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Public and private stakeholders have invested billions of dollars in the PEV industry thus far, and continued support will be necessary by both if PEVs are to reach the mainstream consumer. Considering the gloomy short-term outlook for public budgets across the United States, expansion of large, publicly funded pilot projects is unlikely and may not be necessary to accelerate PEV adoption. If private investors are to continue and eventually carry the PEV industry without public support, they will require a reasonable return on investment in a manageable timeframe.
The discussion in this chapter focuses on investment challenges for public and private entities that the Action Plan addresses. The actions identified will foster local and regional PEV markets by encouraging private investments and appropriate public support.
The PEV Dialogue Group developed the actions laid out in this chapter to accomplish the following two objectives related to public and private investments in PEV charging infrastructure:
The Group believes optimizing public and private investments in PEV deployment is essential to accelerating PEV adoption. Significant new public subsidies for PEV deployment are unlikely, so leveraging private capital is a necessity. At the same time, the sole use of private financing is problematic since some locations will need to incur upfront costs to accommodate charging infrastructure, such as electrical grid service and system upgrades. In these instances, business models for vehicle charging may not be profitable and may require some public subsidy to thrive in the short term.
The Group focused on three aspects of public and private investments in charging infrastructure that are specific to a geographic area: the suitability of PEVs, charging type and infrastructure needs, and the extent of public investments in EVSE. Combined, the actions in this chapter will encourage private industry to enter new markets and rely on public investments only when necessary and appropriate.
The PEV industry would not exist without the billions of dollars invested by the private sector to date. In the case of charging infrastructure, the investments have come mostly from public-private partnerships. Bringing PEVs to mainstream customers through an expansive charging infrastructure is a significant business opportunity that can also benefit the public. This chapter identifies the actions needed to help other markets grow based on lessons learned from early movers.
Factors affecting whether a PEV market takes hold in a geographic area include consumer interest, gasoline and electricity prices, the existing regulatory environment, degree of involvement of local and state government, local utilities, automaker and PEV service provider enthusiasm, area geography, travel patterns, and expected environmental and economic benefit provided by PEVs. A one-size-fits-all approach may miss local nuances.
Consumer Interest: The most important factor in assessing the suitability of PEVs in a geographic area is consumer interest. Demand is a function of interest in hybrid vehicles, above-average wealth (or purchasing power) and other socioeconomic factors, concern for the environment, the importance of personal image, and information availability. It is apparent that cities like San Francisco will have greater early consumer interest in PEVs than other places due to the high degree of consumer purchasing power and interest in the environment. Statistical modeling techniques exist that could be useful in estimating consumer interest in an area. For example, discrete choice models can help forecast future market share of PEVs using the results of consumer preference surveys.
Figure 4-1: Variation in electricity (August 2011) and gasoline (November 2011) prices nationwide.
Box 3. How does an automaker decide where to sell a vehicle?
Unless an automaker produces a vehicle in very low volume, state franchise laws prevent an automaker from controlling the distribution of that vehicle within the state in order to protect a franchisee's right to do business. As a result, auto dealers must assess local interest in a particular vehicle to determine the amount to stock in their inventories. Automakers can assist dealers in making this assessment.
New vehicles like PEVs warrant special attention by auto dealers since they introduce a number of new characteristics (e.g., refueling options, range, driving experience, etc.). Consumer response is still largely unknown, so estimating the suitability of PEVs in an area is very useful to dealers.
Gasoline and Electricity Prices: The regional nature of gasoline and electricity prices can influence consumers. Electricity prices vary by well over 150 percent nationwide while gasoline prices vary less than 35 percent (see Figure 4‑1). Nationally, gasoline prices have been rising at a sharply faster rate than electricity prices-which have actually decreased in real terms since the early 1980s-and gasoline prices are more visible to the consumer. Thus high gasoline prices will likely act as a greater incentive for PEV adoption than low electricity prices. Further, because PEVs are so efficient, the cost per mile of operating a vehicle on a battery fueled by electricity is typically much lower than gasoline nationwide, even if road taxes were applied to electricity.
Regulatory Environment: The degree and clarity of regulation in a jurisdiction as it relates to commercial and residential charging infrastructure can greatly influence the likelihood of private sector involvement, depending on the business model. Too much or uncertain regulation can discourage investment by some businesses by making their model unprofitable or too risky. For instance, some businesses cannot compete if a PEV service provider is treated as a utility (see Section 3.1.1). On the other hand, utilities may want to invest some of their profits in infrastructure to increase revenue. Other regulatory factors to consider include pricing strategies for vehicle recharging (e.g., time variant and demand charges) that may be beneficial to the PEV market.
