The Five Pillars of Utility Engagement in the EV Space
by Julie Scrivner, EMI Consulting
The American Council for an Energy-Efficient Economy (ACEEE) recently held its 2018 National Convening on Utilities and Electric Vehicles. The invitation-only forum was an opportunity for a variety of stakeholders in the transportation electrification sector (including the Georgia Public Service Commission, Greenlots, ChargePoint, Kansas City Power & Light, Rocky Mountain Institute, Nissan, and Lyft) to come together and discuss the rapidly evolving electric vehicle (EV) space. During all-day discussions on the opportunities and challenges for different actors, five pressing actions emerged as opportunities for utility engagement. These actions included:
- Educating customers
- Modifying rates
- Optimizing the grid
- Building infrastructure
- Creating partnerships
Following highlights each of these in more detail.
1. Educating and Engaging Customers
Utilities can support EV adoption by focusing on educating and engaging their customers with simple and easy messaging on EVs to raise awareness across all customer groups. Utilities already have experience in customer outreach through outage updates and energy efficiency program marketing. They can leverage this experience and take advantage of the opportunity to market EVs and build a stronger customer relationship that goes beyond a customer’s electricity bill. A big element of this is detailing the range of benefits from transportation electrification for all customers — from decreased emissions, maintenance, and fueling costs, to better utility optimization of resources. Various organizations at the National Convening discussed best practices for how to market EVs to customers, including:
- Butts in seats – Offer test drives or short-term (at least one week) leases.
- Lead by example – Electrify and brand fleets.
- Give EVs a broad appeal – Cater EV messaging to customer and politicians’ interests in the area, moving beyond “green” messaging when needed.
For example, Tim Echols from the Georgia Public Service Commission shared the difference between the state’s positive response to solar, which benefited counties across Georgia, compared to the state’s extremely negative response to EVs, which are perceived to only benefit certain counties and politicians.
2. Develop usable, understandable, and predictable rates for public EV chargers
Utilities must focus on designing the best rates for customers using public charging. Currently, demand charges make up a significant portion of public charging costs for both charger owners and users. The EV market will have a hard time driving (pun intended) ‘early majority’ adoption if it is more expensive to fuel an EV outside of the home than a gas car. Modifying rates to make the cost of fueling EVs competitive with the cost of gas will enable EV adoption by customers who need to charge publicly (e.g., residents at multifamily properties without home or work charging options, customers who are driving long distances, etc.). Utilities in California, New Jersey, and Minnesota have proposed a variety of rates upon which other utilities can build. Their rate structures focus on right-sizing demand charges with charging station utilization. Rocky Mountain Institute (RMI) recommends a rate structure that starts the demand charges at zero and then increases the amount as charging station use increases.
3. EVs as a grid asset
An important element of advancing electric vehicles is the associated impact on the grid. The ACEEE forum included discussion directed at utility use of EVs as a grid asset, to balance demand and optimize grid utilization. Currently, the majority of EV drivers charge their car at home after work during ‘peak hours’ when the demand for energy from the grid is the highest. Smart EV charging management is a unique opportunity for utilities to balance demand for electricity across the day, which can lead to additional revenue, lower the cost of electricity for customers, and mitigate the impact of carbon-intensive plants that go online during peak times of demand. Utilities must manage charging behavior in a manner that makes sense for their customers, which may or may not include time-differentiated rates.
Kansas City Power and Light (KCP&L) pointed out that time-of-use rates as a way of managing customer usage and directing customer behavior was used with limited success in the cell phone industry. Whatever approach utilities choose to use should always include a focus on education and ease. For example, one stakeholder found that customers responded well to ‘happy hour pricing.’ Most importantly, utilities should implement these smart charging management strategies now, as the ‘early majority’ adopts EVs, to embed behaviors from Day One.
4. Update buildings so that they are ‘EV-ready’
The success of EVs in the future requires a charging infrastructure that ensures access and availability. Utilities must be part of the discussion to ensure buildings have charging and are EV-ready. There is no current business model for profitable private investment in charging stations. Utilities are in a unique position to broker deals and take advantage of their customer relationships by making sure the EV industry is properly structured and viable for future build-outs. The discussion included utility consideration of ‘patient capital’ while utilization rates are low, and then allowing the private market to take over once use of charging stations increases to a profitable rate. Utilities can also help serve low-income communities by building out and owning infrastructure for communities that cannot afford to purchase and install charging units.
5. Create partnerships with a variety of stakeholders
Utilities should seek to create and leverage partnerships to drive adoption efforts. There is an opportunity to take advantage of the nascent market now, by building important partnerships with a commitment to long-term engagement. For example, when KCP&L found through its research that dealers were not selling EVs because they didn’t have customer-facing materials or encouraging commission incentives, the utility created educational materials and provided incentives. Greenlots partnered with the City of Los Angeles to help the city determine infrastructure needs for city vehicles (e.g., refuse trucks and pursuit vehicles), and they have held discussions about how they might prepare for emergency evacuations with EVs during natural disasters. Lyft partnered with Georgia Power to give an incentive ‘cash boost’ to EV owners to encourage them to join the platform as a driver in an effort to electrify the rideshare network.
Stakeholders at the conference all agreed that utilities must play a role in EV adoption. Although there are any number of relevant non-utility stakeholders (EV automakers, charging companies, federal, and state entities), utilities are in a unique position to leverage their experience and actively develop ways to increase adoption. Even if a utility isn’t ready or able to take all five actions outlined above, they can make huge strides by taking two steps: (1) educating customers across their service territory about EVs, as all utility customers can benefit from EVs, and (2) modifying demand charges to reflect actual charging impact on the grid. As with any new technology, utilities should create space to support the growth of this market.
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About the author:
Julie is passionate about understanding the regulatory, social, and economic contexts of current energy issues. She has a wide range of qualitative research experiences focused on improving how communities interact with their limited resources. Before joining EMI Consulting, Julie spent two years digging into utility residential and commercial customer engagement in energy efficiency programs. The ultimate extra-curricular enthusiast, Julie is frequently found climbing mountains, dancing with her hip-hop crew, speaking Spanish at a local community center, or volunteering with a poverty alleviation group in downtown Seattle.
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