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EV charging growth: How can power and utilities prepare?
As electric vehicle (EV) adoption rates rise across the United States, power and utilities will face additional demand requiring proactive moves to reduce grid and capacity impact. The US grid should be able to handle the increases through the next two decades according to a PwC analysis of projected EV growth and capacity needs. But there’s a caveat. Electric providers should consider measures to shift or spread out EV charging to reduce periods of peak demand that could stress grids in areas known for fast-rising EV adoption as well as other emerging growth areas across the country.
Many utilities already have initiatives focused on managing or learning from today’s EV charging. To help further these efforts, we analyzed how charging could shift in the coming years to ease capacity constraints and create other benefits for your business as well as your customers, EV prosumers and other stakeholders. Building a successful strategy to manage EV charging could help power and utilities find new revenue growth opportunities, enhance reliability, facilitate grid modernization and reduce the need for new peak generation.
Preparing to power over 90 million EVs
Government programs intended to increase EV production and encourage consumers to adopt EVs are among many factors expected to move the nation further into an era of coast-to-coast EV growth. There could be 92 million EVs on the road in the US by 2040 based on a PwC analysis — 20 times more than the estimated 4.5 million EVs in 2023.
The impact of EV charging on the national grid over the next two decades could be significant yet manageable with the right planning and control measures. According to our projections, the average total annual EV load in the US could rise from an estimated 24,000 GWh in 2023 to 468,000 GWh by 2040. That’s an 1850% increase or about as much as the total electricity generated annually in Texas. This anticipated EV load could account for 9% to 12% of the projected US grid capacity, which is under the current reserve margins, but still at levels that may factor heavily into load demand and generation needs. While the growth in some parts of the country will likely outpace other areas, every service territory across the US is expected to see significant load increases.
Source: PwC Strategy& analysis of projected EV load increases from 2023 through 2040
Charging infrastructure needed for EV growth
Meanwhile, the number of charge points is expected to climb to 58 million by 2040 from about four million in 2023, according to our analysis. Residential charging is forecast to be among the fastest-growing charging segments, accounting for 29% of the total, followed by charging at work, on-the-go charging and others. Also, there are signs that fleet charging could be on the rise. A 2023 PwC survey of large commercial and industrial (C&I) customers found that 56% of those surveyed have already begun electrifying fleets, with another 30% expecting to start within the next two years. As such, utilities should closely monitor emerging customer needs and societal trends that could either expand or contract the growth of certain segments. For instance, infrastructure needs could change near large companies and corporate parks or charging needs could shift even more from work to home if the remote-work trends persist.
Can renewables help to counter EV load?
Behind all this EV growth is an industry-wide cleaner energy transition that may become an important factor in how power and utilities manage increasing energy needs. There’s an opportunity to strategically deploy more affordable or available cleaner power generation, moving away from more carbon-intensive sources. Companies that operate in areas with strong renewable growth, for instance, may be able to shift EV load toward hours of the highest solar generation and away from the late afternoon and evening, when residential EV charging now typically occurs. Our analysis indicates that utilities could reasonably shift the average daily EV load to more optimal times if most EVs across all charging types participated in time-of-use (TOU) rates or other incentives intended to shift charging windows. Aggregating controllable EV load as a “virtual” generation asset can be used for long-term capacity planning as a low-cost, low-carbon alternative to building new generation. The most beneficial load shift and charging profile may look different based on the energy mix of each utility, with programs tailored to the most efficient and available generation across service areas.
What can we learn from California?
Utilities may want to look closely at California, a pioneer in EV and solar adoption. According to public data, nearly 40% of all EV car registrations in the US were from California as of 2021. Solar accounted for 20% of the state’s total energy generation in 2022. Based on a PwC analysis, aligning EV charging demand in California with renewable energy availability could help to reduce current timing imbalances between peak demand and solar power generation, commonly referred to as the California duck curve.
With properly designed TOUs and other incentives, the state could shift as much as 41 GWhs of daily load to more optimal times by 2040. The amount of power delivered to EVs would remain the same, but the utility grid could have more flexibility to address other supply and demand constraints. In addition to grid stability, utilities in California and elsewhere could reduce the need to activate (or even build) new generation. Unlocking these benefits requires more advanced forecasting and operational planning capabilities, including the use of more granular load data and digital tools to understand peak loads.
Source: PwC Strategy& analysis of California’s projected possible daily EV load shift (GW) in 2040
Key questions to consider when evaluating how to control and incentivize EV charging
Because EV penetration and generation sources vary from one state or service territory to another, charging programs and incentives should be tailored to the specific needs of customers. Asking these key questions now will help build effective programs as well as a smoother and more manageable path forward.
- Customer needs
- Behavioral changes
- Rates and regulatory
- Capabilities
Customer needs
What are the EV charging demands across segments today, and what might customers expect tomorrow?
Shifting the EV load means closely tracking charging by all segments — including residential, at-work, fleets, on-the-go and public parking — and anticipating how these segments may grow (or contract) in the future. Segments could respond to incentives in different ways, so guiding behavior across segments will likely require tailored strategies. Residential customers, for example, may respond well to credits on their electric bills or other near-term incentives. Meanwhile C&I customers operating large fleets may look for longer-term incentives such as guaranteed rate structures or support for infrastructure upgrades.
Behavioral changes
How can we foster behavioral changes and overcome challenges?
Simply incentivizing customers may not be enough. Consider how to effectively communicate or market the benefits of your programs to facilitate adoption across residential and C&I customers. This means developing ways to learn what incentives could alter charging behaviors and which ones may not. Also, it’s important to understand if customer concerns, such as range anxiety, could stand in the way of behavior changes. You may consider educating customers about the day-to-day program benefits as well as how their participation supports broader efforts, such as grid reliability and the transition to a cleaner, more efficient energy future. It’s also important for utilities and other EV players to create or expand digitally enabled customer experiences, including applications that make it easier to monitor charging, find charging locations and access other helpful information.
Rates and regulatory
How should rate structures and regulatory strategies evolve to support EV needs?
Properly designed TOU rates can shift demand toward supply while helping to maintain grid stability and reducing the need to activate more costly and carbon-intensive generation sources. Deferring the load and lowering peak demand may also help utilities avoid building more peaking load capacity, potentially avoiding rate cases or capital investments related to new generation. Instead, companies could seek approval for investments related to new or upgraded infrastructure supporting EV charging, including new transmission and distribution lines or grid technologies.
Capabilities
What new capabilities or relationships should we consider to support the EV evolution?
The build-out of EV charging and other infrastructure enhancements will take ongoing collaboration across industries — from charge point operators and automotive manufacturers to power and utility companies. You may want to consider what strategic capabilities or strategic relationships are needed or how existing capabilities and relationships should continue to evolve. This could include working with charge point operators and other vendors to help build infrastructure in your territory. It might mean taking a leading role in exploring the use of EVs as “mobile batteries” during high demand or DC fast-charging for more efficient delivery of power in states with significant renewable generation. For utilities, it could mean advancing forecasting and planning capabilities through the use of more advanced geospatial, digital tools and partnering with other value chain players to understand more real-time customer behavior and load impacts through available data.
Sam McBride and Konstantinos Siokos contributed analysis and research to this report.
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