RMI and EVgo Report Reveals Utility Rate Structures to Support Fast Charging Growth
Los Angeles and Boulder, Colo., April 11, 2017 – EVgo, the nation’s largest public electric vehicle (EV) fast-charging network, and Rocky Mountain Institute (RMI) have released a report regarding the future of EV fast-charging utility rates. The report, titled EVgo Fleet and Tariff Analysis, found that public fast-charging infrastructure is critical to EV deployment; however, California’s state legislators and regulators must make future adjustments to allow for more cost-effective fast-charging services. More cost-effective utility rates ultimately will help support the state’s efforts to move toward an electrified consumer vehicle fleet and simultaneously cut emissions.
Direct Current (DC) Fast is the future of EV charging, providing approximately 150 miles of range at a charging rate of 50kW per hour. Compared with other EV charging options, such as wall outlets and Level 2, DC Fast is one of the fastest charging methods available today, and already EVgo is researching 150kW-per-hour charging rates and faster to service the next generation of high-range EVs. As EV use increases and more DC Fast chargers are built, infrastructure will follow EV adoption, given economically viable electricity rate structures.
RMI’s study found that, under certain electricity tariffs, current demand charges can make up as much as 90 percent of the monthly bill of operational public DC fast chargers, driving the cost of delivered electricity as high as $1.96 per kilowatt-hour (kWh) during summer months in some locations. These charges are nearly seven times as high as the current gasoline equivalent cost of $0.29/kWh, meaning it is difficult for DC Fast charging providers like EVgo to remain competitive with the costs of operating petroleum-fueled vehicles.
“As EV adoption increases, it’s important that drivers have access to affordable charging options outside their homes,” said Terry O’Day, Vice President, Product Strategy and Market Development, at EVgo. “Public fast charging is critical to EV deployment, and the more chargers installed will affect the amount of EVs deployed, which, in turn, will drive utilization and revenue.”
The report recommended the following approaches in order to promote a competitive business environment for public DC Fast charging stations and to incentivize future infrastructure investment:
- Low fixed charges, which primarily reflect routine costs for items such as maintenance and billing.
- The opportunity to earn credit for providing grid services, perhaps along the lines of a solar net-metering design.
- Rates that vary by location—for example, offering low rates for DC Fast chargers installed in overbuilt and underutilized areas of the grid. This strategy can increase the efficiency of existing infrastructure and help build new EV charging infrastructure at a low cost.
- Limited or no demand charges. If demand charges are necessary, it’s essential that they do not capture upstream costs of distribution circuits, transmission or generation.
- Time-varying volumetric rates, such as those proposed for San Diego Gas & Electric’s Public Charging Grid Integration Rate (GIR). These volumetric charges would recover all, or nearly all, of the cost of providing energy and system capacity.
The report finds that integrating these policy levers could reduce costs dramatically for DC Fast charging operators, allowing them to sell power to end-users for $0.09/mile or less and enabling faster reinvestment into growing a future EV fast-charging infrastructure.
“As more and more Californians embrace the many benefits of EVs—reduced carbon and air emissions, lower per-mile usage costs compared with gasoline-powered vehicles and increasing operating ranges— now is the time for California to ensure that the support infrastructure for EVs keeps pace,” said Jeruld Weiland, a Managing Director at RMI. “We hope this research helps inform California’s electricity-sector stakeholders on constructive approaches to best position the state to meet its ambitious carbon-reduction goals.”
California Governor Jerry Brown’s administration has set a long-term goal of supporting 1.5 million so-called zero-emission vehicles like EVs on California’s roadways by 2025, and EVgo finds that studies such as RMI’s will help inform future legislation to achieve and surpass this goal.
Download the report here.
About Rocky Mountain Institute
Rocky Mountain Institute (RMI)—an independent nonprofit founded in 1982—transforms global energy use to create a clean, prosperous, and secure low-carbon future. It engages businesses, communities, institutions, and entrepreneurs to accelerate the adoption of market-based solutions that cost-effectively shift from fossil fuels to efficiency and renewables. RMI has offices in Basalt and Boulder, Colorado; New York City; Washington, D.C.; and Beijing.