Jean Feingold 2018-11-15 10:48:58
And How Utility Companies Are Expanding Charging Infrastructure
The number of electric vehicles (EVs) on the road in the U.S., while still small compared to those fueled by internal combustion engines, is growing. On a global basis, the International Energy Agency (IEA) reports record sales of EVs (1.1 million) in 2017, leading to a global stock of more than 3 million. This represents less than 1 percent of the global car fleet, with only 1.2 percent of these EVs in the U.S.
Based on current policy trends and anticipated price reductions, the IEA predicts there will be 125 million EVs worldwide by 2030, representing about 17 percent of the fleet. The more ambitious goal is for 30 percent of the global fleet to be EVs by 2030. This target is motivated by a desire for significant reduction of greenhouse gases.
Inside EVs, an online publication of EV news, reports record U.S. sales of 199,826 EVs in 2017, representing 1.1 percent of the total vehicles sold domestically that year. While Tesla’s three models are the biggest sellers, almost every major auto manufacturer offers at least one model. EV prices are typically about $10,000 higher than equivalent gas- or diesel-powered cars. Sales have been stimulated by the Plug-In Electric Drive Motor Vehicle Credit (IRC 30D). This allows a maximum $7,500 federal tax credit based on battery capacity when an EV is purchased. This credit phases out on a per-manufacturer basis once that company has sold 200,000 EVs total for use in the U.S.
Charging Issues
Any electric outlet can be used to charge an EV, although doing so with an ordinary 120-volt current is slow. More than 80 percent of vehicle charging is done at the owner’s home. Other than Teslas and the Chevy Bolt EV, a full charge allows less than 200 miles of travel.
As the number of EVs grows, petroleum marketers will likely have to battle for a share of the electric vehicle charging market with utility companies that see EV charging as right up their alley.
Homes and workplaces worldwide had 2,875,000 chargers in 2017. There were also about 430,000 publically accessible chargers, including 112,000 fast chargers (Level 2). These typically take four hours for a full charge. Fast chargers matter more in densely populated cities and are needed to increase EVs’ appeal by enabling long- distance travel. The Department of Energy’s Vehicle Technologies Office indicates about 4,900 Direct Current Fast Charging (DCFC) stations are needed in the U.S. to ensure that EV drivers in cities are always within 3 miles of a DCFC station. Providing the same level of coverage for towns would require approximately 3,200 more such stations. Another 400 corridor DCFC stations (spaced about 70 miles apart) are needed for EVs traveling on interstate highways.
So far, most public charging stations are being installed by Tesla and by utility companies. Hardware for a single-port Level 2 charging station ranges from $2,300 to $6,000, with additional installation costs that can more than double that amount. This depends on the distance to the breaker box and the cost of trenching to run the wiring. The parking space is not included in these costs.
Who Pays?
As the number of EVs grows, petroleum marketers will likely have to battle for a share of the EV charging market with utility companies that see EV charging as right up their alley. When utility companies install charging stations, they include that cost as part of their capital investment. After these costs are approved by governmental regulatory agencies, they are passed on to all ratepayers as part of their monthly electric bills. This means electric utilities are being allowed to enter a new business — fueling EVs — without any financial risk.
Some of those ratepayers are petroleum marketers, with utilities being their third largest operating expense. If marketers wish to provide EV charging stations, they will have to pay for equipment and installation themselves without knowing how long it will take to recoup their costs from the fees users pay.
In 2018, more than 30 states have approved or received proposals for EV infrastructure investments by utilities. Some of that charging equipment will be owned by non-public entities, like in California, where Pacific Gas & Electric is installing 7,500 Level 2 chargers, of which they will own at most 35 percent while providing partial rebates to the other owners. Whether EV drivers will have to pay for the electricity they consume is unknown, as many public charging stations are free.
Petroleum marketers cannot compete in the EV charging marketplace with utilities that can pass the cost of new EV charging equipment on to all of their customers, whether or not those customers can use it. “PMAA members are very concerned with utilities using their rate base to pay for EV infrastructure expansion,” noted PMAA President Rob Underwood. “We believe this allows utilities an unfair competitive advantage over marketers and others who must economically justify at-risk investments in new equipment like EV charging stations.” This puts a financial burden on poor and middle-class consumers who must subsidize these stations but cannot afford EVs. PMAA Vice President Sherri Stone agreed. “Government should not be in the business of picking winners and losers in the EV charging marketplace. Providing consumer rate-based payments for EV charging infrastructure development means utility companies develop infrastructure at absolutely no net cost while petroleum marketers and anyone else who wishes to develop EV infrastructure must pay. At an absolute minimum, utility owners should be required to allow their consumers to determine whether they will pay increased rates in order to subsidize EV charging infrastructure.”
At the same time the number of EVs is growing, the automotive industry is working to create more energy-efficient gas-powered vehicles. Underwood pointed to the proposed development of energy-efficient high compression engines (HCE) coupled with a higher-octane fuel (HOF, called 95 RON, with up to an E10 blend), a concept PMAA is still vetting. “This could be a game changer in the marketplace, which could significantly reduce emissions and comport to motorists’ preferences,” he said. “While waiting to see whether these new vehicles challenge EVs, PMAA opposes granting a de facto monopoly to utilities unfairly competing in the charging marketplace, which could ultimately put small business petroleum marketers out of business.”
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