Category Archives: Electric Vehicles

EV Charging Puts Downward Pressure on Electricity Rates

Real-world experience from utilities with a relatively high penetration of light-duty EVs shows that EV charging brings additional utility revenues that vastly exceed the costs to generate and deliver the additional energy. This may be surprising given the concerns expressed in some industry opinion pieces on the ability of the grid to support EVs. However, in California, with high EV penetration and otherwise relatively low average residential load, only 0.15% of EVs required a service line or distribution system upgrade.[1] At a system level, a Hydro-Quebec study shows that average home charging of an EV draws only 600 watts on peak – a small amount.[2] It is worth noting that these two examples do not even rely on EV load management, which would further lower contribution to peak load. 

In practice, many factors contribute to mitigating the impact of unmanaged EV charging on the grid. For instance, many owners of long-range EVs only charge at home once or twice a week, and not necessarily at peak system time. Also, many EV drivers are simply charging off a standard 120 V wall plug – slow but enough in most circumstances. More and more drivers charge at their workplace or at public stations, with diversified load curves. At the local level, distribution transformers used for residential customers are typically loaded at 25% to 30% of their rating; a few hours a year may be above the kVA rating of the transformer, but with little consequence.[3]

If anything, the advent of EVs may get electric utilities growing again: current year-over-year electricity consumption growth (kWh) averages below 1% in North America but was about 2.5% as recently in the 1990s.[4] Perhaps incredibly, yearly growth was about 8% to 10% in the 1950s and 1960s, as a wave of electrification propelled the economy. The ADN of electric utilities includes building the electricity grid and adding capacity.

Looking forward, various forecasts of the electricity use from EV adoption range from a fraction of a percent to perhaps 2% per year[5] – not negligible, but clearly manageable in view of past growth rates. 

Overall, grid impacts of light-duty EV load profile over at least the next decade should be relatively modest and net economic benefits from additional utility revenue vastly exceed costs. Those benefits will exert a downward pressure on rates for all utility customers – not just to those driving EVs. For example, Avista estimates that the net present value to ratepayers of a single EV on its system is $1,206 without managed charging.[6] Furthermore, shifting charging to off-peak or high renewable generation periods further improves benefits – up to $1,603 per EV for Avista. Furthermore, EV drivers also gain from lower maintenance and operating costs. And besides, the switch to EVs significantly reduce greenhouse gas and other harmful air pollutant emissions.
This post was initially published at https://chargehub.com/en/blog/index.php/2020/03/25/ev-charging-puts-downward-pressure-on-rates/.


[1] Joint IOU Electric Vehicle Load Research – 7th Report, June 19, 2019.

[2] Public Fast Charging Service for Electric Vehicles, Hydro-Québec, R-4060-2018, HQD-1, document 1.

[3] Electric Power Distribution Handbook, T.A. Short, chapter 5. Some winter-peaking utilities are even planning the overloading of distribution transformer, counting on the low ambient temperature to cool it down.

[4] https://data.nrel.gov/files/90/EFS_71500_figure_data%20(1).xlsx, figure 2.1, for US data. 

[5] For examples of forecast electricity use from EV adoption, see: 
– Mai et al., Electrification Futures Study, page 82. https://www.nrel.gov/docs/fy18osti/71500.pdf.
– Canadian electric vehicle transition – the difference between evolution and revolution, EY Strategy, October 2019, page 9. https://assets.ey.com/content/dam/ey-sites/ey-com/en_ca/topics/oil-and-gas/canadian-electric-vehicle-transition-the-difference-between-revolution-or-evolution.pdf.

[6] Electric Vehicle Supply Equipment Pilot Final Report, Avista Corp., October 18, 2019.

The Electric Cars in the Future of Utilities

Yogi Berra famously said that “it’s tough to make predictions, especially about the future.” Electric vehicles do not escape this wisdom. Still, recent trends and forecasts suggest a sustained growth in adoption of light-duty electric vehicles in North America. 

There are many reasons to believe that there will be many electric cars in our future. 

First, most electric vehicle drivers think that their cars are the best cars they ever had – according to a AAA survey[1], 96% of electric vehicle owners say they would buy or lease one again the next time they are in the market for a new car. Anecdotally, we can confirm this: through the ChargeHub platforms, electric vehicle drivers express their enthusiasm daily toward their cars (but also, unfortunately, their frustrations toward public charging).

