What's driving the change when it comes to the electric grid? EVs? Household consumption? Learn more about the electric grid in this week's episode of #UtilimarcFleetFYIs.
Utilimarc's annual Fleet Industry Compensation Survey: https://www.utilimarc.com/take-the-survey/
If electric vehicles are shaping the future of our electricity consumption and future demands, it's reasonable to question whether or not the current electric grid could actually handle the strain, because the thing is, it's not just one factor charging electric vehicles that can overload the electric grid. It's a multitude of faucets that can sometimes be avoided by simply delving further into a planning strategy.
Welcome to the Fleet FYIs podcast, the weekly podcast by Utilimarc that reveals how you can make the most of your data for smarter fleet management. My name is Gretchen, and every week I'll be sharing with you not only over two decades worth of data insights, but some of the industry's hottest talking points and key metric analysis with the aim to help you better [00:01:00] understand your fleet from every angle.
Before we begin, if this is the first time you've heard our show, thanks for stopping by. Once you've finished today's episode, if you could take a few minutes to leave us a review on your favorite podcasting platform, I would really appreciate it. Give us a rating, five stars I hope, or tell us what you liked, or leave us a comment or a question about what you've heard in today's episode. If we haven't yet covered a topic that you're interested in hearing more about, let us know. We would be happy to go over it in detail in a later episode. [00:01:30] Let's dig in.
Hello everyone, and welcome back to another episode of the Fleet FYIs podcast. Before I dive into today's episode, I wanted to remind you that Utilimarc's annual fleet industry compensation survey has opened and is waiting eagerly for your response. If you've ever wondered about the average compensation for fleet managers, benefits packages, and education opportunities, then this is the survey for you. All answers [00:02:00] are completely confidential, so your input is fully protected. But just keep in mind that the survey will only be open for two more weeks until it closes for the 2024 update. I want to make sure that you get your input heard because it is a survey you absolutely won't want to miss. If you're interested in taking the survey, you can go to utilimarc.com, U-T-I-L-I-M-A-R-C.com/take-the-survey, dashes in between the words. Or you can always look at the show notes and description below because the link will be there as well. Without further [00:02:30] ado, let's dig into the show.
[00:03:00] It was once thought that the move towards electric vehicles couldn't be questioned at all. The benefits for climate concerns were clear. There was a paved road ahead for adoption, and prices were meant to even out in just a couple of years. Looking back at this, this was clearly rosy glass's optimism. I mean, let's be honest, have any of those things actually happened exactly as planned? No, but electric vehicles are proving [00:03:30] to be a challenge for fleets across the board, especially when it comes to procurement and infrastructure installation. But now what really comes to mind instead is how will we power so many electric vehicles at one time once it starts to even out and there's more on the road, especially as we're beginning to see that fleets are still committed to their adoption in 2023 and beyond, just like they were in 2020? Along with the lack of sufficient charging stations across the country to support a major increase in EV use, whether or not the electric grid [00:04:00] could support this demand needs to be considered and further explored.
According to the US Energy Information Administration or the EIA, an average American household used about 29 kilowatt-hours, or KWH if you're looking at acronyms here, per day to power their home. This is roughly the same amount of electricity that would power an electric vehicle for about 100 miles give or take, depending on of course the speed and the load and if you have any accessories actually running in the cab. It's projected that with the increasing demand for electric vehicles year [00:04:30] over year, energy consumption across the entire country could go up nearly 40% by 2050. And to support this transition, a lot of states, actually pretty much every single state, is going to have to reevaluate their current capacities and whether or not grid expansion, increasing power production, introduction of a more extensive sustainable power source or if purchasing electricity from other states would be a viable solution.
Well, first I think to answer this question or to begin to shed some light to the answer to this [00:05:00] question, maybe that would be a better way about it, is to delve into the history of the electric grid itself. Now, what began as just a single power plant in Lower Manhattan connected to a handful of homes and businesses is now comprised of 7,700 power plants, 3,300 utilities and over 2.7 million miles of distribution lines powering hundreds of millions of private homes and businesses all across the United States. In regard to how this energy is actually generated, the EIA states that 60% [00:05:30] comes from the burning of fossil fuels, 20% from nuclear power, and another 20% from renewable sources.
In 2020, so three years ago, 3.8 trillion kilowatt-hours of electricity was consumed in the United States, which was 13 times greater than the total amount consumed in 1950. Of this amount, 38.9% and 34.8% of the electricity sales are attributed to residential and commercial sectors respectively with about a mere 0.2% going to transportation. [00:06:00] So we're not really factoring in a ton of electric vehicle charging needs here. And of course, we're going to start to see this as electric vehicles, I'm considering their adoption to be more of a hockey curve or a hockey stick curve, if you've ever heard of that. And if you haven't, basically what that means is it's flat, it increases incrementally, and then boom, all at once. Everyone kind of knows what they're doing and production meets demand and so on and so forth.
