The electric vehicle (EV) market got a jolt of good news this fall with the announcement that dozens of non-profits, schools, and utilities are purchasing electric fleets and installing workplace charging stations.
The challenge is to encourage more fleet operators – and the general public — to adopt EVs on a similar scale. And that’s not likely without more charging stations that the public can use.
Governments have played a central role in deploying the public EV charging infrastructure we now have, but private investment is needed to get more charging along major highways and at popular destinations, multi-unit residential buildings and workplaces.
A new C2ES report explores the role that state clean energy financing organizations, such as clean energy banks, can play in unlocking private investment to expand EV infrastructure. The analysis is part of a joint project by C2ES and the National Association of State Energy Officials on ways to finance alternative fuel vehicle refueling infrastructure.
The need for more public EV charging is clear. A recent C2ES study noted a lack of access to public charging stations in many parts of Washington state, for example. Despite having one of the largest per-capita charging networks in the country, the study concluded EV drivers in Washington could still have a hard time getting to many locations outside the immediate Seattle area.
Attracting private investment in EV charging has been difficult because the business case for EV charging is very challenging, and high start-up costs have kept potential investors on the sidelines.
A clean energy bank (also known as a “green bank”) is a government-created institution that facilitates private sector financing for clean technology projects. They can use limited public dollars to attract private financing of clean energy projects in many ways, including offering private lenders partial protection from the risk of financing unfamiliar technologies, contributing public capital alongside private financing, helping standardize financial products to make them easier to buy and sell, and informing private lenders about the financial performance of unfamiliar technologies.
Some of these tools may already be familiar to state energy offices, and in fact, one of the benefits of clean energy banks is that they put in one place existing tools and incentives that the government uses to encourage private investment.
States across the country are focusing more on clean energy finance. Connecticut opened the first state green bank in 2011. Earlier this year, New York opened the nation’s largest green bank, with the governor pledging $1 billion in funding. California, Hawaii, and New Jersey also operate dedicated clean energy finance programs, and other states are considering doing the same.
To date, clean energy banks have focused primarily on energy efficiency and renewable energy projects. The lessons learned in those areas could help inform strategies to help overcome similar financial, information, and coordination barriers facing EV charging projects, providing a bridge to a future where private sector EV charging solutions can stand on their own.
In the short term, finance programs can leverage public funds to attract private investment in charging infrastructure through a combination of low-interest or longer-term loans, interest rate buydowns, project equity stakes, small grants, and, as the market develops, credit enhancements. By sharing upfront costs and risk with project developers and acting as an information resource, clean energy banks can increase overall investment and accelerate technology deployment for EVs as they have in other areas.
In the longer term, finance programs can increase capital flows by fostering the development of secondary markets for EV charging loans and leases.
If Americans are to embrace electric vehicles, they need to have access to public charging infrastructure. While the EV market will certainly develop over time, the pace and scope of that development will depend greatly on how much private investment goes into charging infrastructure. By drawing on their experience in building efficiency and other clean energy projects, clean energy banks can be part of the solution.