Navigant Research Blog

Solving the EV Charging Puzzle

— May 11, 2015

When Tesla, Nissan, and General Motors (GM) introduced plug-in electric vehicles (PEVs) to the mass market, arguments against PEVs mainly cited weaknesses with vehicle cost, range, and limited publicly available electric vehicle supply equipment (EVSE). The first two weaknesses are difficult to solve, but their solutions are fairly straightforward: battery cost cuts through economies of scale and range increases through the development of better batteries. However, solving the third weakness is more nuanced. For instance, it’s been assumed that simply increasing public charging infrastructure will increase the adoption of PEVs, which has led to multiple government- and utility-funded initiatives on public infrastructure build-outs.

A Contradiction

Though it’s arguable that the public charge point build-out on behalf of the EV Project has been integral to PEV sales growth (most likely as passive marketing), data from these and other early infrastructure projects has suggested that PEV owners overwhelmingly charge at home rather than at the public points. This fact questions the practicality of these initial public infrastructure investments. Yet, data analyzed from a survey discussed in Navigant Research’s Electric Vehicle Geographic Forecasts report suggests that a lack of charging infrastructure still seems to be the biggest drawback to PEV ownership, as illustrated in the chart below.

Primary Drawback to PEV Ownership, United States: 2015              

(Source: Navigant Research)

What this contradiction appears to indicate is that yes, there is a need and likely a business case for public EVSE, but it needs to be in the right place. The trouble is that building owners are unlikely to invest in EVSE unless they see a need from residents, employees, or customers. And these groups are unlikely to ask for these services unless they have a PEV, which is unlikely if they don’t have places to plug in the PEV. What this all means is that the EVSE industry has to continue to find the right places for both the PEV owner and the building owner—or run the risk of placing infrastructure where it’s unnecessary.


An innovative approach to solving this problem is underway thanks to the efforts of a San Francisco-based non-profit organization, Charge Across Town. In mid-April, the organization launched the Driving on Sunshine campaign, which showcases EVSE company Envision Solar’s integration of solar power and energy storage into a mobile EVSE unit named the EV ARC. The campaign places three EV ARCs at predetermined locations throughout San Francisco for 3-month periods and collects data on site usage. Findings on the data will be used to inform on public EVSE use and determine where units may be most effectively placed for consistent use; units will be donated to sites with the most use.

The charging stations are likely not inexpensive; however, it’s feasible to consider that a utility with big plans for infrastructure development (Pacific Gas & Electric, perhaps) would benefit greatly from a similar approach to siting public EVSE installations. Further, it would provide incredible value to potential host sites in actually determining the efficacy of EVSE placement without the added costs and embarrassment of a never-used public EVSE station.


California Utilities Look to Manage EV Charging

— March 27, 2015

Through multiple programs aimed at both supply and demand, California has developed the most vibrant market for plug-in electric vehicles (PEVs) in the world. According to the forthcoming update of Navigant Research’s report, Electric Vehicle Geographic Forecasts, the total number of light duty PEVs in California is expected to surpass 140,000 by the end of this year and 1.5 million by 2023. The state’s electric power sector is taking note because the speedy PEV market growth may pose problems if PEV charging isn’t managed well.

The most likely problems will occur at the residential transformer, where a cluster of PEVs may outstrip a transformer’s capacity, requiring costly upgrades and/or repairs. To date, this issue has been fairly minor, with California’s three major utilities (Pacific Gas and Electric [PG&E], Southern California Edison [SCE], and San Diego Gas & Electric [SDG&E]) reporting that, of the 97,350 PEV customers in their combined service territories from July 2011 to October 2014, there have only been 126 PEV-related infrastructure upgrades.

Getting Worse

These problems are likely to worsen with the aforementioned 10-fold increase in PEVs in under 10 years. Looking ahead, the California Public Utilities Commission (CPUC) launched a PEV submetering pilot in September 2014 through the big utilities. The pilot is designed to lower energy costs for PEV owners through time-of-use (TOU) rates that incentivize off-peak charging and measure their energy consumption for vehicle charging apart from their overall energy consumption. By separating PEV charging, utilities could assess how best to influence PEV charging beyond TOU rates to avoid infrastructure upgrades.

Although TOU rates are effective at managing demand for a more efficient grid at the generation and transmission level, their effect on localized demand issues like transformer capacity is limited. Automated charging of PEVs based on TOU rates essentially creates a new spike in demand at the beginning of the off-peak period. This spike looks marginal at the grid level, but can be fairly drastic at the transformer feeding a cluster of PEVs.

Leading Edge

Thus, utilities, electric vehicle supply equipment (EVSE) manufacturers, and EVSE service providers are looking to create more dynamic and advanced PEV charging schemes to manage charging at all levels of the grid. Greenlots, for example, recently announced its partnership with EVSE LLC to demonstrate the company’s SKY Smart Charging system in 80 Level 2 workplace chargers at SCE facilities. The SCE project will examine how PEV owners respond to demand response events and dynamic pricing schemes for a number of purposes, including mitigating local transformer issues.

Outside of California, other PEV markets are expanding, too; utilities in these areas will need to begin testing and implementing similar technologies and programs soon. Companies competing for utility services in California now will be well served by expansion elsewhere and likely represent the leading edge of charging services development for years to come.


