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2020 Strategic Directions: Electric Report

Electric Transportation: Getting Out of First Gear

Across the nation, the drive to electrify transportation is shifting into high gear, with further acceleration expected as market participants increasingly see electric vehicles (EVs) as a gateway to sizable business benefits.

It’s a transformation borne out in the feedback from more than 600 electric industry stakeholders surveyed for Black & Veatch’s latest Strategic Directions: Electric Report. The percentage of respondents who consider electrified transportation as a big opportunity to gain future load and revenue spiked 74 percent over 2019, to 21 percent from just 12 percent. Consistent with a year ago, an additional 38 percent said it was a good business opportunity — in many cases, a must to operate and grow business in certain states — but that they would have to invest in infrastructure to optimize the benefits.

The survey was fielded during a busy summer for electrifying transportation. In July, 15 states and the District of Columbia signed a memorandum of understanding (MOU) to spur greater adoption of electric options in medium- and heavy-duty fleets to improve air quality by curtailing carbon emissions, fighting global climate change. Later this year, the MOU signatory states will produce a multi-state action plan to identify barriers and propose solutions to support widespread electrification of medium- and heavy-duty vehicles.

We know from a century of utility regulation that utilities respond to regulatory direction, which should apply a little more octane on their journey to electrification.

2020 Strategic Directions: Electric Report

When respondents were asked where they were on the road to electrifying transportation, survey results produced a bell-shaped curve. Those on the leading edge — roughly one in 10 — said they were in the late stage of adopting, meaning charging stations were widely available in their market. More than one in five — 21 percent — said they were in the middle to late stage, where many charging stations were deployed in their service area. Some 44 percent said they were in the middle stage, where some charging stations were deployed.

Perhaps not surprisingly, utilities that identified themselves as being in the late stage of EV infrastructure deployment were concentrated in the West, where state mandates and local incentives have led to aggressive EV infrastructure plans to meet emission reduction targets. Notably, 40 percent of those who said they were in a middle to advanced stage of EV infrastructure deployment were found in the Northeast.

This reflects the somewhat more recent growth of EV adoption in the Northeast and increase in regulatory mandates to hasten charging infrastructure. Ownership of EV charging infrastructure continues to be a charged question, and utilities are finding regulatory proceedings on EV infrastructure ownership have become a bumper-to-bumper traffic jam, where filings from numerous intervenors have crowded regulatory dockets.

Regulators in some states are getting aggressive, imposing or mulling mandates that force broader adoption of zero-emission vehicles (ZEVs). California is leading the way, calling for full transformation in the next couple of decades. With California, at least nine other states — Connecticut, Maine, Maryland, Massachusetts, New Jersey, New York, Oregon, Rhode Island and Vermont — have signed a MOU committing to coordinated action to ensure the implementation of their state ZEV programs, explaining why such policy mandates are clustered in the West and Northeast. Collectively, these states are committed to having at least 3.3 million ZEVs operating on their roadways by 2025.

Perhaps not surprisingly, 14 percent of small utilities — defined as serving fewer than 500,000 customers — are on the sidelines of electrification. But half of their small-utility brethren report that they are in the middle stage, with some charging stations deployed. Among those in the late stage of EV infrastructure deployment, there were no statistically significant differences between small, medium and large utilities.

Despite the expressed enthusiasm for electrifying transportation and deploying EV infrastructure, there’s a significant disconnect: a solid, sizable proportion of respondents to this year’s survey — between 36 percent and 41 percent — said it was of slight or no importance that vehicle charging stations be tied to renewable generation. From a public policy perspective, elected officials and utility regulators are pushing electrifying transportation as a way to clear the air and help combat global climate change. Recharging EVs with electricity generated from coal isn’t likely to pass muster with lawmakers and regulators.

On a year-over-year basis, there was a marked decline in the number of utilities that said they were working closely with local transit agencies to support vehicle electrification. But encouragingly, there were statistically significant increases in respondents that said they were just starting to engage with those agencies. Such was the case also with those who said they had not yet engaged but were planning to do so.

2020 Strategic Directions: Electric Report

Once again, engagement with transit agencies appears to be partly a function of the utility’s size. Compared to mid-sized and large utilities, small utilities say they perceived less of a need to engage with local transit agencies, while more than one-quarter (27 percent) said they had not engaged with such agencies and had no plans to do so. But half of large utilities — those serving at least 2 million customers — said they were very engaged with local agencies. Half of mid-sized utilities, serving between 500,000 and 2 million customers, said they were starting to interact with those agencies.

Changing over the nation’s vehicle stock is an activity measured over the course of a decade or more, rather than a single model year. Ultimately, durability and functionality will hold sway, particularly for electric buses, trucks, cars, airport service vehicles and freight-moving vehicles. For passenger vehicles, greater battery range and increased deployment of charging stations, both in the home and in public places, would speed the attainment of the clean-air future promised by electrified transportation.

About the Authors

Maryline Daviaud Lewett leads sales and partnerships in distributed infrastructure and sustainable transportation for Black & Veatch’s transformative technologies business. The group has extensive experience in design and engineering, procurement and construction of electric vehicle charging infrastructure networks, fuel cell vehicle filling station networks, and behind-the-meter energy storage. Daviaud Lewett has more than 20 years of experience in the cleantech, life sciences and software industries.

Randal Kaufman directs sales in Black & Veatch’s transformative technologies business. He is the author of the “Fossil-Free Resilient Energy for Zero Emission Transportation and Facility Power Strategy,” devised from more than 15 years of experience in the data center and fuel cell industries, including significant responsibilities in electric vehicle charging infrastructure and complementary energy delivery systems.

Paul Stith is director of global transportation initiatives for Black & Veatch’s growth accelerator, where he focuses on building ecosystems needed to plan, finance, deploy and operate sustainable transportation and distributed clean energy infrastructure at scale. His projects support investors, utilities, fleets, energy and transportation providers in electrifying, decarbonizing and automating their ground, aviation and marine fleets. Stith has a decade of zero-emission vehicle infrastructure experience and serves on Forth and NACFE boards of directors.

Mark Von Weihe is a senior managing director with Black & Veatch Management Consulting, where he is working to expand the company’s technology offering portfolio into new industry segments. With more than 20 years of experience, Von Weihe is recognized throughout the utility industry for his strategic work in technology, commercial trading, renewable energy and electric distribution operations consulting.

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