July 16, 2021 - By Ashiss Kumar Dash, Infosys
How EVs will re-energize the energy sector
As of February 2021, 191 countries from around the world are actively working on reducing their carbon footprint and CO2 emissions in line with the Paris Climate Accord. Among the strategies that countries, communities, and corporates are charting to meet their emissions goals, electrification of transportation has risen as a key driver. Consequently, the global Electric Vehicle industry has seen a massive boom.
For some perspective, California plans to outright ban the sale of gasoline-powered cars by 2035. Ambitious as that target sounds, China also aims to have a 100% EV-to-gasoline ratio by 2035, raising its 2025 EV sales target to 25%, and is pioneering the business of swappable batteries and mobile charging units. Germany with its equally tall targets is also aggressively expanding its EV charging infrastructure. Add to this the commitment from some of the world’s largest automotive players to go electric over the next decade, and the battery-powered future of our dreams is inevitable.
As governments and policymakers incentivize this transition for consumers, there are massive changes on the horizon that the energy industry needs to spot, analyze, and prepare for, to not be disrupted out of business.
The transformation tipping point is near
The EV space is pushing customers to leverage renewables (think solar and reverse-charging), and is driving Lithium-Ion battery makers to innovate battery tech that’s more efficient and faster to charge. While electricity production will have to massively scale up over the coming years to meet the demands from millions of EVs, oil and gas providers will need to leverage their infrastructure and retail know-how to provide charging stations at scale.
A 2020 study by Bloomberg found that 290 million charging points will be required globally by 2040 to support the growing number of EVs. Wall Street Journal also confirmed that the largest roadblock to greater EV adoption is range anxiety resulting from a lack of public charging points.
Two major factors affecting the EV industry are affordability and range offered by batteries – the most expensive component in an EV. Fortunately, battery costs have plummeted from an estimated $1000/kWh in 2010 to ~$120/kWh in 2020 and are projected to fall to around $60/kWh by 2030 if investments in scaling up production keep up. Lower maintenance costs for EVs (which have less than 5% moving parts than IC vehicles) will further tip the scales.
The disrupted can become the disruptor
EVs are already displacing demand amounting to 1 million barrels of oil per day. By 2040, this number is expected to rise to 17.6 million barrels per day. At the same time, the US alone will need close to 1.5 million chargers by 2030 to support growing EV fleets, according to a report from Plug In America. Globally, this number stands at 290 million charging points, of which at least 12 million must be public charging stations. In addition to the passenger vehicles, electrification of the medium- and heavy-duty vehicles used for freight hauling will need this infrastructure. The result – a significant spike in electricity demand that will need to be addressed by green energy sources like solar and wind.
This is an excellent opportunity for oil and gas companies that are willing to transform and act quickly by modernizing existing gas station networks into future-ready electric charging stations. Paired with the right digital infrastructure, this will open unprecedented opportunities for providers to deliver an array of end-to-end EV services to customers while leading the charge in building more sustainable energy networks.
The need for a digital energy orchestrator
Digital transformation will enable existing oil and gas companies to build a parallel ecosystem around EV charging. The right technology will enable utility enterprises to modernize the grid to be smart and bi-directional, power the grid with renewables, receive unused power generated from rooftops, monitor how prosumers and community generation impacts load balance and dynamically manage the load. The opportunities to innovate and disrupt with a robust software backbone are plenty.
The need of the hour then is a Digital Energy Orchestrator that can offer data analytics, AI/ML, IoT platforms and even blockchain, and fuse infrastructural touchpoints like vehicle/grid sensors, GPS and mobile apps, to ultimately help not just oil and gas but energy and utility enterprises build, operate, and scale this futuristic ecosystem.
This IT/OT convergence will be necessary to accommodate a smart-charging infrastructure, innovate new rate structures to encourage load shifting to off-peak hours, and actively enable peer-to-peer energy transactions between energy prosumers.
At their core, the oil and gas enterprises that power our vehicles today can continue doing so for decades to come, long after we transition to a completely electrified system. They are not only perfectly positioned to build an entire ecosystem of products and services around EVs, but they also bring together multiple stakeholders from across the value chain to completely change how the automotive and power industries operate. Achieving it all will simply take some vision and transformation.
Ashiss Kumar Dash, SVP and Segment Head (Global) for Services, Utilities, Resources and Energy business at Infosys, leads a highly driven team of client services professionals and technologists focused on creating leading-edge capabilities to help clients navigate their digital journey. In his role, Dash is responsible for the growth of this amalgamation of verticals, from setting strategic direction, driving financial and operational excellence, to accelerating revenue momentum. With over two decades of industry experience, Dash creates business strategies and consolidates client services for the resources (chemicals, metals, mining and agribusiness) and utilities (electric, gas and water) sectors. Dash specializes in global delivery solution design and IT transformation. He also has expertise in designing value-driven engagement models to create business value transformation programs. As an initiator of innovative thoughts and opinions,