Utility Week

28 | 30TH NOVEMBER - 6TH DECEMBER 2018 | UTILITY WEEK Customers Market view T he UK electric vehicle (EV) charging market is reaching a tipping point. EV stock and charging assets are growing rapidly. Major energy players are targeting the sector, including BP (acquiring Charge- master) and EDF (looking to grow its EV charging market share). A flow of capital is surging into the sector. Having the right strat- egy, capabilities and business model in place will determine which charge point operators and utility players are the winners and losers. In our report Powering ahead! Making sense of business models in electric vehicle charging, we identified several key elements that underpin successful operators and will allow them to flourish. These include the need to generate multiple revenue streams, achieve scale, address customer concerns around "experience anxiety", and having the right partners to host charging assets. Yet no business model is guaranteed to survive, let alone thrive, in this market. EV stock has been doubling year on year and according to green car website Next Green Car, we reached 182,000 EVs in October 2018. Publicly accessible fast and slow chargers have been growing at around 50 per cent per year, with charging point map Zap-Map quoting more than 18,700 in November 2018. Despite this growth, there are questions about how consumers will charge their vehicles. We identified four key charging segments: home, workplace, destination and rapid charging. The conundrum is that how EV drivers charge today may not be how they charge tomorrow. In the near term, most charging is likely to be done at home, given that 78 per cent of home owners with cars have off-street park- ing. Moreover, taking into account experience anxiety, charging at home is still convenient and relatively cheap. But what happens if destination charging becomes more wide- spread, say consumers are offered free charg- ing if they visit supermarkets? Or will rapid charging gain momentum? Questions like these will shape the destiny of operators and have major implications for utilities. Until recently, the large UK electricity retailers adopted a wait and see approach to EV charging. This is changing. In recent months, utilities such as Eon and Scottish Power have announced new EV charging solutions. EDF's parent announced an ambi- tious plan to target 30 per cent market share of EV charging across Europe by 2022, with the UK a target country. Overseas interest is growing, with Engie and Vattenfall entering the UK to offer new charging solutions. Suppliers will be keen to develop bun- dled solutions offering special tariffs for EV drivers. Our research indicates that when a customer switches to an EV, they become acutely aware of their energy costs, prompt- ing significant engagement in their energy management. This opens up a channel to provide generation, storage and smart charg- ing hardware in the medium term. DNOs will need to figure out how best to manage demand load given the prospect of large fleets of EVs charging at the same time. Using charging in a managed way can help alleviate constraints on the grid, espe- cially if a vehicle-to-grid (V2G) component is used, and could potentially lower the cost of system management in the future. Western Power Distribution's Electric Nation project is one example exploring how best to manage EVs as charging habits evolve. National Grid is planning a network of 50 strategic sites across the UK for rapid charg- ing. The sites are at locations where the grid is most resilient to handle the expected load requirements. This not only lowers the trans- mission development costs for integrating the technology, but also provides a strong growth platform for its unregulated revenues. Operators are competing to find the right balance between charging technology (slow, fast, rapid), the location of charge points, and the right partnerships to address cus- tomer behavioural trends. Utilities are also figuring out where they can play and grow across the EV charging value chain. This all makes for a dynamic operating environment where companies with strategic focus and innovative business models will thrive. Steve Jennings, UK leader of industry for energy, utilities and resources; Adrian Del Maestro, director of research, Strategy&; and Tom Haddon, energy, utilities and mining industry analyst, PwC Model behaviour Charge point operators and utilities need the right strategy, capabilities and business model to win in EV charging, say Adrian Del Maestro, Steve Jennings and Tom Haddon. Overnight home charging • Charge your EV at night to take advantage of lower tariffs • Potential V2G applications • Limited V2G financial incentive and technical constraints Electric highway • Drive your car along dedicated EV only roads • Have access to chargers at regular intervals Fleet charging • As a commercial operator charge your fleet of taxis or delivery vehicles at a central hub Destination charging • Top up your charge when visiting regular destinations (supermarkets, leisure centres, gyms) Street charging • Charge your car from a lamp post outside your home Motorway charging • Charge your car during a long distance journey using on-demand rapid chargers on motorways and other strategic destinations • Part of existing fuel retail network Workplace charging • Top up your charge during the day at work • Demand can be limited if commute is short • Potential V2G applications • Limited V2G financial incentive and technical constraints Source: PwC Strategy& research EVOLVING EV CHARGING PATTERNS Source: PwC Strategy&

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