Finding a Pathway to Profit for EV Charging

— February 24, 2015

The question of whether it’s possible to make a profit from a public charging station continues to hang over the electric vehicle (EV) charging industry. The challenges are threefold:

  • The costs of the EV charger and installation, which remain fairly high.
  • The utilization rate; i.e., how many plug-in electric vehicles (PEVs) are actually using the chargers each day.
  • The question of what PEV drivers are willing to pay for the charging.

Level 2 charging is still the most widespread type of installation deployed in public charging, and a back-of-the-envelope payback model shows that it is possible to receive a reasonable return on investment (ROI) for a Level 2 charger with high utilization and the right price point. A networked Level 2 charger with two plugs typically costs around $5,000–$6,500. Installation costs vary significantly, but can easily double the upfront investment by the site host. Operating costs are actually quite low. The electricity used is not a major cost factor, even at a relatively high cost of $0.13 per kWh (as in California, for instance). Typically, the site host will pay monthly services fees to a network operator. In some cases, it will share revenue with the operator, as well.

Just in Case

It’s important to note that there are only so many hours in the day that a public charger is going to be both accessible and likely to be used. If a dual public charger can reach utilization of around 10 charging sessions per day, and charge $2 per session, the host could make back the initial investment in 5 to 6 years.

This picture is a little rosier than the reality today, simply because the current rate of usage of public chargers is nowhere near 10 charging sessions daily. Nevertheless, this simple ROI model demonstrates that there is a pathway to profit for offering public charging services. However, there is a real question as to how many drivers will be willing to pay $2 for around 20 miles of charge, which is what a typical battery electric vehicle (BEV) driver may get from a single charging session. Given that this should cost them less than a dollar when they charge at home, it’s not clear that Level 2 public charging will ever be much more than a just-in-case opportunity for drivers. This will be even more accurate as we see affordable, longer range BEVs come on the market, since the need to top up during the day will be lessened.

Keeping It Free

These economics are one reason why many businesses will continue to offer public charging as a free service, figuring that there’s more benefit from using the chargers to attract customers, and keep them shopping longer, than to collect charging fees. It’s also why public charging manufacturers are offering leasing or no money down, no interest financing to keep the upfront cost from being so daunting.

According to Navigant Research’s new report, Electric Vehicle Charging Services, global revenue from EV charging services is expected to grow from $81.1 million annually in 2014 to $2.9 billion by 2023.

Annual Revenue from EVSE Charging Services by Region, World Markets: 2014-2023

 EV Charging Services chart

(Source: Navigant Research)

EV charging is a promising new, multibillion-dollar business sector. These forecasts include revenue from DC charging, which is likely to be a more lucrative segment than Level 2. But our scenario also assumes that some public charging will remain as a free perk, rather than as a direct revenue generator, given the questions that linger about drivers’ willingness to pay for top-up Level 2 charging.


Kansas City Takes a Flyer on EV Chargers

— February 11, 2015

Kansas City Power & Light (KCP&L), announced in late January that it will install 1,000 public EV charging stations in Kansas City, creating a dramatic increase from the 40 stations that are currently available. The stations are expected to be installed by the end of summer 2015.

According to Navigant Research’s report, Electric Vehicle Geographic Forecasts, there were only 2,687 EVs on the road in the entire state of Missouri at the end of 2014. The report also projects sales of 1,615 plug-in electric vehicles (PEVs) for the state of Missouri in 2015.

With such low PEV numbers in the state thus far, perhaps this move by KCP&L is an effort to encourage more PEV adopters in the Kansas City area. Even California, the largest adopter of EVs in the country, has fewer than 2,000 public EV charging stations. And Missouri, unlike California and other states with high PEV penetration rates, has no tax incentives for EV buyers.

Risky Business

The business proposition for the utility doesn’t look good, either. The network of chargers is estimated to cost $20 million, and the network will be free to the public for the first 2 years of operation. How many years will it take to recoup that investment through added sales of electricity and usage fees once implemented?  Perhaps KCP&L is following the path of California utilities that see significant value in controlling the flow of electricity and re-selling it through EV charging stations. Several California utility companies successfully petitioned the California Public Utilities Commission (CPUC) to allow utilities in the state to re-sell electricity via EV charging stations.

Nevertheless, California has far more EV users and according to PlugInsights, 81% of EV charging occurs at users’ homes, with just 10% of charging occurring at public stations (the remaining is mostly attributed to private charging stations and at workplaces). Thus, even if more Missourians do adopt EVs, the majority will likely be charging their vehicles at home.

Real Impacts

If KCP&L isn’t intending to make money from this initiative, but instead trying to reduce emissions, it would be better suited to convert the state’s existing power plants from coal to natural gas. This would be more cost effective and have a far more significant impact on emissions and air quality. Physically, it does not require much in the way of new equipment to convert a coal plant to run on natural gas. Missouri has one of the dirtiest electricity grids in the country, with coal accounting for a whopping 83% of the state’s electricity generation in 2013.

The map below, from the Union of Concerned Scientists’ report, State of Charge, shows that the gasoline vehicle mile per gallon (mpg) equivalent of an electric car is just 35 mpg in the SPNO region, where Missouri is located. This means that a gasoline car with 35 mpg, such as a Volkswagen Passat, would have the same impact on the environment as an electric car in Missouri (due to the high coal usage in the state). While KCP&L is moving toward removing a few coal power plants from its generation portfolio, an overhaul of the company’s electricity generation sources would have a much bigger impact on emissions reductions than building 1,000 EV charging stations that may or may not be used by consumers.

Electric Vehicle Global Warming Pollution Ratings and Gasoline Vehicle Emissions

(Source: Union of Concerned Scientists)


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