Pike Research says lack of technical standards could hinder utilities’ readiness for EVs; forecasts $5.1B in spending from 2010-2015 on EV IT systems
|EV IT investment by segment, United States: 2010-2015. Source: Pike Research. Click to enlarge.|
Utilities will face a host of new infrastructure requirements to support the increased power demand that will result from customers plugging in to recharge. The majority of EV service equipment (EVSE) will be networked and managed via information technology (IT) and communications systems that will aggregate power demand and enable a coordinated response to changing grid conditions.
However, according to a recent report from Pike Research, “Electric Vehicle Information Technology Systems”, many utilities could be unprepared to deal with the impact of EVs on the electrical grid, due to a lack of standards for sharing information between utilities and external systems.
Pike Research anticipates that worldwide investment in electric vehicle IT systems will reach $1.5 billion annually by 2015, with a cumulative total of $5.1 billion in spending between 2010 and 2015. However, according to the firm’s analysis, those levels of investment are far lower than other smart grid infrastructure categories, and may be insufficient to adequately prepare for the arrival of EVs in increasingly greater numbers over the next five years.
Greater knowledge of the lifetime value of EV IT systems, including the financial benefits from reducing carbon emissions, would make it easier for utilities to justify the investment. While plug-in electric vehicles will not threaten the integrity of the power grid as a whole, they will have an immediate local impact on neighborhood distribution infrastructure. Many utilities are reluctant to make long-term investments in IT systems that will be necessary to support EV charging, often due to state-level regulatory structures that discourage such spending, and as a result they may be playing catch-up as more and more electrified vehicles drive off dealers’ lots.—senior analyst John Gartner
EVs are expected to be purchased in clusters around neighborhoods that have historically seen high adoption of hybrid vehicles, Pike notes in the report. (Nissan and GM, the first companies to offer the new EVs in the United States, will initially sell vehicles in only a few coastal states plus Arizona, Michigan, and Texas.) If multiple EVs plug in simultaneously at the Level 2 charge rate into a single transformer (built to provide power to three to five households), the power draw could exceed the rated transformer capacity, resulting in equipment failures.
As thousands of EVs begin to plug in daily, peak demand at the conclusion of the work day could be increased if intelligence is not built into the charging process, Pike suggests. EV IT systems are needed to automatically manage charging; during times of extreme weather, demand can exceed supply throughout the day. With a comprehensive EV management system that can respond to grid signals, EV charging is not expected to require the addition of any generation resources.
Automotive, home networking, smart grid, and utility industries are collaborating with organizations, such as the National Institute of Standards and Technology (NIST), to develop standards to establish first-time interoperability with grid equipment, but many of these standards will not be completed until 2012 or later. Utilities are largely taking a “wait and see” approach to EV IT investment and are assuming that the vehicles will not sell in sufficient numbers to impact grid performance for several years.
Moreover, utilities’ understanding of the benefits of EV IT systems across all aspects of grid operations including load management, the use of renewable energy, and being able to avoid capital investment in generation and transmission equipment, are not well known today.
Utilities historically have not had the interest, motivation, or resources to develop advanced IT systems, but the promise of the smart grid and the launch of the EV market require a change in philosophy. Companies including EVSE vendors, smart grid companies, third-party energy aggregators, and communications companies are all developing technologies to provide EV IT services to utilities.
Utilities are likely to outsource and partner to develop systems for optimizing EV charging, but most utilities that are currently evaluating the impact of EV charging on the grid do not view investment in IT as an urgent priority today. Therefore, utility service providers currently investing in IT are likely to require several years before they can expect substantial revenue streams from utilities. In many cases, service providers will charge fees for developing the communications and data exchange between vehicles/EVSEs and utilities, and then provide ongoing “software as a service” licenses on an annual basis.—“Electric Vehicle Information Technology Systems”
Investments in EV IT systems are initially focusing on collecting data and presenting it to consumers, with $125 million invested globally in 2010. Pike forecasts that by 2015, annual investment will grow by more than tenfold as data analytics and integration with utilities' internal information systems becomes paramount. Investments in EV IT in the United States will grow to $371.9 million in 2015, representing 24.5% of the global market ($1.5 billion). The Asia-Pacific region, led by China, will be the largest market by far for EV IT, Pike says.
Pike Research’s report, “Electric Vehicle Information Technology Systems”, analyzes the IT requirements and market opportunities associated with managing EV charging and the interaction with grid resources. The report examines the information and communications systems for EV enablement within the utility grid infrastructure. It includes forecasts through 2015 for investment in EV information and communication technology in world regions, along with profiles of key industry players.