- Electric Vehicles
- EV Charging
- EV Charging Infrastructure
EV Charging to Tap Carbon Credits for New Revenue Stream
The business case for EV charging involves a long payback period thanks to the upfront infrastructure costs and the low retail price of electricity. Because the ROI takes so long to be realized, it slows charging infrastructure relative to the size of the plug-in EV (PEV) fleet. For companies in charging infrastructure development, finding a profitable charging service business model is a continuing quest.
In September, the Electric Vehicle Charging Carbon Coalition (EVCCC) came up with a new revenue stream for EV charging. EVCCC published a methodology that calculates the reduced greenhouse gas emissions from EV charging versus internal combustion engine vehicles. These credits would be certified by the Verified Carbon Standard and eligible for sale on voluntary carbon credit markets. The coalition anticipates charging service providers Electrify America, EVgo, and Exelon—who are already certified to generate credits—will begin producing them in 2019. EVCCC estimates that revenue from carbon credits could contribute to a 5%-10% return on capital over a 10-year period.
Revenue Dependent on Renewable Energy Sources
Using the US estimates in the Argonne National Laboratory GREET Tool for an internal combustion engine vehicle (emitting 393 grams of CO2 per mile), an EV (emitting 166 grams of CO2 per mile), and as a ballpark estimate $7/credit (1 ton CO2 offset = 1 credit), chargers could generate $0.005 per kilowatt-hour delivered. However, the revenue generated under this methodology is also dependent on the use of renewable energy sources, which will vary by region and could vary by chargers with onsite renewable generation. In situations where chargers powered EVs with 100% renewable energy, charge point operators could generate carbon credit revenue just shy of $0.01 per kilowatt-hour sold.
The generated credits are sold into voluntary carbon credit markets, where a growing number of stakeholders purchase the credits to achieve carbon neutrality. While most of the carbon credit purchases in North America are made by the for-profit sector, government organizations, non-profit organizations, and individuals are also participating in the market.
Not All Carbon Credits Are Created Equally
Credits for sale on voluntary carbon credit markets are characterized by project, or how emissions reductions are taking place. This allows for buyers to not only achieve carbon neutrality, but also enables them to do so in support of specific types of emissions. This could make EV charging carbon credits more valuable than other credits in the carbon offset markets. For example, Lyft—or other stakeholders which primarily emit carbon via the transportation sector—may find transportation-related carbon credits more attractive. As the State of the Voluntary Carbon Markets 2017 report shows, some companies care enough about the source of their credits that they are willing to pay a premium.
Carbon markets are poised for growth as governments around the globe look for more ways to reduce carbon emissions. The World Bank found that revenue generated from carbon markets grew 50% last year, and a number of governments are looking to launch their own. China has been making strides on developing and opening its new carbon markets in the near future, and the carbon market for international aviation is likely opening in 2020.
As carbon markets continue to grow around the world, the certification and participation in carbon markets by EV charging infrastructure will be a useful tool in both expediting the expansion of public charging infrastructure and providing growing markets with a supply of credits.