There has often been more than a touch of magical thinking running through the way that electric vehicles are talked about. They are cheaper to run, they will be cleaner, charging won’t be a problem, the grid can cope with the extra demand, and so on and so on. Perhaps (and maybe even probably) many of the problems likely to be associated with EVs could indeed be solved given time and entrepreneurial initiative. Sadly, that’s not the way that we seem to be going. Demand will not be allowed to grow naturally (as, in many respects, it now is) but will be accelerated by state intervention of one sort or the other. One of the things that we know about state intervention is that it tends to be expensive and not too consumer friendly.
So it was good (sort of) to read this refreshingly blunt piece by Axios’s Joann Muller. Here’s an extract:
Americans nationwide will likely face higher electric bills to pay for the next stage of the country’s electric vehicle (EV) charger buildout — even if they don’t drive an EV . . .
The U.S. will need a massive investment in public charging infrastructure to match the anticipated spike in EV demand. But such capital outlays don’t make economic sense for many companies until there are more EVs on the road — which won’t happen until there are more chargers. . . . It’s a classic chicken-and-egg scenario that, in the near term, is likely to be solved by regulated public utilities that can pass on the investment burden to their customers over many years.
Oh.
And so:
Power utilities across the country are planning to build extensive EV charging networks across their service areas.
Muller gives the example of Minnesota’s Xcel Energy, which is planning “to spend $170 million for about 750 fast-charging stations in Minnesota and Wisconsin over the next four years, part of a broader $300 million EV initiative.”
And:
Xcel says the plan would encourage more of its customers to buy EVs by offering them a steep discount on electricity at its charging stations.
Great!
But:
. . . for everyone else — including those who can’t afford an EV — it just means steeper electricity bills, given that many communities only have a single utility.
Oh.
Utilities, of course, are not necessarily models of efficiency and customer friendliness. On the bright side, however, that might represent a business opportunity for competitors to step in.
But:
Stores and gas stations offering EV charging may wind up competing with the very same utilities they’re paying for the power flowing into customers’ cars [and] [r]etailers say the way they’re billed for power leaves them at a disadvantage. Utilities apply so-called “demand charges” based on the maximum amount of power commercial ratepayers use at any point during their billing cycle. So if just one customer plugs their EV into a 150-kWh fast-charger for 30 minutes [note that definition of a ‘fast charge’], causing power demand to spike, a store would be billed at the peak demand level for the entire month.
Problem.
A utility, of course, will want to generate a good return on its investment in charging stations (and its customers will likely want the same, to keep their electricity bills down). Achieving that probably does not involve changing billing arrangements to benefit its competitors.
To say that this throws up an issue or two is an understatement, and so it’s well worth reading the whole of Muller’s article.
She concludes:
Private businesses — not regulated utilities — will eventually own and operate most of the EV charging network because they know how to compete on things like price, service and amenities, says Mark Boyadjis, global technology lead at S&P Global Mobility. But for now, utilities could have a head start, and electricity customers will pay.
I wonder how long that “for now” will last, and what that will mean for gas-station operators, quite a few of which are mom-and-pop operations.