What role will utilities play in the EV charging infrastructure build-out?

May 05, 2021

Hugh Le
Director at Strategy&, PwC US

There's a big speed bump for mass electric vehicle (EV) adoption in the US: access to charging infrastructure. Meanwhile, utilities grapple with their evolving role in future planning and integrating the electric grid's coming EV charger ecosystem. With an electrified future down the road, utility players are in a unique position to fill the gap between the deployment of EV charging stations and mass EV adoption.

Sharing the costs

EV adoption is set to grow from about 2% of the fleet today to up to 15% by 2030, according to a recent PwC analysis.  To support this rate of adoption, stakeholders should work together to build a national EV-charging infrastructure and utilities will be one of the central players. While the uncertainty of EV growth in service territories leads to EV load-planning challenges, we see clear opportunities for utilities in distribution network upgrades that enable EV interconnection in cities where the overall power demand could force substation and wire improvements. The capital investment of faster charging stations can reach as high as $100,000, and that excludes the associated grid construction and upgrades to transformers, substations, wires and other equipment. To recoup those costs, we expect utilities to implement capacity charges for stations connected to local electricity grids. These fixed and recurring charges typically link to the highest expected load at a charging station.

For site host customers (automakers, fleet managers, real estate developers and commercial charging providers), early collaboration with utilities could reduce costs and shorten deployment times. Numerous utilities and state and local governments offer incentives in the form of rebates and grants. A federal tax credit, reinstated in 2020, gives businesses 30% of the total cost of purchasing and installing an EV charging station by the end of 2021.

Better grid management 

While today's grid impact from EV charging infrastructure is modest, demands could change rapidly. Utilities can reduce grid impact by counting on integrated software embedded in the EVs and charging locations. Integrated software allows utilities to have remote monitoring and control of the EV chargers. Operators can then aggregate and shift EV loads to balance the grid. In addition to home charging, utilities can manage the power needs of the increasing number of public, corridor and fleet charging sites on the multi-megawatt scale.

Consumer issues

Consumer acceptance remains key for mass EV adoption. Utilities could help by offering flexible price options for EV drivers, perhaps providing time-of-use (TOU) rates to incentivize drivers to utilize off-peak or even super off-peak charging periods. TOU offers residential and commercial customers (fleet managers and transit agencies) cost savings on electric bills while reducing stress on the power grid during peak electricity demand periods. Like setting a thermostat, drivers can program EVs to charge only during specific hours to take advantage of those savings. Utilities could also offer EV-specific rates. A west coast utility company offers various electric rates with an online tool that identifies the lowest-cost EV rate plan along with incentives and rebates to purchase an EV.

We expect to see a "quality" consumer segment emerge in which individuals would pay a premium for green power from renewable sources such as solar, wind, or geothermal for home chargers. With much of the charging happening at home, it is uncertain how utilities will offer a diverse set of energy sources for night-time charging to compensate for dips in solar-generated power. 

Universal EV infrastructure access 

Utilities are also well situated to provide higher-density or low-income communities access to EVs. For example, utilities could work with ride-sharing companies and public transit agencies to confirm that they have the charging infrastructure and rate design to move to EVs. For multifamily properties, governments and utilities already offer an array of tax credits, rebates, and grants. A southwest utility, for instance, provides a rebate of up to $4,000, or 50% of the cost, to install Level 2 charging stations for businesses and multifamily properties.

We expect utilities to play a significant part in building a national network of chargers that satisfies customer demand and supports the greater adoption of EVs. Exactly what their impact will be on the electrification of transportation remains uncertain, but utilities can influence the EV infrastructure in many ways (planning, network upgrades, grid management, customer education and greater consumer choice) to support one of the biggest energy transitions ever seen.