Electric Vehicles Drive Investment in Smart Grid Across Europe

LONDON, UK (GlobalData), 16 April 2012 – Preparing the smart grid for the rise of the electric car will offer significant opportunity for private funding in Europe, which will support growth alongside government incentives and national resource sharing, according to a new report by business intelligence company GlobalData.

The new report* found that European governments are eager to support the Electric Vehicle (EV) market in Europe through non-financial incentives, but independent companies are anticipated to develop the smart grid sector by making shrewd investments that will house substantial financial benefits in the future.

The presence of an untapped market in the European smart grid sector, combined with government projects supporting EV technology development, is expected to foster the emergence of new technology vendors. However, these new entrants will need significant capital infusions in order to commercialize their technologies. Venture capital firms can act as possible sources of financing to these new businesses, with the aim of generating a better return on their investments once the technology becomes successful commercially.

Non-financial incentives will also be implemented, functioning as major drivers of growth in the EV market in Europe, by making EVs financially viable alternatives to Internal Combustion Engine (ICE) vehicles. Various European nations have introduced non-financial incentive schemes to promote the sale of EVs, including parking stations exclusively for EV owners, reserved traffic lanes, and free use of toll roads. These provide EV owners with monetary and practical benefits, without the need for huge financial investments from the government.

Resource sharing between nations will help satisfy the electricity needs of different countries. The interlinking of regional grids would ensure the optimum utilization of renewable resources, as excess energy produced in one country during periods of low demand could be transferred to another underproducing country to meet its needs. For example, the construction of a super smart grid (SSG) would allow for the utilization of the enormous solar and wind potential in North Africa, satisfying the electricity needs of the Mediterranean and the rest of Europe.

By developing a unified power market equipped with smart technologies, problems surrounding the high cost of power supply can be solved. At the same time, smart grid developments to support EVs will require enormous investment, but the future rewards for private funders may drive interest in the sector.