Second, more and more car manufacturers are committing to an electric future: global automakers are expected to invest $225 billion on the development of battery-electric vehicles from 2019 to 2023, according to an AlixPartners study[2] — roughly equal to the massive amount that all automakers globally combined spend on capital expenditures and research and development in a year. New electric car plants are being built and internal combustion ones are being converted. There’s no turning back.

Thirdly, many states, provincial and federal governments have policies to reduce greenhouse gas emissions in order to stave off climate change. The transportation sector is the largest contributors to U.S. greenhouse gas emissions, and light-duty vehicles contribute to 59% of transportation emissions[3]. Necessarily, reducing greenhouse gas emission will require us to drive electric light-duty vehicles. 

Yet, only about 2% of 2019 new passenger car sales in North America are plug-in electric vehicles.[4]

There are a number of factors to explain the dichotomy between actual and forecast sales of electric vehicles. The first is simply availability: buying a new electric vehicle usually implies waiting months and there are few model options. If you do not happen to live in the few states or provinces that have a zero-emission mandate[5] requiring a minimum percentage of electric light-duty vehicles, you may actually be out of luck: car manufacturers may simply not offer them to you. For example, Subaru stocks the Crosstrek plug-in hybrids in California, nine other states[6] and the Canadian province of Québec[7] that have adopted zero-emission vehicle regulations. 

Even in jurisdictions with zero-emission mandates, availability is often limited to regulatory obligations: internal combustion vehicles are currently far more profitable than electric ones, and automakers don’t have enough incentive to move away from internal combustion engine vehicles, especially at current low-volume. However, analysts, like the McKinsey strategic consultancy, expect that EVs have the potential to reach initial cost parity with and become equally—or even more—profitable as internal combustion vehicles around 2025[8]. Combined with already lower operating costs for drivers, this will make building electric vehicles a compelling proposition for automakers and drivers alike. 

If investments being made in manufacturing will cure current availability and cost issues, there are still a few more obstacles that need to be removed to hasten the advent of electrical cars. A survey by KSV lists top worries about batteries running out, convenient home charging and how to charge, operate, and maintain electric vehicles. These other concerns primarily point to insufficient consumer knowledge and incomplete public charging infrastructure. While home charging remains the principal means to recharge electric vehicles, charging at workplaces and public stations plays an important role for drivers who cannot charge at home or when traveling away from home. Utilities have a central role in enabling public and workplace charging, through policy-induced subsidies and tariffs. Utilities are also the second-most trusted source of information on EVs, after Consumer Reports – car dealers are last[9]. To succeed, electric utilities need to work with site owners (for public charging) and automakers (for education) – two types of stakeholders with which utilities do not have relevant business relationships. 

This was initially published at https://chargehub.com/en/blog/index.php/2020/03/05/the-electric-cars-in-the-future-of-utilities/.


[1]       https://www.oregon.aaa.com/content/uploads/2020/01/True-Cost-of-EV-Ownership-Fact-Sheet-FINAL-1-9-20.pdf, accessed 2020-03-05.

[2]       https://www.alixpartners.com/media-center/press-releases/alixpartners-global-automotive-industry-outlook-2019/, accessed 2020-03-05.

[3]       https://www.epa.gov/greenvehicles/fast-facts-transportation-greenhouse-gas-emissions, accessed 2020-03-05.

[4]       https://en.wikipedia.org/wiki/Electric_car_use_by_country, accessed 2020-03-05.

[5]       https://electricautonomy.ca/2020/02/04/industry-divided-on-the-merits-of-a-national-zev-mandate-as-federal-budget-nears/, accessed 2020-03-05.

[6]       https://www.autonews.com/article/20181124/RETAIL01/181129954/subaru-goes-greener-plugs-in-the-crosstrek, accessed 2020-03-05. 

[7]       https://plus.lapresse.ca/screens/1ee08d4e-e711-4ece-ba8d-8599239ff27a__7C___0.html.

[8]       https://www.mckinsey.com/industries/automotive-and-assembly/our-insights/making-electric-vehicles-profitable, accessed 2020-03-05. 

