The introduction of driverless cars could have knock-on effects for the power generation sector and make utility companies a more attractive investment proposition, according to Australian fund manager AMP Capital.
Power generation capacity is currently shaped by heavier demand during the day – but the widespread adoption of autonomous vehicles, most of which are expected to be electric, would require greater electricity capacity overnight due to vehicles being charged.
AMP Capital global listed infrastructure portfolio manager Andy Jones told Infrastructure Investor that a more consistent baseload would be needed to meet demand through the night, which could lead to more opportunities for investors in areas of power generation, especially nuclear power.
“There will be a narrower gap between the peak and trough demands,” he said. “We could use cleaner sources like nuclear, if we need a higher baseload, then use renewables to top up and meet peak demand.”
Utility companies will also have to invest so that networks can cope with the large amounts of data generated and used by driverless cars, with Jones estimating that it could be as much as 4,000 GB per car per day.
“5G is a prerequisite for driverless cars,” he said. “It has 10 times the transmission capacity of 4G, reducing the time the car will take to ‘think’.”
This critical need to upgrade could change the nature of investment in these companies, too, Jones argued.
“Utilities are, by and large, perceived as being limited-growth opportunities, low-risk and low-growth,” he said. “But if those companies have to reconfigure investment, it could transform them into medium-growth, medium-risk opportunities.”
It was impossible to precisely quantify the scale of investment required, Jones said, but he did estimate that it could cost “$10 billion to $30 billion for each country” that wants to make use of driverless cars. However, how that would be paid for remains undetermined.
Jones was speaking following the publication of a report by AMP Capital titled Autonomous vehicles: The real opportunity that lies ahead for investors.
The report argued that road investments will be critically important, too, ranging from solutions to traffic congestion – including managed lanes and installing new vehicle-to-infrastructure interfaces, such as data receivers.
Jones highlighted that digging up a road to install new cables would cost, on average, $250,000 per kilometre.