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Insight

3 growth opportunities electric vehicles have created for traditional utilities

Most people know someone with an electric car, or at the very least have seen these cars a little more often on the road. While adoption is still in its early stages, long-term projections show a rapid increase globally. According to the International Energy Agency (IEA), the number of electric vehicles (EVs) will grow to 125 million in 2030—up from just 3.1 million in 2017.1 This growth will have a profound effect on energy consumption and open the door to new and different opportunities for traditional utilities that are seeking innovative ways to remain competitive and grow.

Authors

Chris Hawkes

Senior Director

Antonia Maedel

Manager, Program Management

Electric vehicle ownership doubles energy consumption in households

As a rule of thumb, the energy consumption of an average household will double2 with the installation of an EV charging point, assuming the car is regularly charged at home. As EV adoption increases, both the grid connection of a household and power grid as a whole will have to accommodate rising demand. Given the differing charging needs of average households compared to commercial fleets, energy suppliers can mitigate some of this effect through effective load management.

Figure 01

Passenger EV adoption by region

Electric vehicle ownership doubles energy consumption in households.

For utilities, adding more power to a load-optimized connection for EV charging points is a logical product range extension. However, due to constantly evolving consumer expectations, it is no longer sufficient to simply provide the power to charge the EV; customers increasingly expect a service that automatically adjusts to their changing needs.

Yearly electricity consumption from EVs

Figure 02

Annual electricity consumptionby vehicle type

E-mobility offers an opportunityto enhance existing customer relationships and build new ones

Thanks to brands like Amazon, Uber and others, consumers now expect customized experiences from every company they engage. What’s more, market liberalization in many countries has heightened competition from emerging, innovative companies who are hyper-aware of modern consumer demands. As a result, utilities are grappling with the challenge of creating personalized experiences for every single customer, along with the technology and cultural changes this shift demands.

To meet consumer expectations and become more service-orientated, utilities should view the e-mobility ecosystem as an opportunity to enhance existing customer relationships and build new ones.

 A utility can have three entry points into a customer relationship:

  • If they already supply the power to that household
  • If the customer chooses that supplier 
  • If they are the installer/operator/owner of the charging point3

Gaining access to e-mobility customers through one of these three entry points will allow the utility to collect data from households as well as EVs. This data set has the potential to provide a great deal of insight into consumer behavior—such as charging times, frequently visited charging points and even commuting patterns. It also means a greater level of insight into the consumption habits of that household.

To meet consumer expectations and become more service-orientated, utilities should view the e-mobility ecosystem as an opportunity to enhance existing customer relationships and build new ones.

Utilities can use this information to optimize a supply portfolio. What’s more, utilities can compare data sets from before and after the acquisition of an EV, as well as additional information from the energy management system that usually accompanies the installation of a charging point.

This data can be easily enriched with information collected via the plethora of apps used by today’s consumers, such as vehicle data, location tracking, smart devices in the home and others. The insights from this data can drive the development of new products, allowing utilities to build on trusted customer relationships and compete in new areas, such as the smart home market.

Consumption data is the key to driving growth

To be sure, e-mobility offers utilities a distinct opportunity to grow revenues through the increased sale of power. But, it is the subsequent access to detailed consumption data for each connected charging and consumption point that can offer additional paths for growth. If scaled up, this combination of increased demand and data access can have significant effects on a utility’s trading behavior as it seeks to optimize and hedge its portfolio. Such behavior modeling, through neural networks, machine learning, AI or even ordinary statistics, can be extended to optimize distributed storage and consumption points. In doing so, utilities can generate significant additional flexibility, which can be turned into innovative products for the trading floor and dispatching team, such as products for participation in the intra-day and ancillary services market.

Figure 03

Data as revenue driver

Data can also be used to develop additional services and applications, allowing the utility to provide hyper-personalized product offerings and expand into non-core markets. For instance, it could create an application that makes “convenience recommendations” based on past behavior, advising consumers of the best time to visit the store, the ideal time to leave their current location to beat traffic and where the nearest charging station4 is located, etc. This level of insight and guidance is not limited to individual households; a utility could also become a “one stop shop” for the management of an electric fleet or a network of distributed charging points.

