ELECTRIC VEHICLE CHARGING: OPTIMIZING PRICE AND REDUCING POWER OUTAGES AT PUBLIC CHARGING STATIONS
“A major buildout of fast-charging stations likely would help drive greater adoption of electric vehicles, experts say. But it’s extremely difficult for public charging stations to turn a profit because of volatile fees, called demand charges, that many electric utilities charge their commercial customers.” Areg Bagdasarian, energy analyst²
Public fast charging stations for electric vehicles face some of the same utility “demand charges” that are now prevalent in most commercial building rates. Conventional ratemaking likely will not lower demand charges to levels that will be acceptable to the public, which will not tolerate variable, high rates for charging their electric vehicles. Similarly, charging stations will be subject to the same power outage problems facing the electric grid. On-site battery storage at charging stations could be the technology solution that addresses both the demand charge and power outage problems, results that require dedicated policy and market development strategies to be put in place.
Updated August 2018.
The future of electric vehicle (EV) charging stations, especially those with high power, quick charging technologies known as direct current fast chargers (DCFC), must be ubiquitous, reliable, and cost effective in public places easily accessible from major roads and highways.
While there are many issues that must be resolved to create that infrastructure, two major challenges are getting too little attention, and that might undermine those long-term goals. And for both, batteries—onsite energy storage—could provide some unexpected solutions.
Recent evidence shows that electricity costs at DCFC stations may be largely driven by utility demand charges in many regions, particularly at those stations with lower rates of utilization. These might make EV charging costs exorbitant in some utility territories, making it difficult to develop a sound business model for building out charging infrastructure.
This problem was identified in a recent report (“EVgo Fleet and Tariff Analysis”) by Rocky Mountain Institute (RMI) (3). According to the report, which was funded by EVgo, utility demand charges are “a significant barrier to the development of viable business models for public DCFC [direct current fast charger] network operators” (4).
The RMI report indicated that demand charges for some public charging stations constitute nearly all its operating costs:
With today’s EV market penetration and current public DCFC utilization rates, demand charges can be responsible for over 90% of electricity costs, which are as high as $1.96/kWh at some locations during summer months. (Emphasis added.)
In one example from the RMI report, the charging infrastructure company EVgo had a charger that generated a monthly bill of $1,938, of which $1,362 was demand charges. That’s likely a very unprofitable charger. According to the RMI author, this means there is “no business case” for public charging with such high utility demand charges.
If the future of clean transportation will be electric vehicles, utility demand charges are a major market barrier that must be addressed for the success of that energy transition. But that’s not all.
Electrifying the transportation system also exposes vehicle transit to the same power outage problems that plague the electric power system, where there are thousands of outages a year across the country. If EV charging stations are unreliable and susceptible to frequent electric power loss, EV owners will not accept the risks of driving and finding stations out of service, without electric power needed to recharge their cars.
In-depth analysis or comprehensive studies on the problem of EV charging stations and power outages are not readily available, and few reports about this issue have written by advocates for this technology option. It is odd that such a consequential problem is not receiving any serious attention. The best coverage that we could find was a 2009 article in The New York Times that asked, in the context of electric vehicles, “what if there is a blackout?” The expert from a new start-up gamely answered, “a long blackout is unlikely” (5).
With EV transportation, we are importing all the power outage issues from the electricity sector to the transportation sector. That shift is a major one that deserves a great deal more attention, and the lack of analysis is more than problematic. If the entire transportation fleet is to be electrified, as has been proposed, the existing, growing problem of power outages in the electric generation sector should be a key issue in the discussion about transportation electrification. That does not seem to be the case.
For both demand charges and power outages, the conventional solutions are not satisfactory. As to high demand charges and fuel costs, many experts simply say utility rate design will solve the problem. In the case of charging station resiliency in the face of power outages, there seems to be no attention paid to it in the literature (6).
Download this report as a pdf here.
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