Public Charging: It Could be Profitable

By · June 06, 2013

Public Charging at a Mall in Hawaii

Most people are charging at home, but public outlets--as at this mall in Hawaii--are still necessary to allay range anxiety, says Deloitte. (Flickr/Coconut Wireless)

A study released Wednesday by the Deloitte Center for Energy Solutions takes a close look at public charging infrastructure and concludes that not only is it much-needed, but—beyond the government entities that largely supported the first round—it can be profitable for entrepreneurs who want to sell electricity.

Worrying About Range

Although a recent Electric Power Research Institute (EPRI) report said that the majority of owners will plug in overnight at home or work “similar to a cell phone,” and need no further charging, Deloitte thinks the public networks are important—mostly to alleviate range anxiety, particularly for drivers who own no other car. Deloitte also found that 60 percent of the American people are still expecting their car to charge fully in two hours, and only 44 percent would be satisfied with 200-mile range, but that’s another story.

The Findings

Deloitte’s investigation of the public charging issue was unusually thorough, and here are some of its major conclusions:

  • So far, public chargers have mostly been installed by governments and municipalities, principally in cities targeted by automakers for EV launches. These include ECOtality’s EV Project, which took in federal funding of $115 million, and Coulomb, with the $37 million ChargePoint America program. Both also had home installation components.
  • Electric utilities have not, as might have been expected, stepped up in a big way. Only 19 percent in Deloitte’s survey have partnered with third parties to build charging networks. Deloitte’s paper urges utilities to get more involved, because understanding customer charging behavior will help them with future load planning.
  • Partly because of legal restrictions, only 10 states are currently allowing third parties to sell electricity at a rate that reflects the fluctuating cost per kilowatt-hour plus a markup, a model used by gasoline stations do today. The alternative, a flat fee based on how long the EV owner is plugged in, doesn’t work nearly as well, since EVs charge at different rates. Says Deloitte, “The flat fee pricing model is more sensitive to fluctuations in the price of electricity…as the actual cost of electricity is not passed on to the EV owner.”
  • Using either pricing model, would-be charging entrepreneurs “can break even in a relatively short period,” Deloitte said. Payback is possible in as little as three years, though it's dependent on a growing EV market. Location is important. The cost of installation is the biggest factor, of course—the study assumes a base price of $4,000, but length of conduit, existing wiring and other factors can easily make it more. For every $1,000 extra paid to install the station, the break-even point recedes 20 percent. Still, break-even can occur with only 438 hours of use per year, or just 1.2 hours per day. But using flat-fee pricing, it could require billing more than $5 an hour.
  • Retailers who put in chargers don’t want to operate the units themselves, but prefer handing over parking spaces for others to manage. They cite “customer goodwill and positive public relations” as motivating factors. Many say that EVs are in line with their values and corporate sustainability goals.

Will we see a big expansion of private EV networks operating on a for-profit basis? My guess is that those entrepreneurs are waiting to see electrics attain a bigger market share before they take that plunge. As we all know, only 53,000 were sold in the U.S. last year.

New to EVs? Start here

  1. Seven Things To Know About Buying a Plug-In Car
    A few simple tips before you visit the dealership.
  2. Incentives for Plug-in Hybrids and Electric Cars
    Take advantage of credits and rebates to reduce EV costs.
  3. Buying Your First Home EV Charger
    You'll want a home charger. Here's how to buy the right one.