Governments are preparing for significant EV growth by investing in public charging networks
HOME CHARGING
Currently, much EV charging takes place at home but as the number of EVs grow, so could the need for more public charging outlets
CITY SPOTLIGHT
Pressure is growing on city authorities to streamline permitting and approvals processes to ease the route to market for various types of public chargers
KEY QUOTE
Home chargers will deliver 43% of EV energy demand, with other types of charging, including at workplaces and at depots for trucks and buses comprising the balance
The electrification of road transport will be essential to averting climate disaster. Transport is responsible for more than 15% of annual global emissions and in countries such as the US and UK, it contributes more climate emissions than the entire electricity generation sector, notes Amanda Myers, a policy analyst at Energy Innovation, a US research and analysis firm. Worldwide, transport as a sector has the fastest growing emissions, she says. The roll-out of electrical vehicles (EVs) is accelerating. In China and Europe by 2025 they will account for between 13% and 20% of all new vehicle sales, growing to almost 70% in both regions by 2040, says Ryan Fisher of BloombergNEF, the new energy finance arm of New York research and media company Bloomberg. In the US, the share of EVs in vehicle sales is progressing more slowly, a reflection of less strict fuel economy regulations and car model availability, but EV deployment will catch up with that of other major economies in the 2030s, he says.
EVs are expected to reach price parity with those propelled by internal combustion engines by mid-decade, faster than earlier predictions because of plummeting battery prices. This leaves two further barriers to their uptake: the fear of a battery running out mid-journey and a perceived potential lack of sufficient charging infrastructure, notes Jean-Christoph Heyne of Siemens’ Future Grids business unit. For full e-mobility, charging an EV must become as easy as charging a smartphone, argues Heyne. “It is chicken and egg,” he says, especially for people living in large cities without the convenience of a private parking space with an electricity outlet. They have to rely on public charging infrastructure. “If it is not there, you will think twice before buying an e-vehicle,” he says. Reference to public charging includes charge points along freeways and other major roads, at the kerb side on urban streets, at workplaces and in municipal or shopping centre car parks, or at hotels, restaurants and airports. Although some of these locations are technically “private” they are often included in the definition of public charging points.
Home charging will go a long way to meeting demand. Some 90% of US EV charging is at home as early EV adopters often have a private parking place. Yet, home charging will not cover all demand longer term. Chris Nelder, a manager on the mobility practice at the Rocky Mountain Institute (RMI), a clean energy think tank, notes that even in the US, with its extensive areas of light population, a third to 40% of homes are in multi-unit buildings that may not provide parking areas where charging points could be located. In California—the country’s largest EV market—about half the population lives in such buildings.
HOME CHARGING FOR NOW
Longer-term most EVs will continue to be charged at home. The International Energy Agency (IEA), in its Global EV Outlook 2020: Entering the decade of electric drive, says that of the roughly 7.3 million chargers worldwide in 2019, about 6.5 million were charged at homes and workplaces. “Convenience, cost-effectiveness and a variety of support policies (such as preferential rates, equipment purchase incentives, and rebates) are the main drivers for the prevalence of private charging,” the report concluded. In America over 90% of the charge points and over 70% of all the required electric energy for electric vehicles are likely to come from home charging for the foreseeable future, agrees the International Council on Clean Transportation (ICCT) in its January 2019 white paper, Quantifying the Electric Vehicle Charging Gap across US Markets. But it sees the use of public and workplace charging growing more rapidly. The US EV market is expected to grow from about one million vehicles in late 2018 to three million-plus on US roads by the end of 2025. Meanwhile, for those who cannot charge at home or are driving long journeys, the current availability of public charging is likely to be sufficient for the time being. Most of the time, drivers do not go far on a daily basis and the range of the newest EVs on a single charge has also now reached almost 650 kilometres. RMI’s Nelder says before owning an EV, drivers often overly worry about charging but once they own one they realise they do not have to charge as often as expected. Yet he stresses that predicting how charging will evolve even in the medium-term is difficult. He views most forecasts of public charging as conservative. “As long as EVs remain as 2% of [US car] sales, we are not going to know for a while,” he says.
PUBLIC CHARGING TO GROW
For EVs to become a vehicle for the masses and not just a second commuter car, some market forecasters argue that mature public-charging infrastructure must come first. They say home chargers will deliver 43% of EV energy demand, with other types of charging, including at workplaces and at depots for trucks and buses comprising the balance.
Ultra-fast chargers, acting like today’s refuelling stations for ICE vehicles, are most likely to be found on major through-routes. They can serve a much larger number of cars than either a slower public charger or home charger, but make serious demands on local grid capacity. BloombergNEF forecasts ultra-fast chargers delivering 30% of the power used for transport globally by 2040, although it predicts they will make up just 4% of chargers globally: 12 million chargers out of 280 million.
