National EV charging network needs private investment incentives, retailers say

Private investors need incentives to invest in a national electric vehicle charging network, retailers say

Private investors need incentives to invest in a national electric vehicle charging network, retailers say

  • Some convenience stores, truck stops and other retailers are unhappy with certain policies about electric vehicle charging. They say that the policies will make it harder to invest in building a network of charging stations. The federal government is providing money to help build a national network of charging stations.
  • Investment in charging facilities will be low due to the demand charges and the ability of regulated utilities to own charging facilities in some states, according to Doug Kantor, general counsel of the National Association of Convenience Stores.
  • The Biden administration is planning to give $5 billion to states to install charging stations for electric cars. But experts say that more private investment is needed if people are going to feel comfortable buying electric cars, because of worries about how far the cars can travel before needing to be recharged.

To access NEVI funds, states must file EV charging network plans by Aug. 1 with the U.S. Department of Energy and Department of Transportation. The plans will be approved on a rolling basis, according to a formula.

According to the Charge Ahead Partnership, or CAP, Texas could receive up to $408 million over five years. California could see more than $380 million. Florida could receive $198 million. And New York could see $175 million. CAP is a coalition of businesses, organizations and individuals supporting the development of a national EV network.

Some states have already published plans for electric vehicles. Ohio has set a goal for 90% of the state’s residents to live within 25 miles of an EV charger. Wyoming and Nebraska have also published draft plans. CAP on Tuesday hosted a call with media to highlight concerns businesses have regarding their ability to install charging equipment and turn a profit.

Jay Smith, from the CAP Executive Director, said "Congress wants to use this money to help get the electric vehicle charging market started. This will bring in more private investors and help the market grow."

Some of the investment for EVs will need to be made at retail locations, like gas stations, but those businesses are unsure they can turn a profit with current EV policies. Businesses represented by the National Association of Convenience Stores sell about 80% of all the traditional motor fuels today, he said, and they “see selling electricity to EV drivers as a huge part of the future.”

Kantor said that the only way the NEVI program could be effective is if it incentivizes private investment. "There is no way to build out the infrastructure that's needed to charge vehicles without private investment," he said. "To just do it with public money, that's not going to happen."

In order for private businesses to install chargers en masse, state regulators need to address two key issues: the demand charges associated with peak demand, and the fact that utilities are unfairly competing with private businesses.

Retailers are not confident that it is a good idea to provide charging services for electric vehicles, even with this help from the government. They are worried about being charged too much for electricity used.

Demand charges for EV charging stations have been a problem for a while. In 2017, Rocky Mountain Institute did a study that showed demand charges could be responsible for over 90% of the electricity costs for a charging station. Since then, some states have tried "holiday" exemptions from demand charges or have drastically reduced the demand charges for charging stations.

Another issue is who owns the charging stations. This is a particular concern when the stations are subsidized by ratepayer funds. Georgia Power has a network of more than 50 chargers, Smith noted.

"There is a lot of money to be made by retailers and the power companies when more people are driving EVs," Smith said. "Both sides need to work together for this to be successful, rather than one side taking money away from the other."

Utilities say that they need to install chargers in areas where private companies might not be able to turn a profit while electric vehicle adoption is new. Georgia Power currently owns and operates 59 public charging stations in the state – but that is only about 3% of the state’s chargers, utility spokesman John Kraft said in an email.

"We believe that utilities are in a good position to help grow the charging infrastructure - especially in underserved areas and charging deserts," Kraft said.

Retailers are prepared to compete, but they need a level playing field, said Kantor. If the regulators allow the utilities to build chargers with ratepayer funds, "that's not a market system," he said.

Installing a fast charger is a big expense, Kantor said. Retailers have to get that money back somehow, but the utility doesn't because it's been paid for by all the other customers. That makes it hard for private investment to happen.

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