[9]       https://www.eei.org/issuesandpolicy/electrictransportation/FleetVehicles/Documents/EEI_UtilityFleetsLeadingTheCharge.pdf, accessed 2020-03-05. 

How Not-to-Succeed in the Next Decade of Energy Transition

The 2020s promise to be a momentous time for the electricity industry, and I wanted to take some time to reflect on what businesses might need to succeed through the energy industry transition. I might have a privileged perspective on this, having worked with utilities, vendors and investors, first in the IT and telecom industries as they went through their transitions, and then mostly in the electricity industry for the last 20 years. This does not mean that I can’t be wrong (I know – I’ve been wrong many times), but perhaps my views will help others be right. 

I’ve structured this post as a series of “don’ts”, based in part on actual IT and telecom examples that I’ve lived through – I’ve put these examples in italic, but I left the names out to protect the innocents. I found that many businesses have short-term views that lead them down dead-end paths, and I might be more useful in showing known pitfalls than trying to predict the future. 

Don’t Fight a Declining Cost Curve

The IT, telecom and, now, electricity industries are all seeing declining cost curves. The best known one is Moore’s Law, the observation that the density of integrated circuits (and hence the cost of computing) halves every 2 years. Moore’s Law is nearly 60 years old and still strong. It gave us iPhones more powerful now than supercomputers of a generation ago, even though my iPhone ends up in my pocket most of the time, doing nothing. These days, the electricity industry sees the cost of wind and solar energy as well as that of electricity storage dropping at a rate of 10% to 20% per year, with no end in sight.[i]

In IT, telecom and, now, electricity, this also leads toward zero marginal cost, the situation where producing an additional unit (a Google search, a FaceTime call or a kWh) costs nothing (or almost nothing). 

During the IT and telecom transitions, many startups proposed solutions to optimize the use of (still) expensive information processing assets. Some sought to extend the life of previous generations of equipment (like a PBX) by adding some intelligence to it (a virtual attendant), while others were dependent on a price point (like dollars per minutes for overseas calls) that simply collapsed (calls are essentially free now). 

If your business case depends on the cost of energy or the cost of storage remaining where they are, ask yourself, what if the cost goes down 50%? That’s only 3 years of decline at 20%/year. After 10 years, costs will be only 10% of what they are now. Can you survive with near-zero marginal costs? If your solution aims to optimize capital costs, will it matter in a few years? Or, will people just do as they do now, with a do-nothing iPhone supercomputer in their pocket?

Don’t Think That Transition Will Go 2% a Year Over 50 Years

Phone companies were depreciating their copper wires and switches over decades. Phone utilities were highly regarded companies, imbued with a duty for public service and providing lifelong employment to their loyal employees. Service was considered inflexible, but everyone could afford a local line, which was cross subsidized by expensive long-distance calls and business lines. Things were simple and predictable.

In 1980, McKinsey & Company was commissioned by AT&T (whose Bell Labs had invented cellular telephony) to forecast cell phone penetration in the U.S. by 2000. The consultant predicted 900,000 cell phone subscribers in 2000 – the actual figure is 109,000,000. Based on this legendary mistake, AT&T decided there was not much future to these toys. A decade later, AT&T had to acquire McCaw Cellular for $12.6 Billion.[ii]

In 1998, I was operating the largest international IP telephony network in the world, although it was bleeding edge and tiny in comparison to AT&T and other large traditional carriers. Traditional carriers were waiting for IP telephony to fail, as the sound quality was poor, it was not efficiently using the available bandwidth, it was illegal in many countries, etc. The history did not play out as expected. In 2003, Skype was launched, the iPhone, in 2006. Today, you can’t make a phone call anymore that is not IP somewhere along its path. 

I’m seeing the same lack of vision in energy industry. For example, the International Energy Agency (IEA) is famous for being wrong, year after year, in lowballing the rise of solar and wind energy in its scenarios.[iii]

Another example is the rise of electric vehicles. There are about 77 million light-duty vehicles sold in the world, and this number is flat or slightly declining.[iv] Of these, about 2 million electric vehicles were sold in 2019, but the number of EVs sold in increasing 50% every year.[v] In other words, the number of internal combustion vehicles is clearly decreasing and the growth is only coming from EVs. Looking at their dashboards, car manufacturers are quickly reducing their investment in developing internal combustion vehicles, especially engines.[vi] Disinvestment in upstream activity means that internal combustion vehicles will fall behind newer EVs and become less and less appealing. It won’t take 50 years for most light-duty vehicles to be electric – a decade, perhaps.

