Energy Demand From EVs Will Save Suffering Utilities
U.S. GDP growth has never been better.
And yet… Wall Street analysts are worried.
Because even though the economy is booming, electric utilities are struggling.
During the 1980s and 1990s, the growth in the demand for electricity averaged 2% per year. However, since 2002, demand for electricity has grown just 1% annually.
Utilities desperately need a new source of revenue. They funnel $100 billion each year into America’s energy infrastructure.
And with 2.7 million employees, utilities are directly responsible for 5% of total U.S. GDP.
So why is electricity growth stagnant?
Since the turn of the century, manufacturers of everything from refrigerators to motors have focused on one thing: improving energy efficiency.
And it’s paying big dividends for customers because they’re getting lower electric bills.
So it’s easy to see why demand continues to drop.
But now there’s a knight in shining armor coming to save the day for utilities.
I’m talking about electric vehicles (EVs).
EVs have a lower energy cost per mile when compared with internal combustion engine vehicles of similar size.
That’s one of the big factors attracting car buyers to EVs.
And utilities are smacking their lips in anticipation of the additional revenue EVs will bring in.
That market could exceed $2 trillion annually. That’s great news for the stagnant electricity market.
There are concerns, however. The biggest is the potential strain on our already aging grid.
In the worst-case scenario, an influx of EVs in a large neighborhood could overload the electric supply.
Some utilities are already rising to the task by upgrading the grid where needed and adding Internet of Things (IoT) sensors to monitor the grid.
They’re learning to make the nation’s power grids as smart as the EVs that will be relying on them.
And they’re investing heavily in the smart software that controls and manages the decisions that must be made in microseconds regarding the grid.
Additionally, utilities must be able to communicate with EVs and charging stations. As EVs become more prevalent, utilities must leverage the IoT and smart grid control technology.
It’s all about timing. Imagine all the EV drivers coming home after their evening commutes and plugging in to charge.
Today, utilities can predict this and fire up peaker plants to meet the demand. But with incentives to charge during off-peak times, utilities won’t have to rely on these natural gas-fired generators.
Ultimately, utilities need the coming wave of EVs as much as EV owners need the electricity utilities provide.
So bring on the EVs. Utilities are laying the groundwork and will ultimately benefit from this rapidly growing revenue source.
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