The shift to electric vehicles (EVs) in the U.S. necessitates a large-scale installation of fast chargers, but a key point of contention is whether utilities should be responsible for owning and operating these charging facilities.
Analysts on both sides of the debate agree that this issue is slowing down progress.
According to a June 2023 report from the National Renewable Energy Laboratory (NREL), achieving the national 2030 target of 50% of new light-duty zero-emission vehicle sales, up from the current 10%, will require a transformation “unprecedented in the history of the automotive industry.”
Utilities and charging companies largely agree with NREL about the significant need for public charging infrastructure, but they differ on which entities should be the main providers.
Utility investment can help accelerate the deployment of fast chargers, especially if regulators allow cost recovery for proactive infrastructure development based on planning, a view shared by many stakeholders.
However, some argue that utility cost recovery for charger capital costs would mean that non-EV owners, including lower-income customers, would end up subsidizing wealthier EV owners.
Frank Lacey, founder of Electric Advisors Consulting and co-author of a May 2023 paper opposing utility ownership of chargers, pointed out that “those subsidies inhibit private sector investment by giving utilities competitive advantages over other charging providers.”
In response, Phil Jones, Executive Director of the Alliance for Transportation Electrification (ATE) and co-author of a June 2023 paper advocating for a larger role for utilities, noted that new policies, funding, and goals to support transportation electrification have “changed the rules” regarding utility spending.
As a result, costs associated with expanding charging infrastructure are now more acceptable to many stakeholders. He emphasized that investments in utility distribution systems are becoming necessary and crucial “market enablers” in the transition.
Many stakeholders agree that fast charger deployment needs to align with charger usage in order to ensure the financial viability of investments in charging infrastructure.
This alignment will require policy reforms, including proactive utility planning and procurement practices. However, whether utilities should own and operate chargers to meet future needs remains a contentious issue.
The cost to deploy 182,000 publicly accessible direct current fast charger (DCFC) ports to support the forecast of 33 million EVs by 2030 is estimated to range from $27 billion to $44 billion, according to NREL.
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Private investors, governments, and utilities in the U.S. have already committed over $20 billion, according to a May 2023 Atlas Public Policy report, with the 2022 Inflation Reduction Act and the 2021 bipartisan infrastructure law providing “significant” additional support.
Despite these investments, the ongoing policy debates such as the role of utilities—are not benefiting customers, reliability, or affordability, said Cisco DeVries, CEO of the distributed energy resources aggregator OhmConnect.
Recent state policy developments have allowed for utility ownership of charging facilities, but most regulations have limited utilities to owning infrastructure only up to the charger or allowing ownership only for underserved customers, as reported by Autumn Proudlove, Associate Director for Policy and Markets at the North Carolina Clean Energy Technology Center.
Lacey, whose May 2023 paper was funded by the National Association of Convenience Stores, emphasized the need for conveniently deployed and readily available public DCFC stations.
He argued that utilities, by recovering the capital costs of chargers through rates, could build charging facilities in less trafficked locations that are easier to develop.
However, he added that this could inhibit private investment in charging infrastructure, as competing with “subsidized utilities” could slow the urgently needed scaling of public charging.
Lacey also argued that limiting the role of utilities in owning charging facilities would protect utility customers from “the costs for charger O&M [operation and maintenance] that can be done better by charger providers.”
There is some common ground, however. Utilities could support charger providers by designing new EV charging rates that mitigate the impacts of demand charges, especially while charger utilization is too low to significantly affect demand peaks.
Justin Wilson, Senior Director of Utility Partnerships and Regulatory Affairs at ChargePoint, agreed that demand charge reform is necessary and highlighted how both utilities and charger providers have collaborated in states like Utah and Arizona, where utilities have been allowed to own public charging.
For Wilson, the utility’s role should be limited to making interconnections as quickly as possible and deploying distribution system infrastructure up to the “make-ready” stage, where the utility has built the necessary hardware to interconnect a charger.
Wilson stressed that EV charging “should ultimately be done by the private competitive market,” and that utilities should focus on streamlining interconnection and accelerating infrastructure upgrades.
Despite some opposition from charger providers, utilities such as Rocky Mountain Power (RMP) and Arizona Public Service (APS) are moving forward with charging facility ownership, often in partnership with major private charger providers.