Utilities can also leverage data to enter into new and extended partnerships. For example, they can develop joint offerings with automotive companies or after sales services in conjunction with car dealerships, as well as less obvious partnerships with home insurance companies and fitness apps, or cooperation with shopping centers, restaurants, hotels, etc. Data also opens the door for the utility to provide additional services such as managing third party payments at a given charging point.

  There are other ways utilities can benefit from data, such as by cooperating with companies to present customers with tailor-made recommendations or targeted product suggestions. The anonymized data could also be used by third-party companies to support their commercial decision-making process. For example, a restaurant chain could choose to open a restaurant and install a charging station in a particular area if they knew there were a lot of EVs and few charging stations.

Utilities can leverage datato provide hyper-personalized product offerings and expandinto other markets.

Enabling the organization to foster innovation

To thrive in this new environment, utilities will need to fundamentally alter their mindsets, capabilities and processes. Organizations that are rooted in hierarchy and bureaucracy will struggle to make the shifts necessary to foster innovation.

Only by empowering people and teams to make decisions and own their successes (and failures) can e-mobility innovation be nurtured on an enterprise-wide level. When it is, the company will benefit from the expertise of people who are specialists in their fields while creating enough freedom for the development, experimentation and implementation of new ideas.

Only by empowering people and teams to make decisions and own their successes (and failures) can e-mobility innovation be nurtured on an enterprise-wide level.

To support this shift and be able to leverage insights from data, utilities will also need to make technology infrastructure changes. Any benefit the utility may derive from the increased amount of data collected can only be realized if this data is managed in a way that is optimized for use by algorithms and other machine learning paradigms. Since energy trading is already a highly automated and data-driven environment, this upgrade process has already started for many utilities.

Modern infrastructure and process changes alone will not be enough. Becoming part of the digital world will require a highly specialized employee skill-set. To transform data into new customer solutions, utilities will need to develop expertise in analytics, machine learning and AI. This might be challenging, since they will be competing for talent in an environment where the majority of companies are also transforming their businesses.

Changing the way a company works, the tools it uses and the people doing the work is a daunting task. The best way forward is to start small; identify a specific area or project and use that as a proof of concept. Once you are able to demonstrate value, scaling these capabilities and making wholesale changes will be easier.

Seizing the window of opportunity in e-mobility

Remaining competitive in today’s changing market is a considerable challenge for many utilities. It requires a radically customer-centric approach to product and service delivery, as well as the ability to leverage market trends, such as e-mobility, to drive growth. The data utilities can generate from e-mobility customers can be augmented and used to create entirely new revenue streams, enter new markets and extend their value in countless ways. Yet, the window of opportunity to be a true innovator in this space is small. Utilities that don’t act fast might struggle to catch up, particularly since once consumers have made their choice of e-mobility energy provider, they will be unlikely to change in the short to mid-term. 

sources:

  1. CNBC. Electric vehicles will grow from 3 million to 125 million by 2030, International Agency forecasts.
  2. Based on an average vehicle traveling 13’257km/yr (Statistisches Bundesamt DE) at an average consumption of 25.9 kWh/100 km (ADAC) à 3’336 kWh/yr; average household consumption: 3’207 kWh (musterhaushalt.de)
  3. The ownership model of charging stations allows for a number of separate opportunities – in short: utilities can act as independent suppliers (B2C) or they can enter into a cooperation with car manufacturers or car show rooms (B2B).
  4. Can also be coupled to personal health goals (e.g., 10’000 steps a day) and generate recommendations which allow the user to meet set goals.
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Chris Hawkes
EMEA
Chris Hawkes
Chris Hawkes Senior Director
Antonia Maedel
EMEA
Antonia Maedel
Manager, Program Management