Money for Nothing & Your Chargers for Free

Money for Nothing & Your Chargers for Free

Charles Botsford, P.E.

Is $7.5B of government funding for EV charging infrastructure a good thing? Only if it has the right focus and implementation.

Stranded assets are the big problem. The Bipartisan Infrastructure Law [1] promises $7.5B for EV charging infrastructure. Much of it could be wasted. The funds will be spent to procure and install EV charging infrastructure that will eventually languish into disuse and harken to the days of Solyndra, Fisker Automotive, A123, and other disastrous American Recovery and Reinvestment Act (ARRA) programs from a decade ago [2].

According to the EV Charging Action Plan [3], $5B will go to “build a national charging network”, while the other $2.5B will go to “communities and corridors… supporting rural charging, improving local air quality and increasing EV charging access in disadvantaged communities.” This will be a waste of money because only those motivated to sell and install public EV charging infrastructure will make money, leaving those who have little experience owning and operating the charging stations with a situation that is supported by a bad business model.

Why the Public Charging Business Model is Bad

Successful business models are ones in which revenue exceeds expenses. Ideally, a successful business model has a positive return on investment, say three years, and is even profitable [4]. Public Level 2 EV Supply Equipment (EVSE) are not profitable and public DC fast charging stations are marginally profitable only with high utilization. This infrastructure survives in the long term with subsidies, either by the government (local, state, federal) or by the site host [5, 6].

The evidence of this bad business model can be seen by checking the charger out-of-service status on PlugShare and other apps that EV drivers use to map out their routes for long distance trips. With a negative bottom line (i.e., greater O&M costs than income), the independent site host eventually gives up and allows the charging station to lapse into disrepair [7, 8].

The exception is with network ownership of DC fast charging stations by Tesla, ElectrifyAmerica, EVgo, and select other Electric Vehicle Service Providers (EVSPs). The business model is still bad, but these companies have business motivations other than making money from their charging stations. For example, Tesla uses their supercharger network as a means to sell their EVs. The ElectrifyAmerica and EVgo networks originated from settlement lawsuits – ElectrifyAmerica from the misdeeds of VW, and EVgo from the misdeeds of Enron/NRG. However, EVSPs would like to make money, eventually.

The good thing about EVSPs is that they are motivated to keep equipment operational (to avoid bad reviews) and are competent in finding ways to not lose too much money. How much worse is it for independent owners of a single DC fast charging station who don’t have a service organization at their fingertips? A lot.

Another potential exception is with electric utility ownership and operation of DC fast charging stations. While this has downsides (subsidies by ratepayers, market distortion, slow market reaction), it also has upsides (consistent O&M, a way out of the demand charge problem, longevity of operation.) The case could be made that utility ownership and operation of DC fast charging stations for heavy-duty vehicles is even more compelling because of the multi-MW power levels.

The business model for public Level 2 EVSE is much worse than DC fast charging because the daily flow of kWh, and therefore money, is low, and the upkeep, which includes network costs, is relatively high. Revenue from the charge sessions doesn’t pay for the electricity, let alone for continuing O&M, taxes, and amortization [9]. In addition, it’s the most expensive way for an EV driver to charge their vehicle. Most EV drivers use public charging only as a last resort.

Why Public EV Charging Shouldn’t be a Government Funding Priority

Doesn’t Help EV Adoption. Not only is Public EV charging infrastructure supported by a bad business model, but it shouldn’t be a priority if everyone’s goal is to promote EV adoption. At this point in the EV adoption curve, we don’t need the oft cited excuse of “charger visibility” to instill confidence in new drivers. We need functional and cost-effective EV charging infrastructure.

Corridor public DC fast charging is primarily for long distance trips that exceed 200-250 miles. EV drivers occasionally travel more than 200 miles, but this is the exception. Is the current network of DC fast chargers adequate for long trips? For the most part, yes, with planning. With the build out of EVSP networks, this situation will improve further without a huge influx of federal funding. A secondary use for DC fast charging is to support destination charging and potentially ridesharing. However, the companies who benefit from its use could subsidize this charging infrastructure.

