The EV revolution is well underway. Passenger EVs now account for 9% of all vehicles sold globally and in major markets such as Germany and the UK, EV penetration is 26% and 21% respectively. For the carbon conscious, this is good news. And for investors, some opportunities are clear e.g. power grid upgrades, renewables, charging point infrastructure. However, at Igneo Infrastructure Partners, we look at the less obvious opportunities also.
Wide scale EV roll-out requires huge investment - McKinsey estimate around €150bn will be spent on EV-related infrastructure in Europe by 2030. Less appreciated is the need for software solutions to manage and enable this infrastructure investment. Power grid and charge point management for example will require more sophisticated tools in order to manage peak demand from EV owners. The scope of software services to support greater EV adoption is wide:
· Location aggregators – allowing EV drivers to plan and book in advance their charging visits
· Interoperability – making communication standards compatible between vehicles, infrastructure and management systems
· Customer service – integrating payment and shared services
· Data analytics – efficient EV network planning
· Smart charging – managing energy requirements for EV charging
These present opportunities for EV-related businesses able to manage large data volumes such as EV charging operators together or in conjunction with businesses such as off-street car park operators and retail partners.
How to balance supply & demand
The crucial role of software as EV adoption grows is particularly acute given the need to balance power grids. With renewables accounting for more of the energy mix going forward, the inherent intermittency of renewables demands smart charging solutions. EV-led supply and demand power peaks need to be addressed. Indeed the UK Government and OfGem have published a roadmap for ‘smart charging’ - the assumption being that by 2050 almost 80% ofEV owners will be ‘smart charging’ their car, charging outside the evening peak when power is cheaper and grid pressure lower.
Network management needs software solutions
But supply/demand energy management is not only an issue during peak evening periods, it will be a factor throughout the day. As EV adoption increases, public charger utilisation will surpass private. This matters as Boston Consulting Group estimate up to 50% of EV power will be supplied by public chargers within 10-years. These public chargers, utilising fast-charge technology, will subsequently place heavy demands on power grids during peak periods. Managing networks of public EV charge points will be critical to providing practical solutions at scale for electric vehicle users, including using Vehicle-to-Grid and battery solutions. Software solutions are also needed to further manage customer usage data, pricing strategies and energy management.
As the world embraces EV’s, the need for significant investment in new infrastructure is obvious. But the opportunity set for investors is not restricted to physical infrastructure – software solutions linked to it are likely to sit at the heart of the EV revolution.