State and Local Government Involvement: While many localities have not taken proactive steps to support PEV deployment, others have taken aggressive action including the installation of public EVSE and other incentives to support the PEV charging industry (e.g., educating electrical contractors and local and state inspectors on all aspects of EVSE). For some PEV service providers, this support is necessary and helpful to their business. Subsidies for EVSE installation deter entry into the market of subscription-based businesses that rely on offering discounted EVSE. As a result, local governments should tailor their involvement to suit the needs of their locality.
Local Utility Involvement: Without participation from the local utility, there is little likelihood that PEV deployment will be successful in a locality. Utility education and outreach efforts that describe the benefits of vehicle electrification can accelerate the market's growth. Utilities could become PEV service providers themselves, competing with other businesses (see Section 3.1.1). However, the utility can also stifle growth if its procedures take too long for consumers.
Automaker and PEV Service Provider Enthusiasm: Perceived interest and likelihood of success will influence automakers and PEV service providers. Although automakers cannot control where vehicles wind up (see Box 3), they can control where a vehicle is introduced initially. Automakers have a vested interest in the successful deployment of PEV charging infrastructure:achieving the right balance between too little and too much infrastructure is critical to consumer acceptance. PEV service providers will seek out places that best match their business model. A "chicken and egg" situation exists because both PEV service providers and PEV automakers need each other to succeed.
Area Geography: Climate and topology can reduce the range of a BEV, thereby directly affecting consumer interest. This is similar to the effects geography has on a conventional gasoline vehicle, but can be much stronger, for example in winter since a BEV does not have waste heat from an internal combustion engine readily available. Though the effects on a PHEV are less because of the combustion engine backup, geography can also make these vehicles less efficient. Automakers are developing ways to minimize these effects on range by offering heated seats, or solar-powered fans to pre-cool the vehicle's cabin, and developing advanced thermal control systems for the battery.
Travel Patterns: PEVs typically become economical as more all-electric miles are driven. A PEV can be useful in almost any environment - suburban families can use it for errands around town and city dwellers can use it for almost all trips. The practicality of PEVs depends on consumer driving behaviors, which are largely a function of travel patterns and land use. Factors here include proximity to commercial zones, industrial zones, schools, etc. The denser the area, the more practical it is to drive a PEV since it is more likely the trip will be "all-electric." However, the fewer all-electric miles driven, the more time it takes to recoup the upfront costs of a PEV.
Expected Societal Environmental and Economic Benefits: PEVs offer societal environmental and economic benefits that warrant inclusion in any evaluation of PEV suitability in a geographic area. The environmental benefits include local air quality improvements and the mitigation of greenhouse gas emissions, which are a contributor to global climate change. When operating in zero-emission mode (which is the only mode for a BEV), a PEV directly emits no harmful air pollutants from the tailpipe and can improve local ozone levels (i.e., reduce smog). The economic benefits of PEVs include increased energy security, job creation to build out and maintain charging infrastructure, and opportunities related to PEV research, development, and manufacturing.
Best practices for PEV charging equipment and infrastructure needs are largely unknown today. The lack of real-world data on PEV driver behavior is the primary reason. Factors that affect charging equipment and infrastructure needs are similar to those that influence consumer interest including the PEVs adopted in the area, travel patterns, and area geography.
Cities and regions across the United States are actively investigating PEV charging infrastructure needs through pilot projects, public-private partnerships, and other efforts. In September 2011, DOE awarded $8.5 million in PEV deployment planning grants to 16 organizations covering 26 states. In addition, the ongoing pilot deployment projects will provide valuable data on driving patterns, charging infrastructure needs, and charging equipment used for DOE grant recipients and others interested in supporting PEV deployment.
Since many consumers are not aware of their own driving patterns, it is difficult for them to assess which PEV is the best fit. The type of PEVs adopted strongly influence the charging equipment and infrastructure needs, especially at the market's outset.It is evident that PEV drivers will need access to a charger at their home- and that this is likely the primary location for all vehicle charging. It is important to note that a number of potential PEV buyers park on public streets and do not have access to a garage. The extent of the need for public charging infrastructure, however, is still largely unknown but is likely critical to expanding the PEV market beyond consumers with access to garages.
