For electric vehicles (EVs) to hit the mainstream and make a meaningful contribution to reducing greenhouse gas emissions, they’ll need a robust public charging infrastructure that lets drivers go where they take gasoline-powered cars now. Our recent work for Washington state identified some promising ways to get the private sector to fund more of that infrastructure in the near term, and fund all of it eventually.
The C2ES study was commissioned by the Washington State Legislature’s Joint Transportation Committee and guided by an advisory panel of state legislators, EV experts, and other stakeholders. The findings, which could be implemented in the state through a bipartisan House bill, demonstrate that, with continued public support and accelerated EV market growth in the near term, the private sector could predominantly fund commercial charging stations in about five years.
A frequent question about funding infrastructure for EVs is, “Why not just follow the gas station model?” Under that model, an investor would pay to install and operate equipment and make a profit by selling the electricity to charge an EV.
Putting aside the fact that gas stations make most of their money at the convenience store or repair shop and not at the pump, this business model doesn’t work for EV charging for three reasons. First, the cost of owning and installing EV charging equipment is high. Second, the market for EVs is small in most places and the demand for charging is uncertain. And third, EV drivers are not willing to pay a high price for public charging when charging at home is cheap and easy.
These barriers are the same whether you’re in Washington state or Washington, D.C.
To overcome them, we first identified three sources of revenue to businesses – the sale of electricity, the sale of EVs, and the sale of other retail products while an EV driver is charging. We quantified the additional revenue that could flow to the electric utility, the automaker, and the retailer from increased EV deployment. We then quantified how an investment to capture this revenue would benefit the financial performance of a charging infrastructure project. Financial performance improved significantly, but not quite enough to earn a payback for the station owner-operator in the time an investor typically seeks (about five years or less).
We then looked at the role of government in supporting the market in the near term to see if that helped. We considered a combination of policy incentives, such as extending Washington state’s sales tax exemption for all-electric cars for five years and subsidizing some of the cost of the charging equipment. We found that if this public sector assistance is offered, and if the EV market continues to develop, after about five years some EV charging business models will be profitable and sustainable with no further public sector intervention.
The near-term success of EVs is critical if we’re going to significantly reduce emissions from the transportation sector, which is responsible for 28 percent of greenhouse gas emissions. We know that private sector investment is crucial, but that the private sector must see a profit if it is to invest billions in EV technology and infrastructure.
Our study reflects what we’re already seeing on the ground, as utilities, automakers and retailers invest in charging infrastructure. Three major electric utilities want to help deploy charging stations in California. In January, automakers including BMW and Volkswagen announced they will work with ChargePoint to install more than 100 charging stations in key markets. And some retailers, including Walgreens, were early adopters of EV charging, partnering with NRG’s eVgo back in 2010.
Our work for the Washington State Legislature shows how policymakers can build a small bridge to a time in the near future when more private businesses will invest in EV infrastructure on their own.
Learn more about our project and download the business model tool we developed to complete this analysis.
In the past six months, the price of gasoline in the United States has declined precipitously - from its June peak of $3.63 per gallon to less than $2 in some parts of the country now.
The effect this sharp price decline will ultimately have on greenhouse gas emissions is not yet known, but a reasonable estimate is that emissions will rise as less efficient cars and trucks become popular for the first time in years. Luckily for the climate, stronger federal fuel economy standards will mean that emissions from the transportation sector won’t rise nearly as much as they would have.
Using travel data from the U.S. Energy Information Administration (EIA), monthly vehicle sales data, and fuel economy calculations by Michael Sivak and Brandon Schoetle of the University of Michigan, we calculate that vehicles purchased in last five months will emit 7.8 million more metric tons of greenhouse gases than if car-buying habits before the gas price drop had continued. An average car emits about 43 metric tons of greenhouse gases over its useful life, so the additional emissions are about the same as putting 180,000 new cars and light trucks on the road.
The sudden plunge in gas prices can make it tempting to forget the lessons of the past.
Sales of electric vehicles (EVs) were up 25 percent last year, and automakers are looking to boost sales further in 2015 with new and updated models. Clearly, EVs have moved beyond their infancy. But continued growth in the EV market will require smart public and private strategies to expand charging infrastructure so motorists don’t have to worry about running out of juice.
Advancing the deployment of low-carbon vehicle technology, like EVs, is essential if we’re going to achieve meaningful emissions reductions from the transportation sector, which is responsible for 28 percent of U.S. greenhouse gases. Globally, the problem is more acute as the number of light-duty vehicles on the road is expected to double to more than 2 billion by 2050.
Automakers will begin introducing their second generation EVs beginning this month with the 2016 Chevy Volt. While sales will likely jump because of the incremental improvements from the first generation Volt, more time is likely needed for batteries to improve and charging infrastructure to be deployed.
Our work for the Washington State Legislature shows that new business models to foster private investment in charging infrastructure will be vital, but public sector policies and incentives will still be needed in the near term to keep the market growing.
My ride for the weekend: BMW’s first mass-produced all-electric vehicle.
Washington, D.C., is well-situated for day trips with mountains, forests, beach and bay all a short drive away. On a recent weekend, I was lucky enough to tool around in style. BMW lent me their new electric car – the i3 – and asked that I race it around the DC metro region. (Or perhaps that’s just how I heard them.)
The car handles beautifully the way you’d expect a BMW to, and proves there’s no performance tradeoff by going with an electric vehicle (EV). For most drivers, EVs like the i3 can accommodate daily driving needs. The average American only travels 30 miles per day. In particular, EVs are well suited for commuting because a driver can charge at home or the workplace. But day-tripping with an EV can take more planning and I learned firsthand that a robust public charging network is essential if EVs are to make more headway in the marketplace.
At C2ES, we often cite the importance of public charging stations to extend the range of EVs and give drivers confidence that an EV is a practical replacement for their conventional car. To allow EV drivers to travel as they would with a gasoline car, quick charging stations are needed along major roadways. Multiple, slower charging stations (referred to as Level 2) should be at key destinations to provide redundancy in case stations are in use or down for maintenance. Those are some of the conclusions of our new paper assessing the public charging infrastructure in Washington state and the same can be said of Washington, D.C.
Owners of large buildings who want to save money by improving energy efficiency first have to overcome a huge hurdle – the upfront costs of getting the work done. A similar hurdle exists for fleet managers considering switching to natural gas vehicles to save on fuel costs – high initial expenses for vehicles and infrastructure.
What if the same method being used to pay for more energy-efficient buildings could also be used to get cleaner alternative fuel vehicles on the road? A new report by C2ES makes the connection between a commonly used business arrangement in the building sector and its potential use in the deployment of natural gas in public and private vehicle fleets.