EVs are here to stay, are you ready?
EVs are set to change how energy is consumed and supplied.
According to a recent report from the World Economic Forum (WEF), countries across the globe are poised at the start of a mobility revolution. By 2040, more than half of new cars sold in the world will be EVs, with 70 percent of the market share in Europe, and over 50 percent in China.
Despite net growth, important decisions must be made now in order to create a reliable system capable of incorporating these EVs into power systems. The momentum of electric vehicle growth is unrelenting, and there are two clear paths that may be taken in order to achieve reliability in this necessary system. One way—with plenty of EVs and minimal coordination and planning—limits the possible benefits through the electrification of mobility and creates challenges for the grid.
The other way will require taking a more intelligent approach to EV management - could prove to incorporate population and economic growth without congesting and polluting cities. For this second path to be viable, concepts such as ride-sharing, car-sharing and self-driving cars will all need to be incorporated into the plan for modern cities. However, the grid will require more than just these additions to remain intact.
Electrification of transportation offers the largest opportunity in transforming the future.
As with any disruption, major industries will be affected, including oil and gas, but much sooner, the automotive and power sectors. While these threats may at first seem detrimental, they can, and should be looked at as new opportunities for oil majors and automotive companies to adopt more modern business models in electric transportation, electric supply and energy flexibility management services.
Widespread EV adoption will pose both challenges and opportunities for the electric business—including threats to traditional business models. However, it is important to note that the decisions made today will define companies, communities and the future of the planet.
Convergence: Where the Rubber Meets the Road
The EV revolution will lead to convergence.
Primarily, the EV revolution will culminate in the convergence of power and mobility. Electrifying the transportation system offers numerous benefits, including greater diversity in the fuel portfolio, reduced dependence on fossil-based sources, lowered total cost of ownership and increased price stability.
There are many potential benefits for the energy sector. By 2035, one in nine cars sold worldwide will be electric. China, India and European countries are all planning to phase out fossil-fueled vehicles. With new mobility models and technologies emerging, EV growth will be exponential. EVs will need electricity to recharge, and utilities will be there to supply that power.
For an industry with stagnating revenues and legitimate concerns about disruption, the added income from selling electrons to charge these vehicles’ batteries will boost profits and provide a modernization of the energy sector. Bloomberg New Energy Finance (BNEF) calculates the revenue stream from replacing all 236 million gasoline-powered cars in the United States with EVs at about $115 billion.
Electric Vehicles will be critical in bringing more renewable energy onto the grid. Integrating solar and wind is challenging. Due to inherent intermittency, these resources require fast responding backup generators, which are currently fueled by natural gas – a fossil fuel. This is not only expensive but defeats the purpose of achieving sustainability by deploying these wind and solar energy resources.
In this “distributed new energy world,” electric vehicles can be likened to grid assets, because, in effect, EVs are mobile storage units. One EV can store as many as three days’ worth of a typical home’s energy usage. These batteries can store energy when it’s available and use it when it’s needed. EVs will be able to absorb cheap energy from the grid and then discharge that energy back to the grid during periods of peak demand. They can be cycled on and off—in response to remote, automated price signals—when grid operators need to balance energy supply and demand. When aggregated and connected to the electricity grid, EVs collectively mimic a fast-responding backup generator.
Utilities already have the capacity to do much of this. A study from the Pacific Northwest National Laboratory found that 160 million EVs could be powered entirely by pre-existing off-peak generating capacity alone. Executing this transformation, however, will still prove challenging. According to the Smart Electric Power Alliance (SEPA) report, annual energy use from EVs in the United States will rise from a few terawatt-hours to perhaps as much as 733 TWh by 2030. Research from this report highlights the vulnerabilities of utilities for rapid EV adoption, indicating they are ill-prepared for these upcoming transformations.