As this year's Super Bowl viewers learned, parts of Europe are well-ahead of the U.S. in electric vehicle adoption.
Energy providers there have developed an array of services to help business customers make the switch to electric, with large utility companies such as E.ON not just installing and maintaining charging stations at businesses and employees' homes but also advising customers on where to locate chargers and use them to manage an EV fleet.
The U.S. EV services market is not as developed by utilities, but as the federal government and major U.S. automakers step up their investment into EVs U.S. power companies like Duke and Pacific Gas & Electric (PG&E) are finding opportunities more enticing and harder to ignore, according to several experts on utilities and mobility strategy.
These opportunities, focused on services like vehicle procurement and helping customers use EVs as a distributed energy resource in concert with solar and battery storage, go outside the typical utility skill set. But given their close relationships with corporate customers who may be now considering taking their fleets electric, utilities are in a unique position to offer these services, according to Jim Mazurek, a managing director at Accenture who works on strategy for utilities.
So far, "utilities have been taking different pathways to growing EV demand,” he said, such as exploring private ownership of charging stations and conducting EV rate pilots. Several of the largest utility companies recently announced they are working together on a network of charging stations across the South, Midwest and Plains regions.
"Currently there’s a gap in understanding — what is really happening in the EV market itself?” according to Mazurek. "Who can really give me advice on the vehicle itself? Will there be a better version next year? What is the financing model?
In early February, as the news of GM and the Biden administration's individual plans for vehicle electrification was still fresh, Duke Energy announced that it was forming a new subsidiary, eTransEnergy, that will provide fleet services to customers in unregulated markets who want to switch their commercial fleets to electric.
For U.S. utilities, offering EV services like this is "all new," Chris Nelder, a manager with Rocky Mountain Institute's mobility practice, said. But it may not be new for long. "There is going to be a significant amount of this effort going on as we proceed to widescale electrification," he said.
Incentives and disincentives
Both carrots and sticks are leading utilities to consider expanding into these markets where they have not ventured before. On the carrot side, the utility has access to information about when and how much a company uses electricity — information that is key to devising a strategy for EVs. "Nobody has more perspective on a customer's energy use than the utility does," Mazurek said.
On the stick side, with the use of EVs predicted to grow quickly over the next decade and beyond, if utilities do not take advantage of services unlocked by EVs, then others will, according to Greg Bolino, founder of DG Reimagined, a Michigan-based consulting company helping utilities and other companies make the clean energy transition. An EV fleet management program, for example, can incorporate related services as add-ons, like helping customers use battery storage to work in concert with EV charging to save on energy costs. "But if I'm a C&I customer and a major battery company offers me a solution instead… that [scenario] eats at the utility's revenue," Bolino said. "The disincentives are now overt."
Utility customers also have a strong financial incentive to seek help with EV fleet transitions, according to a recent report from RMI. Without expertise guiding a customer through the process, a fleet going electric can become a "series of very costly errors," the report said, such as buying under-sized chargers that then need to be replaced as the fleet moves to larger EVs.
"Major fleet managers in particular do not have all the knowledge and expertise and experience that they really need to electrify their fleets successfully. There is a lot to know. This is not trivial stuff," Nelder said.
Often the first entity the company making the fleet transition has to turn to is the utility. Connecting enough chargers to power a fleet involves a long approval process with the local utility, which may need to build a new substation in order to accommodate the charging capacity, Nelder said.
Because the utility will be working with the company on EV infrastructure anyway, it can make sense to add on more services related to EV fleets so the utility can essentially become a "one-stop shop," according to Mazurek.
But some utilities may find that offering all of these services in-house is impractical. Smaller utilities may find it more cost-effective to contract those services out to specialized companies with which they would otherwise be competing, he said.
Duke's new subsidiary eTransEnergy seeks to provide commercial and fleets as well as fleets of municipalities and school districts with "one comprehensive source for transitioning their fleets to EVs, from start to finish," according to a statement from Duke. Those efforts include finding specific types of vehicles that fit customer needs, and managing the performance of the fleet to reduce costs. The subsidiary's services will also involve maintaining the "supporting infrastructure" for EVs, including battery back-ups and solar generation sited at commercial customers' facilities.
A goal for the subsidiary is to make fleet electrification less intimidating for customers, according to Greg Fields, managing director for eTransEnergy at Duke. He takes a "depot-centric view," under which a top priority is to make sure the customer has a home base charging depot that is outfitted with the right kind of EV infrastructure for the fleet's needs. Determining exactly when to charge fleet vehicles from the standpoint of keeping electric bills low can be difficult, given the complex web of demand charges and time-of-use rates, so eTransEnergy aims to guide customers on the most cost-effective charging patterns. "Customers don’t want to be utility rate experts," Fields said.
Unlike Duke's investor-owned utility subsidiaries, eTransEnergy is a competitive business, not subject to regulation by state public service commissions. While it will operate in markets that coincide with the service territories of Duke utilities, due to the ties to Duke, eTransEnergy must abide by a code of conduct that differs legally from state to state regarding how it markets to and recruits customers of Duke's utilities, according to Fields.
Services related to C&I fleet electrification are still part of a relatively "untapped" market, according to Mazurek. Several other utilities have recently expanded the breadth of solutions they sell to C&I and other customers.
PG&E has an "EV Fleet Savings Calculator" that gives customers "a personalized recommendation that includes estimated costs, savings, and rebates or incentives of up to approximately $10,000" to acquire EVs, according to spokeswoman Ari Vanrenen. The utility also has an EV Fleet program for customers with medium-duty, heavy-duty and off-road fleets that assists with identifying the type of charger the customer needs, developing the configuration of the charging stations based on the customer's space and helping with design, installation and financing.
The Northern California utility has several ongoing pilot projects that are exploring how to better utilize EVs as a distributed energy resource, according to the PG&E spokeswoman. A customer pilot with the San Joaquin Regional Transit District is testing how smart charging and battery storage can lower operating costs and maximize efficiencies for the agency, she said.
In another example, Southern Co. utility Georgia Power has a program called "Will It Work," which collects customer data about its fleet operations and uses it to quantify the potential fuel cost savings of switching to EVs. The customer is then referred to EV procurement services offered by the utility.
In the background of all of these efforts is the prospect of the federal government further nudging fleets toward electrification through incentives supported by the Biden administration. Duke's eTransEnergy is trying to get ahead of that possibility. "We see a lot of folks moving toward 100% electrification," Fields said. "We want to be ready and positioned to go after it when it happens."