Cleantech Market Intelligence
How Deregulated Electricity Markets Spark EV Infrastructure Development
Texas is big in land mass, hats, and, well, most things. The state has no corporate or income tax and is one of the more conservative states. Europe, on the other hand, is made up of small nations with high population densities, characteristically high tax rates, and a reputation for liberalism. Despite these big differences, however, the state and the continent share a deregulated approach to governing electricity markets.
In many European countries, residential electricity consumers have the ability to choose their power utility. This competitive retail market has created an environment in which each individual consumer can choose to have electricity at a higher price from a cleaner source or cheaper, dirtier power. Deregulated electricity markets first started in the United Kingdom, under Margaret Thatcher, and spread to other EU members in the early 90s.
Stateside, most electricity markets are controlled by geographic near-monopolies. Specific utilities supply entire communities through a regulated relationship with that community’s governing entity, usually in the form of a public utilities commission. In the 1990’s many states considered deregulation schemes, but momentum in that direction has since waned. Texas, however, continued to progress towards deregulation, and today is one of 10 states to offer both an open market for retail competition and no rate cap. Seven other states offer either open market retail competition or no rate cap, but not both. The remaining 33 are more strictly regulated.
Deregulation has not always succeeded in developing competition or decreasing consumer costs (see California). In some cases unwary consumers have been caught on the harsh receiving end of dramatic price increases. However, deregulation may have found a new advocate in electric vehicle infrastructure development.
For the last few years, the growing interest in electrified transportation has spurred European utilities to get into the business of developing and servicing EV infrastructure. Most major European utilities have begun developing and deploying their own EV supply equipment in major European municipalities through private membership programs for EV owners. The memberships usually include, for a monthly fee, unlimited charging at home and access to a network of intelligent chargers that can signal members when specific charge points are available for use.
Norway, for example, a country with a population slightly smaller than Colorado’s 5 million, has over 900 installed EV charging stations while Colorado has at most 30. Granted, the disparity can’t be blamed only on regulation: Norwegians pay twice what Coloradoans pay for gasoline.
Yet in Texas, where utilities do not have geographic monopolies, European models of EV infrastructure membership services are emerging from both investor-owned and municipal utilities. NRG recently launched its eVgo network operating in Dallas/Ft. Worth and Houston, and Austin Energy offers membership services through its Plug-In EVerywhere network.
Perhaps the success of electricity market deregulation is largely dependent on timing. Perhaps the correct timing is now, as smart grid technologies are evolving to better assist electricity consumers communicate with providers, and society is becoming more dependent upon utilities to not only provide power for homes and buildings but power for transportation as well. State legislators should take note of these success stories.