It should also be thinking: "Ah-ha!"
Because much of the angst in the oil patch, of course, centers on electric vehicles -- and there's a certain sector beginning with "u" that might benefit from that.
The total potential market for electricity fueling American vehicles is staggering (warning: large back-of-envelope ahead).
Let's just take light-duty vehicles with a short wheel base (not heavy trucks or buses), of which there were about 190 million on the road in 2015, according to government figures. For the sake of simplicity, replace them all with a full battery-electric vehicle that gets 3.5 miles per kilowatt-hour, loses 10 percent of the power it takes as it charges and discharges, and travels 13,000 miles a year.
Presto! You've basically created an entirely new center of demand for power rivaling the entire industrial sector of the U.S.:
The prospect of roughly 20 percent growth in a century-old industry that's been flat-lining on demand for a decade is so alluring it's almost scary. And, in fact, it is -- because adding even a portion of that much demand to the grid takes more than a little planning and coordination.
The vehicle fleet doesn't turn over on a dime, though. Plus, if done right, charging wouldn't be a simultaneous nightly ritual conducted in America's garages, overloading the grid.
That's no reason for utilities (or others, importantly) to be complacent or miss the potential opportunity, though. In a report published Tuesday called "From Gas to Grid", analysts at the Rocky Mountain Institute point out there could be 2.9 million electric vehicles on the road within five years , adding about 11 terawatt-hours of demand -- equivalent to creating another New Hampshire.
The RMI is, of course, an advocate for clean energy and reducing carbon emissions, so its vision of rising vehicle electrification fits with its worldview. Yet most of the world's automakers and governments in several major economies have adopted electrification strategies, and several major oil companies also factor it into their projections. The pace at which it takes place is debatable, but dismissing the trend altogether would be hard to justify.
And the point of the report isn't merely to laud a sweeping revolution in transportation. Rather, it points to the critical need to get the charging infrastructure right today if tomorrow's electric vehicles are to realize their potential. As co-author Chris Nelder puts it, there's a risk in "waffling about this chicken-and-egg problem" rather than planning now.
The role of utilities will be central to this.
That doesn't mean a future in which utilities simply own all the charging infrastructure in your region, as they do the wires, poles, substations and many power plants. But if state governments want to prepare for or encourage vehicle electrification, then those extra power loads outlined above mean utilities could be crucial in, as the report suggests, building "make-ready" infrastructure -- essentially, wiring to the curb, letting them or a third party then put a public charging station on top. (Remember, utilities earn a return on building stuff, not selling power per se).
Letting utilities spread the cost of this investment across their ratepayers will depend on how high a value local regulators place on things like clean air and limiting carbon emissions. Linked to that is how comfortable regulators are with the concept that building a vehicle-charging network falls under the usual remit of planning for future demand, just as they might consider proposals for a new sub-station.
So-called level-2 chargers are the most common type deployed right now; for example, they account for more than four-fifths of California's roughly 13,000 public chargers, according to the RMI. These offer higher power, and thereby faster charging, than a standard socket; a typical one might take about three hours to add 80 miles of range.
This is fine if you are charging at home or at the workplace (maybe even the mall) for standard commutes, but won't cut it if you need to charge up again in a hurry -- say, on a freeway. As of now, there are very few direct-current fast chargers installed, and even finding an available public level-2 charger can be tricky -- even in California:
Price is the critical element here. More sophisticated pricing, utilizing time-of-use rates or even location -- say, a discount if you charge at your employer's car lot -- would shift demand around to help address that mass switch-on threat described at the beginning.
Those fast chargers are a different issue, though. Their high power means they can incur demand charges, a very high tariff that typically applies to larger customers such as a factory. Under the RMI's assumptions, even in electric-vehicle-friendly California, the juice for a fast charger costs way more than gasoline, mile-for-mile:
As with any premium service, faster charging should be more expensive than regular charging, especially given that installing one can cost upwards of $50,000 (versus maybe $500 to $6,000 for a level-2 unit). But if a state wants to get more electric vehicles on the road, then some sort of special pricing for fast chargers -- say, an initial waiver on demand charges until a certain threshold is reached -- looks essential.
Easy to agree/regulate/price/litigate/build? No, but hardly impossible, either -- and utilities have a strong incentive to get behind it.
Update: Updated to clarify that the light-duty vehicle example in the fifth paragraph refers to vehicles with a short wheel base.
This column does not necessarily reflect the opinion of Bloomberg LP and its owners.
This is roughly in line with estimates published earlier this year by Bloomberg New Energy Finance.
To contact the editor responsible for this story:
Mark Gongloff at firstname.lastname@example.org