Editor’s note: This executive summary, from a report from the Editor Electric Institute, may be of interest to wind farm owners and utilities as the nations begins its transition to electric vehicles, and an uptick in the demand for more power.
Against the backdrop of slowing growth in the electric power industry, bringing electricity to the transportation sector is a huge, albeit long-term opportunity for load growth. According to the U.S. Energy Information Administration (EIA), the transportation sector is the second largest consumer of energy in the U.S. (behind electric power generation), and yet 93% of the energy consumed in transportation today comes from petroleum. Electrifying the transportation sector is a proactive, positive strategy: it enables significant economic and environmental benefits and new opportunities for consumer engagement.
Participating in our own success
Despite the significant opportunity to power the transportation sector with electricity, we are not yet leading by example. An analysis of utility fleets by Utilimarc shows only about 1.7% of the vehicles purchased by electric utilities in the last five years were equipped with plug-in technology.
Convergence of public policies
Public policies at the federal, state, and local levels are increasingly pushing in the same direction. Automakers are investing in electrification as a compliance strategy for federal fuel economy standards as well as state air quality regulations. Leading the charge on electrification will help the electric utility industry control its own destiny and meet future regulations on its terms.
Technology is available and becoming more mainstream
In the passenger car market, plug-in technology is available at scale: approximately 200,000 Plug-in Electric Vehicles (PEVs) are on the road today. They are being adopted roughly three times as fast as hybrid vehicles during their first three years on the market. The market is evolving quickly as more automakers, also known as Original Equipment Manufacturers (OEMs), embrace the technology. Zero PEV models were available three years ago, and more than 16 models are available today. A similar transformation is occurring in the truck market. Grid-connected vehicles are available today, including Plug-in Hybrid Electric Vehicle (PHEV) technology in pickups and electric Power Take-Off (ePTO) technology in service trucks. Plug-in technologies will continue to penetrate new sectors of the market as costs are driven down with improved technology and higher volume. For example, U.S. Department of Energy data show that battery costs fell by roughly 50% in the last four years alone.
Utilities collectively represent a major market driver. Together, we have the opportunity to lead the adoption curve and help shape the market for ourselves and for our customers.
Makes good business sense today
Plug-in technologies are available and cost-effective for a number of fleet applications today. Two examples of cost-effective applications are shown in the table below. An electric Power Take-Off (ePTO) system may break even in five years, depending on idle hours eliminated. The payback period for a Chevrolet Volt plug-in hybrid sedan, as compared to a Chevrolet Cruze, is only about three years depending on miles driven and charges per day. While not every application is a candidate for electrification, the cost-effective threshold will expand to include more and more applications and technologies as the market evolves.
Plug-in technologies enable significant operational savings (i.e., fuel cost and maintenance) over conventional vehicles. Plug-in vehicles typically have longer useful lives than conventional vehicles. The Return on Investment (ROI) will continue to improve as the incremental cost is reduced. Leveraging our industry’s collective buying power could lead to price reductions, a boost in production volumes, and drive down cost across the entire plug-in vehicle production landscape.
Shifting perspective: fleets no longer a cost center, but a strategic investment
The utility fleet is the point of the spear: it is a critical step toward mainstream electrification and the transformational opportunities therein, such as grid support and distributed storage. An additional benefit specific to utilities is truly a game-changer: exportable power capability could significantly reduce planned outages and provide new solutions to emergency response teams. In addition to these strategic benefits, electric technologies offer real operational advantages, including quiet operation that improves worker safety. Utility fleet vehicles are rolling billboards and engagement tools. The value created by electrification in terms of public relations and building goodwill among our communities cannot be ignored. Customers look to utilities to be experts on electric vehicles, and we should set the example.
For the full report:
Filed Under: News