As many utilities approach or have achieved their long-term goals in the energy efficiency sphere, they face a future of declining electricity sales and projections of constrained load growth. This issue has been identified by several studies and industry leaders and requires a calculated solution. For several utilities, this solution has taken the form of electrification programs, designed to electrify previously non-electrified end-uses. In fact, this solution has the potential to address several additional problems faced by the industry, although it presents unique challenges.
There are several reasons why many utilities are incentivizing electrification equipment:
- Replaces fossil-fueled equipment with electric
- Suitable for transportation, material handling, heating, commercial, industrial, agriculture, etc.
- Provides operational benefits and lower energy bills to customers
- Decreases emissions (i.e., decarbonization)
- Increased system utilization drives down rates
Although utility programs that incentivize technologies aimed at beneficial electrification objectives are multiplying, Figure 1 below summarizes C&I electrification programs from around the U.S. as of late 2017.
Map courtesy of ICF. Copyright ICF Resources, LLC, 2019
- On-Road Transportation: On-road transportation is a key area of electrification activity as evidenced by a growing interest in both municipal buses and school buses as suitable targets for conversion. There are a few active programs or pilots in development to explore busing with electric fleets, specifically to address smart grid challenges and battery storage options. Moreover, there is significant interest in future fleet electrification efforts. In these cases, the customer (municipality, transportation department, or school district) is the recipients of rebates, and the planning discussions are tied to grant applications.There are a number of players in the on-road landscape that could materially contribute to the decisions around investments in infrastructure. These include state and local governments, utilities, property developers, as well as fleet owners and retailers seeking to offer a competitive edge. With companies like Amazon, UPS, and FedEx growing their EV fleets, there is increasing opportunity for road electrification programs.Automotive dealers also offer the opportunity to drive applications for electric vehicles. The highly competitive nature of vehicle sales means that auto dealers are always looking for ways to close a sale. And with incentives for both the vehicle and the charging system, retail auto dealer can be leveraged to generate both individual and fleet sales.
- Non-Road Transportation: Non-road transportation electrification initiatives are fairly common and appear to act as a foundation for the development of electrification programs. Forklifts in particular are the initial entry point into electrification for the utilities, driven by active sales in primary and secondary markets. There is the added advantage of improving air quality from gas or propane when they are operated in closed spaces. According to Modern Materials Handling (2017), global lift truck orders across all classes including electric grew by 18% with US sales increasing by 12.6%.Forklifts are the exception to the rule of incentivizing only the customer. Incentives for forklift dealers are being used by four of the five utilities we interviewed, with at least two of the utilities using them as the entry point to their electrification efforts. Port authorities, municipal bodies, airport authorities are also eligible for participation and active participants. Municipal bodies were recognized as strong target for electrification opportunities.
- Commercial Equipment: Customers are the recipient of rebates for electrification purchases. However, there is active use of or consideration of mid-stream programs for commercial kitchen equipment. Some utilities are exploring how they can use the mid-stream model with more types of equipment.
- Customer Directed Rebates: The biggest positive characteristic of customer directed rebates is that the customer can use the rebate directly towards the capital purchase of the equipment and that operating costs and ROI go down post-installation. While rebates can range from $25 for an on-road EV charging system, they can go as high as $70,000 for an electric crane.Participation in the electrification program also drives awareness and participation in the wider energy efficiency programs managed by utilities. With easy-to-measure participation and market saturation for certain purchases like forklifts and non-road vehicles due to a limited and dedicated manufacturing and customer pool, it is easy for utilities to engage with and directly measure program participation.While not related to customer directed rebates, it should be noted that there can be challenges with incorporating new measures or new segments into a utility portfolio such as needing to establish/define measurement requirements and what data are necessary to track: this needs to be addressed prior to the launch of the program.
Another negative perception is that the overall procurement process is slow – slow for the manufacturer to be able to produce the volume of electrified units, slow for the customer to acquire the units (sometimes in multiple phases), and slow for the utility to be able to accept and pay on the applications for rebates. For equipment with high hurdles to overcome, like electric commercial cooking equipment, this may be an issue to consider.
In summary, this research has revealed the following market insights. Firstly, non-road electric vehicles (NREVs) are a common entry-point for electrification. Electric forklifts are the easiest measure to incentivize due to their long use-cycle and relatively quick return on investment. Electrification programs should also focus their incentives on the end-use customer as utilities have seen the highest program success with this mode. However, mid-stream markets are set to grow—especially for commercial kitchen equipment. Utilities also predict a fleet electric vehicle (EV) future. As conversations of fleet electrification grow and mature, and as more vehicle manufacturers announce upcoming EV models, industry leaders must take advantage of the significant benefits presented by the technology. From EV buses to commercial fleets to passenger vehicles, EVs present a substantial opportunity for load shaping and battery storage that should not be ignored. Finally, this research has identified that municipalities must have an equal seat at the table regarding electrification strategies as cities offer excellent opportunities for electrification efforts, particularly as they are standing out as leaders in setting carbon reduction goals. In light of decreasing loads, customer and business sentiments re-carbon reduction, and a call for greater system flexibility, incentivized electrification is a critical part of future utility offerings.
 Presentation at AESP Southeast Annual Conference.
 Bond, J. 2018. Top 20 Lift Truck Suppliers: Global market reaches new heights. Modern Materials Handling.