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Investing.com -- Electric vehicle (EV) adoption in Europe is set to recover from the 2024 dip, with Bernstein forecasting over 20% average annual growth through 2030. Yet the broader implications for the European power sector are more modest than revolutionary.
In their base case, Bernstein analysts expect power demand from EVs to increase from about 30–40 TWh today to around 120 TWh by 2030, which would represent 4% of total European power consumption.
This is “one of 5 key tailwinds for power demand,” Bernstein notes, alongside electrification of heating and industry, green hydrogen, and data centers. However, they stress that EVs will account for only “25–35% of expected European power demand growth to 2030.”
The economic case for EVs is not driven by falling retail electricity prices. “We do not see falling retail power prices as likely,” analysts led by Deepa Venkateswaran said, citing higher grid and policy costs offsetting commodity price declines.
Fuel costs currently make up 5–20% of EV ownership costs, and even with high electricity prices, EVs are generally cheaper to own than combustion vehicles when home charging is used. Only public fast charging erodes this cost advantage.
Network investment is a clearer area of impact, Bernstein notes. As EVs increase peak demand loads, distribution grid operators will need to invest significantly in low and medium-voltage infrastructure.
According to industry estimates cited by Bernstein, annual EU27 and Norway distribution grid investments will need to rise to €67 billion from 2025 to 2050, roughly double current levels. “EVs will be one of the demand drivers contributing” to this surge, the analysts said.
There’s also potential upside in grid flexibility. EVs could act as virtual power plants, smoothing demand and reducing strain during peak periods.
“An expanded EV car parc could in future act as a large Virtual Power Plant, enabling grid operators to better manage a power network with an increasing share of intermittent sources,” the team added.
Still, the report is clear that while EVs bring incremental benefits to the power sector, they are not "a game changer."
The main beneficiaries are expected to be electricity distribution operators such as National Grid (LON:NG), Iberdrola (BME:IBE), and E.ON SE (ETR:EONGn), which are already aligning capital expenditures to accommodate rising EV-related demand.
Overall, Bernstein sees the continued rollout of EVs as one of several key drivers supporting power distribution capital expenditure plans from the late 2020s, complementing the more established drivers of transmission asset growth.
The broker views the aforementioned power distribution companies as appealing investment opportunities, citing strong earnings visibility and improving return prospects.