Perhaps nowhere is momentum toward a clean energy future more visible than in recent announcements about electric vehicles (EVs). General Motors now plans to sell only EVs by 2035, which is also when California will require all new cars and passenger trucks to be emissions-free. EVs could figure prominently in President Biden’s “Build Back Better” initiative, and Biden has already pledged to replace all government vehicles with EVs. With significant initiatives already underway in China and Europe, the global shift to EVs has clearly begun.

To understand what the shift to EVs means for companies and how energy storage fits in, we spoke with Stem VP of Market Development, Tad Glauthier.

Q: How does GM’s recent announcement tie in with other trends you’ve observed?

At the highest level, I think the pandemic has reinforced the idea that we’re all sharing the same planet and shown that we can actually mobilize to combat a global threat, which is heartening.

But the larger trend here is acceleration. Back in 2016, the Paris Climate Agreement got countries started with setting emissions reduction targets, mostly for 2030 and later, which immediately set people to thinking about what those targets would mean for 2025 and 2020, and how to lay the groundwork faster.

More recently, we’ve seen several U.S. states announce 100% clean energy targets and set increasingly ambitious timeframes for reaching them. So overall it seems like the world is really waking up to the urgency of climate change, and that deadlines and targets are getting more aggressive rather than less. That’s good for clean energy.

With respect to EVs, I think several other states will join California in setting zero-emission vehicle mandates in the next few years, and that this trend will accelerate and lead to a kind of “stair step” model of progress across the U.S.

Q: As EV adoption expands, what will it mean for corporate energy users? For the grid?

For some corporate energy users, certainly they’ll need to rethink logistics around fleet charging and management. This is a fundamental infrastructure transformation that’s happening across the country and around the globe. How you’re refueling fleets and what you’re fueling them with is all changing. The cost of electricity will replace fuel costs, which by itself may yield significant cost savings. But even so, there will likely be opportunities to save more with the right combinations of renewables and energy storage.

So enterprises need to think about the interplay of their functional needs and how electrification will change their logistics and operations, and whether they have a robust energy strategy that’s suited for the transition. As a society we’ve basically doubled down on clean electricity, so it’s more important than ever for companies to “get smart” on energy and be able capitalize on technologies like solar and storage where they deliver the most value.

For the grid, widespread EV adoption will be another step in its evolution from large, centralized resources to smaller, distributed resources. This is definitely a challenge, because the system is built to transmit power in one direction, from power plants to end users. Adding solar PV at the grid edge has already caused some grid management challenges in places with high solar adoption, like Hawaii.

Adding new EV loads will have a similar effect – new “hot spots” created by EV load will crop up, almost like whack-a-mole, so utilities will need to be prepared. Some utilities are getting out in front of this by using energy storage as a “non-wires alternative” (NWA) to avoid more expensive traditional distribution system upgrades. For example, Stem is currently working with a utility in the Great Lakes region to install energy storage at two locations, a mixed-use office building and a retailer, to relieve stress on the grid. These loads aren’t from EVs, but in a few years they could be.

Q: What’s Stem’s take on the longer-term role smart energy storage will play in transportation electrification?

Energy storage certainly has an important role to play in managing electricity consumption at charging stations and smoothing out charging loads. Same thing at homes – storage will shift the impact of home charging to flatten the load and align it with renewable energy production so the whole grid can run cleaner.

But beyond cars and trucks, storage will likely also play a role with electric buses, trains and even, in the much longer term, airplanes. City buses need to run on specific routes and schedules, and accommodating charging demands for entire EV bus fleets is something some transportation agencies are grappling with, starting in California which requires mass transit agencies to buy all-electric buses starting in 2029.

With light rail, there’s an inrush of current to enable stopping and starting, so the impact of adding more trains is substantial; some cities are already running up against the limits of transformers and looking at adding storage so they can add more trains to a given area of rail. In reality, I think some municipalities will think they’re prepared, and then energy storage will turn out to be the fastest, easiest solution when they realize they haven’t done enough.

Electrification of air travel will take longer, but I’m excited to see how it unfolds! There’s a startup in Hawaii, where I used to live, that’s already offering short hybrid-electric flights. Electric planes would be perfect for puddle-jumpers and short distances, and again batteries could help manage those charging loads.

Q: How do you help businesses connect the dots between a longer-term trend like EV adoption and nearer-term opportunities and challenges that might arise from it?

I guess the main thing I’d say is that even if EV adoption is unlikely to affect your operations or electrical loads now, companies should proactively plan for it starting now. EVs aren’t about energy storage per se, but in many cases batteries will be a key part of the solution that enables customers and the grid to get the most benefit from EVs while minimizing the integration costs and challenges. Even in sectors where EVs will be a game-changer, like transportation and logistics, I don’t think there’s much understanding of energy storage or what it can do for them.

Q: What kinds of businesses do you think are more likely to see near-term impacts from EV adoption, and how do you see that unfolding?

Grocery stores and shopping malls may be feeling it now, especially in wealthier areas. To date there’s been a huge correlation between wealth and EV adoption, and obviously that’s something policymakers need to address so the EV transition is inclusive. I definitely see EVs proliferating to the masses, and having more consumer choice will help with that. And of course the more passenger EVs are on the roads, the more in-demand EV chargers will be in retail parking lots.

Next I think will be logistics companies, and already we’re seeing companies like UPS and Amazon making substantive moves and setting targets around EVs, renewable energy and emissions reductions. The pilot projects they’re doing today will smooth the transition to EVs, not just for them but hopefully for the entire sector.

Q: How can Stem help customers prepare for EVs and capitalize on opportunities as they arise?

Again, the key is to be proactive, so I think one place where Stem can help is thinking through a holistic energy strategy, particularly as we have such extensive insight into energy storage and it’s such a unique technology. It’s called a “Swiss Army knife” for a reason!

For example, there’s currently a lot of interest in battery storage for backup power. We can help customers think through that kind of investment, because it may require a lot more solar and storage than they thought. And we can also help them strategize for what things will look like three to five years down the road, when EVs are a bigger part of the picture.

For companies, part of the challenge here is thinking through infrastructure investments, like carport solar projects, and how to future-proof those for a much higher number of EVs. But there’s also likely to be organizational issues, because the EV transition will bring together a lot of functions and teams that have historically been siloed. In some cases, people may be asked to do work they’re unfamiliar with – for example, if someone who manages fuel contracts is suddenly asked to develop EV charging stations. Those are completely different jobs.

There are a lot of different players across the EV space – not just car manufacturers, but also companies who want to develop EV charging infrastructure, and companies who want to finance those companies, and of course electric utilities.

As this ecosystem takes shape and Stem builds our network of partnerships, one way we can help businesses is by partnering with companies that offer “one-stop shop” solutions so it’s as seamless as possible to get a project designed, financed, installed and operated. We are developing those partnerships now and look forward to working with companies who are electrifying their fleets!