U.S. Markets closed
  • S&P 500

    3,635.41
    +57.82 (+1.62%)
     
  • Dow 30

    30,046.24
    +454.97 (+1.54%)
     
  • Nasdaq

    12,036.79
    +156.15 (+1.31%)
     
  • Russell 2000

    1,853.53
    +35.23 (+1.94%)
     
  • Crude Oil

    44.78
    -0.13 (-0.29%)
     
  • Gold

    1,805.20
    +0.60 (+0.03%)
     
  • Silver

    23.28
    -0.02 (-0.09%)
     
  • EUR/USD

    1.1902
    +0.0006 (+0.0476%)
     
  • 10-Yr Bond

    0.8820
    +0.0250 (+2.92%)
     
  • Vix

    21.64
    -1.02 (-4.50%)
     
  • GBP/USD

    1.3364
    +0.0005 (+0.0388%)
     
  • USD/JPY

    104.5000
    +0.0200 (+0.0191%)
     
  • BTC-USD

    19,137.19
    +16.88 (+0.09%)
     
  • CMC Crypto 200

    380.50
    +10.75 (+2.91%)
     
  • FTSE 100

    6,432.17
    +98.33 (+1.55%)
     
  • Nikkei 225

    26,653.06
    +487.47 (+1.86%)
     

Utilities Set to Cash in on Growing EV Charging Business

Aparajita Dutta
·4 min read

In the United States, the transportation sector accounts for the biggest portion of greenhouse gas (GHG) emissions. As the entire economy is transitioning toward a clean energy environment, there has been increasing electrification in the transportation sector to promote reduction in CO2 emissions and air pollutants.

This has offered a lucrative opportunity to Utilities to invest in the rapidly growing electric vehicles (EV) market, by setting up thousands of new EV charging stations across the nation.

Gap Between EV Sales and Charging Stations

With more individuals choosing to switch from gasoline-powered vehicles to EVs each year, the demand for EV charging stations has been rising rapidly.  However, the charging infrastructure is not yet adequate in the United States.

Per the latest report by the International Council on Clean Transportation, more than 3 million EVs are expected to be on U.S. roads by 2025. Across major U.S. markets through 2017, only one-fourth of the workplace and public chargers needed by 2025 were in place. To achieve the 2025 target, charging infrastructure deployment will have to grow at about 20% per year.

The biggest charging gaps are in Boston, New York, Portland, Denver, Washington and some cities of California as EV adoption is likely to grow rapidly in these places.

Will Utilities be Able to Fill the Void?

Utility companies play a vital role in filling the gap between EV sales growth and charging infrastructure, since they possess the unique expertise and advantage in setting up faster and more efficient charging stations nationwide. Notably, the electric grids throughout the United States are already managed and maintained by these companies, which may help reduce the costs for expanding EV charging station infrastructure.

Since rising EVs on the road means increased strain on the electric grid, electric utilities, with deep rooted knowledge in maintaining such grids, can efficiently help in successful transformation of the grid for the EV revolution.

Impressively, many of the biggest initiatives in EV charging infrastructure as of the end of 2018, in California and elsewhere were led by electric utilities in partnership with charging service providers.

To expand their footprint further in the EV charging market, a group of utilities, including several investor-owned utilities, released a report in June 2020 recommending addition of electric vehicle charging stations for freight haulers and delivery trucks, along the interstate corridor running from Canada to Mexico. This report was commissioned by six public utilities, Pacific Gas and Electric PCG, Pacific Power, Portland General Electric POR, Puget Sound Energy, San Diego Gas & Electric – Sempra Energy SRE subsidiary, and Southern California Edison – a unit of Edison International EIX.

No doubt this proposal reflects the eagerness of these utilities to invest in the EV charging business.

Utility Stocks to Gain

Looking ahead, infrastructure projects with Electrify America and three major electric power utilities are projected to cover about 40% of the charging infrastructure gap in California markets. U.S. utilities are rapidly investing in EV charging stations in other states as well, as is evident from the discussion below:

Edison International's subsidiary, Southern California Edison (SCE) received regulatory approval in August 2020 from the California Public Utilities Commission for the expansion of its Charge Ready 2 EV charging infrastructure program. The $436 million program will be the nation’s largest light-duty electric vehicle (EV) charging program, which aims to add about 38,000 new chargers throughout the utility’s 50,000-square-mile service area. Its ongoing $356 million Charge Ready Transport program will add at least 870 commercial charging stations over the next five years, expected to be capable of powering at least 8,490 vehicles.

Duke Energy DUK in August 2019 proposed the largest investment in EV infrastructure ever in the Southeast U.S. – a $76 million initiative to spur EV adoption across the state. The program is set to support about 2,500 new charging stations in North Carolina. The company has also installed approximately 530 EV charging stations within its Florida service area.

Pacific Gas & Electric’s EV Charge Network program is helping to accelerate California's transition to a clean transportation future by offering EV charger installation at select locations in PG&E's service territory. Through this program, the company is set to install up to 7,500 Level 2 EV chargers at multi-unit dwelling and workplaces between 2018 and 2020.

More Stock News: This Is Bigger than the iPhone!

It could become the mother of all technological revolutions. Apple sold a mere 1 billion iPhones in 10 years but a new breakthrough is expected to generate more than 27 billion devices in just 3 years, creating a $1.7 trillion market.

Zacks has just released a Special Report that spotlights this fast-emerging phenomenon and 6 tickers for taking advantage of it. If you don't buy now, you may kick yourself in 2021.

Click here for the 6 trades >>


 


Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
 
Sempra Energy (SRE) : Free Stock Analysis Report
 
Edison International (EIX) : Free Stock Analysis Report
 
Portland General Electric Company (POR) : Free Stock Analysis Report
 
Duke Energy Corporation (DUK) : Free Stock Analysis Report
 
Pacific Gas Electric Co. (PCG) : Free Stock Analysis Report
 
To read this article on Zacks.com click here.