The infrastructure for electric-vehicle hook-ups is expanding. In 2019, publicly accessible chargers accounted for 12% of global light-duty vehicle chargers, most of which are slower chargers. Globally, the number of publicly accessible chargers, slow and fast, increased by 60% in 2019 compared with 2018, higher than the electric light-duty vehicle stock growth, says the IEA. However, market analysts believe the pace of deployment needs to increase. The ICCT found that across the 100 most populous US metropolitan areas, more than 195,000 non-residential electric vehicle charging points will be needed by 2025, more than quadruple the 2017 total. Public charging infrastructure deployment, including at workplaces, will have to grow at about 20% per year to meet the 2025 targets, according to its forecast. Transport & Environment (T&E), a European advocacy group for the EV industry, says that around three million public charging points will be needed in the EU and UK for 44 million electric vehicles by 2030. In many cities in western Europe, charge points are already standard in underground parking beneath residential and office buildings. In January 2020, the region had around 185,000 charge points. To reach 44 million requires a 15-fold increase and private and public investment of some €20 billion, according to T&E. Yet that is just 3% of the EU’s annual spend on road infrastructure. “Not an unthinkable sum,” notes T&E. Cities can streamline permitting, building codes, and zoning to accelerate residential, parking garage, right-of-way, and kerb-side charging, says the ICCT. In the US, individual states can offer tax rebates and, through cost-sharing, support charging providers as they improve business models, its report says. China requires that new residential and office buildings are readied for installation of charging infrastructure, notes Siemens’ Heyne. Utility involvement is also key, where efforts for utility funded charging infrastructure are imminent in many marketplaces, adds ICCT.
Business models for charging
Such is the prevalence of chargers in public locations that providers are failing to profit from them, including in countries where electric vehicles make up a high proportion of new car sales_By 2028 as much as $55.7 billion in cumulative global investment over a decade will be needed to install 48.4 million so-called Level 2 residential chargers, 4.9 million Level 2 public chargers and 560,000 fast public chargers reliant on a direct current cable, Northeast Group, a Washington-based research firm, estimated in 2018. Level 2 chargers are 240 volts and take several hours to fully charge a vehicle from scratch.How to make public charging profitable is taxing many early movers in the field. The sector is so far mostly investor-based, with a high prevalence of equity and venture-capital funding for start-ups. In some cases, big players have moved in and bought start-ups. In 2019, a subsidiary of energy firm Royal Dutch Shell bought Los Angeles-based firm Greenlots, which offers software and services for EV infrastructure.According to research released in November 2020 by EY, a global provider of business advisory services, reaching break-even may typically take five years for a public charging point, while positive returns may not come until year ten. EY identified four revenue and two cost levers to boost profitability. Financially rewarding flexible charging at times that keep costs low for the electricity supplier can add 8% to the return. Advertising, such as on a charging pole, may add 7%.As a cost lever, allowing different companies to invest in sub-components of the operation, such as having fractional ownership, may add 5%. And having neutral hosts, such as the owner of land where the charger is located, sharing revenues, can add 12%. Together these six levers could bring positive cash flow as early as year two, with a 5-25% increase in returns, says EY’s Thierry Mortier.An indication of market optimism came when US company ChargePoint in September 2020 announced it will go public via a special-purpose acquisition company, Switchback Energy Acquisition Corporation, with a $2.4 billion market valuation. ChargePoint is involved in the largest online network of independently owned EV charging stations and operates in 14 countries selling hardware and maintenance and supporting software to site hosts. It does not front capital for the installation site or profit from electricity sold.The model has been most successful with slower charging, which is cheaper, says BloombergNEF’s Fisher. Competitors in its home market, EVgo, Electrify America and Tesla, are scouting the best locations and are, in contrast, fronting capital for faster charging, he says.Electrify America, part of the Volkswagen Group in America, has one of the largest fast charging networks. It is in the early stages of investing more than $2 billion over a decade in zero-emission vehicle infrastructure, access and education in the US. The company was established as part of the settlement after VW’s Dieselgate emissions scandal in 2015. DC chargers convert AC power from the grid to DC, then deliver the DC power directly to the battery more quickly than AC charging.Another model at an “early but promising” stage in China and, to a lesser degree, in India are large fast-charging hubs of roughly 100 public chargers with a high voltage DC connection to the grid and built in coordination with a large deployment of vehicles, notes Clay Stranger with the Rocky Mountain Institute, an energy transition think tank. RMI has found generally that a fast charger needs to be used 20% of the time to be commercially viable and that such hubs can see a 70-80% use. Public transport can connect the hubs with work sites such as major IT campuses. In India ride-sharing companies Ola and Uber are also partnering in them.
