The Fuse

Utilities Need to Get Involved in Developing Infrastructure for Electric Vehicles

by Matt Piotrowski | December 16, 2015

Utilities need to become bigger actors in developing infrastructure to support the electrification of the car fleet, according to leading experts in the field.

Electric utilities are one major entity that can gain financially from deployment of electric vehicle (EV) charging stations and will be key in improving charging infrastructure, according to Nick Nigro, the founder of Atlas Public Policy.

Experts agree that utilities need to become bigger actors in developing infrastructure to support the electrification of the car fleet.

Speaking at a panel on electric vehicles at the Center for Strategic and International Studies (CSIS) this week, Nigro said, “[Utilities] are effectively the elephant in the room. They are starting to get involved, but the case really needs to be made with them on an individual basis across the country that there is a business case for this and there is value to the ratepayer.”

In California, investor-owned utilities have proposed using ratepayer funds to build charging infrastructure, to the tune of $680 million for 40,000 stations.

He noted that outside California, where most EV sales occur, the movement has been slow, although Kansas City Power & Light and Georgia Power provide examples of two utilities that have made significant investments in charging infrastructure.

map of ev sales

Despite the range of positives from electric vehicles, such as low fuel costs, increased energy security, and stabilization of the electric grid, they still remain a “niche” market. They will remain as such unless utilities and regulators “get involved” through messaging, public outreach, building infrastructure, and improving vehicle-to-grid technology, Britta Gross, the director of advanced commercialization policy at General Motors, said at the CSIS event.

Despite the range of positives from electric vehicles, such as low fuel costs, increased energy security, and stabilization of the electric grid, they still remain a “niche” market.

The biggest obstacle to greater penetration of EVs is the current low oil price environment. It diminishes cost savings for consumers and undercuts enthusiasm from traditional car dealers and regulators to push forward to make EVs more accessible. As shown in the following graphic, EV sales have been lackluster since the middle of last year, when oil prices began their plummet.

evsales

Utilities will need help from the public sector, at least in the near term. Nigro noted how difficult it is to make investments in EV charging attractive to business without public support given that there is a five-year payback period. “If the EV market develops, the government role could be scaled down to virtually nothing in five years,” he added.

There needs to be a “suite of policies,” according to Nigro, similar to those put in place by California, which dominates the EV market in the U.S. In California, its zero-emissions program, financial incentives to purchase EVs, charging policies, and utility engagement have all led to robust sales.

Local economic benefits of EVs

There are many different economic incentives for states to pursue measures to make EV charging infrastructure more accessible.

GM’s Gross discussed the many different economic incentives for states to pursue measures to make EV charging infrastructure more accessible. She notes that fuel cost savings for consumers are spent at the local level, bringing about multiplier effects—the boost to overall income from an injection of spending—for state economies. Moreover, the money saved through the federal tax credit, which totals $7,500 in most cases, also provides a huge bonus for consumers and is typically spent locally.

Retailers and workplaces can also help build-out infrastructure for EVs, and benefit themselves in the process. For instance, one retailer that provides charging stations, Gross points out, has seen customers that own EVs spend an extra 50 minutes in its stores, adding time for them to make in-store purchases.

Employers, meanwhile, have a large role to play. According to data from the Department of Energy, employees with access to workplace charging are twenty times more likely to purchase an EV.

Employees with access to workplace charging are twenty times more likely to purchase an EV.

Gross noted that 78 percent of EV customers commute less than 40 miles per day, which means a majority of charging can be done at home. In fact, roughly 60-80 percent of charging already takes place at home. She says that only 3-4 percent of charging is done in public, “a trend that won’t change too much.”

The cost of charging EVs is relatively low, with the estimate at $1.70 per night for 40 miles of EV driving. That may not rise, meaning the cost savings versus petroleum-based products will persist. Robert Graham, the director of EV Everywhere Challenge at the Department of Energy (DOE), told the audience that over the past 50 years, the electricity market has seen “levelized prices,” and they are likely to remain low and stable, in contrast to the inherent volatility of oil prices.

In this program, DOE is engaging with utilities throughout the U.S. to help them understand the benefits of electrification, for themselves and the public.

In the coming year, Graham’s office will put out a number of studies on a variety of topics, including the economic impact of EVs on the U.S., an infrastructure analysis, a report on EV consumer behavior, a look at the “fleet gap,” and a case study on Vermont, where EV sales have taken off and the success could be replicated elsewhere.