Utilities know that electric vehicles (EVs) penetrating the market is a reality they must face.
The need for more sustainable and efficient transport technology, while crucial for emission reductions, will put new levels of pressure on grid operators to provide a sturdy infrastructure.
With new EV designs being released more and more frequently, the next pain points to address are energy storage solutions and EV charging infrastructures.
Following conversations with industry experts and further research into the emerging markets, we evaluate the potential business models and technological enablers which will aid the growth of EVs on the grid.
Subscription-based EV charging
One popular emerging business model is subscription-based EV charging packages, which work almost like a phone bill - users can sign up for different allowances and services matched to their own personal EV usage.
On the utility side, this offers a variety of benefits. EV charging subscriptions can be tagged on to monthly electricity bills, or offered as an extra service. Furthermore, it allows the grid operators to maintain a high level of control and visibility on the grid.
The opportunities within this model go beyond simply implementing charging infrastructures. Utilities may also pair with the original equipment manufacturers (OEMs) of electric vehicles and chargers for innovative EV subscription services.
One of the preliminary manufacturers to offer this service was Hyundai, which in 2017 began offering all-inclusive, 36-month EV subscription services in California at $295 per month, aiming to demonstrate to consumers the value and ease of owning an EV.
For utilities, subscription-based EV charging models can offer a guaranteed stream of income, further opening the market not only to EV owners who charge at home, but also to renters and sharers.
However, challenges may be presented as EVs become more commonplace and put more pressure onto the grid, as subscription-based models can not always account for demand/response and peak charging hours.
Bi-directional EV charging
Another business model for utilities and EV charging is Vehicle-to-Grid (V2G).
V2G charging can be a huge benefit for consumers and utilities alike, offering utilities more grid flexibility at a small cost, and giving the consumer further incentive to move away from internal combustion engine vehicles.
From car manufacturers like Nissan and Audi to utilities such as Enel Energia, stakeholders along the value chain are increasingly backing V2G as a potential business model to support both the grid and the spread of EVs.
OVO Energy, for example, recently introduced its proprietary platform VCharge, which acts as a domestic vehicle-to-grid (V2G) charger, a smart EV charger and a home energy storage system.
The UK energy supplier claims that using this technology can reduce electricity bills by up to 30% and alleviate peak demand pressure on the grid. Furthermore, in February 2018, the UK government injected £30m into V2G technologies.
Despite the building interest, however, Navigant Research concluded in a recent study that regardless of the likely rapid growth, the actuality of V2G will be marginal throughout the next decade, averaging well below 1%.
Heralded by some as the ‘smart charging’ solution, time-of-use (TOU) tariffs encourage EV users to be aware of peak hours on the grid and charges them accordingly.
According to findings from Aurora Energy Research, early experience has shown that EV owners tend to charge in the evening when prices are high and capacity is scarce, despite not needing their vehicles until the following morning.
Aurora suggests that grid operators implement TOU tariffs to more intelligently control and monitor demand/response on the grid. In doing so, the research suggests, consumers could save up to £170 per year.
One example that Aurora cites as an example of TOU EV charging infrastructure is Green Energy, which created the product ‘Tide’ for EV charging. Originally designed as a general time-of-day tariff for households, Tide encourages consumers to set timers and caps on energy usage.
Furthermore, TOU EV charging will naturally boost the renewables market, finds Aurora, leading to gross margins increases of 2%.
The opportunities for utilities in TOU charging infrastructures is as of yet unparalleled by competitors. With an established base of customers, in-house grid expertise and readily available access to technologies such as smart meters, utilities are well placed to deliver smart charging.
EV market insight - webinar
With new technologies, opportunities and solutions entering the market, utilities have a variety of options when it comes to implementing EV charging into their territories.
For more insight from industry specialists on how utilities can support and capitalise upon the EV market, register now for our Engerati webinar, Balancing the grid: innovative charging and storage solutions to support widespread EV adoption.