(NASDAQ: TSLA) Utilities should build America’s electric-vehicle infrastructure
When it comes to charging their cars, Tesla Motors’ () customers have it fairly easy: the electric-vehicle pioneer has built a nationwide network of almost 3,000 free-to-use “Superchargers” that provide enough juice to drive 170 miles with just 30 minutes of charging. For other EV motorists, however, things aren’t quite so straightforward. Including Tesla’s network, the US currently has just , about a quarter of them in California —a tiny number compared to the country’s 150,000 or so conventional filling stations.
That lack of infrastructure is deterring drivers from giving up their gas guzzlers, and has left some EV early adopters at charging stations. With EV sales booming — more than 118,000 plug-in electric vehicles were up almost 23 percent (from the previous year — there’s a clear demand for more charging stations, especially in California, where the state’s Zero-Emission Vehicle action plan calls for to be put on the road in the next decade.
A string of now-defunct EV charging specialists, including Ecotality, Better Place, and 350Green, have tried and failed to address that need. While a handful of specialist companies — most notably ChargePoint and Car Charging Group () — remain in operation, the clearing away of dead wood, combined with surging demand, has made space for a new player to enter the sector: .
PG&E () has been the in the sector, seeking to build 25,100 charging stations in California, while Southern Cal Edison () and San Diego Gas & Electric, a subsidiary of Sempra Energy (), are also hoping to build out hundreds of new charging stations. And the trend isn’t restricted to the Golden State: in Illinois, Commonwealth Edison is for a 5,000-station expansion. Similarly, Kansas City Power & Light, a subsidiary of Great Plains Energy Incorporated (), is building about 1000 stations, or one for every three EVs in the state, and Georgia Power () is opening dozens of charging stations.
It’s easy to see why utilities want a piece of the EV-charging pie. Distributed renewables and energy efficiency drives are eating away at the companies’ core electricity-retail business, and EV charging could provide an important new revenue stream. Indeed, each new electric vehicle boosts demand for electricity by the equivalent of about a quarter of the average household’s full annual usage, according to . “EV charging presents an opportunity for [utilities] to significantly increase revenue through increased electricity sales,”the report notes.
Utilities’ forays into charging could be good for the EV sector, too. “Everyone has different opinions about whether or not the utility model is the right one, but it is regulated and every stakeholder can get involved,”, manager of electric transportation at the Electric Power Research Institute. “What the utilities can do is, they have scale, so they can drive costs down.”
Only one problem: California regulators on the utilities’ plan to fund the expansion through a surcharge on ratepayers’ bills, and last week ordered PG&E to dramatically scale back its ambitions. Denied the right to charge ratepayers an additional 70 cents a month to build its planned $654 million network, the utility is now planning a more modest pilot project to deploy around 2,500 charging stations over the next two years. “If PG&E feels strongly they can do this program cost-effectively, they can always use shareholder money to do it,”, a senior policy advisor for Plug-In America.
That might not be an appealing proposition: NRG Energy () last month shunted its eVgo charging network, along with its solar-energy division, into , citing the capital costs associated with building out the industry. “It is very much the time to impose a new higher level of financial rigor on GreenCo befitting the type of capital discipline imposed on entrepreneurial startups by venture capitalists,” said CEO David Crane.
That’s a particularly big deal given a , published this week by the Idaho National Laboratory, that found EV owners now strongly favor charging their vehicles at home, not at public charging stations. In fact, more than 80 percent of EV charging takes place at home, and only a handful of particularly well-located public charging stations see any significant use.
Left without an established public charging infrastructure for so long, EV owners have apparently begun to learn charging habits that could be hard to break.
While investors should always be wary, they need to understand the impact of consumer behavior and of the regulatory contexts within which electric utilities operate as they make investments.
Companies to watch
* PlugShare helps EV-users find their nearest charging stations via a free mobile app — and in the process, and conducts research that it then sells on to industry players, utilities, regulators, and other interested parties.
* Richmond’s Evatran Group this year from Chinese auto-parts maker Zhejiang VIE Science and Technology to help bring its wireless EV charging technology to China. Evatran faces stiff competition from Qualcomm, Siemens and Bosch, which are all reportedly working on similar wireless-charging protocols.
* Solar design company Envision Solar () has won contracts with for “solar trees” — standalone PV arrays and battery systems built around a central “trunk” that provide shade and off-grid EV charging for up to six vehicles.
Ben Whitford is the U.S. correspondent for The Ecologist. He has written for the Guardian, Newsweek, Mother Jones, Slate, and many other publications.