Utilities must adapt before electric cars drive off with their business

Recent advancements in energy technology should come as a wake-up call to Canadian utility companies.

The rise of electric vehicles (EVs) in particular is already an indicator of change as batteries become more affordable, ubiquitous and desirable. According to the World Energy Markets Observatory report, new registration of battery and plug-in hybrid electric vehicles recently reached a record high with more than 750,000 sales worldwide. The prevailing rise of gas prices, the cost of EVs dropping and the convenience of battery and charging technology are all important factors.

This disruption within the energy industry will affect Canadian business leaders and consumers alike. If Canadian utilities are not studying what is happening around the world regarding new energy business models resulting from major advancements from batteries and electric vehicles, they risk getting left behind.

For example, in countries with a higher adoption of EVs, we are now seeing the evolution of new business models around residential communities and vehicle fleets. The Nordics are leading the way with a fleet of plug-in cars that is the largest per capita in the world. Car owners are beginning to have easy access to charging stations through housing co-ops. Using an app, co-ops can bill drivers for individual usage of charging stations and consumers to keep track of their electricity usage while providing visibility into the distribution of energy across the grid.

But what about the rest of the world? The Cars Online report that studies behaviours in the automotive sector asked 8,000 consumers from eight countries what would drive them to buy an electric car – 43 per cent of respondents said that charging or exchanging the battery would have to be as quick and easy as filling up their tank with gasoline. Assuming the average Canadian automobile commuter travels about 50 kilometres a day, companies such as Tesla are already capable of supercharging an EV battery quickly enough to meet the average commuter’s needs.

And while battery technology is already disrupting transportation, it will have its biggest impact on the energy and utilities industry. Those who own the batteries and the charging infrastructure will play a significant role in the future of energy management.

Consider this energy management scenario in the not-so-distant future. Imagine an EV with an 85 kilowatt hour (kWh) battery. The average home in Canada consumes between 25 kWh and 30 kWh a day, depending on where they live. As a result, a fully charged 85 kWh EV battery represents almost three times more power than one needs to run a home daily. The typical commuter’s electric vehicle only uses a small amount of its battery every day – to go to work, run a few errands and go home. Most people with electric vehicles would have energy capacity to spare at the end of an average day’s commute.

Consumers would be able to drive EVs to work the next day, plug in and have the building or parking lot buy the excess energy at lower time-of-use rates from their battery, to a limit they approve. The building could then use that energy to feed their facility’s own energy needs. Better still, consumers could use excess battery capacity to power their homes.

As EVs grow in numbers and magnitude, they will have greater impact on how we view sources of energy and transform the model for how energy is supplied and who supplies it.

Here in Canada, utilities should look forward to this change and view it not only as a threat but also an opportunity to provide new business models in more innovative and environmentally sustainable ways.

Canadian utility executives must decide if they are going to be at the heart of this change and proactively be part of developing the infrastructure needed in the future or if they will stay on the sidelines and simply react to the disruptions. Government and regulators need to play the part of making energy transition easier for utilities as well.

Utility companies are already well positioned to be part of creative and positive solutions. For example, further developing the approach to solar renewable energy could include a business model that gives consumers fractional ownership. Alternatively, the growing number of EVs on the road could mean that vehicle fleet operators partner with utilities to repurpose second-run batteries to offer consumers backup energy during storms and emergencies (at a fraction of what it would cost the homeowners to put in batteries themselves).

Staying ahead of the game, looking at renewables and distributed energy storage assets are all ways of remaining relevant in the new energy economy. As consumer and corporate sentiment drives Canada toward new energy mixes, executives must put more emphasis on emerging technologies or risk getting left behind. Once a consumer is on board for an alternative to the traditional model, they are likely gone forever. Once they disconnect from the grid completely, utilities, and even regulators, won’t be able to stop them.