Vito Labate in conversation with Perry Stoneman, Energy & Utilities global sector leader and Philipp Haaf, eMobility specialist, discuss the automotive sector and the implications for energy providers.
Vito Labate: (00:22)
Hello and welcome to our podcast series on the transformation of energy and utilities companies to better serve their customers in the digital age. My name is Vito Labate and in this episode we’re going to take a look at the automotive sector and the implications for energy providers. To discuss this today, I’m pleased to welcome back to the podcast Perry Stoneman, who is the head of Global Energy and Utilities at Capgemini. And I’d also like to introduce Philip Haaf, who specializes in e-mobility as part of Capgemini’s Global Automotive Business. Gentlemen, welcome to you both.
Philip Haaf: (00:55)
Perry Stoneman: (00:56)
Thank you, Vito
Vito Labate: (00:58)
Perry, I’d like to start with you to understand why energy and utilities companies should be thinking about what’s happening in the automotive industry in particular. Why should they care? When we think about interaction on the electric vehicle level, we hear about charging impact on the grid, we hear about vehicle-to-grid issues and solutions. And also you know what the impact of autonomous vehicles will be. Maybe you can provide an input on this please.
Perry Stoneman: (01:26)
Sure, Vito, I mean that’s a huge question. To distill it, the first point I’d make is the utilities need to care because it’s growth opportunities for them. As we start to move from fossil fuels to electrification of transportation, the utilities have a chance to gain in delivery of electricity and revenue. The early impacts on the grid, which you kind of pointed out, will be insignificant because 80% of electric vehicles today are charged at home, and the vast majority of that charging is at night. So the impact on the grid today is insignificant, but the opportunity on revenue growth is significant.
Perry Stoneman: (02:10)
As we look to the future, however, and the concept of autonomous vehicles, or fleet ownership, these fleets will need to, I like to call them flocks, they will move to different locations depending on their ridership. Certain urban demographics will have very different ridership needs in the future of autonomous vehicles and these shared ride ownership fleets. And these flocks we’ll have to have nesting sites, and these nesting sites, where the flocks go at night to be recharged, maintained, cleaned, are going to have significant demands on the grid.
Perry Stoneman: (02:46)
And as a result, those locations, where flocks of electric vehicles go to, are going to have to have investments made in the grid, either through Microgrid, new battery technologies, or through traditional traditional methods. So I think it’s an interesting time. I think the utilities have time to do the engineering and figure out where things are going. But ultimately data and analytics and partnerships with these future autonomous vehicle fleet owners will be critical to the future of the utility industry in monetizing this opportunity to their best … to their benefit.
Vito Labate: (03:26)
So this is a really interesting concept and Philip, maybe I think you might be able to comment next. Maybe we’ll start on this idea of electric vehicles and set some context for some of the comments we just heard from Perry. How quickly is the electric vehicle market actually growing, would you say?
Philip Haaf: (03:44)
Yeah, the market is likely to grow very fast in the upcoming years. There are several reasons for that; OEM start to launch a variety of new plugin hybrids and also pure battery electric models, but also legislation around the world is increasing its pressure on automotive OEMs to fulfill given CO2 targets. And last but not least, customer’s demand for sustainable mobility solutions. So I’m talking about it and figures, we expect within two decades electric cars to dominate the global shares of car sales. So in 2020 electric vehicle car sales will account for 3% of overall car sales, and we at Capgemini expect the share of EV’s of the global car sales to be 55% by 2040.
Vito Labate: (04:37)
So, I guess the question is, and Perry maybe I’ll come back to you, is how are energy and utility companies feeling about this? Though obviously the trend is rising, but to what extent are they reacting? Are they ready for this?
Perry Stoneman: (04:51)
Right. Great question, Vito. It depends on where you are geographically. Norway, they were caught by surprise. The vast majority of vehicles, the largest percentage of vehicles or electric vehicles in the world, are in Norway and the charging infrastructure’s simply not adequate to keep up with demand. So new business models and new companies, like Smartly, are emerging that allow EV owners to find charging stations and do settlements through their mobile phones and applications. So third parties have had to step in because the utility industry itself is not able to, or equipped to to accommodate the needs of the customers.
Perry Stoneman: (05:37)
Where other countries, and Phillip brought it out, where you have government and regulatory policies, the actions and plans will be a lot more deliberate, and as a result utilities will be through the regulatory process. Consulted, asked, is part of their plans. So it really does depend where you live. I think any city or any country that has rapid adoption, the utility gets challenged. Anywhere where it’s regulated and not consumer driven, there is an opportunity for the utility to be prepared and be part of the process.
Vito Labate: (06:20)
Are we finding the auto industry is working with energy providers, Phillip, to address some of the concerns that maybe even Perry was talking about? And if so, I mean are there any solutions that you’ve seen as examples that they are proposing?
Philip Haaf: (06:36)
Yes, for example, IONITY. IONITY is a joint venture of [AVE 00:06:42] and the BMW group Daimler AG, and also the Ford Motor Company, as well as the Fox One Group with its brands, Audi and Porsche. It was founded at the end of 2017 to set up and operate the network of 350 kilowatt high power charging stations for electric cars along all the main European traffic routes, and has the aim of making electric mobility suitable for long distances. In our latest study, electric cars are the tipping point, we did some research on the most important information for customers before taking a buying decision for an electric car. Firstly, 94% of all respondents stated that the range of the car is the most important information in the buying process. Additionally, the biggest concern for 81% of the participants is range. So therefore, from my opinion, IONITY is an excellent example of what the industry can do together with energy companies to reduce customer’s range anxiety.