Table 3 : Charging level type by site in the near term.
|Site||AC Level 1*||AC Level 2**||DC Level 2***|
|Single Family Home||X|
|Private Rest Stop|
*AC Level 1 means low-power 1.2kW.
**AC Level 2 means effective power levels up to 6.6 kW in commercial locations and 3.3 kW in residential locations.
***DC Level 2 refers to fast charging at typically 50 kW.
For charging equipment, the need for a high-power charging network largely depends on the popularity of BEVs. However, demonstration programs have shown that BEV drivers largely overcome their range anxiety and adjust their driving patterns quickly.The internal combustion engine inside an EREV or PHEV overcomes this challenge by eliminating driver range anxiety. The type of charging equipment depends on the site as outlined in Table 3. For instance, DC fast charging is impractical in residential locations, but BEV owners could find them useful in many publicly accessible areas. Also, the electrical grid load profile during the day can affect what kind of charging equipment makes sense outside the home. Some electric utilities may prefer faster charging in the workplace so the PEV loads are on the grid for as short a time as possible, while others may prefer less load spread over a longer time.
For PEV drivers to maximize their electric miles, they will need access to a charger at home for all PEV types, but the charger type can vary. Although PHEV owners might choose to use AC Level 2 chargers when they are available, a low-power AC Level 1 charger is suitable to recharge the vehicle's battery overnight. However, a BEV owner will likely desire an AC Level 2 charger capable of providing at least 3.3 kW of power in order to charge the battery overnight.
Whether PHEVs, EREVs, or BEVs are adopted also influences public charging infrastructure layout. Although any PEV owner could use commercial EVSE, BEV drivers will likely need them to maximize their travel radius from home.
As previously mentioned, land-use patterns strongly influence charging infrastructure needs and indirectly influence charging equipment needs. The closer drivers live to where they work, the more likely they will feel comfortable with BEVs, though traveling fewer miles will reduce the value proposition that PEVs provide over conventional vehicles. Similarly, area geography can affect charging infrastructure needs since PEV range is affected by topology and climate. Areas with significant elevation changes or with extremely hot or cold climates can increase the demand for charging infrastructure since these conditions decrease the expected range of electric-only travel. Other factors that limit a PEV's electric-only range, such as high traffic congestion, can also increase charging infrastructure demand.
Optimizing public and private investments in EVSE is a complex balance of social cost-benefit analysis, business innovation, and automobile market dynamics.
Strategic action by government in the form of regulatory reform and capital investments can help accelerate private involvement in PEV deployment. The benefits to society of PEV deployment warrant some public funding, but too much could stifle private investment and fail a cost-benefit assessment. This balance is not necessarily the same for all geographic areas, so there is no single, or simple, method to accelerate private investment.
Implementing a successful business model depends on a variety of factors, including a compatible regulatory framework as laid out in Chapter 3 and some public investment. Public investments in some markets can jumpstart private competition around EVSE, charging rates, and charging availability.
Currently, much of the discussion around PEVs focuses on maximizing deployment in order to improve energy security and the environment and to support nascent industries. Increasing deployment of PEVs helps the industry reach economies of scale, which can lead to significant cost reductions. There is a clear social benefit to the deployment of PEVs with respect to the environment and energy security, so some public investments are warranted. Public policy thus far has included vehicle subsidies and investments in research and development (R&D) related to battery and vehicle technology, vehicle charging infrastructure, pilot deployment programs, and manufacturing. Subsidies at the federal and state level exist to lower the upfront cost of PEVs, and some incentives exist for EVSE. Regarding EVSE installation, Chapter 3 says electrical grid service and system upgrades for PEVs should be treated like loads with similar power requirements and rate classes; meaning some sharing of costs to accommodate EVSE is appropriate.
Public-private partnerships are currently the most popular method to deploy EVSE. The two largest pilot projects today are public-private partnerships between DOE and two companies with very similar business models, ECOtality and Coulomb Technologies. DOE also provided a nearly $1 million Electric Vehicle Readiness Grant to the New York State Energy Research and Development Authority on behalf of the Transportation and Climate Initiative to support the Northeast Electric Vehicle Network, a group of eleven northeast states and the District of Columbia. Another example is the U.S. Department of Transportation awarded $2.7 million in TIGER grant funding for over 20 DC fast charging stations along key corridors in northwest Oregon. Leveraging public dollars through these partnerships provides one model for nationwide deployment.
