Keys To Better DCFC Utilization
The electric vehicle population is rapidly growing and EV charging infrastructure is expanding to support this growth, including the increased availability of DCFC (direct current fast charging). Charging infrastructure is critical because it is needed to address issues like range anxiety among potential buyers. Currently, most EV charging happens at home or at the workplace. Level 1 and Level 2 chargers often found in residences and businesses can take hours to fully charge an electric vehicle.
DC fast chargers can power up an EV in under an hour and are now becoming more common. DCFCs are usually set up charge point operators (CPOs) and involve a heavy investment, with hardware costs of around $100,000 per charger. Charger owners need to ensure they are maximizing revenue earned from their assets station utilization.
Energy delivery should produce a healthy return on investment. Revenue is dependent on the ability to generate a good resale premium on the energy itself, as well as other streams such as digital advertising. Revenue models can also include partnering with property owners, employers, and automotive OEMs to generate supplementary income and maximize utilization. Premiums charged often depend on factors like location and charging speed.
Perhaps the most important factor determining revenue is charger utilization. Currently, the average utilization of DCFCs is less than 5% in most cases. According to a McKinsey report, the three core drivers of utilization are charger location, charging speed and scalable partnerships with property owners and large-scale users like rideshare and delivery companies.
Well-Planned Network Expansion
The first step for DCFC deployment is determining charger placement to tap maximum demand and prevent oversupply in the market. This begins with an objective assessment of existing demand by looking at data sets like EV registration numbers in the micro/macro market, travel data, housing and income information and existing charging infrastructure supply. This helps to establish a baseline demand. Next, future demand growth must be estimated by looking at sales forecasts for EVs.
Once demand for charging infrastructure is established, it is critical to look at costs, primarily of power, in the target market. Power cost can be determined by the basic supply cost from the utility, demand charges (based on peak loads), and the timing of charging sessions (peak vs. off-peak). Charger locations can be adjusted to align with utilities with lower costs or more attractive incentive programs. On-site storage can also reduce power costs by storing energy during off-peak hours. DCFC owners must determine the cost per charge to its customers and understand how this will impact charger utilization. A strong demand estimate can prevent oversupply of chargers in the micro market.
DCFC User Preferences
In a survey of 500 EV users, McKinsey found that there are three segments of DCFC users – routine, occasional and sporadic. Across segments, drivers are focused on charging speeds and reliability, as well as the cost of energy. Drivers, particularly routine users, are willing to pay for faster charging, guaranteed charger availability, and additional services at charging stations. Difficulty in finding stations and long wait times can be significant pain points.
Drivers of DCFC Utilization
Where a property chooses to place their chargers matters. High traffic areas, such as office and retail clusters and busy traffic corridors are good places for building high-density, reliable networks that provide users with sufficient scale and availability. This can be extended via roaming, which allows customers to charge on other networks.
Customers are likely to seek the highest charging speeds available, especially as EVs that handle high power charging become available over the next two to five years. DCFC operators need maximize utilization for the future, even if that means investing more upfront to earn more in the long term.
One strategy to maximize utilization of DCFCs is to form partnerships with large scale users of EVs, like rideshare firms and delivery companies who value fast charging as a means of maximizing their fleet usage. This creates a reliable baseline usage for the DCFCs and a steady revenue stream. DCFC owners can also partner with shopping centers, retailers, or automobile OEMs that can provide discounted or preferred charging access to customers. Locating the chargers within the overall power load of a large customer like a shopping center can also reduce the cost of power for the DCFC owner.
Building an ecosystem around the DCFCs with services such as delivery to cars, convenience and food retailing, and charger reservations can generate additional revenue streams and improve charger utilization. Lastly, creating a great customer experience is important in attracting users to DCFC locations. Fundamental aspects include providing safe and clean charging locations, ensuring charger reliability, and having high-quality charging apps and software that communicate seamlessly with the battery management system of the EVs, making the charging experience as painless as possible and ensure that customers keep coming back.
DC fast chargers are a vital element of the future of the EV ecosystem and contribute towards equipping customers with the confidence to switch to EVs. Given the high upfront costs, owners of DCFCs must understand their charger demand correctly to avoid over-saturating the market and then deploy a variety of strategies to maximize utilization and generate additional revenue streams. By considering these factors, DCFC owners have a great opportunity to make a strong return on their investment and help boost the growth of EV adoption and the overall development of the EV ecosystem.
Sources:
EV fast charging: How to build and sustain competitive differentiation | McKinsey
3 Keys to Better DC Fast Charger Utilization | Presentation by Stable