A wave of electric vehicle charging investment is here

Electric vehicles face a variety of financial challenges, from infrastructure to energy storage.

If you need more proof that transportation is going electric, just look to the close to a billion dollars in funding that was allocated this week to electric vehicle charging networks.

On Thursday afternoon, California energy regulators — the California Public Utility Commission, or CPUC — approved a portfolio of EV charging projects worth a whopping $738 million for California’s investor-owned utilities Pacific Gas & Electric (PG&E), San Diego Gas & Electric (SDG&E) and Southern California Edison (SCE). The programs, which will build chargers for both passenger and commercial vehicles, is one of the largest uses of public funding for utility EV charging infrastructure to date.

On the same day, across the country, New York Governor Andrew Cuomo announced up to $250 million for a program with the New York Power Authority (NYPA) to build electric vehicle charging infrastructure across New York state along highways, at airports and in communities.

The state-led projects highlight the growing role that utilities and power companies could play in deploying charging networks. At the same time, the two programs are gaining praise from some industry groups for making sure that they take into account disadvantaged communities, rate-payers, private industry and innovation.

And overall, the programs will move a lot of money into EV charging. The CPUC deal “is the largest omnibus package of IOU investments to be approved,” said Chris Nelder, manager of Rocky Mountain Institute’s mobility practice.

EV growth

Research firms like Bloomberg New Energy Finance are predicting that a third of the world’s vehicles will be electric by 2040. To meet this demand and adequately charge such dramatic growth in electric vehicles, more public charging infrastructure must be deployed.

Currently, there are between 50,000 to 70,000 chargers publicly available and at workplaces in the United States (not including home chargers). Including home chargers, there are close to 475,000 charging ports across the country.

Research from the Edison Electric Institute and the Institute for Electric Innovation published last year predicts that to support the growth projections of EVs over the next seven years, 4.5 million to 5.5 million chargers would need to be installed by 2025.

A report from Rocky Mountain Institute published late last year, which Nelder worked, on stated clearly: 

“Building EV charging infrastructure should be an urgent priority in all states and major municipalities. Getting it right will require unprecedented cooperation by many stakeholder groups. The time to act is now.” 

Historically, utilities have taken a rather conservative approach to deploying EV charging infrastructure. The industry group the Smart Electric Power Alliance (SEPA) recently released a report that grouped utilities into “early,” “intermediate” and “late stage,” when it comes to EV charging programs.

SEPA found that only 3 percent of utilities are in the late stage, while 74 percent are in the early stage of EV charging. 

Part of the reason for utilities' hesitance stems from a lack of mandates and incentives in many states. Some states like California, Washington and Oregon have approved legislation that encourages utilities to file applications for public charging infrastructure with their public utility commissions.

In California, SB 350, enacted in 2015, directs the CPUC to require that California’s investor-owned utilities submit EV charging projects as a way to reduce air pollution. The CPUC projects approved this week are the result of that policy.

California Air Resources Board Chair Mary Nichols said in a release on Thursday that the CPUC’s decision “makes California’s investor-owned utilities full partners in accelerating the drive to a zero emission transportation future.”

It’s in the best interest of other utilities to act more aggressively, too, according to SEPA. “[T]ime is not on the utilities’ side. Forecasts increasingly predict exponential growth over a fairly narrow span of time,” the report notes. 

Here are more of the details

The projects from California’s investor-owned utilities and the NYPA have won praise from some industry groups.

SDG&E, which will receive $137 million, will provide rebates to residential customers to install up to 60,000 Level 2 home charging stations. It will also expand its EV-rate charging program that provides dynamic and day-ahead forecasts.

PG&E, which will receive $236 million, will install “make ready” infrastructure around at-least 700 sites to charge medium and heavy-duty vehicles. SCE, which will receive $343 million, will install "make-ready infrastructure" at 870 sites for medium and heavy-duty infrastructure.

“Make-ready infrastructure” means that the utilities will be getting the commercial sites ready for chargers through grid upgrades, but aren’t installing chargers themselves. For example, a big bus charging depot could cost tens of millions of dollars. 

SCE will also create new time-of-use rates for commercial customers with electric vehicles.

In New York, the EV charging program — called Evolve NY — will use state funding and private sector funding to deploy charging infrastructure along highways, at airports and at “EV model communities.” The latter program could include new residential EV charging pilots like charging subscriptions.

SEPA’s Director of Research Erika Myers, said there are three reasons why the California and New York projects are a big deal.

First, the CPUC made sure that the EV infrastructure investment will be “a prudent investment on behalf of electricity.” They’re making sure that consumers are protected and that can be a model for other public utility commissions that are now working through similar decisions, Myers said.

Secondly, both the New York and California programs are taking into account technology innovation and more sophisticated EV charging programs. For example, SDG&E has a pilot project that provides day-ahead dynamic pricing for electric vehicle owners and enables users to schedule charging.

Finally, the amount of charging infrastructure for medium and heavy-duty vehicles included in the CPUC programs is important, Myers said. “Cleaning up this sector will have a major impact on transportation,” she said. The large size of the investment could also help the industry move toward standardized charging, Myers added.

Social justice groups appear pleased that the CPUC approvals have taken into account the need to reduce air pollution in disadvantaged communities. Earthjustice described the CPUC approval as “a major victory for environmental justice, and is the result of years of hard work by EJ advocates fighting to protect their communities from heavy polluting industries.”

Not everyone agrees with the use of such sizable public funds for EV charging. The California Independent Oil Marketers Association called the CPUC’s move a “$500 million money grab.”

While there are various details in each proposal that have been hotly contested, the overall trend is a big win for the electrification of transportation.

“I see this as a big wave of EV investment picking up steam nationwide,” Rocky Mountain Institute's Nelder said.

If you want to learn more about the electrification of transportation make sure to come to our VERGE 2018 conference in Oakland in October.

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