How Electric Vehicles can Economically Benefit Electric Utilities

By Jonathan Susser | December 15, 2016

The transportation sector accounts for 28 percent of the United States’ energy consumption. To fuel the over 250 million vehicles in our country we import a large amount of foreign oil. Just last year, we spent over $179 billion on imported oil.  Imagine if we could transform the transportation sector to instead use domestically produced fuel. Electric vehicles are one of the biggest strategic opportunities that utilities currently have to help make this transformation. 

Data from EIA and the U.S. Federal Highway Administration shows that a switch from oil to electricity for the entire light duty vehicle market would raise electricity sales by about 25 percent, adding roughly $100 billion per year to electric utility revenues and saving car drivers about $300 billion a year.[1] This revenue growth and savings would occur because of drivers switching to fueling at the plug instead of the pump. According to Idaho National Laboratory estimates, the average monthly electricity consumption of an electric vehicle is 261 kWh. If a driver only charges while at home, the charging would increase their household electricity demand by 30 percent, while lowering their gasoline bills by over $500.

For electric utilities, this is an opportunity to increase load at a time when growth is slowing. Electric vehicles also enable utilities to increase load without adding new generation facilities. Due to the flexibility of charging, utilities have the option to manage charging to best fit their needs. Examples of this include offering time-of-use rates to encourage customers to charge at off-peak times, asking customers to only plug-in at night to take advantage of wind energy, or creating a vehicle-to-grid program, where vehicles can be asked to discharge onto the grid during peak times.time of day charging chart 2

Utilities across the country are currently testing and implementing these programs to make electric vehicles work with their generation patterns. In return, they will increase revenue and improve their load factor by boosting sales during low nighttime periods of demand. For member-owned cooperatives, this means that the additional kilowatt-hour sales can assist with more cost effective management of the cooperative, spreading the revenue to benefit the members.

 “Today is a perfect time for cooperatives and IOUs to begin thinking about and planning for electric vehicles,” said Kristi Brodd, communications manager at Advanced Energy. “Electric vehicles are a unique opportunity that can bring a lot of benefits to the utility, community and driver.”

At Advanced Energy, we are working to provide utilities with the resources they need to implement programs and educate their customers and members. We are helping utilities host trainings, create guidebooks and craft strategic plans that guide the utility on what steps to take to increase electric vehicle adoption in their territory. It is beneficial for utilities to raise consumer awareness and excitement about electric vehicles, and we’re glad to be a helping hand during this electrifying time.

[1] Utility Dive, The $100B prize: Why EVs are the opportunity of the century for utilities – http://www.utilitydive.com/news/the-100b-prize-why-evs-are-the-opportunity-of-the-century-for-utilities/416373/