Could EVs Solve The Utility “Death Spiral”?

The Economist highlights a new report that says that electric vehicles could solve the electric utility “death spiral.” This spiral is projected to occur as more customers go solar and use less electricity overall, which means fewer customers to pay for the electricity infrastructure. Then rates go up on the remaining customers, which encourages them to go solar and buy batteries. And spiral ensues.

But is electric vehicle help on the way?

A modest 250,000 plug-in cars now glide silently along American roads, and they currently account for fewer than 1% of vehicles sold. But sales have been almost doubling each year (compared with about 5% annual growth for the entire car industry), and homes that own a plug-in car typically consume 58% more electricity, according to Opower, a seller of energy-conservation software. The Edison Electric Institute, a power-industry trade body, recently issued a report that called plug-ins a “quadruple win” for utility companies. In other words, they could help the industry increase demand, meet environmental goals, get closer to customers and cut costs by electrifying its own vast vehicle fleets.

The problem though is that many EV drivers get rooftop solar, so that negates the bounce in electricity usage. A better solution for utilities, as the article hints, is for them to fully embrace these new technologies, from EVs to rooftop solar to battery backup storage to EV charging facilities. In some case, regulations prevent them from engaging in these new lines of business. But if they were smart, they’d aggressively try to enter this market, offering customers an array of new technologies.

The reality though is that utilities are generally too risk-averse to be aggressive in this way. As incumbents, they’d rather try to strangle these new technologies in the crib. And maybe that stance is best for society anyway. After all, the utilities will likely fail in those efforts, and we may not want them (literally) monopolizing the new technologies. Perhaps it’s better to have utilities serve as a retail platform on which multiple companies can compete for customer services, with on-site renewables, energy storage, electric vehicle charging, and energy efficiency programs.

Electric vehicles are unlikely to be the savior alone, but they could help prompt utilities to re-imagine their future. Because as it stands now, the present course for utilities is not sustainable.


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