But back to the residential sector side of things, in that sector [00:06:30] itself, heating and cooling consume the most energy by a decent margin. That's really no a surprise, especially with weather being so extreme, really, really hot summers and freezing cold winters, which we are no stranger to in Minnesota. It's easy for heating and cooling to strain electrical systems that were built decades ago when such extreme we weather conditions weren't even a consideration, or if they were, it was a complete outlier of event rather than a predicted norm.
Coming out of the 2010s, which are recognized as the hottest decade on record, a lot of [00:07:00] grid operators have seen firsthand how urgently the electric grid needs revamping. Plain and simple, right? Summer heat waves and polar vortexes in the winter have become commonplace. Like I said, freezing winters in Minnesota, there's no stranger to that at all. And it damages above ground power lines, whether it's with trees falling or with fires or whatever it is. But my point is, is that it exacerbates limited electricity supply and ultimately can cause a lot of power blackouts, which we're starting to see rolling across the United States. [00:07:30] There's some neighborhoods that are without power for a week, sometimes they're without power for two hours. It really depends on how fast the utility can get power lines up, which is an extremely difficult job. And storm response always has to be a top priority for some of these folks, which of course, as fleet managers you would understand it's a lot of brain power that has to be put behind it.
But when it comes to electric vehicles overall, because households and businesses, they're not the only ones that are relying on the electric grid, [00:08:00] it's said that EVs are shaping the future of electricity demands because they're going to require a lot of power to be able to charge an entire fleet or potentially a lot of consumer vehicles that are now going electric. The demand for EVs is definitely increasing every single year. You see more on consumer lots, you see more in fleets as the years go on. And soon, hopefully, there's going to be no major need for increased grade capacity anytime soon. However, in the long run, new power plants and upgraded networks will facilitate [00:08:30] nationwide EV adoption and also the possibility for a lot of EVs to become commonplace. If the United States was to fully rely on EVs, the electricity demand could grow as much as 55% in some states, requiring significant investment in the infrastructure itself.
But for now, analysts agree that the current grid has the capacity to power millions of new electric vehicles with the help of meticulous planning, i.e, looking at peak times, charging times, making sure that electric vehicle owners and [00:09:00] operators within fleets itself are working with utilities to understand just what the expected load can be. And I'm super excited to share that in a couple weeks, you'll be able to hear a recent interview that I did with Kevin Kushman, who is a CEO of Electrada, who's going to be speaking a lot about electric load capacity for the grid, and also how infrastructure can play a role. So make sure you guys stay tuned. It'll be out the third week of August, so I think you guys are going to like that one.
But anyways, back to the grid itself. As every state [00:09:30] has varying grid capacities, as you know, every state is different and differing patterns of consumption during different times of the year, grid operators will have to carefully manage energy consumption overall and month by month. Considerations, of course, will include seasonal changes and electricity use, peak and off-peak usage times like I mentioned throughout the day, and whether or not purchasing electricity from other states could be that alternative solution.
With the increase of electricity consumption due to electric vehicles, it's really, really, really [00:10:00] important to question how this electricity's being generated, and potentially if it could be cleaner. The urgency in adopting electric vehicles goes hand in hand with the need for renewable energy, such as solar and wind power. And if the country transitions to electric vehicles, ensuring that this electricity is produced in a clean way is just as important for the bigger picture, especially if as a consumer or as consumers demand, which utility fleets, municipality fleets, we're all feeling this, right? Even if it's not mandated, even [00:10:30] if it's not in the policy, consumers who depend on fleet services are demanding that fleets are more sustainable. And one way to do this is looking at energy sources and where your power is actually coming from.
A lot of utilities in the US are doing a really, really great job with this, trying to understand, "Okay, if my consumers are requiring that I have a greener power source, should we look at wind? Should we look at solar? Should we look at nuclear?" There's a lot of options out there, and so far our utilities are doing a great job handling it, but it's going [00:11:00] to become increasingly more important as this movement continues.
[00:11:30] So I know what you're probably all wondering, can the electric grid actually handle the strain? Well, if electric vehicles are shaping the future of our electricity consumption and future demands like they say, it's reasonable to question whether or not the current electric grid can handle the strain. Because the thing is, it's not just one factor, charging electric vehicles that can overload an electric grid. Instead, [00:12:00] it's a multitude of facets that can sometimes be avoided by simply delving further into a planning strategy. For example, if we look at optimal charging times, and by optimal charging times, I mean these off-peak charging times, a main concern with electric vehicle use is when individuals or fleets will actually be charging their vehicles. Electricity use is significantly higher in the late afternoon. Think when you come home from work and you're on your devices, you're cooking, you have an electric stove top. Energy usage is [00:12:30] just higher between 5:00 and 8:00 PM in the evenings. And if consumers are charging their vehicles at this same time, fleets as well, it could likely lead to a grid overload.
