EVs Need Grid Power. Utilities Better Get Ready

California Gov. Gavin Newsom wants all new car sales in the state to be zero-emission—which includes battery electric vehicles—by 2035. That is only 14 years away. Meeting the goal will require huge investments in charging infrastructure, as well as power-generation technologies.

The California Energy Commission is the state’s energy policy planning agency. To meet Newsom’s goal, the state will need 1.2 million public and shared chargers by 2030, the agency predicted in a report released earlier this month. Those will serve an anticipated 7.5 million EVs on the road. What’s more, the Energy Commission sees the need for an additional 157,000 chargers to serve commercial vehicles.

That would mark a huge increase: There are roughly 75,000 chargers in California today and about 26 million registered automobiles. More than 1 million new chargers are needed, according to the report.

“To make the evolution to zero-emission vehicles successful, California must have a robust charging infrastructure,” said Assembly Budget Committee Chair Phil Ting in a commission report. “The assessment shows we must now scale up our installation efforts, building out our charging network in order for electric vehicle adoption to be as seamless as possible.”

All those chargers, of course, need power.

“Charging millions of EVs will bring significant new load onto the electric grid,” Evercore ISI analyst James West in a Monday report. West covers energy stocks, including renewable technology.

He points out that the Energy Commission estimates 5,500 megawatts of charging demand around midnight—when cars are plugged in, charging for the coming day—and 4,600 megawatts in the morning of a typical day. That increases demand at those times of day by 25% and 20%, respectively.

Those numbers imply that midnight and morning total power generation, with all those EVs plugged in, will be roughly 27,500 megawatts and 27,600 megawatts, respectively. “Let’s hope somebody slipped the California Utes [ power utilities] a copy” of the Energy Commission report, West quipped in his note.

The state has roughly 80,000 megawatts of generating capacity, so things look OK. Power-generating capacity, however, is always about meeting peak demand, and several factors play into that. Average demand, for instance, is higher in the summer on hot days. Solar power contributes to overall capacity, but that type of energy isn’t generated at night. Still, meeting EV demand doesn’t look impossible. But state utilities will likely need to invest in battery back-up technology, technology to balance loads, and potentially more generation capacity.

West, however, wasn’t focused on capacity in his report. For his part, he wants to see investments in a standardized charging infrastructure to make sure charging is convenient.

Standardization is a good idea, and overall greater investment to build out a charging infrastructure should be good news for EV charging stocks, such as Beam Global (BEEM), Blink Charging (BLNK), and ChargePoint Holdings (ticker: CHPT).

A number of EV charging stocks that could also benefit are planning to go public by way of mergers with special purpose acquisition companies, or SPACs. EVgo is merging with Climate Change Crisis Real Impact (CLII); and Volta is merging with Tortoise Acquisition Corp II (SNPR). Wallbox is merging with Kensington Capital Acquisition II (KCAC), while EVbox is merging with TPG Pace Beneficial Finance (TPGY).

Those seven stocks aren’t really performing like a boom is coming, however. Five of the stocks, excluding Climate Change and Kensington, are down about 25% year to date on average, trailing behind comparable gains of the S&P 500 and Dow Jones Industrial Average.

Kensington only sold shares to the public in April 2021. Climate Change announced its EV charging merger in January. The stock spiked back then, but is down 32% from its January high.

Performance has been a little better lately, however. Over the past month, the seven stocks are up about 22% on average.