Utilities and Ride Hailing Electrification: An Opportunity for All | SEPA Skip to content

Utilities and Ride Hailing Electrification: An Opportunity for All

Ride hailing companies know a thing or two about opportunity- their innovative platforms were founded to connect users to create new mobility opportunities. So, as the ride hailing industry commits to ambitious carbon reduction targets, it’s unsurprising that they’re turning to transportation electrification — the opportunity of the century for utilities and other electricity stakeholders.

Prominent ride hailing platform Lyft, for example, aims to convert to 100% electric vehicles on the platform by 2030. The team at Lyft acknowledges they cannot accomplish this alone, and has detailed plans to collaborate with electricity stakeholders to make good on their commitment. Now is the time for utilities to seize this unique opportunity.

“Utilities and local governments had many of their own targets, so we were stuck in a chicken and egg situation,” says Jon Walker, Sustainability Policy Manager and utility partnership expert at Lyft. “We decided to send a very strong partnership signal. Baked into making our commitment successful is collaboration with utilities.”

What’s in It for Utilities?
Ride hailing companies, sometimes called transportation network companies (TNCs) have self-identified as willing and invested electrification partners. Utilities that commit to working with TNCs are unlocking a key opportunity to scale transportation electrification technologies and programs that will incentivize electric vehicle (EV) adoption among both TNC and non-TNC drivers. In addition, TNC drivers typically drive and charge at different times of day than personal EV drivers. If managed correctly, this synergy in charging patterns has the potential to help flatten the load curve as EV adoption grows.

TNC platforms also bring a key asset, detailed trip data, to these collaborations that are of great value to utilities. This data can help reveal areas where TNC drivers, and potentially some private drivers as well, have the greatest need for additional charging infrastructure. When combined with other utility planning tools and processes, this valuable data can support utility decisions on future public charging locations. As shown in the figure below, higher utilization can significantly shorten the financial return on the up-front costs of installation.

Higher-utilization charging stations break-even sooner for installers. (Source: Deloitte, Plugged In: The Last Mile)

Another benefit of transitioning every TNC vehicle to electric is exposing riders to the power, convenience, and ride experience of EVs, not to mention the cost benefits of going electric. This valuable mass-market customer education expands upon traditional utility-led initiatives, such as EV ride-and-drive events and other marketing, notes Kate Staples, Manager, Electrification at Dominion Energy Virginia. “Also, TNC drivers drive a lot of miles. If they share how an EV works for them, it will help [others] resolve concerns with range anxiety.”

The Unique Role of the Utility
Enabling the right charging infrastructure
As TNCs get more of their drivers into EVs, and charging networks increase the availability of DC Fast Charging (DCFC) infrastructure, utilities can fill key charging infrastructure gaps. A recent Rocky Mountain Institute (RMI) report found that primarily relying on DCFC eliminated many of the cost benefits of EVs for TNC drivers. The report identified a need to secure level-two (L2) charging for ride hailing drivers, whether at the home or with public L2 chargers in residential areas. Utilities can complement the growing charging ecosystem directly by installing chargers, and indirectly by providing cost-effective L2 charging access through “make-ready” programs, L2 public charging incentives for TNC drivers, and incentives for L2 residential charging at houses and multi-unit dwellings (MDUs).

Effect of Increased L2 Usage on EV Total Cost of Ownership (TCO) (Source: RMI, Racing to Accelerate EV Adoption: Decarbonizing Transportation with Ridehailing)

“Utilities have a unique capability to get charging infrastructure installed efficiently and effectively, and manage it – maximizing benefits and minimizing costs for everybody,” says Dominion’s Staples. Capabilities can include expertise in charger installation, local and trusted relationships with customers and vendors, and permitting and system management teams. Walker also notes that utilities have the ability to monitor and ensure reliability and resilience at charging stations.

Beyond ensuring reliable, resilient, and ideally-located DCFC and L2 charging, utilities can incentivize the deployment of smart chargers to collect data on charging times, durations, and locations. As more TNC drivers switch to EVs, utilities can use smart chargers to facilitate managed charging solutions, minimizing grid impacts, such as new daytime system peaks. This data is also helpful for utilities developing cost-benefit analysis used in regulatory filings involving vehicle-grid integration (VGI) initiatives.

Streamlining Customer Education
Many utilities have programs to educate their customers on EVs, types of chargers, optimal charging behavior, and more. With a multitude of incentives and available options, ride hailing drivers would benefit from getting all their information in one place. For example, Lyft’s Walker identified five partial charger reimbursement opportunities from different entities for California customers alone! “What we really need is someone to consolidate all those incentives so it’s just a click of a button.”

Utilities are perfectly suited to provide this streamlined information, allowing TNC drivers to spend less time determining a charging plan or researching rates. “Utilities, like Dominion, have a captive audience of customers who trust us to provide electric solutions; they now also want us to provide transportation solutions,” Staples notes. “We can be that solutions provider.”

Using Pilots to Set Rates
Pilot programs, per Staples, are one of the strongest tools utilities have to design rates that can facilitate TNC electrification. Pilot programs give utilities the opportunity to inform time-of-use rates and other price signals while minimizing risk. “Pilots allow us to see if there’s a rate solution that is applicable to this [ride hailing] segment. We need to get it right by using data.”

Walker also identifies some rate-related challenges, including steep demand charges for DCFC installers inflicted by isolated charging events. As utility pilots reveal best practices in recovering charging installation costs, utilities can proactively share these findings with charging installers to help them maximize returns and minimize the impacts of demand charges on their bottom line. Walker also mentions the possibility of a bulk commercial rate for an entire TNC fleet. “We could treat that dispersed fleet as one commercial customer and do a commercial level 2 rate. In Colorado, there’s a less than 10 cent per kWh commercial rate – that’s something we’re very interested in seeing if we can capture.” As utilities build collaborative relationships with TNCs, they can better assess these ideas and determine a combination of rate solutions that work for all stakeholders.

Demand charges for DCFC can increase rapidly for installers. Could utility rate solutions help? (Source: McKinsey & Company, How battery storage can help charge the electric-vehicle market)

The Role of Regulators

Utilities and TNCs are only one piece of the puzzle. Regulatory support is also key to unlocking a fully electrified ride hailing ecosystem. Regulators should be aware of the need to promote TNC-friendly infrastructure and programs. Streamlined incentives and proper funding can go a long way to providing benefits for TNC drivers. Likewise, regulators can help facilitate this transition by promoting innovation and protecting consumers through improved regulatory processes. SEPA recently published a roadmap for regulators to enable EV adoption and pave the way for managed charging and vehicle grid integration (VGI). Many of these solutions can help further TNC electrification.

Seize the Opportunity
Utilities have a strong motivation to collaborate with TNCs as they pursue their electrification commitments – and many already are. SEPA members, such as Xcel Energy, Southern California Edison, Baltimore Gas & Electric, and others have already connected with Lyft to begin this work. All utilities should consider incorporating TNC electrification opportunities into their transportation electrification plans. Through collaboration, utilities can begin unlocking the benefits of transportation electrification before mass adoption. TNC electrification may hold the key to accelerating the overall EV transition, and to help all stakeholders meet their goals faster – a worthy opportunity indeed.