Power Plays S1E06: Co-op EVolution: A Blueprint for Rural Electric Vehicle Adoption

Episode ID S1E06
June 16, 2021

Electric vehicle sales are on the rise in the U.S. and could make up 10% of all new car sales by 2025. From lower operating costs to more model options, rural consumers are seeing the upside of EV ownership. In this episode of Power Plays, CoBank’s Teri Viswanath visits with two industry leaders to discuss the practical steps rural electric cooperatives might consider as they plan for a more expansive future with EVs. Listen to Teri’s discussion with Brian Sloboda, director of consumer solutions at NRECA, and Regi Goodale, director of regulatory affairs at Iowa Association of Electric Cooperatives, for insights on strategic EV initiatives. 

Transcript

Teri Viswanath: Welcome to Power Plays, a CoBank knowledge exchange podcast series. An audio program where we connect you with top energy and environmental innovators who share their insights, experience, and market observations. Hello. I'm Teri Viswanath. I'm the Lead Economist for power, energy and water at CoBank. I'm joined today by co-host and CoBank Regional Vice President, Tamra Reynolds. Hey Tamra.

Tamra Reynolds: Hey Teri. We finally get to host a podcast where we get to talk about electric vehicles. Almost every conversation that I have with a customer these days really involves the topic of electric vehicles and when we might see adoption began to take hold in rural communities.

Teri: There is going to be a record number, almost a hundred pure electric models, and they're going to set today view within the next three years. These more affordable models have the potential to sway a significant percent of car buying public, including rural consumers toward buying their first EV with the efficiency, performance and lower ownership costs. Well, they're likely to continue to buy EVs. For rural electric co-op listeners, how are you going to prepare for the possibility that the time has finally come when your members are going to be driving electric vehicles?

They're going to be looking to you as their primary refueling station, because let's be super clear here. At-home charging is convenient and it's mostly inexpensive. Most plug and EV drivers, they're going to do maybe 85%, maybe more of their charging at home. If they don't charge at home, when they get to work, it's probably where they're going to plug in. That office site, while the office side is probably still in your service territory and you're going to have to serve them.

Tamra: I've seen a number of forecasts that suggests that 10% of all new car sales will be electric in less than five years. Now, can you imagine there's roughly 17 million cars that are sold in the US every year? What if one or 2 million of those cars could become electric? The average electric vehicle requires 30 kilowatt hours to travel 100 miles. The same amount of electricity an average American home uses each day to run appliances, computers, lights, and heating and air conditioning.

If you live in a rural community, chances are that you're driving about 40 miles a day, and that's about 10 miles more than someone living in the suburbs. Don't worry, for the first of our two-part Evolution podcast series. This month, we caught up with Brian Sloboda, the Director Consumer Solutions with NRECA to understand how the association is supporting its co-op members with their planning and executing around electric vehicles. Here's that discussion.

Brian Sloboda: What we discovered is that there are co-ops that are seeing higher levels of EV penetration and others. There's suburban co-ops ,there's co-ops with higher income members are seeing EV adoption at a faster rate. What we decided to do is offer a tailored solutions for those individual cooperatives on a fee for service basis. Also for co-ops that are looking into the future 2, 3, 5 years down the road and want to plan for EVs. That is really the big thing from a distribution engineering perspective, from a member engagement perspective, it's about planning having that plan, executing the plan, and then changing the plan as this fast moving world of EVs continues to evolve.

Tamra: Yes, that's a great intro to that, Brian. How might it be helpful for a co-op to develop a program with NRCA? What are some specifics that you guys work on?

Brian: First and foremost, the starting point is creating a strategic plan. You have to know what you want to do and where you want to go with your EV program, because it's not just about residential EVs, it's light duty EVs. It's also about fleets, but after the strategic plan, what we're able to do is help co-ops manage a pilot. Typically that pilot is going to be around managed charging. How do you get the charge off of peak and into the middle of the night, several different ways to do it. There is no one-size-fits-all approach.

It's really going to be guided by demographics, by the previous technology investments of the co-op and really how the co-ops want to engage their members on this particular issue. We even get down into, the consumer segmentation, we've developed a segmentation tool that can predict who's going to adopt technologies like electric vehicles or things like rooftop, solar. You're able to look at your membership and start to project out, 5, 6, 7 years down the road who are going to be the prime customers for these technologies. Start reaching out to them, start the education process and really have this be a very positive engagement. And not have people get caught by surprise on this brand new technology. That's pretty exciting.

