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How your Utility can claim a stake in the high-growth electric vehicle market

“Utilities have considered EV charging as a top-line synergy play, opening the potential to higher energy sales, and the opportunity to deploy their balance sheet in this high-growth sector.” – Drake Star Parnters, EV Charging at the Crossroads: The Fast, The Curious & The RaEV charger

As the Innovation Manager at your Electric Utility, you’ve presented a compelling business case for an electric vehicle charging operation.

In this blog post, we’ll discuss a business model canvas that highlights key components to a successful E-Mobility program development from a Utility’s standpoint. A model is a simplified representation of, in this case, a future reality. I’ve included some partner names for illustration purposes. The model will help describe the rationale of how the program will help create, deliver and capture value.

At SAP, we are committed to helping businesses transition to electrified transportation as quickly as possible. Why? Because it makes good business sense, it addresses the 3 Ps of people, planet, and profit. The alternative- business as usual- is unsustainable for the global environment and our customer’s bottom line. We want to help our electric utility customers transition to a sustainable future.

Figure 1: Business Model Canvas for a Utility’s E-Mobility program. Images licensed to SAP

Let’s start with the customer segments. E-Mobility is an excellent fit for Utilities because you already have the customer base and established relationships. There are three main segments in order of scale and fastest profit potential:

1. Fleet electrification: your largest industrial customers consider electrifying their vehicle fleets to improve margins and meet decarbonization goals.

2. Commercial customers: Two flavors here

  • Charge at work: your business customers want to provide their employees with charging options at their place of business
  • Point of interest PoI: retailers want to increase foot traffic to stores, and they know the electric vehicle owners represent an attractive consumer profile.

3. Residential customers: people want electric cars. Once they go electric, it’s unlikely they will go back to the internal combustion engine ICE. I test drove the new Volkswagen ID.4. It is a fantastic drive. But we’ll need a way to charge our vehicle at home.

Once you achieve critical mass in all those segments, you’ve created a distributed energy resource. You can start planning the next phase of your metamorphosis: vehicle to grid V2G operations, but that’s beyond our discussion for now.

What is your E-Mobility value proposition?

To provide your customers with turn-key EV charging hardware, software, and services. That’s it. Simple. You already have established customer relationships. And you’ll be able to grow these, attracting new customers and boosting sales for this new business, boosting commodity energy sales of your traditional business.

You’ll leverage your incumbent communications, distribution, and sales channels. The customer relationships management organization is perfectly suited for new electric vehicle services. And you’ll be able to raise awareness with advertisements in the established postal billing process.

How to generate cash? There are a few revenue stream opportunities:

  1. A one-time fee for the turn-key installation of your customer project
  2. A service subscription fee with “all you can charge” for residential customer night-time charging
  3. Reuse your existing pricing models and rate structures

You’ll need a few key resources. And this is where SAP comes in with a concrete solution: SAP E-Mobility. It’s easy to manage a few charge points, but with our cloud-based software, you’ll be able to handle a large number of them remotely. What’s more, you’ll be able to connect to your SAP S/4HANA billing and invoicing system. Of course, another key resource will be access to so-called EVSEs, electric vehicle service equipment. This hardware constitutes the charging stations and the network that connects them. Most importantly, you already have the backbone, nay you ARE the backbone to any charge point operator: the power distribution grid.

You will need to build key partnerships that will provide the essential resources we just mentioned. SAP will be such a partner. We want you to succeed because the task to electrify transportation matters. We are your business solution provider and also your business transformation partner. Together we will develop those relationships with EVSE manufacturers, equipment installers, and subcontractor agencies when required.

The cost structure is the last component of your new business model. You will most likely start with a value-driven, high-cost structure as you scale up the charging network and the overall business. Once the infrastructure is in place, you’ll focus on minimizing costs wherever possible. Over time, you’ll have a cost advantage thanks to economies of scope insofar as the Utility leverages the channels and resources described above.

Setting up this business won’t be easy, but should be worth the investment. You’ve already learned about NB Power in Canada. Other examples include Stadtwerke München in Germany and E.ON in the UK.

What are some examples here in the United States? Also, what are your thoughts on the future of electrified transportation and the charging infrastructure needed to support it? What other role can Utilities play in this space? Please post your comments and questions below. I look forward to your feedback. I’ll be posting more topics related to electric vehicles, charging networks, and sustainability in general; follow me to be notified.

If you have other related or specific questions you’d like answered by the community, please post them in the community’s Q&A area here. Another helpful link is the community’s topics page.  You can engage with peers on the Climate21 topics page, and it’s your one-stop shop to learn more about other sustainability initiatives at SAP.

 

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