Shift to electric vehicles a boon for utilities as demand mounts

10 May 2018 4 min. read
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As transportation shifts to cleaner forms of locomotion, electric cars fuelled by renewable energy are likely to pick up momentum as costs come down and consumer acceptance builds. New analysis shows that the shift in gear from electronic vehicles on the market will also have positive effects on society as a whole, including the transformation of ailing infrastructure and reducing the pressure on in demand utilities.

It would be fair to say that the forecast shift to electric vehicles received a considerable amount of hype in recent years, despite current sales figures still languishing at around 1% of global sales. While just 1 million units per year are being sold at present, electric vehicles (EVs) have been projected to hold half of the automotive market by 2030 – thanks in part to falling battery prices, automation strongly favouring electric mechanics, and a shift in attitude towards more efficient uses of energy to diversify away from fossil fuels embodied by numerous governments looking to outlaw the sale of new internal combustion engines (ICE) by 2040.

A new article from Deloitte considers some of the changing dynamics in the market which are creating incentives to ditch ICE vehicles once and for all, and quickly shifting the world to electric. The article further considers the impact such a change might have on utilities companies, whose supply forms a key part of the wider chain of development – electric vehicles leveraging loads at the right time, from renewable sources, are by far the most effective to meet global climate targets and reduce environmental impacts.

Global PEV annual sales and market share, 2010 through 2016

Despite having been discussed as the alleged future of transport for decades, the electric vehicle is relatively late to the show, with the negative impacts of the earliest models continuing to deter people from investing. These include the harmful environmental pollutants, such as lead and fine particles used in original EVs, to considerable additions to the global emission profile, and inefficient and expensive energy storage.

The technology that drives the vehicles is only now maturing to the level required for mass adoption, with battery prices falling steadily, while the range of many of the vehicles has extended significantly. The performance of the vehicles has also improved, while regenerative breaking, and a lack of needing to idle, further add considerably to their efficiency scores.

The number of sales has remained relatively low, although the drop-in price of the most expensive part – the battery – is increasingly driving interest. The number of sold vehicles has increased to 0.9% of the global fleet, while sales have increased to around 800,000 units per year.

Projected PEV share of total light-duty vehicle sales

The world is increasingly focused on leaving behind ICE based vehicles, with various local, regional and national authorities opting to ban or restrict the use of ICE vehicles in the mid to long-term. In Norway for instance, new sales of ICE vehicles will cease from 2025, with similar moves across various countries, at various dates, in Europe. Meanwhile, the improving cost profiles mean that higher ICE fuel prices will push people to make the shift in some regions, while tightening emission standards in others will increasingly make ICE propositions uneconomical.

An additional drivers are noted by the firm, including increased mobility demand, with electric vehicles more cost effective – and simpler – to share in various modes; while autonomous vehicle technology benefits considerably from the drive train format, the access to lithium battery types as well as additional space not taken up by the bells and whistles of ICE vehicles, among other benefits.

The future of mobility

For utilities the shift offers opportunities, as well as a way of meeting three challenges thrown up by a shift to renewable energy generation: "Stagnant demand, the requirement to integrate renewable and distributed energy resources seamlessly, and the need to engage customers and interest them in new services". Developed countries tend to have the capacity to operate sufficient numbers of electric vehicles, with factoring in distribution increasingly a priority.

The firm concludes, “If executives begin to act now, by educating and incentivising EV purchases, building out charging infrastructure, and preparing to manage EV load – the electric power sector can help enable this future and secure its own role powering the emerging mobility ecosystem, while increasing value for customers and shareholders.”