By Amanda Myers, Policy Analyst at Energy Innovation focused on the U.S. power sector transformation.
Recent research reveals a concerning trend – 88 of the top 100 U.S. metropolitan areas do not have enough electric vehicle (EV) charging infrastructure to support the expected three million EVs that will be on the road by 2025 (a conservative estimate compared to many others, including BNEF). This is creating an EV charging infrastructure gap struggling to meet expected demand – so how can states solve this problem?
Transportation is drawing new scrutiny from policymakers focused on decarbonization, after it eclipsed the electricity sector in greenhouse gas emissions in 2017. Luckily, vehicle electrification allows the transportation sector to piggyback off power sector emissions reductions successes by providing more fuel from clean energy generation.
But regardless of the local power mix, EVs produce less greenhouse gas emissions than gas-powered vehicles. This means PUCs across the country should act now to implement EV infrastructure programs that serve vehicles on the road today, as well as plan implementation for future growth.
Electric utilities are key partners for rolling out EV charging infrastructure programs—they are responsible for providing the energy and grid connection for residential, commercial, corridor, and destination charging. In fact, utilities will need to provide up to 733 terawatt-hours by 2030 to support the EV load. Utilities can also recoup their investment in EV charging infrastructure by selling electricity and using the chargers as responsive demand to balance the power grid. But the path to bridging the EV infrastructure gap runs through public utility commissions (PUC) overseeing utility investments and planning.
PUCs in California, Minnesota, Oregon, and New York are developing and implementing utility EV charging infrastructure programs, with different approaches and levels of sophistication. The primary differentiating factor between these various programs is the level of utility ownership, and regulators will have to continue wrestling with the appropriate level of utility and third-party control.
Bridging the electric vehicle charging infrastructure gap
The International Council on Clean Transportation’s (ICCT) recent white paper outlines the looming EV charging infrastructure gap across America. Closing this gap would require increasing workplace and public level 2 chargers by 7x and 3x, respectively, and DC fast chargers by 3x.
Typically, Level 2 chargers provide about 25 miles of range per hour and DC fast chargers provide between 100 and 200 miles of range per hour and are located where a car does not have as much idle time. Note that home charging (80% of charging is done at home), DC corridor charging (fast charging available alongside major corridors), and charging in rural areas was outside of the scope of the ICCT project.
With nearly exponential EV sales growth expected in the near future, more utility and government programs are needed to serve the market. While the private sector has successfully brought advanced charging technology and innovative business models to the market, inadequate EV charging infrastructure indicates a need for utilities and government to step in.
Utilities are eager to tap the EV market – large-scale vehicle electrification can reverse a decade-long trend of flat demand growth. But program evolution has been slow in this historically conservative industry.
The Smart Electric Power Alliance’s (SEPA) recent Utilities and Electric Vehicles: Evolving to Unlock Grid Value report found 74% of utilities were in the early stage of EV programs, 23% were in the intermediate stage, and 3% were in late stages; each stage was determined based on level of consumer engagement, as well as availability of incentives and rate programs.
Clearly, utilities need to accelerate their EV infrastructure programs, and most will do so under the direction of PUCs. Leader states can help lagging states and their associated utilities by determining the best way to spend their time and money, but models of success have been and are being developed so replication at scale can happen now.
EV charging infrastructure turns California’s car culture into climate leadership
It should come as no surprise that California tops the list when it comes to EV infrastructure programs . It constitutes half of the U.S. EV marketand has an EV infrastructure goal of 250,000 EV chargers by 2025, transforming its car culture into climate leadership. Still, transportation emissions have yet to decrease, highlighting the tall task of transforming America’s largest auto market into an all-electric system.
In 2016, the California PUC (CPUC) approved EV infrastructure pilots for the state’s three largest investor-owned utilities (IOUs), structuring each program differently:
- SOUTHERN CALIFORNIA EDISON (SCE) PROVIDED MAKE-READY ELECTRICAL INFRASTRUCTURE NECESSARY TO INSTALL AND OPERATE A CHARGING STATION ALONG WITH FINANCING BUT ALLOWED CUSTOMERS TO SELECT, OWN, AND MAINTAIN CHARGING STATIONS.
- SAN DIEGO GAS & ELECTRIC (SDG&E) OWNED AND OPERATED THE EQUIPMENT, BUT BROUGHT IN THIRD PARTIES TO BUILD, INSTALL, OPERATE, AND MAINTAIN THE ELECTRIC VEHICLE SUPPLY EQUIPMENT (EVSE).
- PACIFIC GAS & ELECTRIC (PG&E) ALSO OWNS EQUIPMENT BUT THIRD PARTIES MANAGE INSTALLATION, BILLING, AND MAINTENANCE. PG&E’S INITIAL PILOT PROGRAM IS ONGOING, SCE AND SDG&E’S HAVE CONCLUDED.
Though not all pilots are complete, early results show how utility program structures build out infrastructure in the hardest to reach areas—multifamily housing and disadvantaged communities (“DACs”). Multifamily housing is a challenging segment of the market for most third-party providers due to the split between who pays for the infrastructure to be installed versus who uses the infrastructure, similar to the split incentive issue for tenants and landlords with energy efficiency.
50% of charging ports installed by SCE went into disadvantaged communities, compared to SDG&E at 32% and PG&E at 27%. 51% of PG&E’s installed stations were at multifamily housing, followed by 47% of SDG&E’s stations and 3% of SCE’s stations. These results show eliminating upfront costs matters most in DACs, and confirm EVSE business model limitations for to multifamily housing, meaning utility ownership often best addresses infrastructure need at these building types.
Since these pilots launched, the utilities have used their findings and documented infrastructure need to propose updates, expansions, and extensions. In 2017, SDG&E’s proposal for a trial rate to shift residential EV charging was approved, along with a new SCE EV-specific rate which was designed to address challenging demand charges.
In 2018, the CPUC approved another set of utility proposals focusing on different market segments. In their proposals, PG&E and SCE focused predominantly on trucks, cranes, and forklifts while SDG&E focused on residential charging needs. This year, the PUC will address PG&E’s proposal for a monthly subscription charge, which would replace demand charges for commercial and industrial customers.
California’s not alone in crossing the EV charging infrastructure gap
California’s approach to EV charging infrastructure targets underserved markets, either to jumpstart a viable but early opportunity or intervene when the private sector is unable to address demand. As the state develops lessons learned in the initial utility EV infrastructure programs, it moved onto creating a favorable policy framework (including rates) for sustainable third-party success.
In addition to specific lessons on utility program designs, this approach to addressing the EV infrastructure gap helps address shortcomings while encouraging market development.
Part two of this analysis will review recently proposed and approved utility EV infrastructure programs in other leader states, evaluating program structure based on levels of utility ownership and level of sophistication (similar to SEPA’s early/intermediate/late stage construct).
While each of these states are working on utility programs to bridge the EV infrastructure gap, each of their own approaches hold lessons for policymakers and utilities in other states considering solutions to the problem.