Public Level 2 Is Not Needed. Public Level 2 EVSE charging isn’t needed at all. Why would someone pay $0.30-.40/kWh to charge at a mall that’s a few miles from their house, when they could charge for a third of that at their residence? This is one reason public Level 2 EVSE charging, even when free, has low utilization [10].

Doesn’t Solve the Equity Issue. An influx of federal funding for public EV charging infrastructure won’t solve the equity issue. Siting DC fast charging stations along corridors, some of which happen to be in underserved communities, doesn’t help the underserved community. The EV driver wishes only to recharge and get back on the road again, spending possibly thirty minutes at the charging station while they wait. The equity issue goes much deeper.

Where the Federal Infrastructure Money Should Go – Effectiveness and Equity

The US Federal Highway Administration (FHWA) issued a Request for Information (RFI) [11] to “invite public comments to inform the development of the guidance.” Stakeholders should respond to this RFI. To promote equity, one recommendation would be to take an approach divergent to the focus in the EV Charging Action Plan for the reasons listed above, and not spend the bulk of the funding on a public network of EV charging infrastructure.

Ironically, the proposed (and currently on-the-ropes) Build Back Better plan contained a more appropriate focus, with its target on charging infrastructure within communities.

Fig. 1: Residential EV Charger, Source: Abbot

Multi-Family Housing, Residential, and Workplace EV Charging Infrastructure – Equity, Economical, and Where Charging Happens

From an equity perspective, promoting EV charging infrastructure for multi-family housing (apartments, condominiums, etc.), single-family residential, and workplace charging is the most effective path forward. Many studies show that 80-90 percent of charging takes place overnight at the drivers’ residence, and 5-10 percent at work [10]. In addition, these long dwell time venues are typically the cheapest for the EV driver to charge their EVs. For example, many workplaces (if we ever go back to our physical place of work) provide free charging to encourage employee retention. The cost for residential charging is on the order of $0.10-0.20/kWh, through time-of-use and special EV rates, which is a third to a tenth the cost of public charging.

Charging at multi-family housing is the tough nut to crack, not because of technical issues, but because of Home-Owner Association (HOA) requirements, Americans with Disability Act (ADA) requirements, and parking issues. However, this is the heart of the equity problem, and where solutions must consider that many multi-family housing developments are in low-income and underserved communities [12, 13, 14]. By the way, so are many single-family residential, and workplaces.

If equity is to be addressed, providing EV charging infrastructure where people live and work is essential. The other piece to solving equity issues is with electrification of mass transport, such as transit and school buses, which greatly reduces local air pollution in underserved communities.

Additional Revenue for EV Drivers – Low Carbon Programs and Grid Services

In California, EV drivers can receive utility rebates from the Low Carbon Fuel Standard (LCFS) program for vehicle and charger purchases. Oregon has a similar program and Washington’s program is in development.

EV drivers will also have access to grid services programs that can provide substantial revenue. The markets for these services are in pilot stages, but show great promise for unidirectional managed charging as well as bi-directional charging.

Reasons for Focusing on Multi-Family Housing, Residential, and Workplace EV Charging

• Equity – Incentives and rebates can be directed to low income and underserved communities
• Where Charging Happens – This is where 90 percent of charging happens
• Cheapest Charging Rates for EV Drivers – EV drivers pay a third to a tenth of public charging rates (sometimes even free)
• Low Carbon Programs and Grid Services Revenue – This additional revenue provides more incentive to purchase EVs and chargers, and drops the overall cost of operating an EV well below a conventional fossil-fueled car.

Use State and Local Programs to Fund Incentives and Rebates

In the early days of EV adoption, EV-related incentive programs acquired the stereotype reputation as “welfare for the rich” due to the high price of EVs, and those capable of buying them. However, with EVs becoming mainstream and used EVs now entering the market, drivers across all economic strata can afford EVs.

Multi-family housing, residential, and workplace EV charging infrastructure funding has taken the form of incentives and rebates through state, local, and utility programs. The most efficient use of federal funds would be to use state and local programs as a conduit to distribute the next level of incentives and rebates.

