Electrification of transportation — a silver bullet for electric utilities?

The great Lawrence Peter “Yogi” Berra of American baseball fame, in one of his many famous quotes, said: “The future ain’t what it used to be!” This is true for many of us as we consider the many disruptions around us, changing and improving our lives in ways we could have never imagined. This appears to be the new norm for humanity.

Globally, motorcar manufacturers have seen the convergence of electricity and transportation and, coupled with the pressure to create a more sustainable planet, have signalled their intent to switch to producing electric vehicles.

According to Bloomberg New Energy Finance, by 2040, 55 per cent of all new car sales and 33 per cent of the global fleet will be electric. They also suggested that the upfront costs of electric vehicles would become competitive on an unsubsidised basis starting in 2024. BMW plans to mass produce EVs by 2020. Renault plans to produce 20 electrified models by 2022 and Volkswagen will invest up to US$84 billion in battery and EV technology to electrify all 300 of its models by 2030. Volvo has committed to fit every car it produces by 2019 with electric or hybrid engines.

The electrification of transportation is the use of plug-in hybrid electric and battery electric vehicles (BEVs) instead of all-petroleum vehicles where the drive system contains one or more electric motors powering the wheels. The BEV is charged from an external source of electricity by plugging into an electrical outlet or charging station such as wall sockets. The electricity is stored in rechargeable batteries that deliver full power to the electric motor driving the wheels and once depleted, must be recharged to continue operating the vehicle.

BEVs have lower operating and maintenance costs than both hybrids and full internal combustion engine vehicles. In addition, they emit no air pollutants while running in all-electric modes.

Multiple opportunities

Electric vehicles can curtail Jamaica’s dependence on imported oil, cut carbon emissions and reduce energy costs. The electrification of transportation in Jamaica ties in with Jamaica’s Energy Policy 2030 vision — National Development Plan objectives and the achievement of two other national strategies articulated in the plan, namely “adaptation to climate change” and “to contribute to the effort to reduce the global rate of climate change”.

As battery prices continue to fall, EVs will soon provide cheaper mobility for fleets and individuals. Factoring the lower maintenance and operating costs, the total cost of ownership for EVs will reach parity in the next five years. EVs will also make better use of the electricity systems assets through “smart loading” which is charging when the demand is low and discharging during peak demand. This ancillary service is particularly attractive for large fleets that can supply their facilities with the electricity stored in their batteries.

Electric vehicles have disrupted the transportation sector, driven primarily by the need to improve air quality, protect the environment and the sharp fall of battery prices. Increasingly, global cities see the electrification of the transportation sector as a huge opportunity and are already deploying various strategies to seize the wave. To capture these opportunities, electric utilities will have to build out charging infrastructure, while policy makers, citizens and all stakeholders determine the pace and scope of the change for the benefit of the broader objectives.

Forward-thinking electric utility executives get excited for opportunities that result in expanded customer relationships, load growth and capital investments that increase returns to shareholders. EVs offer all these dimensions and here are some ways to capture that value:

New Services

With the deployment of charging infrastructure, new business models will naturally emerge, providing EV owners with new market opportunities.

New Capital Investments

Utilities that make a return on rate-based assets will be happy to introduce new charging infrastructure to contribute to their growth KPIs.

Ancillary Services

EV Fleet operators with predictable operations and capacity can supply the excess electricity stored in the vehicles’ battery to buildings or the electricity grid reducing their operating cost and earning revenue.

As the utility transforms its business model to fit the future, one key element that becomes critical is the development of the people to support it so that all the benefits can be realised. Universities would be best advised to prepare for this change as well.

Many surveys conducted with the charging habits of EV owners show that the majority charge at home through the night or at work where it is no cost to them, and that cars are parked more than 90 per cent of the day. This behaviour will be the key factor for utilities in the decision to build out charging infrastructure. This EV wave will require the Ministry of Science, Energy and Technology, Office of Utilities Regulation, Jamaica Public Service and other key stakeholders to simulate the disruption and the effect it will have on the society while we work to clean our air, improve our health and achieve our climate change goals.

— Ricardo Case is director, engineering services at JPS

Source: http://www.jamaicaobserver.com

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