Vito Labate: (07:50)
Well, so this is interesting and again, I guess one of the things that … We can’t discuss automotive and energy without touching on a bigger issue around the internet of things. IOT is obviously enabling the kinds of devices that we’re talking about here to feed back data. Whether it’s about how you’re using your automobile or how you’re consuming energy. Phillip, would you say, are there any other insights on this development when it comes to IOT as it relates to electric vehicles?
Philip Haaf: (08:22)
Yes. I truly believe that IOT in combination with AI will ensure that electric mobility become a success story. So sensors of cars will communicate with the AI’s operating and steering the energy grid. For example, it might be possible to make very precise predictions about when and where electric cars will connect to the grid in order to charge the batteries. And for example, to balance the energy supply and demand in a specific area, and also secure power system stability. So electric costs will increase the demand for renewable energies and also decentralize the generation of this energy. At the same time, this also means that electric cars are directly integrated into intelligent energy networks and also the energy market via their sensors. So the basic prerequisites for this are smart energy markets and also smart energy networks.
Vito Labate: (09:23)
Well, you know, essentially these electric vehicles are network edged devices and Perry, what does that mean for energy companies now that they have these devices on the edge that are essentially feeding back data?
Perry Stoneman: (09:36)
Well, I think Phillip really touched on every one of the major aspects about smart charging and how that will be a part of the future ecosystem. When you really look at things, the electrical grid in the past the utilities would see to their feeders maybe, or in substations, but now with smart meters they can see to the house. With EV’s being intelligent devices connected through an IOT network, they can see even greater granularity of the demands on the grid. And Phillip brought up the key point about AI, it will be a huge part of the analytics. Understanding patterns and behaviors to predict the needs, days, weeks, in advance. And in the past they used to just use weather forecast and what day of the week is it to guess what the demand would be. Well now the granularity of the data will be far better and they’ll understand their network in ways that were never able to understand in the past. So huge operational benefits to utilities if they mine that data.
Vito Labate: (10:48)
Well, you might have some advice on this, Perry. So between the rise of electric vehicles that we talked about, the trend is clearly rising. IOT is ever more becoming an emergent technology in the ecosystem. And of course there’s all these other advancements that we expect to happen within technology in the near future. Do you have any recommendations for an energy and utility company as they try to manage the challenge, and more so capitalize on the opportunities that could come from this disruption?
Perry Stoneman: (11:22)
I think there’s two things I would say to utility executives; the first is they will not own and control all the vehicles or the charging infrastructure. Those will be owned by individual consumers and by corporations that have fleets. So they need to have a approach, a model, and a rationale to talk to those companies, partner with those companies, and partner with those citizens to say it’s in your interest, it’s in our interest to create smart charging algorithms, et cetera. So that would be the first is that this new business opportunity comes with new relationships that have to be established beyond the traditional commercial, industrial and residential clients.
Perry Stoneman: (12:09)
The second is, they should own some of this charging infrastructure. Most utilities, if they have a good balance sheet, should be in the game of providing charging infrastructure at locations that they’re interested in because it’s a huge revenue opportunity. So where you don’t own it, they need to partner. And where you do own it, plant locations. I like to say it’s kind of like real estate, the three biggest rules of charging infrastructure is location, location, location. The best locations will be fantastic for revenue generation for the next 30 40 years.
Vito Labate: (12:48)
Very good, Perry, thank you. Philip, maybe a last comment from you on this. Looking at it from the other side of the … The other perspective, do you expect that the automotive market will become a disruptive force in the energy industry? And if so, how?
Philip Haaf: (13:04)
Yes. As the energy demand for electric vehicle charging on a global level will increase from roundabout 30 megawatt hours in 2020 up to more than 200 megawatt hours in 2030, it becomes clear that they will definitely happen something big and actually companies have to react accordingly to this disruptive force. But from my perspective, this is a great time for energy companies as there are tons of chances to generate new business. First and foremost, they can offer products and services that make it as easy as possible for customers to use EV’s in their daily lives.
Philip Haaf: (13:43)
For example, network operators could offer special EV tariffs to direct new customers. Energy companies already have installed infrastructure in private and business-use buildings and definitely have knowledge about respective customers and also of the infrastructure in those buildings. What brings them the opportunity to distribute, install and also maintain these charging hardware devices. And furthermore, they could operate units that activity control the charging behavior of their customers to support them in charging as effective as possible.
But overall, this will be a big challenge and I’m talking about 200 megawatt hours in 2030, it definitely will become a disruptive force for the energy industry. I’m pretty sure.
Vito Labate: (14:32)
Very good. Well to our listeners, you’ve been listening to me speak with Perry Stoneman who is the head of Global Energy and Utilities at Capgemini and also Philip Haaf, who is from our Global Automotive Business here at Capgemini. Perry and Phillip, thank you. Really interesting discussion. Appreciate the insight.
Perry Stoneman: (14:50)
Thank you Vito.
Philip Haaf: (14:51)
Thank you, Vito.
Vito Labate: (14:52)
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