With the proliferation of electric vehicles, we have come to understand that EVs are fantastic vehicles. The problem is that our nation’s electric vehicle charging infrastructure needs work. As we go about building out the EV charging station infrastructure, we also need to consider planning for DC Fast Charging Profitability.
Sona Energy is working with a regional retailer who owns a large number of properties within a few neighboring states. After we reviewed EV supply equipment (EVSE) Level 2 vs. DC fast charge (DCFC), they determined DCFC would be a better fit for their goals and asked for our help to figure out the best locations to place DCFC stations.
Any turn-key energy project we implement is approved or denied based on the project’s economics, and DCFC is no different. A project’s economics are driven by initial costs and ongoing cash flow. The main three drivers of EV DCFC profitability are:
- Initial Costs
- Revenue (we’re going to focus on Station Utilization for this post)
- Energy Costs
Initial Costs
- Hardware and networking
- Electrical design, project management and installation
- Interconnection with the utility
- Availability of utility rebates or state grants (incentives)
Hardware and Networking
Choosing a reputable hardware provider that has experience with DCFC is critical. There are stations now that are 350 kW – which is overkill for many commercial retail properties! To put that into context, that’s basically a grocery store’s worth of electricity flowing through one human-sized electrical device! A lot of engineering and electrical components go into DCFC stations and ensuring the hardware vendor has a good track record is paramount.
DCFCs are usually a critical part of making sure a retailer’s customers can get to where they are going. If the DCFC is constantly down for maintenance, this may result in some angry customers!
Customers will almost always access the station through a networked solution. Going into the different DCFC network options is beyond the scope of this post, but like hardware, the most important aspect is the customer interface/network. It has to work when EV driving customers need it, so a reputable, experienced provider is important.
Electrical Design, Project Management and Installation
Once a location is chosen, the installation contractor should be familiar with all code requirements for installing DCFC stations. Many municipalities may not have a single DCFC station within their boundaries, so it’s important to work with an EV partner company that clearly communicates what’s happening and has the patience and follow through to stay on localities who need to permit the electrical work.
Items like appropriate signage, ADA requirements and adequate site lighting for safety also need to be taken into consideration. Luckily, Sona Energy has a deep background in exterior LED lighting installations!
Utility Interconnection
If the existing commercial structure has available power capacity, this step may not be needed, but depending on the size (in kW) of the DCFC system, utility interconnection may be an important aspect of the project.
Utility Dive has an excellent article from 2018 on best practices for utilities and DCFC station providers.
Southern California Edison’s flow chart referenced in the article shows how complicated a utility interconnection process can be:
The main thing charger vendors can do is “engage early and often with the utility about the plans it is making,” SCE’s Sloan writes. “The sooner the utility knows what and where the charger provider wants to build, the sooner we can be ready.”
In short: If needed, utility interconnection can be complicated, especially with utilities who don’t have defined systems and processes in place.
Incentives
Incentives for EV supply equipment (EVSE) often come from one or more of three different areas:
1. Utility incentives
Utility incentives take the form of rebates for hardware/software and/or “make ready” where the utility funds all infrastructure between the electrical panel and the concrete pad for the EV charging station.
2. State incentives
These are often in the form of grants for EVSE installation. Many are funded as a result of VW diesel emissions scandal through the VW Diesel Emissions Environmental Mitigation Trust. If there is a grant available for DCFC it can cover 50% or more of the total installation!
3. Federal tax credits
As of Fall 2021, there’s currently a Federal tax credit for 30% of the project up to $30k for EVSE installation. This is set to expire on 12/31/21 and well…who knows what will happen based on Congress.
Sona Energy can help guide your organization to ensure all incentives for a DCFC are captured to reduce the total cost of installation and improve the return on investment.
