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In favour of EVs

Electric vehicles have been with us for years in the form of hybrid cars, but the advent of the plug-in EV changes everything, helping to reduce our dependence on fossil fuels and drive demand for new electricity services.

According to a global survey by Accenture of over 7,000 people in 13 countries, 58 percent of drivers are in favour of plug-in EVs replacing conventional cars over time.  In reality, today's cars will be with us for the long haul, not least because of their improved engine efficiency and higher biofuel consumption. Plug-in EVs will also compete with natural gas vehicles and possibly even hydrogen fuel cell vehicles in the future.

Changing infrastructures

Even relatively small volumes of plug-in EVs, however, could challenge today's infrastructure, especially where there are clusters of early adopters.  Utilities will therefore need to manage charging demand proactively or face having to invest heavily to increase the capacity of the grid. 

But consumers tell us they are not willing to depart from the tank-filling freedom they currently enjoy. Over two-thirds (67 percent) would not accept charging point operators determining when they can top up their plug-in EV.  

Exactly half say the availability of fast-charging (approximately 30 minutes instead of up to 6 hours) would encourage them to consider buying a plug-in EV for their next car purchase. If they had their way, consumers' charging preferences could overload the grid and require additional power generation.

Non-traditional providers

Plug-in EVs also challenge utilities' competitive position by opening the market to non-traditional providers. Alternative electricity suppliers could capture customers as they buy their new car by raising their presence in motor car showrooms.  Other brands could offer charging services, cutting the utilities out of the consumer relationship altogether.  Our survey showed that though utilities are the preferred provider of car charging services, gasoline service stations are not far behind, posing a threat by taking electricity services away from utilities' traditional marketplace.

How should our energy suppliers respond? 

Utilities will have to develop smart charging technologies to automatically charge cars at speeds and times that are optimal to the grid and to local generating capacity.  This could allow plug-in EVs to make use of otherwise unwanted wind energy at night, for instance. This, in turn, would improve the business case for investing in renewable energy.

But such investments are possible only if energy providers can anticipate the level of demand. For instance, 71 percent of consumers would reject full EVs for plug-in hybrids that run on gasoline once the battery has run down, helping to keep a lid on electricity demand.  In fact, we expect that preference to change once drivers are more familiar with the options.  

However, the best way to mitigate uncertainty over demand is to form commercial relationships with car distributors and fleet owners. Not only could utilities then secure customers for charging services as they buy their car, but they could also track local purchases for different kinds of plug-in EVs and predict the location and nature of electricity demand.  

New knowledge, new fuels needed

Finally, energy providers will have to change the way they engage with their customers. While consumers do not expect their energy provider to be experts on refrigerators or plasma televisions, they will expect specialist advice on electric vehicles and charging. This requires new knowledge and customer service capabilities.

Consumers will be more demanding in other ways, too. For example, 45 percent of consumers say the source of fuel for plug-in EVs is important to them. Of those, 85 percent would be encouraged to buy one if the fuel source was renewable, against only a quarter if the source was nuclear. That will either require advanced communications capabilities or the ability to offer fuel-specific services to different segments of the market.

So, are EVs good news or bad?

With all these expensive steps to come, some may ask whether the advent of EVs is good news for energy providers. Will utilities generate sufficient revenues given that the cost of charging an EV is less than filling a tank? And surely, gasoline retailers will lose customers who can plug in at home?

However, utilities stand to benefit from a whole new range of premium services and gasoline retailers are ideally placed to offer fast charging and other much-needed services on their forecourts. The electrification of transport offers many opportunities. It is therefore time for energy and electricity providers to get closer to drivers and accelerate their investment decisions.

Accenture is a sponsor of the Singapore Energy Summit Networking Lunch.