Who’s Powering the Future of Electrification?
As the world pursues a carbon-neutral future, it’s not just the fate of the planet that hangs in the balance. The stakes are sky-high for energy and mobility companies competing in ecosystems that require they reimagine how and with whom they innovate.
The pressure is building from all sides. Utilities face disintermediation from energy start-ups, mobility companies, and consumers themselves. Mobility companies risk rolling out millions of EVs whose energy demands can’t be met. Both industries are betting their financial futures on their ability to deliver new electric experiences that win over consumers. At the same time, governments—and the taxpayers who fund them—are taking a proactive role in demanding a greener future.
It’s a crowded and fast-moving field, and that’s good. We believe it will take serious innovation from all stakeholders to achieve electrification at scale in time to ward off the worst effects of climate change. That’s why Vectorform approaches the market as a set of ecosystems (not industries) and why we’re exploring these challenges together as Mobility and Energy leaders. Here’s what we’re seeing as mobility, energy, and consumer actions overlap to push electrification forward.
Mobility Companies Taking Charge
Few sectors are reinventing themselves as aggressively as the world’s automakers. GM, Ford, Stellantis, and Hyundai’s multi-billion-dollar investments in new electric vehicle battery plants are just the latest in a flurry of EV investments by major OEMs racing to meet their clean energy commitments. Big autos are pouring big money into acquiring or spinning off new divisions, recruiting top talent from Silicon Valley, and forging new alliances around the world to accelerate EV innovation. Established OEMs like Tesla and Toyota are integrating solar cells into the roofs of EV and hybrid models to extend battery range, while aggressive start-ups like Aptera Motors and Sono Motors are aiming for cars that will provide enough solar energy to meet drivers’ daily commuting needs without ever tapping into the grid.1
Leading OEMs are also investing heavily in bidirectional charging, which lets a consumer use energy stored in their car battery to power other electronic devices—and, theoretically, their homes. GM is currently partnering with California-based utility company PG&E to test technology that lets power flow from a GM Ultium battery into a customer’s home, automatically coordinating between the EV, the home, and PG&E’s electric supply. Ford’s much-anticipated Lightning F-150 has hit the U.S. market, promising to serve as a supplementary home energy source that can keep lights and appliances running for 3-10 days off the grid. Whether consumers are ready or not, the shift to EVs is happening and automakers are forging ahead in the quest for green energy options.
Utilities Turning to Technology
Utilities face the two-pronged challenge of updating the grid and keeping customers from defecting to more innovative options. It’s a tall order. The U.S. has an aging energy infrastructure battered by years of neglect and exacerbated by the impact of climate change. The latest federal allocations of $27 billion for the electric grid and $7.5 billion for EV charging infrastructure barely scratches the surface of what’s needed.2,3 Data from Edison Electric Institute shows that U.S. electric companies invested $3.4 billion of their own money in new EV charging infrastructure last year, while simultaneously pumping more than $143 billion into the grid to make it stronger and cleaner in anticipation of 22 million EVs on U.S. roadways by 2030. Some energy companies are turning to smart software platforms known as distributed energy resource management systems, or DERMS, to manage green grid assets like solar panels, smart thermostats, and electric vehicle fleets. DERMS can also help shift grid loads to prevent blackouts and make the grid more reliable for customers4—a pressing concern considering the slew of major power outages making headlines in the past year alone. Other utilities are using microgrids to provide more localized, reliable power sources that are closer to the communities they serve.
Still, just keeping the power on is the bare minimum expected of utilities. Here in Michigan, DTE Energy has invested in technology that transforms the customer experience—from apps that let users easily measure and manage their in-home power consumption, to the MIGreenPower program that enables residential and commercial customers to reduce their carbon footprint by drawing their energy from local renewable energy installations (wind and solar).
Consumers Gaining Power
As new competitors disrupt the utility market, consumers are gaining new options to access, share, and even monetize green energy. Australia-based Powerledger, for example, uses blockchain to enable peer-to-peer selling of green energy across the grid. The company has expanded this concept to create self-sufficient “energy communities,”5 where customers with rooftop solar panels make a profit by selling excess energy to their neighbors, who buy it at a price that’s cheaper than off the grid. It’s a powerful example of how innovation is occurring outside the traditional utility space and putting power into consumers’ hands. While examples like these are not yet common, they do introduce a new set of players into the energy equation and challenge conventional models of how, where, and by whom power can be generated and sold.
Governments (funded by taxed consumers and companies) are also becoming more involved in steering the public toward EV adoption. In Europe, regulators are strengthening CO2 emission standards and governments are offering bonus payments and tax perks to EV buyers—similar to the electric car tax credit in the U.S., which now goes up to $12,500 per EV. Once a car is purchased, however, the perks get more complicated. There isn’t any standard or best practice to incentivize vehicle-to-grid (V2G) technology, an innovation that enables consumers to sell the power stored in their car battery back to the grid. The UK’s energy regulation agency intends to expand V2G technology across the nation, and EV drivers could make about £700 per year selling power back to the grid. The collective impact is even more impressive. Early reports suggest that if enough EV drivers take advantage of V2G technology, the UK could avoid investing in new power plants with the equivalent generation capacity of 10 large nuclear power stations.6 By selling energy from their car batteries while they sleep, consumers could help power the grid’s future while pocketing a small profit.
The Future Is Electric
As energy companies, mobility companies, and consumers speed toward an electrified future, their fates are increasingly intertwined. All stakeholders need to engage with and learn from each other to solve the challenges they jointly face and make the most of the opportunities that lie ahead. The lessons learned will need to be applied across ecosystems: after all, it’s not just personal vehicles that are going green, but also boats, planes, trains, commercial fleet vehicles, air taxis, and virtually every other form of transportation.
Have you thought about your organization’s strategy for electrification? Start by considering the following:
- What do your customers want in their electrified future? Has your team considered conducting customer research or focus group panels to gather the collective voice of the customer?
- What performance frameworks have you established to assess impactful and effective touchpoints along your organization’s customer journey map?
- How are you collaborating with the broader group of ecosystems (government, financial, supply chain, etc.) in your community to ensure comprehensive success?
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