Conclusions

FHWA should consider pivoting the bulk of funding from a network of public charging infrastructure to funding multi-family housing, residential, and workplace charging infrastructure because such a pivot:

• Avoids funding EV charging infrastructure that becomes stranded assets
• Avoids funding low priority EV charging infrastructure
• Funds high priority EV charging infrastructure
• Provides equity for underserved communities

References

1. White House. President Biden’s Bipartisan Infrastructure Law, https://www.whitehouse.gov/bipartisan-infrastructure-law/, The White House, accessed December 23, 2021.

2. Andrzejewski, A. Remembering “Solyndra” – How Many $570M Green Energy Failures are Hidden Inside Biden’s Infrastructure Proposal?, https://www.forbes.com/sites/adamandrzejewski/2021/04/12/remembering-solyndra--how-many-570m-green-energy-failures-are-hidden-inside-bidens-instructure-proposal/?sh=d51309d2672e, Forbes, April 12, 2021.

3. White House. Fact Sheet: The Biden-Harris Electric Vehicle Charging Action Plan, https://www.whitehouse.gov/briefing-room/statements-releases/2021/12/13/fact-sheet-the-biden-harris-electric-vehicle-charging-action-plan/, Briefing Room, December 13, 2001.

4. Grant, E., W. Ireson, and R. Leavenworth. Principles of Engineering Economy, John Wiley & Sons, Inc., 1982.

5. Chang, D., Financial Viability Of Non-Residential Electric Vehicle Charging Stations, Luskin Center for Innovation, UCLA, August 2012.

6. Madina, C., etal., “Methodology for assessing electric vehicle charging infrastructure business models”, Elsevier, December 2015.

7. Evarts, E., Twitter Poll Results: How Often Do You Encounter a Public Electric-Car Charger That is Out of Order? https://www.greencarreports.com/news/1118242_twitter-poll-results-how-often-do-you-encounter-a-public-electric-car-charger-that-is-out-of-order, Green Car Reports., August 2018.

8. Ferris, D., EV Charging Stations Are Annoying. Ford Wants to Fix Them, https://www.eenews.net/articles/ev-charging-stations-are-annoying-ford-wants-to-fix-them/, EENews.net, 4 January 2022.

9. Smith, M. and J. Castellano, Costs Associated With Non-Residential Electric Vehicle Supply Equipment, https://afdc.energy.gov/files/u/publication/evse_cost_report_2015.pdf, USDOE Technologies Office, November 2015.

10. Evarts, E., Twitter poll results: More electric cars get charged at work than at public chargers, https://www.greencarreports.com/news/1117053_twitter-poll-results-more-electric-cars-get-charged-at-work-than-at-public-chargers , Green Car Reports, June 2018.

11. Federal Register, Development of Guidance for Electric Vehicle Charging Infrastructure Deployment, https://www.federalregister.gov/documents/2021/11/29/2021-25868/development-of-guidance-for-electric-vehicle-charging-infrastructure-deployment , November 29, 2021, Federal Register.

12. Williams, B., J.R. DeShazo, “Pricing Plug-in Electric Vehicle Recharging in Multi-Unit Dwellings: Financial Viability and Fuelling Costs”, Luskin Center for Innovation, UCLA, October 2013.

13. Fortuna, C., “Equity Must Be Central to Transportation Electrification”, https://cleantechnica.com/2022/01/06/equity-must-be-central-to-transport..., CleanTechnica, 6 January 2022.

14. U.S. Department of Energy, Fact of the Week #1219, Residential Parking Options and Access to Electricity Will Impact Electric Vehicle Adoption, https://www.energy.gov/eere/vehicles/articles/fotw-1219-january-3-2022-residential-parking-options-and-access-electricity, USDOE, 4 January 2022.

Acknowledgements

The author would like to express appreciation to Mr. Matt Zerega and Ms. Enid Joffe for their contribution to the discussion and expertise in the field.

Author

Charles Botsford, PE is a professional chemical engineer in the State of California with 30 years’ experience in engineering process design, distributed generation, EV charging infrastructure, and environmental management. He participated in California’s Vehicle Grid Integration (VGI) Working Group and participates in the Society of Automotive Engineers (SAE) J3072 AC Vehicle-to-Grid standards committee. Mr. Botsford holds masters and bachelors degrees in chemical engineering.