Can Oil Majors Make Electric Vehicle Charging Pay?

One of the more surprising implications of the energy transition is energy companies actually trying to sell you energy. For example, today you buy gasoline, sure, but no one sells it to you. You show up randomly and pump the gas yourself. Possibly you’re influenced by saving a cent per gallon versus some other place nearby. But you buy gas because you have to.

This is why the oil business is mostly geared toward finding barrels; demand takes care of itself. Now electric vehicles are messing with that. The latest peak demand call comes from Goldman Sachs, which now expects road fuel consumption to top out in five years. One way to deal with this is to swap out pumps for plugs. Making a go of that, however, means really selling those electrons.

The primary difference between charging up an EV versus filling up a regular car is that the former can often be done at home or the workplace, and these account for the vast majority of connectors and likely will continue to do so. They tend to charge slowly, however; fine if you’re sleeping or working in the meantime but not if you’re on the go. This also doesn’t work so well if you live in an apartment without a garage.

So to really speed EV adoption, you need public chargers, especially high-power ones delivering a full charge in 30 minutes or less. BloombergNEF estimates that while these might represent less than 1% of chargers by 2040, they will dispense almost a quarter of the power going into vehicles worldwide.

Fast Forward

Fast public chargers are expected to account for roughly a quarter of vehicle power demand by 2040

Source: BloombergNEF

Note: Share of vehicle electricity demand by charging location.

Current utilization rates of 10-20% generate a return on invested capital of only 7-9%, according to a recent report from Bernstein Research analyst Oswald Clint. 1 At utilization rates above 30% — meaning about 7 hours out of every 24 — that modeled return jumps above 30%, more like what’s needed to convince oil investors that going green pays. That utilization threshold comports with work done by Chris Nelder at the Rocky Mountain Institute on vehicle-charging economics, as well as projections from Fastned BV, an independent fast-charging network based in the Netherlands.

View full article at www.bloomberg.com