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Electric Vehicle Charging Stations: A Long Road Ahead

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Rakesh  Sharma's picture
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I am a New York-based freelance journalist interested in energy markets. I write about energy policy, trading markets, and energy management topics. You can see more of my writing...

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  • Jul 30, 2021

For utilities, electric charging stations are the proverbial chicken-and-egg problem.


They cannot make profitable Investments in charging infrastructure until there are a sufficient number of electric vehicles (EVs) on the road. But potential EV customers may put off their electric car purchases due to the ‘range anxiety’ of having an insufficient number of charging stations when they travel.


A potential solution to this problem emerged this week. The Biden administration’s $1 trillion infrastructure bill passed its first hurdle. The bill sets aside $73 billion to modernize the electric grid. Out of that amount, $7.5 billion is reserved for charging infrastructure.


More utilities have also signed onto the Electric Highway Coalition, an alliance for EV charging infrastructure. According to a WSJ report, the group doubled its membership numbers to 14 this past week and now counts Consolidated Edison, Duke Energy Corp., Tennessee Valley Authority, and Exelon Corp. as members. Another coalition of utilities in the Midwest and Plains states has grown to 10 from six members.


However, while these developments are encouraging, the road to developing a viable EV charging infrastructure may still be a long one.


EV Charging Infrastructure: A Long Road Ahead  


The United States lags other EV markets in the number of public charging points. In September 2020, the European Union had 250,000 public charging stations. China, which is poised to become the largest market for electric vehicles in the future, has 884,000 stations. The United States had just 97,589 stations, as of this past February.


Electric utilities can help America catch up by outlining an aggressive schedule to build EV charging stations. But they do not seem to be in a hurry. According to Atlas Public Policy, $1.49 billion has already been approved for EV programs by state public commissions and another $672 million is pending approval. Utility ambitions for that outlay are modest. They plan to build 245,000 chargers, out of which 9,100 will be fast chargers, and spend the remaining on other related initiatives.


That is a far cry from the $11 billion capital investment needed to deploy 13 million charging points by 2030. Atlas Public Policy has even more aggressive targets. Taking the Biden administration's goal for a grid powered completely by renewable energy at face value, the firm calculated that a whopping $87 billion is needed to achieve 100 percent electric vehicle sales by 2035. There is a funding gap of $39 billion for electric vehicle infrastructure and the current administration's financial commitments, even including the $1 trillion infrastructure plan, fall "woefully short," the firm writes.  


In addition to funding, utilities will have to define an appropriate charging rates at electric vehicle charging stations. Currently, there is a patchwork of demand charges for electric vehicle charging stations across states. Consolidated Edison in New York charges a base rate of $2.50 per hour or approximately $0.40 per kWh at EV charging stations. Maryland’s Public Commission has approved a rate of $0.18 per kWh.


In California, which has the biggest concentration of electric vehicles by state, electric utilities have carved out differing approaches. In 2017, Southern California Edison (SCE) set a “demand charge” holiday for EV charging stations till 2024. Thereafter, it plans to ramp up rates.


PG&E has asked EV charging owners and operators to plan their demand in advance. It has set rates, ranging from $0.14 for off peak use at night or in the morning to $0.35 during peak use at night. There are no demand charges up to the amount forecasted by the owners/operators but an overage fee is charged above that figure. The overage fee is two times the cost of one kW for each kW over the demand forecast.       


No doubt, the regional idiosyncrasies in utility demand charges are a function of energy priorities for each state. For example, New York’s Consolidated Edison actively encourages industrial users to invest in battery storage to lessen demand charges. But these rates could also make or break markets for electric vehicles in these states and affect bottom lines on utility balance sheets.


There’s also the question of renewable energy sources for these stations. Even as utilities are rejigging their energy generation portfolios, they may be hesitant to commit to an environmental agenda while still using fossil fuels (or fuels derived from them) to power these stations. The problem, at least from a financial perspective, is that supplying power exclusively from renewable energy sources (or one with renewable energy plus storage) may not be feasible because it would may turn out intermittent. Or, given current storage costs, it may turn out to be expensive. 


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