How much of a $100 billion market in electric vehicles can utilities capture – or afford not to?
Michael Shepard is chairman of E Source, where he served as CEO from 2006 until May 2014. E Source provides market research for nearly all facets of the utility business, gathering information from two audiences: the utility and the customer. E Source also operates a consulting arm – E Source Consulting Solutions.
Electric transportation marks one of the biggest strategic opportunities utilities have had in nearly a century. How big? If electricity completely displaced the gasoline that fuels America's cars and light trucks, power sales would rise by about 25 percent, or 1 billion MWh a year.1 That translates to roughly $100 billion per year in additional electric utility revenues. And that doesn't count displacement of diesel fuel used in vehicles or the electrification of other transport-related loads like ports and truck stops, fork lifts, and rail, which in some areas could boost electricity sales as much as electric cars and pickups would.2
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In an era of stagnant load growth, with energy efficiency constantly improving, and revenues eroding in the face of distributed generation, utilities should be hungry for new sources of sales and earnings. And there aren't many attractive options that play to utilities' strengths. Electric transportation can be that growth engine if the industry embraces the opportunity and runs with it. We're talking about what business guru Jim Collins would call a big, hairy, audacious goal - one that should capture the attention of any utility executive.