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Transportation Electrification: How to Do It Right

May 2, 2019
Utilities need to provide customers with programs and services that encourage and reward the adoption of more electric vehicles.

As the march to a more sustainable energy future continues to gather momentum, a singular theme is appearing: electrify transportation. But to effectively capitalize on the transportation electrification rEVolution, utilities need to play a central role in not only supplying the electricity required (which increases revenues) but also improving their customer programs and service offerings and communication methods.

As consumer EV sales continue to climb, forward-thinking utilities are already incorporating electrification into their service offerings. Southern California Edison’s transportation electrification (TE) programs include rebate rewards that subsidize the cost of installations, while also offering customers enrollment in an EV rate, Time-of-Use (TOU) rate, or a different tiered rate plan. Tiered options serve the purpose of not only providing customer choice but has been proven to assist utilities in managing charging by pushing loads off peak and help avoid building additional power plants. Ohio’s AEP and Colorado’s Xcel Energy are offering customers discounts on EV chargers and other rewards. And European power providers are offering even more aggressive incentives, with Enel, Engie, Centrica, and EDF purchasing EV charging companies to accelerate the deployment of public charging stations as well as DC fast chargers.

While these examples showcase promising advancements, the complex thinking and planning that brought  these initiatives to fruition could remain elusive, as one pilot or program wouldn’t fit all utilities. Instead, utilities might also look to the success of non-EV programs in distributed solar, smart meter deployment or connected home devices to identify useful elements they can bring forward into their EV initiatives.

Benefit-Driven Communication Is Key

When introducing any new technology or service, it’s essential to understand that customers resist change, and utilities must excite their customers and work towards their interest, as much as their own. Smart meter deployments that met with resistance (such as those currently in the United Kingdom) failed to communicate to customers what benefits they would realize from the new devices.  

Similar resistance has been shown to happen with new or potential EV owners, as drivers who do not understand how rates for EVs work fear that their use of more electricity will cost more money. And as a result, they choose not to sign up and therefore can’t take advantage of EV rates. And for the utility, non-adopters prevent them from using this economic lever to drive customer charging behavior toward off-peak times of the day when power is cheaper and in less demand.

These experiences illustrate why it is critical that electrification programs first offer real and tangible benefits to EV drivers, and then clearly communicate those benefits. Additionally, programs are successful when they continue to adapt to market and customer preferences over time, keeping them relevant and enticing.

While the mechanics will look different for various EV programs, the challenges to adoption are similar. For instance, if utilities only offer residential EV charging installation rebates, but don’t address challenges faced by customers living in multi-unit dwellings, they risk alienating a segment of customers. Additionally, opinions are divided whether all the utility’s customers should subsidize targeted utility programs related to EVs or if EV drivers should bear the total financial burden.

Another example of the need for communication that adapts to the consumer market is the growth of utility-owned community solar projects, which grew 112% between 2016 and 2017. Community solar programs are initiatives that offer a utility customer the option to purchase a share in an existing solar array and receive a portion of that system’s power for their use, allowing customers to use solar without buying an array of their own.

Community solar programs started slowly because they lacked clear frameworks and terms, resulting in a reluctance to participate by customers. Without subscribers, financiers were reluctant to lend. The industry collaborated on solutions to these complications, which led to legal and transactional frameworks and the establishment of utility best practices. When Colorado, Minnesota and Massachusetts pioneered the implementation of these new solutions, private sector developers flocked to take advantage of the new programs.

Furthermore, utilities would be wise to ensure programs are not too rigid. While customer choice made community solar accessible, it also became a hindrance. According to Utility Dive, long-term contracts, inflexible payment options and unpredictable pricing have served as considerable obstacles to specific community solar programs. These drawbacks counteracted the freedom of choice customers felt they should receive from the programs. 

When developing a new transportation electrification program, it’s important to remember — it’s new! Customers will want to ease into adoption. So forgo any long-term commitments, and develop more risk-free, easy-entry pilot programs for customers.

Customer Service Designed to Transform the Market

While it may seem obvious, it’s important to remember that you’re offering a service, not just selling electricity. Your mission centers around making new energy programs easy to adopt for the end-user.

Xcel Energy’s (Xcel) multi-state program outlines this well. It’s an EV charging program where Xcel owns and operates the smart EV chargers. If the customer moves, the charger stays for the next occupant. Supplying equipment gives customers the feeling that this is truly a service where Xcel has everything handled. It also offers Xcel the freedom to manage the chargers as they see fit. As new technology emerges, it is free to replace old charging devices  with improved ones.

A service-centered approach applies to commercial fleets as well. These electric buses and delivery trucks can dramatically increase electricity sales to utilities. However, the new points of load can also stress the local grid if utility service infrastructure is not upgraded at the depot.

While fleet owners and depot managers are well versed in managing fossil fuel prices, they may not be experts in managing kilowatts. Utilities have an opportunity to support fleets throughout the process of preparing their facilities to handle larger electric loads for charging eTrucks and eBuses. This includes providing education on new rate tiers and demand charges they could encounter, to covering the costs of the electrical service upgrades at their depots.

Elements of the move to transportation electrification have not come swiftly for the utilities, and as a result, new startups are rising to fill the gap. AMPLY Power is offering fleets a Charging-as-a-Service business model, where they manage all aspects of a fleet’s charging infrastructure and billing through a price-per-mile compensation model.

Technology and Collaboration Are Vital

There are many parties involved in bringing new technology programs to the market and transportation electrification isn’t any different. For example, many utilities already organize and manage their energy efficiency and distributed energy programs through cloud-based web portals, and many of these systems could track incentive and rebate programs for EV initiatives as well. For those programs still managed on spreadsheets, the move to developing an EV program is a good time to consider moving all program management, tracking and reporting from spreadsheets to a robust and scalable digital solution.

Regardless of where utilities are in the process of developing transportation electrification programs, it is critical they do not design them in a vacuum. By leveraging best practices of the past, and keeping the customer’s perspective in mind throughout the development process, utilities can provide both residential and commercial customers with programs and services that encourage and reward the adoption of more electric vehicles in their service territories. Doing so will result in new revenue streams for utilities, fewer greenhouse gas and carbon emissions for the planet, and a better overall transportation electrification experience for the customer.

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