The purpose of the DOE projects is to get cars on the road and evaluate how they are used. They will also help establish best practices for home charging installation and other procedures necessary to simplify the vehicle purchase process. While the results of these projects will be incredibly useful on a number of fronts, they will not provide a large amount of data on new business models since the two major infrastructure providers use a similar approach.
In the initial stages of PEV deployment, the federal government has subsidized the installation of thousands of charging stations for demonstration purposes. In addition, some states offer subsidies for consumer purchases of EVSE. Combined, these public subsidies have helped some businesses grow, while deterring others. For instance, businesses like NRG Energy that rely on free home EVSE in return for a monthly subscription can have difficulty competing in areas that provide free home EVSE subsidized by public dollars.The private sector has invested billions so far to support PEVs, but most capital invested has thus far been in support of the PEVs themselves. Charging infrastructure accounts for a small fraction of the total invested. Companies have created new business models in hopes of capturing market share for PEV recharging, but uncertainty about profitability exists.
Depending how they are structured, public subsidies can crowd out private investment. They also can appear to favor the wealthy since PEVs cost much more than conventional vehicles today, and early adopters are likely to be relatively affluent.This perception could hold even though early adopters must bear the additional cost and time required to use new technology. Economists identify actions that are efficient in order to increase "utility" for individuals. Policymakers also temper those actions on occasion to promote equity or fairness. Equity must be a pillar of any policy framework by government, especially when the public shares in the costs of action.
Currently, a public subsidy exists for PEVs up to $7,500 for the first 200,000 vehicles produced by each original equipment manufacturer, and some states offer additional subsidies. It may be difficult to justify further public subsidization of PEV deployment at the federal level beyond this public investment on equity and efficiency grounds, though this subsidy is critical to encourage PEV market development beyond early adopters. It is unclear how long state subsidies will exist given the current strain on state budgets.
There are three situations in which a good case can be made for public investments in EVSE, so long as there is sufficient consumer interest in PEVs. First, publicly financed EVSE can be useful for demonstration purposes and identifying lessons learned. Second, if the private sector is unwilling to invest in sufficient commercial charging infrastructure, such as in some small towns, then it may be prudent for public entities to support the market with the installation of some EVSE. Lastly, public charging infrastructure in densely populated areas with high concentration of multi-unit dwellings or curbside parking, or destination charging (e.g., beaches, parks, and museums) can help stimulate PEV deployment. In some cases, this could enable BEV travel between cities, though it is unlikely that BEV drivers will travel very long distances in the short term due to the time it takes to charge the battery per mile traveled. The degree of support here depends on the willingness of consumers to purchase PEVs without a dense EVSE network or local businesses' willingness to allow publicly funded EVSE co-located with their businesses.
Public and private investment in PEV charging infrastructure is a critical objective of the PEV Dialogue Group. The Group believes that optimizing these investments is a laudable goal, though it is a serious challenge in the nascent stages of PEV deployment. The fact is that some investments will not succeed while others will exceed expectations. However, there are steps that stakeholders can take to move towards optimization.
The actions in this chapter are largely location-specific since much of the growth in the early PEV market will be limited to certain regions. However, since these regions are geographically, culturally, politically, and economically diverse, early leaders can help to establish nationwide best practices related to PEV deployment and charging infrastructure installation and management.
Figure 4‑2: Location-specific actions in sequential order.
In addition, the actions in this chapter are laid out sequentially (see Figure 4‑2). Thus, before estimates of public investments in EVSE or charging equipment and infrastructure needs are possible, stakeholders should assess the suitability of PEVs.
Automakers, auto dealers, PEV service providers, electric utilities, and NGOs should cooperatively develop a method to assessthe suitability of deploying PEVs in a geographic area and share this information with area governments.
Since the passenger vehicle and electricity markets vary greatly nationwide, evaluating the suitability of PEVs in an area is appropriate to optimize public and private investments. The evaluation should consider factors likely to influence consumer interest, including: purchasing power, gasoline and electricity prices, the existing regulatory environment, the degree of local government and utility involvement, area geography, travel patterns, and the expected environmental and economic benefits. The output of such an evaluation should provide the cost-effectiveness, PEV type (BEV versus PHEV), and the ability of PEVs to accommodate existing driving patterns.
Figure 4‑3: NGOs, electric utilities, and other businessescan help estimate PEV suitability in an area.
