Advocates of e-mobility are working hard to understand the role that utility companies now play, and what role they will play in the future. Beyond supplying power, utilities are actively planning and developing charging infrastructure. They’re shaping customer charging behaviors. And they’re collaborating on programs aimed at achieving both economic and social objectives that e-mobility can support.
Depending on the particularities of any given country’s market structure for charging, utilities may also play a supporting role for other enterprises that compete as independent charge point operators. At the same time, utilities may also compete directly with those same independent operators.
Identifying where and when to invest is a critical challenge facing utilities. At the heart of this is over-laying knowledge of electricity supply infrastructure with the combination of other factors: transport demand, e-mobility uptake projections, and land availability for new charging infrastructure.
One problem which utilities are currently addressing: the development of e-mobility, and especially of recharging infrastructure, is slowed by the multitude of local jurisdictions. Some executives in the utility industry think that this is a significant issues, but a manageable issue. The hope is that government bodies with cross-jurisdictional mandates can and will provide support.
The generating capacity needed to support e-mobility is perceived differently by utilities in higher income countries over the near-term future – and their concerns are not existential. In the case of developing countries, with rapidly growing electricity demand, the problems are of a different type.
Utility executives see that e-mobility solutions must cut cross income divides. At the same time, they think that e-mobility must progress as a broader solution. This means that they prefer initiatives which combine infrastructure development with schemes that provide access to vehicles (e.g. both ride-sharing and car-sharing). These are viewed as socially important, and potentially valuable as an economic development stimuli for population centers which are under-served.
Utility companies are becoming an essential partner for the implementation of electric-powered buses run by and for government-owned transport systems. In some places, synergies are being be created between energy providers and public transport operators for an efficient use of the grid.
Planning and delivering on the deployment and reinforcement of charging infrastructure is a key focus of many electricity utilities given associated capital expenditure and lead times. The question of “where” is particularly sensitive when utilities need to respond to market demands or government initiatives around charging infrastructure. Deciding where to put infrastructure (both the customer-facing and back-end varieties) to serve e-mobility is more complex than serving other electricity customers. This is because the “right” locations are at the intersection of travel demand, grid capacity, demand for e-mobility, and availability of land for the infrastructure itself which is particularly difficult in dense urban areas. On top of that, e-mobility has the added challenge of a load group that moves geographically, often together, around the peak hours of daily electricity demand.
The energy sector in many countries is transitioning along with the transport sector by introducing smart-grid technologies to optimize the system, including smart charging which can vary the electricity delivered to a load group of EVs - both in time and in space - such that overall system constraints are not exceeded. Several European utilities reported that if they can deploy smart charging effectively, the need to upgrade back-end infrastructure will, with the exception of some public transport applications, be significantly lower than the current public debate suggests with local, low-voltage grids being the first of the back-end infrastructure that will need reinforcement. By minimizing the need to upgrade when demand projections remain uncertain, flexible use of the grid can also help to avoid stranded assets. This money saved can be used for example to further incentivize flexible charging. As discussed previously, a different situation may be faced by utilities in low- and middle-income countries, where electricity demand is growing rapidly and where smart-charging solutions may take longer to implement due to competing needs. Additional loads from large numbers of EVs may further strain existing networks both locally, and more broadly by creating a need for more generation capacity.
Stakeholder utilities recognized the need for broadening the geographical coverage of charge points in general despite currently low utilization rates in many locations. This is not only necessary for the practicalities of e-mobility in general, but also for shaping “who” e-mobility is actually meant to serve. Extending charging infrastructure into poorer communities is increasingly seen as a way to enhance the inclusive characteristics of e-mobility, especially when combined with programs such as vehicle leasing or sharing that can potentially allow lower-in- come regions to benefit from benefits of e-mobility including lower fueling costs and / or localized environmental benefits. The broader social aim would be to intervene and prevent a “green” divide from existing between more and less affluent segments of society. For example, PG&E will be installing up to 35% of the chargers it has planned under its EV Charge Network Program (2,625 out of 7,500) at work- places and apartment buildings in disadvantaged communities.
At a time when the supply of and demand for charging infrastructure are still crystalizing, a key constraint is funding initial rollout that cannot be supported entirely by rates the e-mobility users pay at charging points. This is linked to low rates of utilization at present due to relatively small e-mobility fleets. The unprofitably low utilization rates facing ConEdison in New York and UKPN in London echo the challenges faced in China. Funding remains a key issue. In each context, government subsidies are seen as necessary for underpinning credible business cases. Similar to other stakeholder groups, utilities also reported the need for stable or at least predictable government policies around financial support to e-mobility. This is because forecasting tools used to target infrastructure investments rely on assumptions about the uptake of vehicles and the rollout of charge points that are subject to government policies.
Local government policy and regulations also has important impacts on utility companies and their ability to support e-mobility infrastructure. Specifically, local jurisdictions play a role in setting the relevant codes that influence the design of infrastructure, the availability of land for charging operations, and the regulation of land use around charge points which affects the attractiveness of given locations for customers. The nature of current charging technologies means that the place value of adjoining land use is an even greater Transit Oriented Development concern relative to conventional fueling stations.