DRIVING MORE DEMAND
A 2020 RMI report, Reducing EV Charging Infrastructure Costs, found that in a market such as the US, soft costs—including permitting delays, complex utility interconnection processes, compliance with a balkanised framework of regulations, and re-engineering projects based on incorrect information—are often more significant cost drivers than the actual hardware. Installation costs are a much larger share of the total cost of installing EV chargers in the US than in Europe, RMI’s Nelder says.
Yet momentum in the provision of public charging is growing. Germany is speeding up construction of a national network of public charging points. With billions of euros of public investment, it is targeting a million high-speed public chargers by 2030, or a charging point ten minutes from every home to help boost demand for EVs and ease range anxiety. All petrol stations will be required to offer charging. According to ICCT, Germany intends to invest more than €3 billion in the charging infrastructure for cars and trucks by 2023. As part of a covid-19 recovery stimulus package, the government has announced an additional €500 million for expanding private charging. In the UK, Project Rapid aims to help the government meet its goal of six rapid chargers at every service area on a motorway by 2023, with 6000 across the whole network by 2035, notes Russell Fowler, EV senior project manager at the UK’s National Grid. Motorways and electricity transmission lines often run along the same infrastructure corridors, he points out. The UK government’s national budget from March 2020 earmarked at least €550 million to support the roll out of rapid charging hubs, by the end of which all EV drivers would be less than 50 kilometres from a charger.
In California, more than 80% of residents are already within a 15 minute drive of a charger supplied by EVgo, says the company, owner of America’s largest publicly accessible fast-charging network. California has pledged to ban all sales of new petrol-powered vehicles by 2035, a decision it took in September 2020. The US might have fewer than half as many chargers as the EU, but that could rapidly change if further states follow California’s example.
Norway’s EV association is advocating charging at home, because it is cheapest and requires fewest grid upgrades
CHINA LEADS
China, the world’s largest EV market, has 52% of the world’s public chargers and 82% of the public fast chargers, says the IEA. Of the 1.3 million chargers serving China’s 3.1 million EVs, 500-600,000 are public, according to Zhe Wang with RMI’s China transport initiative. Charging at home in China is often impossible because of a lack of sufficient chargers connected with residential buildings, notes Wang.
The central Chinese government recently announced a post-covid infrastructure deployment plan that some observers say could lead to some 60 million public and private EV chargers installed by 2030. Wang estimates 20-30 million as more realistic. Public charging is easy in China. Drivers typically pay using a QR code, or they have an account. As of 2020, private companies TELD New Energy and Star Charge operate more than 29% and 24% of the public chargers, respectively. The national utility State Grid is third with 17%. In China, RMI has found that users such as taxis and drivers for ride-sharing companies and logistics vehicles clearly prefer fast charging, even if it degrades a battery more than does slow charging, with extra longer-term cost resulting.
The payback for installing a charging point is three to four years in China, says RMI. Land is a tight constraint, more so than the grid, Wang says. In some cases, cities are even slowing down approval of charging points because of competition for land.
NORWAY GOES FOR HOME CHARGING
Elsewhere, Norway has the highest penetration of EVs globally even if China has the greatest number. In the first half of 2020, EVs made up almost 50% of Norway’s new passenger car purchases, according to the Norwegian EV association. Of the 2.7 million passenger cars on the road, about 290,000 are fully electric. The association has found that 75% of charging is done at home. It is estimated Norway’s home charging points approximately equal the number of EVs, and it has roughly 11,500 publicly available charge points, including those that are semi-private and charge only Teslas, says the association’s Petter Haugneland. The association is advocating that as much charging as possible should be done at home, because it is cheapest and requires fewest grid upgrades. Fast charging at a public charge point would be supplemental, says Haugneland. Starting in 2017, the Norwegian government partly financed installation of two fast chargers for every 50 kilometres on most roads. Financial support was up to 40%, except in extremely remote areas where it could be as high as 100% as there was little commercial interest. Charging parks—with up to 50 charge points— have been found to be effective, with some already developed in major cities, says the association. Future plans include adding banks of second-hand EV batteries in containers to these parks. Charging the batteries with off-peak renewables generation, when it may sell for a lower price, would help cover the cost of buying and running the containers. The stored power could serve to reduce the sudden demand on the grid if the park becomes full, suggests Haugneland. The installation of fast chargers has been successful. In the summer of 2020, Norway’s away-from-home charging infrastructure passed a major test when an estimated 50% of Norway’s EV owners said they would holiday at home using their EV, a higher proportion than usual because of covid-induced foreign travel restrictions. Some charging stations had queues, but few people ran out of a charge on the open road. •
TEXT Ros Davidson PHOTO Zhang Kaiyv