Don’t Count on Regulatory Barriers for Protection

Telecom carriers fought deregulation and competition, teeth and nails. Back in the 1950s, AT&T went to the US supreme court to prevent customer from using a plastic attachment on the mouthpiece of telephones to increase call privacy – it was called Hush-A-Phone. AT&T owned the telephones and forbid customers from using Hush-A-Phone. However, AT&T lost the court battle, and Hush-A-Phone was sold legally from then on. This landmark decision is seen as the start of telecom deregulation in North America.

The IP telephony network that I mentioned earlier was indeed illegal in some of the countries we operated in. It didn’t matter. We had plenty of partners willing to bypass local monopolies, even if illegal in their countries, and customers willing to make cheaper international calls, even if the quality was not always so great. 

Regulatory barriers are only as strong as policy-makers make them. When constituents see an opportunity to save money or simply have choice, they pressure the policy-makers to change the rules – or elect new ones more attuned to moods of consumers. It’s just a matter of time. 

Don’t Take Customers Nor Suppliers for Granted

In 1997, at a time when cellular phones were still a luxury and the Internet was still a novelty, an Angus-Reid survey of the Canadian public put Bell Canada #2 among most admired corporations in Canada[vii], and it had been among the most trusted companies in Canada for decades. Yet, in 2017, Bell Canada ranked #291 in a University of Victoria brand trust survey[viii]. People love their Apple or Samsung phones, are addicted to Facebook to stay in touch with friends, naturally turn to Google for any question, and use Microsoft Skype to see remote family members, but they now mostly hate their phone company. 

Obviously, Bell is still around and making money, but one can only wonder how things could have been if Bell had played its hand differently. (In 1997, none of iPhones, Facebook, Google and Skype existed).

Suppliers to electric utilities should also listen to this lesson. Northern Telecom (Nortel), AT&T Bell Labs and Alcatel were among the large traditional equipment vendors to telephone utilities. However, a startup was founded in 1984, designing routing equipment for IT networks used in university networks. Over the years, it expanded into all sorts of datacom and telecom equipment – all telecom companies eventually standardized on this new vendor. Northern Telecom and the others went bankrupt or were merged and acquired to the point they could not be recognized. In the process, some telephone companies were left with unserviceable hardware. 

This startup company is called Cisco Systems and is now the largest telecom vendor in the world. 

The same pattern is playing out in electricity. On one hand, you have many utilities that do not understand that many customers want choice. On the other hand, you have vendors, like GE and ABB, that are in turmoil. 

Will you be the future Google or Cisco of electricity? Or the next Nortel?

Don’t Follow the Herd

Full disclosure: I’m a career business consultant. Caveat Emptor. 

The reason for this disclosure is that consultants are great at announcing bold trends that often do not pan out. There is a great herd mentality among consultants, and it carries over to their customers. 

Twenty years ago, one of my clients was one of the early Application Service Providers, a business concept where small businesses could access shared personal computer applications over the Internet. The idea was to reduce the cost of maintaining software installed in PCs and to reduce the hardware requirements of PCs. This client was unknowingly fighting the declining cost curve of computers. It went bankrupt (and my last invoices were not paid). 

The concept of application service providers was heavily promoted by consultancies like Gartner, who presented it as the future of business computing. I guess that Microsoft disagreed. 

I see similar fast-fashion concepts going through the electricity industry. Walking the floor at the Distributech Conference in 2018, it was all about microgrids. In 2019, it was distributed energy resources. We will see what will be fashionable in January 2020. 

My recommendation when you hear the same concept over and over again is asking yourself: is this a real trend or am I in an echo chamber? With many new consultants flocking to the electric utility industry – I call them tourists – , you can hear many concepts that are taken for truth but really too complex to be implemented or unlikely in the fragmented regulatory environment that we have. 