For example, RMP’s studies have found that “poor maintenance by private providers” led to “bad consumer charging experiences,” prompting the utility to take a more active role in owning and managing DCFCs.
RMP’s new H.B.107 legislation allows the utility to own, operate, and oversee the operation and maintenance of DCFCs, while working with Electrify Commercial, a subsidiary of Electrify America, to deploy the stations using next-generation technologies.
APS is also working with Electrify Commercial to bring a smaller public DCFC program online.
James Campbell, Director of Innovation and Sustainability Policy at RMP, stated that putting the utility’s brand on chargers ensures that the utility can protect system reliability.
He noted that unlike private owners, who often prioritize profit maximization, utilities have the ability to efficiently plan and manage charging loads for the overall benefit of the grid.
Electrify America’s experience operating over 850 DCFC stations with around 4,000 ports provides insight into the collaboration between utilities and private charging providers.
Aaron Young, Senior Manager at Electrify America, explained that utilities are eager to own chargers but lack the expertise and scale to do so cost-effectively, which led to the creation of Electrify Commercial.
Young believes that the ongoing concerns regarding O&M service, reliability, and the customer experience must be addressed to ensure that the U.S. sees the necessary investment in DCFC deployment.
California’s Public Utilities Commission has taken a proactive approach to building EV charging infrastructure, a model Young believes could be applied in other states.
Supporters of utility involvement in charger deployment point out that a “unique” advantage of utility investment is the availability of “patient capital” that can be used with a long-term perspective to fill gaps where private investors may not see a viable opportunity.
Kellen Schefter, Director of Electric Transportation at the Edison Electric Institute, highlighted that utilities are held accountable under formal regulatory oversight, and their experience in managing reliability challenges could translate into a successful role in EV charging infrastructure.
In states where regulation mandates utility involvement, utilities and charger providers have found ways to collaborate effectively.
For example, Ford is partnering with leading charging providers to develop its BlueOval Charge Network, a network of approximately 1,800 DCFCs, without direct utility control.
Similarly, Austin Energy, a municipal utility, has shifted its strategy to building “make-readies” for private charger providers, ensuring that charging stations are reliable by monitoring their performance.
Cameron Freberg, Austin Energy’s Strategist for Electric Vehicles & Emerging Technologies, explained that the utility’s best investment is in make-readies, which serve as long-term assets.
By allowing private providers to host stations under a “station host agreement,” Austin Energy ensures that the chargers remain operational and that O&M performance is closely monitored.
Utility customers driving EVs are shifting toward a mindset where they will “go where the charging is available.” This shift means that utilities must support charger deployment in a way that meets consumer demand, regardless of the ownership model.
As demand for better charging infrastructure grows, ATE’s Phil Jones believes that state regulators should decide which utility options are best for deploying charging facilities.
This includes building make-readies, owning and operating chargers, or partnering with private charger providers.
While many utilities are focusing on building make-readies rather than directly competing with charger operators, such as in the case of Southern California Edison (SCE), the importance of interconnection reform and proactive infrastructure development cannot be overstated.
SCE’s approach shows that even when utilities are not directly competing with charger owners, they can still play a significant role in ensuring that charging stations remain operational and reliable.
Ken Munson, CEO of Rhythmos, emphasized that utilities must upgrade distribution systems to meet the growing demand for EV charging, but private charger providers like ChargePoint also agree that utilities cannot meet policy timelines for EV growth if they are forced to perform multiple system upgrades as new loads increase.
As the EV charger market continues to evolve, many stakeholders are still learning the best approach to accelerated deployment. Rhythmos’ Munson pointed out that the solutions going forward will be extensions of the existing infrastructure built by utilities.
Ultimately, as Jones noted, “Utility distribution systems are now the pathway to value from new technologies like EV charging,” and utilities should be empowered to optimize this value while maintaining system reliability.
However, if policymakers do not prevent utilities from using their competitive advantages, charging infrastructure could become “economically inefficient,” hindering investment and slowing the adoption of EVs.
The debate over the role of utilities in EV charging facility deployment is far from over, but stakeholders are increasingly recognizing the need for collaboration to meet the growing demand for fast chargers.