Utility Electric Fleets: Charging Ahead

As owners and operators of vehicle fleets, as well as providers of electricity, utilities have a unique opportunity in fleet electrification. By electrifying their fleets, utilities can gain experience and insights they can use to better support their customers on their own fleet electrification journeys.

However, recent research from the Smart Electric Power Alliance (SEPA) found that surprisingly few utilities have electrified more than a tiny portion of their vehicle fleets.

Why? One reason, explains Garrett Fitzgerald, principal of electrification at SEPA, has been the limited selection of available medium-duty EV models. Another reason is rooted in the procurement process, Fitzgerald adds. Like many large businesses or organizations, utilities’ expense evaluations tend to focus on upfront costs, rather than operational savings, which puts EVs at a disadvantage. Some utility regulators may also be less inclined to approve higher upfront expenses, even if the total cost of ownership (TCO) for EVs is lower than for conventional gas or diesel vehicles.

Additional reasons for lagging utility fleet adoption progress include:

• Mutual assistance requirements. Many utilities provide mutual assistance (or mutual aid) to one another during emergencies. Such emergencies could occur hundreds of miles away, and many involve power outages — conditions that are not ideal for EV deployment.
• Insufficient knowledge. Procurement decision-makers at utilities can lack the necessary knowledge or a blueprint to begin the process of transitioning their fleets.
• Brand loyalty limitations. Many utilities favor U.S. auto manufacturers, which may lag foreign manufacturers in terms of EV model availability.
• Change management. Training utility staff to use and optimize the benefits of EVs requires leadership support and investments in planning, education and time.

Evaluating the data
SEPA launched the Utility Transformation Challenge to provide a comprehensive, honest assessment of U.S. electric utilities’ progress towards a modern, carbon-free energy system. Drawing upon extensive surveys of more than 130 electric utilities, the analysis measured meaningful progress across utility infrastructure, programs, strategy and operations.

Regarding fleet electrification progress, the utility responses indicated:

• Nearly one-fifth (19%) hadn’t electrified any of their own fleet vehicles.
• Slightly more than half (55%) had electrified just 1% to 5% of their own fleet vehicles.
• Only one-quarter (26%) had electrified more than 5% of their own fleet vehicles.
• Only 7% had electrified more than 10% of their own fleet vehicles.
• Only 2% had electrified more than 20% of their own fleet vehicles.
• Only 1% had electrified more than 40% of their own fleet vehicles.

Quickly changing landscape
Since SEPA conducted the survey in 2020, a growing chorus of major utilities and utility parent companies have announced robust internal fleet-electrification goals, including:

• Alliant Energy plans to electrify 100% of its active light-duty fleet vehicles by 2030.
• American Electric Power (AEP) plans to replace 100% of its cars and light-duty trucks with EVs by 2030, and to electrify 40% of its entire on-road vehicle fleet by 2030.
• CenterPoint Energy plans to replace 100% of its current electric operations light-duty fleet vehicles with EVs in Houston and Evansville, Indiana, by 2030. It also plans to replace 10% of electric operations heavy-duty vehicles with EVs by 2030.
• Dominion Energy plans to electrify 75% of passenger vehicles by 2030, and will power 100% of all new vehicles (including heavy-duty vehicles) by electricity or alternative fuels after 2030.
• Duke Energy plans to electrify 100% of its light-duty vehicles and to convert 50% of its combined fleet of medium-duty, heavy-duty and off-road vehicles to EVs, PHEVs or other zero-carbon alternatives.
• Exelon’s electric and gas utilities plan to electrify 50% of their vehicle fleet by 2030.
• FirstEnergy announced that 100% of new fleet purchases of aerial and light-duty trucks will be EVs or hybrid vehicles beginning in 2021. It aims to achieve 100% electrification of such vehicles by 2050.
• Hawaiian Electric pledged to achieve a 100% electric passenger fleet by 2035.
• National Grid committed to electrify 100% of its light-duty fleet vehicles and most medium-duty fleet vehicles by 2030.
• Portland General Electric (PGE) plans to electrify more than 60% of its fleet by 2030, including the electrification of 100% of its Class 1 vehicles and forklifts by 2025.
• PNM Resources announced that 50% of all light-duty fleet purchases will be EVs by 2030.
• Southern California Edison (SCE) plans to electrify 100% of its light-duty vehicles, 30% of medium-duty vehicles, 8% of heavy-duty vehicles and 60% of forklifts by 2030.
• Southern Company plans to electrify 50% of its fleet vehicles across the auto/SUV/minivan, forklift and ATV/cart/miscellaneous segments by 2030.
• Tennessee Valley Authority (TVA) plans to electrify 100% of its light-duty fleet vehicles and 50% of its medium-duty fleet vehicles by 2030.
• Xcel Energy plans to electrify all of its sedans by 2023, all light-duty vehicles by 2030, and 30% of its medium- and heavy-duty vehicles by 2030.

Why now?
What’s driving these lofty new goals? The rapidly expanding selection of available EV models, including electric work trucks, is one key factor. Another motivation is mounting pressure from the financial sector to embrace environmental, social and governance (ESG) principles. In response, utilities and utility parent companies have adopted — and in many cases, expanded or accelerated — explicit carbon-reduction targets. The SEPA Utility Carbon-Reduction Tracker™ offers a public catalog and insights on these targets.

Fleet electrification can help utilities fulfill or supplement their carbon-reduction targets, while also demonstrating leadership by example.

• SCE estimates that in pursuing its 2030 fleet-electrification goals, it will save more than 620,000 gallons of fuel annually and eliminate close to 6,000 metric tons of greenhouse-gas emissions.
• Duke Energy forecasts that its commitment will reduce carbon-dioxide emissions by 60,000 metric tons and petroleum usage by 10 million gallons annually.
• Exelon projects that its goal will reduce annual emissions by 12,000 to 15,000 metric tons by 2030, potentially avoiding more than 65,000 metric tons cumulatively from 2020 to 2030.

By electrifying their fleets, utilities also aim to realize a lower TCO, gain a better understanding of the EV ownership and charging experience, maximize the grid benefits EVs can provide, satisfy state and local policy objectives, and inspire customers to follow suit.

One piece of the puzzle
Fleet electrification is one way utilities can innovate and lead by example in the burgeoning EV space. Utilities can also develop and deploy innovative customer program options, including incentives, EV-specific rates, managed charging and fleet services.

SEPA will continue to regularly assess utilities’ progress in the transition to a clean and modern energy system. Keep an eye out for updates on the next version of the Utility Transformation Challenge.

The SEPA Electric Vehicle Working Group
The SEPA Electric Vehicle Working Group includes more than 700 members and focuses on the role of utilities in the deployment of EVs by identifying trends, business models, and strategies to roll out “smart” charging infrastructure. The group tracks trends and examines opportunities for light-duty, medium-duty, and heavy-duty vehicle classes, fleet vehicles, and charging infrastructure.

The EV Working Group has four subcommittees, including fleet electrification. Topics include electrification 101 for fleet managers, electric school buses, infrastructure necessary for fleet electrification, and best practices for deploying and operating electric fleet vehicles.

For more information, contact [email protected]