EV Charging Station Utilization And Attracting EV Drivers
Read Time 6 mins | Written by: Julia Segal
EV charging station utilization is important to help site hosts monetize their investment by attracting EV drivers.
The Covid-19 pandemic has brought about sweeping changes in the way people shop, work and live according to this recent Forbes article. There seems to be an increased willingness to try new things and to be open to change. Values like sustainability, and social responsibility have become a higher priority, and brands which reflect these values have started to gain attention.
With 71% of the Americans believing themselves to be environmentally conscious, and federal policies that push heavy investment in Electric Vehicles and the infrastructure that supports them, an EV boom is on the horizon.
That said, it is critical to attract as many users as possible to the EV ecosystem and to maximize revenue generation to ensure that a critical mass of both users and EV infrastructure is developed side-by-side.
Pricing Strategy
A key element in attracting users to the EV ecosystem is to create a pricing strategy for the supply of energy to EVs that users will find attractive. The optimal pricing strategy for an EV Charging Station may differ based on factors like the type of property where the charger is located, tenant requirements, incentive availability and the financial strength of the property owner. For example, the property owner can offer the charging services solely as an amenity and charge no fee while depending on traffic to the property, increased sales, and corporate branding as sources of income.
When a fee is charged, it can be nominal, to simply recoup operational and installation costs and insulate the owner from spikes in costs from increased utilization, or it can operate in the profit center model, where the fee charged is designed to turn a profit from the sale of charging services. The fees are typically set as a price per KWH of electricity delivered, per unit of time, or per charging session.
While optimizing sales revenue, it is very important that charging station hosts must design fee structures to achieve optimal dwell times for the type of property. For example, a retail site would design fees to achieve a longer dwell time but also create sufficient customer turnover, as the in-store retail revenues per customer tend to taper off after extended dwell times. Retail site hosts, using analytics like customer revenue per minute should design fee structures that optimize dwell time most relevant to their businesses. Retail locations that have low expectations of customer spend per minute can achieve the same sales revenue as more expensive retail locations by choosing a fee structure aimed at increasing customer dwell time such as session-based fees or free charging for a set period.
Indirect Revenue Generation from EV Charging
In addition to charging tenants and customers for the energy that they draw, property owners can also generate indirect revenue streams from EV charging. Indirect revenue sources are an important means of ensuring high net present value for a charging station.
While direct charger revenue may offer an effective hedge against rising operating costs, a significant portion of the revenue at many charging locations is through indirect revenue sources like advertising profit and retail sales profit. Advertising revenue, which can have significant impact on profitability, largely depends on where the charging station is located and how much foot traffic is drawn by the site.
Many public charging stations can be made free to use because the advertising revenue can offset the costs associated with installing and operating the station.
Advertising revenue is typically generated from digital displays at the charging locations, but this can be supplemented through marketing communication delivered via the charging app.
Charging station operators can not only display advertisements but also form co-branding arrangements with like-minded sponsors and brands.
Likewise, they can form alliances with landlords where a part of the incremental profit generated through the extra traffic generated by charging stations – for example, when retail tenants stay longer and spend more – flows back to the operators.
EV Charging as a key Green Initiative and driver for LEED Certification
According to World Economic Forum, buildings account for 37% of the world’s carbon emissions. Technologies that reduce energy consumption in buildings already exist, although many buildings owners, operators and developers are not fully aware of the many solutions that are already out there and the value that they can create.
Some properties have already started to make the shift. The Hilton 2022 Global Trends report showed that 86% of travelers want to travel more sustainably, but only half managed to do so. At Hilton, a new search attribute helps EV owners find and book hotels with charging stations to power up their electric vehicles to make eco-friendly trips more practical.
Adding EV charging to the building projects not only builds value in the eyes of eco-friendly customers, but also can help earn LEED certification from the US Green Building Council (USGBC). With the growing emphasis by office and retail occupiers on Environment, Social and Governance (ESG) principles and the requirements imposed by various regulators to report ESG performance, LEED certification and other sustainability measures will more likely be requirement, than a preference, for a property to attract tenants.
Read more about the requirements for adding LEED points to your project here. This includes allocating 5% of all parking spaces exclusively for green vehicles and providing an alternative fueling station in 2% of all spaces. For parking spaces equipped with EVSE to qualify for the green vehicle point, the charging station must provide a Level 2 charging capacity or higher. The equipment must be connected in a manner that encourages people to charge their vehicles during Off-Peak hours which will lower the price of charging.
Early Mover Advantage in Installing EV Charging
With the car industry going through the “green revolution”, sales of electric vehicles are rapidly growing. Buyers desire to be part of the global green revolution and want to take advantage of multiple incentives available for EV purchase. Such incentives extend to install EV charging infrastructure too.
The initial investment for EV Charging stations can be high, but the Governments, States and Utilities offer an array of incentives like tax credits, rebates, and grants to help make the transition. However, these incentives may not last forever as more and more properties seek to install EV charging infrastructure. Many incentives tend to be time-bound whereas others are capped in terms of the maximum amount of grants or subsidies on offer. Being an early mover is critical in tapping these incentives that can significantly improve the long-term profitability of EV charging infrastructure.
Likewise, being an early adopter in installing EV chargers will also let a property showcase its green credentials better and build its brand with potential customers and users before all its competitors follow suit as EV charging infrastructure become ubiquitous and/or required by law.
EV Charging Station Utilization Sources
https://view.ceros.com/hilton/hilton-2022-trends-report/p/26
https://futuretransport-news.com/wp-content/uploads/sites/3/2021/04/Pod-Point-Commercial.pdf
Rethinking buildings for climate crisis: here’s what to do | World Economic Forum (weforum.org)
Rise of the inclusive, sustainable consumers | McKinsey