The number of battery electric vehicle models on offer in the United States is expected to grow significantly during the next few years, with Audi, Chevrolet, Ford, Tesla, and others all expected to add to their fleets. For these models to be successful, the expansion of direct current (DC) fast charging stations to keep the cars charged will need to keep pace. While the business model for hosting a fast charging site is improving, offering the service can become quite expensive when demand charges are incurred.
According to a new report from the Idaho National Laboratory, offering DC fast charging can increase a host site’s utility bill by 15% to 100%, depending on the rate schedule. The report, which culls data from the U.S. Department of Energy’s (DOE’s) EV Project, illustrates how charges can vary greatly depending on the service territory.
How It Works
Utilities assess demand charges each month if a business exceeds specified amounts of power consumed within peak hours during a single period, usually tracked in 15 minute increments. DC fast chargers can boost power consumption by up to 60 kW, which, depending on the rate schedule and overall power consumption, is more than enough to push many businesses into demand charge territory. And demand charges aren’t a one-time event, as they are levied monthly for up to a year or more.
For small business owners looking to fast charge electric vehicles (EVs), the price can be especially steep. The report states that “power demanded by DC [fast charging] has a more significant impact on electric utility costs for smaller commercial businesses than for larger ones.” In one example, a single charging session that puts a location above its allotted power consumption could cost $482 for that month and subsequent months. DC fast charging locations often charge $10 or less for a single charging session (such as NRG’s growing EVgo network that charges $0.10 per minute in Denver), which could create significant losses for site owners.
Therefore, if demand charges are incurred, sharing that cost among many charging sessions will make offering EV charging more economical, according to the Idaho National Laboratory. Understanding how offering DC fast charging will impact the utility bill is complicated, as each utility offers multiple tiers and rate schedules for power consumption.
An alternative to the often severe demand charge fees is to purchase an energy storage system that would power the EV chargers at times of peak demand. Several companies, including Nissan, are entering the energy storage market to serve this developing niche.
Demand charge rate structures are a moving target in some areas as they undergo periodic revisions, which can sometimes result in contentious public utility commission hearings, as is happening now in Austin and Oklahoma. Simplifying and limiting the fees for offering DC fast charging, such as through separate EV metering or rates, could encourage today’s reluctant business owners who are wary of the fiscal impact to begin to offer the service.