering The Cost Of Electricity

A study published last month by Synapse claims more EVs and using the grid more efficiently can actually lower the cost of electricity for customers. It found more EVs means more electricity sold, which means more revenue for utility companies, which puts downward pressure on utility rates.

According to Forbes, 18 US utilities are now in the process of adapting to the changes electric vehicles will create in the industry, but that leaves more than 350 others which are standing on the sideline waiting to see which way the wind is blowing. The potential market for electricity to power EVs is more than $2 trillion annually, so those who jump in early have a chance to get a bigger piece of the pie for themselves.

Forbes says some utilities are even challenging the Trump administration’s plan to roll back vehicle emission standards because lower standards favor fossil fuel companies at the expense of proactive utilities who see electric vehicles as a potential profit center. That could become more important as more people and businesses elect to generate their own electricity with rooftop solar systems.

Opportunity is knocking for utility companies who see the future and are willing to act decisively now. Utilities have nothing to lose from electric vehicles and everything to gain. Unfortunately, not everyone is prepared to embrace the future. Just ask the Conestoga wagon manufacturers of yesteryear.

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Steve writes about the interface between technology and sustainability from his home in Florida or anywhere else The Force may lead him. He is proud to be "woke" and doesn't really give a damn why the glass broke. He believes passionately in what Socrates said 3000 years ago: "The secret to change is to focus all of your energy not on fighting the old but on building the new."


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