Widespread electric vehicle adoption hinges on charging infrastructure expansion — a process fraught with payback challenges and difficult strategic choices. In the second of a three-part series, clean mobility consultant Jeff Turner explains how the economics enable electric utility leadership in this space

As noted in the first column in this series, there is a challenging Catch-22 that’s impeding EV market growth: public fast-charging stations are needed to reassure potential EV buyers, but EV owners use them relatively rarely. This means that it’s hard to justify investing in public chargers as a standalone business, so we’re unlikely to see sufficient EV infrastructure deployment from private investment alone.

Hard to justify, that is, unless you’re running an electric utility. Then you are in a unique position to build a broader business case around public charging infrastructure.

How so? While a typical EV driver may only rely on public fast chargers for roughly 5 per cent of their charging needs, the electric utility will see revenue from the remaining 95 per cent of that driver’s charging whether they do it at home, at work or on the go.

A different question

This means that the utility may be able to justify installing fast chargers as a loss leader if their presence can help convince more people to switch to an EV. At that point, the question shifts to whether the increase in electricity sales through residential and at-work charging is sufficient to justify that investment in public charging infrastructure.

This is a question we’ve helped to answer on behalf of a number of utilities in Canada and the U.S. with the development of our EV Adoption model (EVA). It forecasts the potential for EV uptake in a given region while accounting for a number of different barriers to adoption, including vehicle costs, range anxiety, home charging access and availability of vehicles in local dealerships.

EVA lets us model investments in various types of charging infrastructure to see what kind of an impact this is likely to have on EV adoption. For public fast chargers, the model considers two aspects:

• The degree to which the infrastructure establishes geographic coverage over a given region so that EV drivers can get from Point A to Point B.

• The capacity of that infrastructure (in both output power and number of ports) to handle a growing EV population without suffering from lineups on busy travel days.

Strategic options

EVA lets us test out different strategies to address these two requirements, and to what extent this can lead to increased EV adoption compared to a business-as-usual baseline scenario. Our analysis has consistently found that if utilities accelerate EV infrastructure deployment beyond what would otherwise occur through private investment, their costs would be more than offset by an increase in revenue from electricity sales to new EV drivers.

There are several options available to utilities in terms of how they accelerate infrastructure deployment:

• Some utilities have opted to deploy and operate their own charging network, such as Hydro Québec’s Electric Circuit, which now counts over 300 fast chargers across Quebec and Eastern Ontario. In 2019, Hydro Québec’s regulator approved the first phase of a plan to deploy an additional 1,600 fast chargers over 10 years on the basis that the costs of this deployment will be completely offset by increased electricity sales through residential charging.

• In other jurisdictions, utilities are using the higher anticipated returns to justify providing incentives to encourage third-party investment. In New York State, for example, a US$700-million “EV Make ready” program will see investor-owned utilities cover the cost of the supporting electrical infrastructure required to power the chargers, while third parties will cover the cost of the equipment itself and take responsibility for operations and maintenance. Utilities can also offer operating incentives or alternative electricity rate designs that reduce the cost of operating a fast-charge station.

Utilities fill the gap

There are advantages and disadvantages to each approach, but the overall effect on the EV market is the same: utilities fill in the gaps in investment caused by the aforementioned Catch-22 and ensure that EV adoption isn’t held back by a lack of charging infrastructure.

One question that might be on your mind: “What about the peak load impact? Won’t EVs drive up electricity costs by requiring significant upgrades to the grid?” The answer is no, not if we’re smart about it.

If utilities put the right pieces in place to make sure EVs are charged when the grid has spare capacity, the additional revenue from EV charging will far outweigh any new costs. In fact, if the utility collects more revenue for the same fixed costs, it can lead to lower electricity prices for everyone. And this isn’t just a hypothetical scenario: a recent analysis of the impact of EVs on the grid in California found that EVs are indeed driving electricity rates downwards.

This means that utilities are in an excellent position to build a positive business case for investing in charging infrastructure, helping to accelerate the transition towards electric mobility while delivering cost savings to their ratepayers. And that’s before we even consider the broader benefits of EVs to society, such as improved air quality and reduced GHG emissions.

The next article in this series will dive into one of our favourite EV topics: vehicle-grid integration. We’ll look at it and other options utilities have to ensure that we not only minimize the impact of EVs on the grid, but further maximize the benefits they bring to the grid by turning them into valuable flexible loads.

Jeff Turner is the Senior Research Lead for Clean Mobility at Dunsky Energy Consulting, where he supports a variety of government and utility clients in their efforts to decarbonize the transportation sector and accelerate the adoption of electric vehicles. Jeff also sits on the board of Electric Mobility Canada.