FinLogic FinLogic Quantitative Think Tank Center|Utilities See Green in the Electric Vehicle Charging Business — and Growing Competition

With electric vehicle sales climbing,FinLogic FinLogic Quantitative Think Tank Center utilities are investing in thousands of new EV charging stations, recognizing that if they don’t move now, they could lose out on a growing and increasingly competitive market.

The latest example is Duke Energy, which this week proposed a $76 million program in North Carolina that it described as the largest investment in electric vehicle infrastructure among utilities in the Southeast.

“This is definitely part of a broader movement in the electricity sector to electric transportation,” said Noah Garcia, a transportation energy analyst with the Natural Resources Defense Council, an environmental group. “They are seeing the opportunity is ripe now as the technology has matured.”

Utilities also see selling power to motorists “as a way to shield or insulate them from other shifts in power sectors,” Garcia said. It could help them make up for some sales losses as increases in energy efficiency and private rooftop solar, for example, cut into growth in traditional electricity demand. As their numbers grow, battery-powered vehicles attached to chargers could eventually prove to be a valuable source of electricity storage capacity for utilities, as well.

A lack of charging stations has been an impediment to electric vehicle sales in many parts of the country, but that landscape is starting to change.

Some states have started requiring power companies to add charging stations. Other utilities are moving on their own to fill the gap and requesting permission to have their ratepayers cover the infrastructure cost. A variety of companies, as well as local governments and communities, are also putting in charging stations on their own.

Tesla, which is currently selling the most electric vehicles in the United States, has chargers at hundreds of locations in the United States and 1,400 globally, and other automakers are also getting in the game.

Electrify America, a subsidiary of Volkswagen, has expansive plans stemming from the legal settlement over its diesel emissions cheating scandal. It’s investing $2 billion over 10 years in electric vehicle infrastructure and education, including putting in fast-charging stations that can add 20 miles per minute in 39 states, and chargers in 17 major metro areas. Volkswagen is separately funding charging stations in dozens of states through an environmental mitigation trust set up under the settlement.

California, Oregon and, most recently, New Mexico, have passed legislation requiring utilities to submit investment proposals to their regulators to accelerate transportation electrification, Garcia said. New Jersey and Illinois are actively pursuing similar legislation, he said.

There is a clear incentive for the utilities to start providing charging infrastructure sooner rather than later, said Brett Smith, an auto industry researcher at the Center for Automotive Research in Ann Arbor, Michigan.

“If the independent companies are in all the prime spots,” he said, “what is left for the utilities?”

Which States Are Seeing Investments?

Dozens of members of the Edison Electric Institute, an industry group representing investor-owned electric utilities, are investing more than $1 billion in electric vehicle infrastructure and outreach, including charging stations and electrical grid upgrades, said Kellen Schefter, a senior manager of the industry group.

The bulk of that has been in California, which has about half of all the electric vehicles in the country right now, but utilities in other states are jumping in, too, he said.

In addition to its new $76 million proposal in North Carolina, Duke Energy has a similar but smaller program under consideration by utility regulators in South Carolina. It is also installing up to 530 electric vehicle charging stations in Florida.

In its filing with utility regulators in North Carolina, Duke identified similar actions by utilities in other states, including Michigan and Maryland just this year.

“There are global policy drivers pushing in this direction, as well,” including international efforts to curb carbon dioxide emissions, Schefter said.

Transportation contributes nearly a third of U.S. greenhouse gas emissions, the bulk of that from light-duty cars, trucks and SUVs, according to the EPA.

Utilities’ Estimate: 18.7 Million EVs by 2030

Nationally, plug-in electric vehicles made up about 2 percent of U.S. light-duty vehicle sales last year.

The number of electric vehicles on American roads topped 1 million for the first time last year, and sales have jumped, with a 29 percent increase from 2016 to 2017, and then a leap of 75 percent from 2017 to 2018, according to industry figures.

Production and sales forecasts for the next few years are still fairly uncertain, but there’s “general agreement” that electric vehicles over the next 15 years “will become a very important part of the fleet,” Smith said.

A November study by the Edison Electric Institute estimates that there will be 18.7 million electric vehicles on the roads in 2030, and that one of every five motor vehicles sold that year will be battery powered.

These cars have a loyal customer base—people like Sarasota, Florida, resident and professional engineer Chris Sharek, who recalled that after spending $1,000 on gas on a vacation in Iceland several years ago, “I was done.”

So he said he traded in his fifth gas-guzzling Jeep Cherokee sport utility vehicle and for a Chevy Volt, an electric car with a gasoline backup, which he said could get 200 miles to the gallon. He said he now drives an all-electric Tesla and calculates his fuel costs at 3 cents per mile.

Having more charging stations along highways will ease drivers’ concerns about drained batteries and make trip planning less challenging, he said. Most of the time, however, he said batteries are so good now with longer driving ranges that people can do much of their charging at home.

Florida ranks fourth in the country for the most plug-in electric vehicles, with 40,548 registered, and with no state rebates. “I just think there is a lot of grassroots advocacy for clean air and clean energy here in Florida,” Sharek said.

Duke’s Charging Investment in North Carolina

The Duke Energy proposal to expand charging infrastructure in North Carolina seeks permission from the North Carolina Utilities Commission to have the company’s ratepayers foot the $76 million cost. The state currently has 13,054 plug-in electric vehicles on the road.

The utility’s plan is intended to support Gov. Roy Cooper’s recent executive order committing North Carolina to cut its heat-trapping greenhouse gas emissions by 40 percent by 2025, consistent with the Paris climate agreement, said Randy Wheeless, a Duke Energy spokesman. The order includes adding 80,000 EVs in the state by 2025. 

Duke Energy has also been boosting its solar power supplies while closing coal-fired power plants, moves that help further lower the climate change impact with the shift to electric vehicles.

A transition to electric vehicles will improve air quality, which will benefit all customers, Wheeless said. “Also, the information we gain from the pilot program will help Duke Energy better invest in future grid infrastructure—again, benefitting all customers by more efficient grid investment.”

The proposal would, specifically:

• Provide a $1,000 rebate for home-charging stations for up to 800 residential customers that can juice a car six times faster than a standard wall outlet.
• Install and operate more than 800 public charging stations across North Carolina.
• Offer $2,500 rebates for up to 900 charging stations for commercial and industrial customers establishing fleets of electric vehicles, including cities and universities.
• Pay for as many as 85 electric school buses and their chargers.
• Install and operate more than 100 transit bus charging stations.

“As we see a shift toward cleaner resources and transitioning away from … coal, these vehicles will only continue to get cleaner over time,” said Garcia, with NRDC.