Teri: You mentioned some commonalities managing the charging, looking at consumer segmentation, I'm really curious to know, what have your findings been as you work with co-ops on their EV program.

Brian: Most people out there have never driven an EV. They've never had their rear in the seat behind the wheel of an EV. We really see co-ops having programs that allow the members to come by and borrow the car, being very successful. You'd need that firsthand experience, and then once you do that and you get people excited, then the co-op has to a couple of different options and that's where the strategic plan comes into play.

One thing that co-ops can consider doing, and it's one of the things we can help with is with dealer engagement. We see that a lot of dealers aren't selling the cars and really it's because of a lack of knowledge and a little bit of fear of the unknown. Do people in that area really want these cars? I think dealer engagement is a great opportunity.

Then also engaging the existing EV owners, where we have developed some tools that can help the co-op find EVs that are currently in the territory, engage those owners, identify pain points that they experienced in the past and try to avoid those pain points in the future. This pain points are rarely with the utility, but there were programs that the co-op can put into place, to minimize those pain points, especially on the education front.

Those are all things that we've helped some co-ops with. What we see at the end of the day, EV drivers are very happy with their vehicle choice. They're very passionate about the vehicle choice, and they're very willing to work with the co-op to inform the rest of the membership about what the co-op is doing, to help EV owners on this path to adoption.

Teri: Let's talk a little bit more about what those major pain points might be, the hurdles.

Brian: Sure. I think number one, it's education. Most people have never seen or touched or driven an EV. Number two is how much is this thing going to cost to charge. That is really, an area that the co-op can help a great deal with because there's so many different ways to go about charging an EV, co-ops can be and are being very creative, with programs to help in, lowering the cost of EV charging.

I think the other thing that we see is that, people are concerned about, the future offerings from the auto manufacturers. They're concerned about, are they actually going to like the car when you do get that opportunity to get behind the wheel, you discover how fun these cars are. At the end of the day, these things are fun to drive. That is very important to most American consumers is that their car is fun because we are very passionate about our vehicles in this country.

Tamra: You can give us a little color for how electric co-ops are thinking about that value proposition in developing an EV program.

Brian: This is a new electric technology, so co-ops are going to be able to increase their sales. What's nice about electric vehicles is that because of the nature of how the batteries can be charged, they can be charged in the middle of the night. You're going to see a system improvement there, but also we have an engagement opportunity. For the first time we have an electric technology that people are passionate and they care about. Now you have the co-op, being able to fuel your vehicle, at a lower cost than what you have with gasoline.

Beyond that on fleet vehicles, now we're able to take diesel, school buses off the road. We're able to take diesel tractor trailers off the road. A lot of those, facilities, the warehouses, and those facilities are in low-income areas with high air pollution. We can now convert those trucks, those buses, over to electric have a significant improvement to air quality. That's only possible because these technologies are going electric.

Teri: If we had to gauge sort of the success, that comes with these programs, what are some of the immediate considerations that you think come to the surface?

Brian: If you're a suburban cooperative, or if you're serving an interstate exit, it might be having public charging in the area. If you're in another type of cooperative, it will actually be putting cars in people's driveways. Success is going to vary from co-op to co-op. I think that is one thing that a lot of folks are struggling with.

Water heater programs, HVAC programs can be somewhat cookie cutter and can be transferable from one area of the country to another, but not so much with the EVs given the fact that there is a disparity in what is going on in the vehicle market in the United States. I think when co-ops are looking at success, number one, you get that plan in place. You start educating folks, you increase the visibility of electric vehicles within the community. You start to get folks excited, you start talking to your dealers. You get some of your dealers willing to put them on the lot, so folks can test drive them.

Then over time you start to see more and more of them on the road. It's talking to your fleets, getting your fleets interested and getting tractor trailers out on the road, getting buses out on the road. This is not a short program. The average car in the United States is 11 years old, and that's the second most expensive thing most people ever purchase in their life. It's really playing the long game.

