Contributors: Lasse Kari and Jeroen Gernay

As battery costs drop and consumers hit the “gas” on electric vehicles (EVs), a massive eMobility value pool is emerging. In Europe and North America alone, the market is expected to top US$2 trillion by 2040. Companies that help make EV ownership as easy as owning any other type of vehicle will bend the adoption curve upward – further accelerating the transition to eMobility. We see opportunity for utilities in four main areas:

  • Selling kWh in the EV market as a natural extension of utilities’ current business (US$1.7 trillion)
  • eMobility services for EV drivers across the customer journey – from awareness and discovery to conversion and use of EVs and charging stations (US$250 billion)
  • Selling, deploying and maintaining home, work and public charging stations (US$400 billion)
  • Grid flexibility – that is, actively using EV charging to balance supply and demand, optimize grid and portfolio performance, and better manage network congestion (US$100 billion)

Leveraging strengths

To capture this value at stake, we believe utilities should focus on two unique strengths. The first is asset and network management capabilities. Utilities, in particular distribution system operators, have operational experience and workforces knowledgeable in running large numbers of distributed, small-scale electrical assets – the same type of infrastructure required to operate EV charging stations, including maximizing charger uptime and utilization. If they can innovate and grow this experience, they may use the same workforce to manage the charging stations as well. As one example, Alpiq is providing EV infrastructure management services, including building load monitoring and charge optimization.

The second legacy strength is utilities’ expertise in customer engagement and management. This is the bread and butter of electricity retailers and for those who are ready to take this to the next level, we see an opportunity for one company to own the end-to-end EV customer experience, and utilities have marketing departments, customer contact centers and other service channels that can be readily adapted to serve as that one-stop provider. Even more important, utilities have the customer relationships through commodity sales, uniquely positioning them for bundled eMobility offerings. Utilities could, for example, provide apps that enable remote charging and offer other services designed to create a seamless, more satisfying customer experience. Those may include integrated home-EV energy management, charge-point navigation, charging reservations, battery management or payment processing. A good example: Innogy’s decision to create a dedicated unit for integrated customer technology solutions for eMobility.

Similarly, utilities could offer financing services to help overcome consumers’ biggest barrier to buying an EV: high initial purchase costs. Consumers have an appetite for such services, with 53 percent of current EV owners having financed or leased their batteries, and half of future buyers expecting to purchase their home charging station as part of a package. Success in this space will require hyper-customized segment targeting and a much more sophisticated consumer engagement approach than what utilities currently use. It could be worth the trouble, as bundled offerings also give utilities access to wider Connected Energy value pools for distributed energy resource (DER) generation services and energy management.

Filling gaps with partners

In addition to leveraging their strengths, utilities need to identify the right partners to extend their capabilities. This imperative is especially critical for utilities that move to become charge-point owners/operators (CPOs). When managing public charging infrastructure, these operators must excel in determining and, even more importantly, securing the highest-value charging-point locations. They will need help optimizing the locations of the semi-public chargepoints, crafting the right value propositions for the selected premise owners, and designing joint business models to monetize the charging infrastructure. Such models must focus not only on selling commodity energy but also on enabling co-located services. Partner strategy and partner value proposition is therefore key and may represent a new capability for utilities to build. Already EDF is partnering with Nissan for location-based smart charging, while Engie is acquiring ChargePoint Services Ltd for an extended charging infrastructure offering.

Similarly, utilities aiming to be eMobility service providers (eMSPs) will need help segmenting EV customers, including fleet owners, and differentiating the approach to very individual customer needs. In addition to the diverse preferences and circumstances of individual drivers, utilities must understand the nuances of supporting electrified fleets of buses, municipal waste trucks and other commercial vehicles. Indeed, fleets and buses are poised to become early adopters of EVs. Utilities have an opportunity to help fleet managers determine the business case to electrify their fleets – and then to enable a seamless experience following adoption.

Notably, utilities can’t assume that eMobility consumers in Europe and the U.S. will be loyal to them. As the chart below shows, they will continue to love their automakers and gas station operators, among others. Thus, utilities will need to build smart ecosystem approaches with carmakers (consider the Volts by Volvo partnership between Volvo and Eneco) and the wider Connected Energy space spanning combined offerings for DER and flexibility.
 Chart showing survey of Utilities service providers. CLICK TO ENLARGE FIGURE 1

To accelerate success, we recommend that utilities start by building on existing strengths. Engage partners to help unravel complexity and build ecosystems. Above all, act today to start bending the EV adoption curve upward. As it goes up, so will utilities’ success.

Sanda Tuzlic

Managing Director – Strategy & Consulting, Utilities, Energy Transition

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