Revenue – Station Utilization
The revenue derived from a DCFC is a function of:
- The price charged for using the station (a post for another time)
- How much power flows through the cables (based on the kW rating of the hardware chosen)
- How long power is flowing to the EV (the “hour” in kilowatt hour – kWh). This is how long a person stays parked while charging, which can be a function of the kW rating (the higher the kW rating, the faster they charge), how long they want to shop/eat or use the restroom – or a combination of all of the above!
- How often the station is used, aka station utilization
We all know that EV drivers are increasing and by 2030 30% of all new cars are projected to be EV:
US EVs, BEV, PHEV Sales Forecast from 2021-2030
But in order to come up with a model for DCFC station profitability, an accurate projection of how often the station is used needs to be developed. Noting how that number increases over time matters a lot.
Population and demographics (i.e. apartments and condos vs. single family homes), access to and from major highways, proximity to ride-share EV drivers, etc. all impact how often a DCFC will get utilized.
Luckily, Sona Energy has some nifty tools and models in our belt to help predict utilization!
Energy Costs
The energy costs associated with a DCFC station obviously play a large role in profitability. As referenced in the Utility Interconnection section above, a DCFC that uses power from a building’s electrical distribution system will pay a different electrical cost than a DCFC that requires a new utility meter. The topic of stand alone DCFC electrical costs is addressed in detail in the article “Getting the Rates Right for a Public Electric Vehicle Charging Buildout“. From the article:
But this long-range payoff (referencing EV DCFC profitability) is threatened by the utility rates known as demand charges, which assess fees based on a customer’s peak electricity draw at any moment during a monthly billing cycle. For charging sites dominated by relatively rare, yet very power-intensive, bouts of fast charging, demand charges can add up to 90 percent of total electricity costs, leaving many sites deeply in the red.
In the early stages of the life of a DCFC, the utilization is likely going to be low – and therefore kWh consumed will be low – and yet the kW (or demand) that the DCFC utilizes will basically be constant over the life of the charger. This means that demand charges will dominate the early life of a DCFC. Finding a rate structure that is low on demand charges is key to DCFC profitability!
The challenge is that when there are multiple sites spread across a large region, there are often multiple utilities involved with their own rules and structures. Regulated vs. deregulated markets further complicate matters because delivery and supply are often provided by different entities.
Sona’s experience is valuable when organizing multiple utility partners who may not have experience with the realities of DCFC.
Other Costs
An often overlooked cost is ongoing service and maintenance of stations. For example, EVgo – which operates over 1,500 DCFC stations nationwide notes “$6,000-7,000 per stall per annum non-energy fixed costs” in their 2021 Q2 earnings call summary.
For commercial companies that want to place a DCFC on their property, Sona can suggest best practices for planning and preparing for these costs (often with service and warranty solutions offered by DCFC vendors, and at a discounted price if grants or rebates are available).
The most important aspect when it comes to maintaining the stations is addressing problems with operability immediately so customers learn that they can rely on the DCFC.
Summary
Installing DCFC stations is much more expensive and complex (but probably a better business decision) for many commercial retailers than L2 stations. Getting an implementation wrong could mean a large DCFC investment that is never cash flow positive on an annual basis.
Let us help your company get it right.
Related:
Fleet EV Infrastructure – FleetMaintenance.com
“Many turnkey providers (like Sona Energy!) can manage this entire process of hardware and software selection, utility planning, construction, and electrical site work.”
and
“Heavy-duty trucks require DC fast charging almost exclusively, so we generally limit our discussions to DC charging at 50kW or faster. The batteries and electric control systems on heavy-duty electric trucks are optimized for that type of charging system. The charging systems themselves generally require little maintenance, but like any software-driven hardware they are subject to occasional failure, Hammond also pointed out. To maximize uptime, TEC recommends choosing EVSE that includes an uptime service-level agreement as well as considering redundant configurations when suitable for the operation. For example, if operating schedules permit longer charging times for a small fleet, three 50kW chargers may be preferable to one 180kW charger.”