Closing Thoughts

In the end, keep cool: sound engineering, good economics and great customer service will always win.

Which leads me to offer you this quote:

If I’ve heard correctly, all of you can see ahead to what the future holds but your knowledge of the present is not clear.
—DANTE, Inferno, Canto X

All this being said, have a great Holiday season and see you soon in 2020!


[i]                 See this previous blog posts, http://benoit.marcoux.ca/blog/lower-and-lower-energy-prices-from-wind-and-solar-pv/, for an in-depth discussion of cost decline in wind and solar energy, accessed 20191220. 

[ii]                See https://skeptics.stackexchange.com/questions/38716/did-mckinsey-co-tell-att-there-was-no-market-for-mobile-phones, accessed 20191220. 

[iii]               See this previous blog post, http://benoit.marcoux.ca/blog/wind-and-solar-pv-defied-expectations/, for a chart of how wrong the IEA has been, accessed 20191220. 

[iv]                See https://www.statista.com/statistics/200002/international-car-sales-since-1990/, accessed 20191220. 

[v]                 See https://www.iea.org/reports/global-ev-outlook-2019 and http://www.ev-volumes.com/country/total-world-plug-in-vehicle-volumes/, accessed 20191220. 

[vi]                See https://www.linkedin.com/posts/bmarcoux_daimler-stops-developing-internal-combustion-activity-6580481304071065600-vRK8, accessed 20191220. 

[vii]               The Fourth Annual “Canada’s Most Respected Corporations” Survey, Angus Reid Group, Inc., 1998, page 5.

[viii]              The Gustavson Brand Trust Index, Peter B. Gustavson School of Business, University of Victoria, 2017. 

EV Charging: an Enabler for Utility Customer Engagement

EV charging is a new type of load for electric utilities – probably the first new type of large electrical load since air conditioning over 50 years ago. A lot is being written about the perils that charging a large number of EV batteries could bring to the grid, but also how shifting EV charging off peak could offset decline in utility revenues. 

However, filling up a car with energy is not new for utility customers. In fact, they are already quite passionate about it. They’ll drive out of their ways to pay less, fueling up on days when price is lower, or driving some distance to get to a cheaper gas station. Multiple apps allow motorists to share tips. Gas station chains offer loyalty program and grocery coupons. Gas stations have become minimarts. Clearly, motorists are deeply engaged with those providers. 

Electric utilities are trying really hard to get their customers to be more engaged. They rightfully see customer engagement as the key to entice customers to participate in energy efficiency and demand management (or response) programs. The problem is that customers generally have no idea how much electricity they use for lighting, entertaining, cooling, heating, cooking, showering, cleaning dishes… This makes customers little responsive and unengaged, especially since these activities have very low emotional appeal for electricity (unless there is an outage during a hockey game). To tell you how bad the situation is, utilities regularly go to conferences presenting EE or DM/DR programs considered to be highly successful with only single-digit percentage of the customer base participating… 

With EV charging, utilities have the opportunity to reset customer engagement – especially as owning and driving a car has much more emotional appeal than, say, cleaning dishes. This is especially true since drivers are used to see how much fuel they use at the pump – there is a direct feedback every few days. We also know that drivers are responding strongly to fuel price signals. 

While much of the discussion on EV charging has revolved around grid-centric issues like peak management and electricity sales, EV charging is also a time-limited opportunity to get their customer more engaged. If electricity distributors are not seizing the opportunity, other players will, and they will fall back to being what they have traditionally been – utility service providers serving passive subscribers. 

I think that electricity distributors can be much, much more, especially in the context of the energy industry transition that we are going through.

The Sun for a Penny

I recently presented at the Canadian Electricity Association (CEA) on the future of the industry. What would happen to the power industry if the cost to generate solar electricity reached 1¢/kWh? What could be the impact of a carbon tax? What are the business opportunities arising from the need for reliable power? While electric utilities have seen tremendous transitions during the 125-year history of the CEA, the current rate of development is unprecedented. To paraphrase a famous quote by Wayne Gretzky, utilities need to “skate to where the puck is going to be, not where it has been.” This presentation tried to provide power utilities with some insights into the future direction of the puck! See the presentation here: The Sun for a Penny 20170225a