As the massive number of people placing a pre-reservation deposit worth $1,000 down on the Tesla Model 3 illustrated, there is currently an enormous, largely untapped demand for electric vehicles. And although electric car sales were slightly down in April (due in part to the Model 3, we’re guessing) electric cars are certainly becoming more and more mainstream.
And that means we’re going to need more and more places to charge electric cars. But while charging providers are happily executing something of a land grab on the charging infrastructure of the U.S., it’s leaving the obvious choice — utility companies — a little out in the cold.
Which is why California utility PG&E wants to help by installing electric car charging stations across the area of Northern California it serves. But because of regulatory red-tape, it’s hitting something of a road block: electric car charging network providers, who are afraid that state utilities entering the electric car charging market will not only destroy their own business models and also that they’ll be bad news for electric car drivers too, using rate-payers money to kill any chance of fair market trade.
For those who have waited a long time for electric cars to come of age, it’s beyond frustrating. For years, automakers have downplayed the desirability of electric vehicles, deliberately underselling them and making the process of buying one a challenge in some markets. Yet when presented with the chance to buy a reasonably priced, very capable, well designed electric vehicle – the public have snapped at the chance. As thousands put down deposits on a vehicle they’d not even seen, it instantly became apparent that despite what you may have heard, electric cars are for the masses: it’s just that historically, the range / price / availability balance hasn’t been right. Now there’s a demand for electric cars — and electric car charging networks are more in demand than ever before — politics is getting in the way.
And it’s a market big enough for both. Recently, electric vehicle charging network provider ChargePoint was able to raise $50 million dollars in funding in its latest round of expansion funding. With Tesla Motors CEO Elon Musk indicating that 93 percent of Model 3 reservation holders are new to Tesla, and earlier reporting indicating that many of these reservation holders are intending to buy their first EV with the Model 3, the market place for EV charging at home, and in public, is set to expand exponentially.
There are numerous makers of chargers, but ChargePoint, with more than 28000 public charging stations and a veritable multitude of home chargers is considered the largest independent charging point supplier and is keen to parlay that early success into market domination. Eventually it plans to expand further into Europe and Asia. Whilst most Tesla owners may use the Superchargers when out and about, what they end up plugging in to at home may not be Tesla branded.
But in the US, ChargePoint is scared by the impact that utilities entering the electric vehicle charging market could have. And to see what that might be, a quick look across the Atlantic, to the UK, is in order.
Public charging networks worldwide often appear to be a triumph of capitalism over usability. The oft bemoaned complaint of the EV owner is the plethora of cards and registrations required if you want to travel outside their home area. But in the UK, this has – at least to some extent – improved in the past few years. With the ‘Source London/West/East’ local charging cards allowing you to charge in all the ‘Source’ locations (albeit sometimes free, and sometimes with an unexpected bonus cost), and the vast Ecotricity network spanning many of the country’s major roads, the combination of two cards often seemed sufficient. But what is more interesting about that is that the rapid chargers, provided free of charge (both to use and to register for) are courtesy of Ecotricity – a green energy utility supplier.
And by partnering with EV manufacturers, Ecotricity has come to utterly dominate the UK rapid charging network. It has the potential, as it is also able to leverage the fact it supplies 100 percent green energy – to encourage more people to buy electric cars and of course, translate that into more customers for its Ecotricity Electric Highway of public charging stations.
Since consumers can choose from any number of national utility companies to supply them with electricity and natural gas, Ecotricity already offers ‘1000 free miles of charging’ for EV owners who sign up to its service. While it doesn’t yet sell electricity per kilowatt to customers who use its charging stations — it’s inevitable that one day, it will simply add on kilowatt-hours consumed away from home onto each customer’s’ utility bill.
Similarly British Gas, another utility supplier (which confusingly also supply electricity) offers free home EV charging stations. So too do most of the other major utility companies, including E.On, EDF, and SSE.
And that’s just the sort of thing that ChargePoint is concerned about.
As California’s governor pushes to make good on a desire for an 8 fold increase in the number of EVs by 2025, Pacific Gas and Electricity, which covers around two-thirds of the Golden State, is looking to utilize a 2014 relaxation in regulatory requirements which allowed utility companies to operate charging points for the first time (within the state).
Originally utilities were barred from installing and operating EV chargers in an bid to encourage independent suppliers. But as charger installations failed to materialize at the rate that’s needed to meet California’s optimistic targets, back in 2014 the state’s regulators revisited – and scrapped – that earlier requirement. Down in the south of California, San Diego Gas & Electric and Southern California Edison together won approval for a pilot scheme of 5,000 public EV charger installations, with Southern California Edison promising $22 million in upgrades to its own network to support the massive boost to EV charging.
Despite relaxation in regulation however, any utility in the state must get official approval from state regulators to install and operate public charging stations. The reason? It’s usually funded by a nominal flat-rate increase on utility bills across the board. And that means that even those who don’t have electric cars will end up seeing their electricity bills going up.
In the Northern half of the state, Pacific Gas and Electricity are looking for permission to roll out 7,500 new charging stations using $160 million from ratepayers in the region. A “jump-start” for the market, as Aaron Johnson, PG&E’s VP for customer energy solutions calls it. And not one that’s entirely altruistic, as Bloomberg reports: “We want to see people using electricity as a transportation fuel. We think that’s great for our business.”
It is, fundamentally, exactly what California regulators were originally attempting to avoid – utilities using their monopoly power to undercut private companies, but when private companies have failed to meet the state’s needs, what’s a state to do?
As former commissioner for California’s utilities, Nancy Ryan, put it: “We’re coming up on a real kink point in targets that have to be met[…] Utilities can be a huge funding source for EV infrastructure.” But it is a strategy not without risk, and risk that smaller, independent public charger manufacturers are keen to point out. California, they say, risks losing out on private investment in infrastructure and shrinking the marketplace for EV charging, something that’s likely to boom in the next few years.
And with utilities potentially ending up holding the vast majority of public charging as part of their portfolio, barriers to entry may be insurmountable for new companies, and what of future pricing for EV charging?
However, as it stands, the smaller companies haven’t produced a plan that resolves the big problem – how to get the massive number of chargers required installed in a timely manner. Both ChargePoint and another independent, Volta, have presented their arguments – but with what may be exponential growth in the EV market approaching, public charging points are going to move from being ‘that one charger in the corner of the parking lot’ to being ranks of chargers – the pressure is on to get chargers in, ready and working. And it seems the fight to be the winner from that change is only just beginning.
Do you think that California is right to open up EV charging to utility companies? Or do you think they risk destroying a new market and hampering innovation? Let us know in the Comments below.
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