Numerous analysts have written about how utilities in the United States were in danger due to low sales volumes because of varying factors such as on-site solar. Sales volumes decline whenever a solar panel is attached to a roof and in May 2014, Barclays downgraded the whole United States utility sector to ‘underweight’ as the threat of on-site solar was deemed to be very real.
According to Barclays, solar and storage could change the organisation and regulation of the electric power trade over the next 10 years. It also said that there had never been a cost-competitive substitute for electricity in the 100+ years it has been used. Utility companies also need to worry about LED bulbs as sales volumes for incandescent bulbs falls by 70-80% whenever an LED bulb is chosen. This is also the case when it comes to efficient appliances and other measures.
Innovation As Standard
Commodities seem to be getting replaced by improved technologies and intelligence and this is what society needs to happen. It is essential for this to be the case if we want to escape the climate change box we have developed and ensure the planet has space for the ever-increasing population.
However, we also don’t want utility sales to fall so dramatically because it will cause companies to collapse and disrupt the economy. Innovation or not, seeing utilities in Germany lose the best part of £400+ million in market capitalization is not the ideal scenario.
While we can benefit from disruption and innovation, it has to happen at a steady pace. Clearly, one industry will suffer as another benefits; if the electric industry can steal from the petroleum industry by increasing the number of electric cars, we all win barring the oil exporters and no one cares about them!
Electric Car Charging. Image: Google UK
Will Electric Cars Save The Day?
According to the Edison Electric Institute (EEI), we need more electric cars to be made to maintain sales volumes and help the utilities industry which is in grave danger. According to the EEI, all but 7% of energy in the transport industry comes from petroleum and that adding more electric vehicles to the mix will help both the environment and the economy. It would also allow utilities to engage their customers.
Yet utilities are not helping themselves; less than 2% of vehicles purchased for utility fleets in the last five years have been electric. Luckily, this can change quickly. There are an estimated 200,000 plug-in electric cars on US roads right now and in 2013, almost 100,000 units were sold in America alone. Even more promising is the fact this figure will increase by 30-35% in 2014.
Electric vehicles of all kinds should be considered as service trucks and pick-ups also offer better performance and a University of Delaware study suggests electric school buses would be far better than their diesel counterpart. According to EEI, electric vehicles offer reduced lifetime operating costs, noise reduction, extended work hours in areas where noise restriction would otherwise be a problem and improved brand image.
Having the ability to use electric batteries on the power grid could also be valuable. For example, demand could be shifted to off-peak hours when it would be most suitable and it could also give enhanced reliability to other services. According to the EEI, plug-in hybrids with a battery and liquid fuel combination could provide exportable power.
This means they could act as mobile generators on wheels and directly provide the distribution grid with up to 125 kilowatts of power. Such a vehicle will be known as a ‘Class 5’ and this type of vehicle is due to be in testing by the end of the year.
Time For A Change
Electric utilities in the United States need new sources to satisfy their current electricity demand. Electric batteries can suck up a large amount of juice; the biggest Telsa battery is 85 kWh and can store enough energy to power the average household for four days. Therefore, electric cars can definitely offset the existing decline in demand for power.
Utilities also have to find new ways to increase the adoption of renewable energy sources such as solar power. As long as it is well marketed, electric cars can add a major storage component to the grid as well as having lots of advantages for the utility industry. U.S utilities must take the opportunity electric cars presents and welcome positive change.
According to the EEI, the electric utility industry needs electric cars to take over the transportation industry. It has challenged utility companies to spend 5% of its annual purchases on fleets on plug-in vehicles. While oil producers are still on top, their day of reckoning may be coming sooner rather than later.