Don't expect to have an EV strategic plan today and have 200 EVs in your service territory next week, it's going to take a while, but it's going to be well worth the effort when we look at the customer satisfaction levels of EV owners. They're very high and the fact that this is going to have some very good system benefits for the co-op.

Tamra: Yes. It sounds like it's more of a marathon than a sprint, right?

Brian: Oh, absolutely. It's a marathon. This is not a short-track race. This is 24 hours of Le Mans.

Teri: Tamra, there's so many reasons to really like Brian, but his enthusiasm about electric vehicles and his efforts to help rural electric co-ops, it's more than a little inspiring.

Tamra: No kidding. Planning for what appears to be a more electric future is going to be challenging. It's great to have partners at NRCA that are not only committed to helping out, but they're passionate about their work.

Michael Anthos: Hi, I'm Michael Anthos from CoBank Farm Credit Leasing. With today's ever changing energy landscape co-ops are evaluating ways to manage cash while continuing to meet their members' evolving needs for affordable clean electricity. This is why more and more co-ops are taking advantage of leasing for their equipment needs from electric vehicles and EV chargers to solar and batteries, CoBank farm credit leasing can meet your financing needs while allowing you to make the most of your cash on hand. Contact your CoBank relationship manager for more information and a free quote today.

Tamra: When we were planning for our EV podcast, which actually turned out to be two podcasts, we tossed around ideas for guests that were as excited as we were about this area and who had a clear message of guidance for rural co-ops. I've engaged with Reggie Goodale, the director of regulatory affairs for the Iowa Association of Electric Co-ops, about his associations work with electric co-ops in Iowa, as they gear up for electric vehicles and I threw his name into the hat.

Teri: It was a good idea you did. I know that when you caught up with Reggie, you did too because you really wanted to understand what his organization in particular is doing to assist co-ops in the state of Iowa and what his advocacy has been in terms of helping at the state, local, federal levels with really providing the infrastructure and support for cooperatives. Here's that discussion you had with Reggie last month,

Tamra: From the perspective of the state of Iowa, how was the Iowa energy plan taking shape on the topic and role of importance of EVs?

Regi Goodale: Our governor a few years ago, it's probably been six or seven years ago. They completed Iowa's energy plan in December of 2016. As a piece of that energy plan, there is encouragement or a goal to encourage alternative-fueled vehicles of which that includes electric vehicles in the process. Then we've moved on into the implementation phase of the Iowa energy plan, and that has involved some studies by the Iowa department of transportation on the issue of fuel use, the taxes on fuel use for electric vehicles.

In Iowa a few years ago here passed some legislation that has electric vehicles paying their fair share for a fuel use tax. That issue has been dealt with. Then also within that legislation electric vehicle charging stations, it was clarified that they're able to charge vehicles and sell to EV owners, electricity on a kilowatt hour basis for charging those, that was clarified.

We've also seen some policy development in the executive branch at the Iowa utilities board, as they look at policies and trying to balance the three critical public policies here in Iowa that are there with the governor's energy plan of one, encouraging electric vehicle charging stations and electric vehicles, but also trying to respect Iowa's assigned service territory law. Then third public policy that's at stake is the encouragement of alternative energy in Iowa. Balancing those three, as we see those three technologies converge together is an important part for policy and the utilities as well as the EV charging stations and the owners as well.

Tamra: A state like Iowa biofuels have have long represented an important part of the economy, whether it's biodiesel or whether it's ethanol. Do you feel that EVs might find themselves at odds with what those two sectors, particularly the ethanol sector?

Regi: There is a mix right now of different fuel sources. I would envision that going forward to that mix may change, but I don't think we'll probably ever become dependent here in the near term on one particular fuel source. I think there's space for all of those fuel sources in the economy. We would like to see ethanol be utilized to the maximum extent it can, but we would also like to see the promotion of electric vehicles as well. We don't think that the two are mutually exclusive by any means.

Tamra: What are some of the key ways you think that co-op CEOs, CFOs, that senior level staff can engage their board members to educate them on the role that utilities find critical and moving the ball forward for EV adoption and accessibility.

Regi: It seems our boards of directors for the electric cooperatives in Iowa, in their daily lives with combines and tractors and things like that, they are exposed to technology changes and are adapting those in their businesses locally. That brings a certain level of culture to the boardroom when it comes to technology for the cooperatives, whether it's AMI or electric vehicles or a heat pump, water heaters, or mini splits, regardless of what that technology is.

