Oil Supermajors Investing in Electric Vehicle Infrastructure Highlights Energy Transition

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3Q 2018 | IN-5219

BP announced last month that it would be acquiring the United Kingdom’s largest electric vehicle charging company, Chargemaster. Chargemaster operates the largest public network of EV charging points in the United Kingdom, with more than 6,500 points and 40,000 customers. The company also designs, builds, and sells Electric Vehicle Supply Equipment (EVSE) for home charging and other residential locations.

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BP Acquires the United Kingdom’s Largest Charging Firm, Chargemaster

NEWS


BP announced last month that it would be acquiring the United Kingdom’s largest electric vehicle charging company, Chargemaster. Chargemaster operates the largest public network of EV charging points in the United Kingdom, with more than 6,500 points and 40,000 customers. The company also designs, builds, and sells Electric Vehicle Supply Equipment (EVSE) for home charging and other residential locations.

The acquisition of Chargemaster follows a similar move by Royal Dutch Shell, which snapped up vehicle charging company NewMotion last year. NewMotion, at the time, offered 30,000 charging points across Western Europe. These acquisitions come as no surprise given the increasing shift towards electric vehicles, a huge threat to oil companies given that gas and diesel make up a large part of overall oil demand.

The transition away from using gas and diesel to power vehicles to utilizing electricity to power vehicles, as well as an increasing number of renewables to provide that electricity, will bring a significant shift in the way the energy is used as well as provided. This energy transition will bring about a wave of new challenges for all those companies that provide energy, from oil supermajors to end-user energy suppliers.

Increasing EV Adoption Brings a New Set of Challenges for Energy Companies

IMPACT


use electricity. This is not only fundamentally a shift in the way energy is used in the vehicle, but also a shift in the way that energy is provided. So, what are the major changes facing those that provide or supply the energy for vehicles?

  • Grid System Operators: The shift towards electricity to power vehicles will place a huge additional load on regional/national grid networks. Grid system operators will have to increasingly manage line constraints, as well as effectively manage any major shifts in demand of electricity. Since system operators are effectively responsible for the transport of electricity in an energy system, they will be at the frontline of ensuring that the correct regional/national infrastructure is in place for electric vehicles, as well as ensuring reliability of the power network for other users.
  • Energy Suppliers: Energy suppliers have the most to gain from the shift towards electric vehicles. The energy once provided by fuel will now be provided by electricity supplied by utility companies. Energy suppliers, however, will have to do their part to ensure that customers are encouraged to charge their vehicles at home to gain the full benefits and during off-peak times to reduce transmission charges levied on them by grid system operators. Suppliers will also have to make sure that they have sufficient generation capacities in place to provide this increased energy demand over usually off-peak periods such as nighttime.
  • Charging Infrastructure Operators: Charging infrastructure operators will have to proactively update their current infrastructure to manage the rapid developments of DC Fast Charging technology. DC Fast Charging technology has increased from providing 100 kW charging power to more than 400 kW; such charges require changes in thermal management, wiring, and system arrangement.

In summary, the main problems imposed by increased electric vehicle usage are increased load on the network and a change in the times of energy usage. Smart charging—that is, charging when energy demand is low—is the first step to helping achieve this, through encouraging users to charge their vehicles when demand is low, typically overnight. Vehicle-to-Grid (V2G) can then be used to amplify the effects of smart charging by further increasing energy demand during off-peak hours as users charge their vehicles more often, as well as critically reducing net demand during peak periods by enabling consumers to return some of that energy back to the grid.

Vehicles as Potential Energy Storage Devices Currently Lacks Crucial OEM Support 

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With the increasing use of electric vehicles, V2Gcould soon be at a scale to seriously impact the way energy is supplied and used. V2Gtechnologies also encompass vehicle-to-home technologies that could allow for homes to be powered by electric vehicles. ABI Research studies have shown that an electric vehicle, with a 100 kWh battery, could power a typical medium-sized family home for around 10 days. When one considers the potential application for such technologies in situations such as natural disasters, it is easy to see how V2G could have a serious impact.

Where V2G could have the biggest day-to-day impact, however, is by extension of current smart charging methods—that is, charging your vehicle when demand, and therefore electricity prices, are at their lowest. Where V2G adds benefit is to encourage those who are already charging during this off-peak period to use their battery as an energy storage system to provide that energy when the grid needs it the most, during peak hours. This is a profitable exercise for utility companies because they essentially buy electricity when it is at its lowest, store it on consumers’ electric vehicle batteries, and then sell when it is at its highest. A large proportion of this new-found revenue is then passed on to consumers to incentivize V2G use. The system grid operator also reaps the benefits of having energy available to it during peak hours.

The widespread adoption of V2G will require new business models that favor all relevant stakeholders. This includes the end-consumer, the utility company, the grid operator, and the OEMs themselves. Without the incentive for all those involved in the process, the chances of V2G getting off the ground are likely to be slim. OEMs, for their part, are currently lacking serious motivation when it comes to V2G. The extra charge and discharge cycles may have negative effects on battery life, although current data is inconclusive, and V2G would add extra complexity to vehicle and software design. Currently, only a few OEMs, through the CHAdeMO charging standard, support V2G. Without crucial wider OEM support, V2G won’t even make it off the ground. Perhaps the only way OEMs may be incentivized is through shared monetization of the service. Utility companies will have to play the key role in incentivizing OEMs through highlighting the potential profits that could be made from V2G as highlighted in the ABI Research report Vehicle-to-Grid Technologies and Applications (AN-4995).

Overall, although vehicle electrification brings numerous opportunities for different players in the energy market, with it comes numerous challenges. This includes increased load on the network, changing usage, and infrastructure-related problems. V2G could be the answer to some of the problems by enabling vehicles to not only be an electricity load user, but also a storage device to provide energy when the grid needs it the most, during peak times. The technology, however, currently lacks crucial OEM support because these companies currently fail to reap any benefits as those companies in the energy market do. For the technology to get off the ground, OEM support will be required. The ABI Research report Vehicle-to-Grid Technologies and Applications (AN-4995) shows that there are clear economic benefits for V2G for energy companies and consumers, but some of these benefits will need to be shared with OEMs to make the technology a reality.

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