Weighing the different attributes based on their influence on PEV suitability can help determine the likelihood of PEV adoption. While attributes that typically influence vehicle purchasing like consumer interest and fuel prices will carry the most weight, other factors will play a role as well. Regulators, state energy officials, local government, electric utilities, and businesses can increase the chance of PEV market success by taking the actions laid out elsewhere in the Action Plan.
The more criteria that an area meets, the more likely that PEV rollout will be successful. Mathematical modeling to predict the probability of success is possible, but it is not likely to be even moderately definitive until consumers have more experience with PEVs. PEV deployment efforts should incorporate the learning from ongoing PEV deployment projects, such as those being sponsored by the DOE, the Rocky Mountain Institute's Project Get Ready cities, and private-only ventures like NRG Energy's eVgo.
See Appendix C for an example scoring system to estimate PEV suitability in an area.
Automakers, PEV service providers, electric utilities and other electricity providers, and NGOs should collaborate to estimate charging equipment and infrastructure needs in a geographic area based on the expected PEVs in an area, travel patterns, and area geography.
Estimating charging equipment and infrastructure needs builds off the assessment of PEV suitability. The evaluation should help predict the kind of PEVs consumer will likely purchase, which matters most when estimating charging equipment and infrastructure needs. Thus, there are three pathways: one for BEVs, one for EREVs and PHEVs, and one for a mixed market of PHEVs, EREVs, and BEVs.
Figure 4‑4: Charging infrastructure approaches.
Preferences that favor BEVs could lead to a considerably larger charging infrastructure network in terms of size and power needs than an area favoring PHEVs or EREVs. It is also likely that consumers in many areas will be interested in BEVs, EREVs, and PHEVs. Once the PEV type is considered, travel patterns and geography for an area matter most in estimating charging equipment and infrastructure needs.
With the idea in mind that BEV drivers will want ready access to power, and that EREV and PHEV drivers will want to maximize their electric miles traveled, the following are considerations for charging equipment infrastructure.
Due to a lack of data on PEV driver behavior, the extent of charging infrastructure to accommodate PEV drivers is largely unknown for both early adopters and mainstream consumers. Pilot projects have provided evidence that range anxiety disappears quickly, but more evidence is needed before these kinds of concerns can be dispelled. Ongoing deployment projects, including the large deployment projects partially funded by the DOE as part of ARRA, will provide useful data on driver behavior. In the meantime, two approaches for charging infrastructure in the short term exist: a minimal approach that may only accommodate consumers knowledgeable about PEV technology and a maximum approach that aims to accommodate more drivers right away.
For the minimalapproach, BEV drivers will need home and workplace charging with some public charging to accommodate range anxiety. PHEV and EREV drivers will only need home or workplace charging; publiccharging is not necessary for PHEVs or EREVs, though it would allow these drivers to maximize electric miles traveled and thereby contribute to greater fuel savings. For the maximum approach, the approach is similar for PHEV, EREV, and BEV drivers. Home and workplace charging is necessary, and publiccharging should be considered at major retail outlets, curbside, and public parking lots.
Other factors that increase charging infrastructure requirements include:
Local and state government and NGOs should work together to estimate the amount of public investments in an area that are appropriate to overcome existing market deficiencies.
Market deficiencies like the lack of a price on greenhouse gas emissions and the failure to include external costs (e.g. military costs of securing oil) in gasoline prices, along with the desire to promote new technology development warrant some public subsidy for PEVs. The existing federal and state subsidies that lower the vehicle's upfront cost can help to address these issues. Additional subsidies may be reasonable, but local and state government should carefully consider these investments only after an assessment of PEV suitability in a geographic area is completed.
As detailed in Chapter 3, upgrades to the electricity service and system for EVSE installation should be treated the same as upgrades needed by equipment with comparable power requirements within each rate class.
Regarding EVSE, new public investments should not be made for private EVSE. That is, government should not pay for EVSE that is not publicly available. Figure 4‑5 conveys cases where local and state government should consider public investments in EVSE.
As outlined in the decision tree below, public investments only make sense if PEVs are feasible in an area and there is insufficient business interest. Section 4.2.1describesthe judgment of PEV suitability. Determining sufficient business interest is primarily based on the ability of the PEV service providers to build a charging infrastructure that satisfies the needs laid out in Section 4.1.2.
The following are three conditions that warrant the consideration of public investments in EVSE:
Figure 4‑5: Decisiontree for local and state government and NGOs to estimate public investments in publicly available EVSE.