Regarding urban public transport, the energy sector must be brought on-board in the early stages of electromobility strategy and planning. The objective is to come to a system where the supply of energy itself is low/zero carbon. Therefore, sustainable zero-emission mobility planning and CO2 emission targets should go beyond low-emission vehicles and zero-emission vehicles and align. They should be aligned with the various efforts focused on greening the grid via an uptake of renewable electricity production and distribution. One of the best examples of such a synergy are electric buses running in the Dutch province of Utrecht, all of which are powered by wind energy. In Amsterdam, all electrified public transport modes, including metro, trams and electric buses are being supplied by local renewable energy sources, starting on Jan. 1, 2019.
In countries with unbundled market structures for charging, firms that operate (and in some cases own) charging infrastructure play a key role in interfacing directly with end customers, and with the utilities which supply the electricity.
Here are a few items of consideration for EU-based utility executives and their suppliers and partners:
- The importance of location and adjoining place value was a key concern for operators. The time currently required to charge EVs makes the place value of charging points particularly important to attracting customers;
- Freedom to operate 24/7 is considered critical for full use of fixed assets.
- Operators cited the importance of legal provisions, permitting, and physical space that will allow for round the clock operations to make full use of infrastructure;
- Operators are conscious of the need for future-proofing grid connections to accommodate technological evolution. The level of power supplied through fast chargers currently ranges from 40-60 kilowatts up to 120 kilowatts in the case of Direct Current fast charging offered by Tesla Superchargers. There are additional plans for 350 kW charging that may appear in the future to provide for the potential to charge within 10 minutes or less but these will require corresponding grid connections to support high rates of power transfer
- Length of concessions or contract periods that can underpin upfront investment was a key determinant of business case for operator investment. The present business case for many charging operators demands on future EV uptake and future returns from envisaged charging. The length of time provided to pay back investment costs and deliver returns therefore influences the level of investment they can make
- Market structures that follow from government regulations and procurement decisions significantly affect the ability of charging operators to compete. Charging operators report- ed this as a key challenge even in highly developed countries.
The current nature of EV charging as an activity is significantly different than fueling a conventional vehicle. In the instance of fast charging, customers spend 20-30 minutes at a charging point. In contrast, regular charging requires times amenable with overnight durations, workdays, or extended periods of complementary activity (e.g. shopping, fitness, school attendance, etc.). In both instances, the value of land use around a charging point becomes important, especially as charging operators look to attract end customers. This also means that placing chargers where people want to visit for other purposes or in route to such locations is essential. Securing the right locations is a key constraint faced by charging operators. The interpretation of local regulations, and/or a contractual framework, can sometimes explicitly prohibit the development of a complementary business to enhance value at fast-charge points which are developed under a concession structure.
As relatively new market entrants, non-utility owners and operators of charging infrastructure have reported experiencing competition-related barriers to operation and expansion. In one European example, an operator is resorting to legal action to challenge a case in which fast charging concessions were handed to an incumbent who operates existing refueling infrastructure, which forced new entrants to opt for less attractive locations. Weaknesses in the competitive process for tenders (even in very advanced economies) and other contracts is something that a number of private operators reported as an issue. Some utility executives have proposed one possible solution: establishing an independent body with responsibility for managing tender processes. In some instances there’s a deliberate pursuit of state-backed venture capital and partnering with public entities to improve their influence on government policy.
The 1990s saw a wave of privatization and an unbundling of electricity supply/generation operations in Europe. While charging infrastructure operators did not perceive this to have made a meaningful difference to market access in all cases, the unbundling of Sweden’s state-owned utility ‘Vattenfall’ was cited as an example that successfully exposed an incumbent operator to com- petition. Companies engaged in the generation and distribution of electricity in Sweden must be legally and financially distinct from one another, and those responsible for distributing electricity across the grid are mandated by the Swedish Electricity Act to publish an annual report detailing the measures they have taken to avoid discriminatory behavior against other actors in the market.
Legal and regulatory regimes that govern the sale of electricity were also a concern for charging operators particularly as they look to the future of interaction between vehicles and the electricity grid. Specifically, this concern applied to “behind-the-meter” operations where the trade of kilowatt-hours be- tween vehicles and / or other users of electricity could become mainstream. In many jurisdictions such a trade in kilowatt hours could present an issue of double taxation or fall within the scope of activity that legally would be regulated as an energy utility.
Stakeholders also expressed pragmatic views on how to manage the market structure for charging based on a view for what different par- ties are best suited to handle. For example, established utility companies with large balance sheets, lower cost of capital, and expertise in delivering capital projects may have an advantage in infrastructure development whereas smaller firms may be better placed to manage charge points themselves. While both actors will undoubtedly have roles to play, non-utility operators did not feel that this is likely to be an adequate solution, as experience suggests that grid operators sometimes struggle with capacity issues given the other pressures on their operations and, depending upon the context, are not always incentivized to invest in infrastructure for which there is, currently, as much of a psychological as a technical need.
