By - Jim Vess

Lack of charging stations may be biggest hurdle in adoption of EVs

Energize Weekly, October 18, 2017

The adoption of electrical vehicles (EVs) is gathering speed, but that momentum could be blunted by a lack of charging stations to service them, according to a new report by the Rocky Mountain Institute (RMI).

While currently only 1 percent of the domestic fleet, EV sales over the last four years have grown at a compounded rate of 32 percent a year. Bloomberg New Energy Finance projects that by 2040, EVs will account for 54 percent of the new car sales.

“Tumbling battery prices mean that EVs will have lower lifetime costs, and will be cheaper to buy than internal combustion engine cars in most countries by 2025-29,” according to a Bloomberg analysis.

The RMI report said that there could be 2.9 million EVs on the roads in the U.S. in the next five years, adding 11,000 gigawatt-hours of load to the power grid.

“A lot of utilities don’t have their heads in the game,” said Chris Nelder, electricity practice manager at RMI and a co-author of the report. “This load is coming, and they need to integrate and manage the load.”

The RMI report looks at the problems around developing recharging infrastructure and offers some policy solutions. It is aimed at state legislators, energy officials, utility executives and public utility commissioners.

“We want to embolden these commissioners to take a fresh look at these trends,” Nelder said. “It doesn’t make sense to make decisions on what there is based on today, that is driving in the rearview mirror.”

The main questions are who should be responsible for financing, building and operating charging station. It is clear that for continued growth of the EV market, answers need to be found.

“By the late 2030s, most of the countries in our model are being held back by a lack of charging infrastructure,” Albert Cheung, head of analysis for Bloomberg New Energy Finance, wrote in a blog post. “If every car and van buyer is to choose a pluggable vehicle, then every buyer needs to have somewhere to charge.”

The problem has been the proverbial chicken-and-egg dilemma: Until there are more EVs on the road, there is little incentive to build charging stations, and without more charging stations, it will be tougher to sell more vehicles.

The RMI report lays out the barriers and broad suggestions for solutions. Among the prime hurdles and RMI’s policy prescriptions are:

  • The cost of chargers is too high. The cost of installing a Level 2 Charger is about $500 for a residential unit to $6,000 for a commercial one and requires a 240-volt line. A Level 2 Charger can provide an 80-mile-range charge in one to six hours. Direct-current, fast-charging stations (DCFC) cost $50,000 and can give an 80-mile-range charge in three to 24 minutes.

RMI said rebates or other incentive programs for homeowners and businesses to install Level 2 chargers for customers and employees are a relatively low-cost way to meet charging needs over the next decade. DCFC installations will require long-term capital such as municipal or green bonds, long-term purchase agreements or allowing utilities to include a portion of the infrastructure costs in their rate base.

  • Regulators still aren’t sure that the investment is worthwhile and are concerned that spreading the cost of charging infrastructure over all utility customers amounts to shifting costs from the rich to the poor.

If the trend is correct and the use of EVs continues to grow, then the issue isn’t one so much of cost-shifting as timing, RMI contends. As more EVs hit the road, utility commissions will have to respond. The issue is similar to developing roads and water infrastructure. “You need a vehicle-electrification strategy,” Nelder said. “If you don’t have incentives, you are already late.” Regulators can take steps in the interim to protect low-income customers from any cost shift.

  • Utilities aren’t accustomed to charging infrastructure investment and are uncertain whether such outlays will be accepted by utility regulators or that the benefits of the system can be accounted for in a regulatory proceeding.

RMI said that using performance-based regulation could be a way to “scale up” utility investment in charging infrastructure and provide utilities with guidelines for developing that infrastructure.

  • Costs are unevenly distributed. If left to the private sector, a charging company would have a large up-front investment with the risk that entails and face recovery over a long period with modest revenue streams.

A variety of financing mechanisms can address this problem, RMI said. These include public-private partnerships, public investment in charging infrastructure, and allowing utilities to install and operate stations. The rebates for installing charging stations now available from some states and municipalities, as well as the federal government, are helpful, but not sufficient, RMI said.

  • The charging station network is balkanized. The existing network of stations has been built in a “bottom-up” way by businesses, utilities and governments. This is not designed for interoperability. As a result, roaming across networks can be complicated for drivers, who complain about having to carry a wallet full of different payment cards.

Cooperative billing arrangements need to be developed with method such as the free, open-source Open Charge Point Protocol (OCPP), which is employed in charger-to-network communications in many countries and parts of the U.S., RMI said.

“There isn’t really a one size fits all solution,” Nelder said. “What works best, what is politically desirable, is going to vary.” The RMI study also concluded there is insufficient data to determine who should own and operate charging systems.

“We wrote this report as a wake-up call for regulators,” Nelder said. “We wanted to get them thinking farther ahead than the two inches in front of their face.”

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