Energy demands across Canada to change with near-term growth of electric vehicles
New EY research outlines impact of rapid, moderate or slow EV adoption in Canada
Electric vehicles (EVs) are increasingly turning the heads of Canadian consumers and energy company executives, and new EY research shows that rapid adoption could mean as many as 13.2 million EVs on the road by 2030.
The EY Canadian electric vehicle transition — the difference between evolution and revolution report outlines how all EV adoption scenarios — rapid, moderate or slow — will have an important impact on Canadian Oil & Gas (O&G) and Power & Utilities (P&U) companies in the years ahead. Already, Canada is the 10th fastest adopter of EVs in the world, with sales growing 165% year-over-year in 2018.
"Electric vehicles have the potential to profoundly reshape everything from local transit to global commerce, and Canada's energy players are not going to be immune from this impact," says Lance Mortlock, EY Canada Oil & Gas Leader. "Companies should be asking themselves not only how quickly EV adoption will unfold, but also whether they're taking the right strategic steps to prepare for this momentous shift. Now is the time to invest in future-proofing."
EY research finds that rapid adoption — with EVs representing 30% of Canada's vehicle stock, compared to less than 3% today — would reduce domestic oil consumption by roughly 252k barrels per day and could trigger convergence of O&G and P&U companies in the marketplace.
"Diversifying portfolios will be crucial for oil and gas companies in a rapid-adoption future," says Mortlock. "To stay relevant and ensure profitable revenue streams, they'll need to invest more in clean energy, petrochemical products and access to tidewater to enter new markets."
Rapid adoption could also cause an 11% spike in Canadian electricity demand, requiring utilities to make significant investments in existing grid infrastructure to allow consumers to charge cars at home and in public spaces. Distribution network upgrades would also be required to improve power transmission across the country, including to rural areas.
"A dramatic increase in electricity demand would likely result in new power and utilities players coming to market," says Daniela Carcasole, EY Canada Power & Utilities Leader. "This could open up a number of collaboration opportunities for existing companies — either through M&A or joint ventures with hotels, restaurants, technology companies and retail stores to offer easy and convenient vehicle charging to consumers."
Availability of charging infrastructure, price premiums, battery performance, subsidies and time to complete the charge remain key barriers deterring Canadians from purchasing an EV. But even a moderate adoption scenario — with 6.5 million EVs on Canadian roads by 2030 — would require a 5.5% increase in electricity demand.
"Growing electric vehicle adoption is inevitable," says Carcasole. "By proactively developing strategic plans that position them strongly for the future, companies can avoid analysis paralysis and turn the challenges of this market inflection point into a significant opportunity."