It's a corporate culture that advances investments and moves the co-op in a good positive way. We will as electric co-ops have member consumers who are very interested in electric vehicles. As a result of that, I think if we all can be as educated as we possibly can and be a resource to the co-ops and to the member consumers for their decision-making in this regard, it goes a long ways.

Tamra: That goes hand-in-hand with what we often refer to as the seven cooperative principles. I think those do play a key role in helping to deliver what those consumer members are looking for from their cooperative. When we talk about member engagement and why that's so important, those principles really come into play. From the EV perspective, how do you think those fit in with the cooperative principles and what should co-ops be considering when it comes to programs and outreach on EVs with their membership?

Regi: Electric cooperatives live and die by the cooperative principle and EVs are no different. I think there are in my mind, at least three key cooperative principles that come to mind for me as I look at electric vehicles. The first of which is concern for community as electric cooperatives being local entities, making sure that our communities are not left behind. Making sure that if we have member consumers who want to invest in electric vehicles, that there are charging stations available for those to charge, their electric vehicles.

Now that doesn't necessarily mean that the electric co-op has to get out there and be investing in level the DC fast chargers and that, but helping to facilitate some of that investment in the communities and being involved in the planning process. That's living that concern for community cooperative principle. I think another cooperative principle within the seven is the education and training principle.

Again, the directors, the CEOs, the management team, the frontline employees, making sure we're all educated on electric vehicles and electric vehicle charging stations and getting facts and information correctly, and being able to respond in a timely manner to questions that anyone may have, whether it's member consumers, or if it's us here at the statewide level, responding to policymakers, whether they're in the executive branch or the legislative branch, that one education and training becomes very empowering. Cooperation among cooperatives is very important as we see the generation of transmission cooperatives, cooperating with the distribution co-ops and then other co-ops, whether it's financial type co-ops like CoBank or CFC, cooperating with the cooperatives in that regard or the statewide associations, providing their cooperation, or NRECA as well. I think those are the three key principles. The other principles probably play some role, but those are the three that I would see as the key.

Tamra: Any other thoughts or any other things that you would probably share with whoever our listeners might be from the cooperative perspective on working with their statewide associations or working with other co-ops and partners to find a strategy that works for their co-op?

Regi: I guess the one thing that I would say on this issue is with regard to any technological changes or any public policy changes that we see coming down the pike, we really have three opportunities to deal with those. We can ignore those changes as they come forward, but oftentimes ignoring them is not a viable option. We can fight those initiatives and often that's not a viable option.

Really the third option is to manage these changes, and I think the electric co-ops are doing a good job in managing the transition to EVs and the challenges that are associated with it in that area of managing will be price signals on EV charging in that, and making sure we're sending the right price signals to those entities that want to charge electric vehicles at the times of day that we need, and that comes back to the cooperation among cooperatives too, with the rate structures between the distributions and the GNTs and working to move in a direction that sends that proper price signal and advancing this technology in an appropriate way.

Teri: That was a really good conversation. As part of Iowa's energy plan, our co-ops were at the table years ago and included plans for electric vehicles.

Tamra: I don't think we can emphasize enough how important it is for our co-ops to envision and plan for a future, where an increasing number of vehicles on the road will be electric and maybe more to the point where their go-to fill service station will be their local electric co-op.

Teri: I'm certain our customers are going to bring their A game to the table, but it's always great to have a clear vision of what the industry best practices might look like. For our second podcast, coming on later this month, we caught up with Karl Popham, he's the Manager of the Electric Vehicle and Emerging Technologies Program at Austin Energy. Karl was brought on that program to start up the program, and it's a really exciting one. In fact, Austin Energy was recognized as Plug-in America's drive electric utility of the year.

Karl Popham: Our emphasis now is to get past that early adopter phase and really move into mainstream. If you typically look at hype cycles and adoption, you want to get about 3% of the market, and that's where you really, where you see that hockey stick acceleration.

Tamra: I hope that all of you will join us again late this month as Karl lets us look under the hood of Austin Energy's incredible EV program.

Teri: That’s right, we're going to make a certified 45-point inspection of Austin's electric vehicle program in a few weeks. Hope to see you then.