EV Fleet Demand Sparks Competitive Growth Opportunity for Utilities

As the electric vehicle (EV) market sees growth in the medium and heavy duty vehicle (MHDV) segment, EV fleet owners will have the flexibility to determine where they draw power, forcing utilities to either collaborate or compete to attract fleet charging.

In an article for Utility Dive, Will Sierzchula, managing consultant in Guidehouse’s Energy, Sustainability, and Infrastructure segment, says fleet EVs, a high use component of the growing electrified transportation market, are not your typical captive market.

“Load from recharging these vehicles represents an uncommon beast in the power utility wilderness—demand that has the flexibility to determine where it draws power,” Sierzchula said. “Utilities cannot be complacent and just expect to be the preferred electricity provider for fleets based in their territory.”

The question is then how utilities will respond to a compelling yet competitive growth opportunity in fleet demand. Will they collaborate to align electricity rates along busy transportation corridors, or will they engage in a price war to attract fleet charging?

Sierzchula explained that aligning rate prices across territories will result in fewer incentives to adjust refueling and supply chains so fleet managers can take advantage of low-cost electricity.

In this case, future fleet EV demand will likely benefit utilities that serve main transportation corridors, as fleet managers would not consider electricity prices when optimizing routes. Scenarios where utilities compete against each other on price to attract EV fleet manager business could encourage innovation, driving down electricity rates and benefiting all ratepayers.

“As markets for distributed generation, batteries, and EVs mature, fleet managers could be key drivers for competition between power providers. Adding some market fundamentals to the regulated utility sector would likely result in improved efficiency and lower rates, a win for all consumers,” Sierzchula said.