Now, if vehicles were to be charged during optimal off-peak hours, potentially overnight or way early in the morning before anyone gets up for work, a lot of states would have more than enough capacity to be able to handle the demand itself. But what about when it comes to infrastructure planning? Well, in the case of states who do not have sufficient [00:13:00] surplus in capacity or cannot charge solely during off-peak times, million or even billion dollar investments into infrastructure will be necessary, point-blank. New power plants will have to be built along with the adding of the necessary transmission lines and transformers to carry the electricity to where it actually needs to go. And the grid will also have to be expanded to support EV charging stations. Because put simply, if we don't have the infrastructure to support the EVs, then the EV movement will be stalled.
[00:13:30] And granted, I don't think that electric vehicles are the only way. Again, I always have to put this disclaimer in these episodes that are very EV-focused. Sure, they're a fantastic option and a lot of folks are really getting a lot of value out of them. However, just remember, it's not a one size fits all solution. Sustainability is not a one size fits all solution and there's many paths forward no matter which route you decide to take.
Now, the last point that I'd like to make when it comes to this EV movement and the planning behind grid expansion is that there [00:14:00] could be some vulnerability to weather to really consider. So in states where weather conditions are worsening and reaching new extremes every single year, think Texas, Minnesota, New York, with the massive snowstorm that we saw last year, electric grids are already facing many, many, many challenges.
In the fall, wildfires run rampant through northern and southern California causing utility managers to carry out preemptive power outages in order to lessen the risk of power lines sparking even more wildfires. And whilst this power outage is actually meant to save lives [00:14:30] and avoid disaster, the daily need for electricity doesn't stop, and life still goes on in other parts of the state. And this isn't just California where this is happening. I mentioned New York, but there was a snowstorm that didn't stop for a couple of days, and there were a lot of power outages. Thunderstorms in Indiana are causing power outages sometimes for a week or more. In Minnesota, the snowstorms are the same thing, where you might need a propane tank to be able to boost up your power supply if your grid goes down or if your power lines go down. [00:15:00] It's all over the US and all over the world where this is happening. It's not just local to one spot.
There is one solution though that some OEMs are coming up with, and that is a vehicle to grid technology, which actually allows fully charged batteries in parked electric vehicles to be used as a backup resource. Think like a... Well, I don't want to call it a generator, but ipso facto, for lack of a better word, it's a generator for your house or another vehicle to use for energy in times of need should it ever come to that. But [00:15:30] what I'm really trying to say here is that the future of this electric vehicle movement lies completely with adequate planning, and that's all there is to it.
Ultimately, the electrification of vehicles and supporting the transition will come down to careful planning from grid operators and utilities, federal and state investment into infrastructure, and a gradual switch to clean energy sources. Because if we can clean up the energy we burn, it's better for everybody. Cleaner air, cleaner energy, all good stuff, right? This process will require major [00:16:00] collaboration on all fronts and creative solutions for the potential problems that we were talking about earlier in this episode.
Electrification will not be a one and done operation, and it'll likely take several decades before the right infrastructure is in place to support it. And it won't just be the electric companies that we need collaboration from. It'll also be oil and gas too, because there are some companies that are already making the pivot to be able to support the grid with renewable energy sources. The cool part is, is that the sooner leaders and managers begin talking and taking [00:16:30] action to make these sustainable changes, the sooner that overall the fleet industry will be able to reap the benefits of a healthier environment and considerable fuel savings and also just an easier access into this newer technology and newer types of vehicles that can be used for daily fleet operations.
I'm curious to hear what you think, though. If you have any questions about electrification or if you have any thoughts, whether good or bad, I'm curious to hear what you think. Please, please, please let me know. You can send me an email. You can tag me on LinkedIn, [00:17:00] use the hashtag #UtilimarcFleetFYIs, or of course you can send me a carrier pigeon because we all know how much I love those.
But before I go, I do want to ask you one quick favor if you haven't already. I would love if you would rate and review our show on any major podcasting platform, your favorite listening platforms, or on my personal favorite, which is Spotify. Any rate and any review will help because not only does it help us out, but it helps other folks like you find our show and hopefully enjoy your weekly dose of Fleet FYIs. [00:17:30] But anyways, that's all for me this week. I will see you again next Friday with a fresh episode of the Fleet FYIs podcast. See you there. Ciao.
Hey there, it's me [00:18:00] again. I think it's time to cue the virtual high five because you've just finished listening to another episode of the Fleet FYIs podcast. If you're already wanting more on all things fleet and vehicle technology, head over to utilimarc.com, which is Utilimarc with a C, U-T-I-L-I-M-A-R-C.com for this episode's show notes and extra insights coming straight from our analyst to you. That's all from me this week, so until next time, I'll catch you later.