Plug-In Electric Vehicles and Charging Infrastructure: Alternative Financing to Develop a Mature Market (Text Version)
This is a text version of the video for Plug-In Electric Vehicles and Charging Infrastructure: Alternative Financing to Develop a Mature Market presented on March 24, 2015.
This is a text version of the video for Plug-In Electric Vehicles and Charging Infrastructure: Alternative Financing to Develop a Mature Market presented on March 24, 2015, by Nick Nigro and Dan Welch (Center for Climate and Energy Solutions (C2ES))
COORDINATOR: Welcome and thank you for standing by. At this time all participants are in a listen-only mode. During the Q&A session of you’d like to ask a question, you may press star 1 on your phone. Today’s conference is being recorded. If you have any objections, please disconnect at this time and now I’d like to turn the meeting over to Ms. Linda Bluestein. You may begin.
LINDA BLUESTEIN: Hi, this is Linda Bluestein. I work at the Department of Energy here in D.C. for the Clean Cities Program and without further ado we’re going to get started. We had a few technical difficulties so sorry about that.
But just to cue-in on why we’re here today, we are working with the C2ES quite a bit in our program these days and they actually have been asked to provide some information on market trends that are important for electric vehicles going forward.
And we’ve also asked them to talk to some of our community readiness grant recipients from 2011 to find out how things are progressing in their community and what’s changed.
In addition to that C2ES has worked under a cooperative agreement with NASEO that we funded in 2012 and they’ve been looking at the business case for electric vehicles and business models and so they’re going to talk about all of those things in slightly different order than that today.
First they’re going to talk a little bit about the highlights from the market and we’re going to hear from Dan Welch and he’s a Transportation Fellow with C2ES and he works with a wide range of stakeholders in the business nonprofit and government sectors to explore in advanced strategies to reduce transportation emissions associated with climate change.
So he’s going to kick it off with a discussion of the market and Nick Nigro with C2ES he’s a Senior Manager of Transportation Initiatives at that organization and he contributes to strategies for saving oil and reducing greenhouse gases for the transportation sector.
And he’s authored papers on electric vehicles and federal transportation legislation and he managed a comprehensive report on reducing greenhouse gas emissions from the U.S. transportation sector and spearheaded a multiyear initiative on accelerating nationwide electric vehicle deployment.
So first we’ll hear from Dan on the market sector then we’ll hear from Nick. He’s going to talk about some of the grants that they’ve been working on with regard to the model for electric vehicles and then finally wrapping it up with some discussion about low gas prices and how the market is going to proceed from there.
And they’ll also be talking a bit about some of the findings from the grant recipients in Colorado, Austin, Michigan and Kansas City so without further delay, let’s get started.
NICK NIGRO: Hey, thanks Linda. This is Nick Nigro. I’m actually going to get things started to talk about that gas price thing first. Again, apologies for the technical glitches with this software and whatever but we got time.
So there’ll be plenty of time for us to do this presentation and to answer any of your questions so first a little bit about the organization, the Center for Climate and Energy Solutions, C2ES.
We’re a small independent nonpartisan group in Arlington, Virginia just outside of D.C. We’ve been around since the late ’90s. We used to be called the Pugh Center on Global Climate Change but we changed our name back in 2011.
And as Linda mentioned we’ve been working with the Department of Energy’s Clean Cities Program and the Argon National Lab for years now on electric vehicles and other low-carbon vehicle technology and so this is the second in a series of quarterly Webinars on the state of play of EVs.
So as we said this is a quarterly sort of thing and so the theme for this quarter is alternative financing methods for funding electric vehicles and EV charging infrastructure so we are going to start with the state of play and where sales are going with the technology.
Dan’s going to cover most of that. I’m just going to talk a little bit about oil prices because I’m sure that’s on the top of everyone’s mind and then Dan’s going to get into the detail on a spotlight on the community readiness grant recipients.
As probably some of you who are actually on this call were grant recipients, a few years ago DOE gave these great grants to a number of stakeholders across the country to figure out what are the key barriers to getting their regions ready for electric vehicles.
And we have been following-up with those grant recipients to see about their progress and see what additional learnings can be shared with this broad audience and so we’ll give you an update on four of those recipients today and finally we’re going to present some of our findings from our work on business models for electric vehicle charging services.
Not only is it a project that we’ve been working with on NASEO that Linda mentioned but we also just completed a study with a very similar objective for the state legislature in Washington State and that report’s available online and we’ll talk more about that in just a few minutes.
So I’m going to skip this slide because it doesn’t look good on this program but we’re going to distribute these slides afterwards but the story from the slide and you’ll probably see it more clearly when you see the slides themselves is that OPEC’s market share in the past had a great effect on oil prices.
But in the recent last 5-10 years or so, that influence over the price of oil has diminished in part because of the lack of substitutes or the elasticity of demand for oil and in a nutshell OPEC still has a grip on the oil market but it’s frankly not as strong as it used to be.
And the volatility in oil prices that we’ve seen in the last few years in particular in the last year, we can expect that to continue. This is certainly a clearer way of looking at that particular graphic on oil prices. What you can also see is the trend in upward pricing pressure on oil prices.
And so despite the fact that prices are quite low - gasoline prices are quite low - compared to what they were sometime last year and the last couple of years, they’re still relatively higher compared to what they’ve been in the past.
And so in a nutshell the volatility we experienced in the last 5 to 10 years we can expect that to continue but we can also expect the floor of that volatility or the bottom of that volatility to continue to rise so prices will continue to be volatile but also continue to rise and Dan’s going to now talk about how that can connect with electric vehicles and what’s going on in that market.
DAN WELCH: Thanks, Nick, so this chart you have here, it shows the price difference for electricity as a fuel source per gallon compared with gasoline prices. The electricity price shown here uses historical prices in 2013 dollars at a gasoline gallon equivalent. The gas prices are also set at 2013 prices.
So what this shows is that not only will the volatility continue but it’s the inelastic oil demand that we have the first graph was supposed to have shown will mean that the prices will feed through straight to consumers so recent drop in oil prices means that consumers are paying less.
However if it goes back up, the consumers are also going to have to pay whatever’s charged at the pump. You’ll see here long term that electricity prices are more stable than the oil prices. It’s hovered around a dollar over the past half a century.
The electricity industry is highly regulated and draws upon several different fuel sources. I mean, electric utilities can switch generators and fuel types to consistently provide the least cost electric rates to consumers. On the other hand oil price has been a number of factors including foreign production and domestic refining and distribution capacity and those are harder to control.
So as you can see here, the cost of charging an electric car is still less expensive than the relatively inexpensive prices of gasoline. $2.49 is practically historically low so that number, that comparison only has to do with the actual price of fuel, not EV price premiums or anything like that.
But the per-mile accounting also doesn’t account for the preferential utility rates that utilities are offered to be able to offer EV consumers. An example would be in Dallas the electric utility TXU offers free nights and weekends so it would be zero dollars for an EV owner to charge.
Looks like we have maybe an issue on this as well but, all right, there’s been a difficulty showing some of the data. What this is meant to show is that 2013 versus 2014 not only have sales increased as a total of new vehicle sales but also the number of automakers.
So the green block you can compare, that’s quite similar. It’s Nissan and it says 23% of the market in 2013, it now has 25% of the market so it’s been relative consistent but you can see that the numbers are changing a little bit. BMW is the bottom blue block. That’s a brand new entrant and it already has 6% of the market. That’s through the sales of its i3 and i8 vehicles.
There were two companies that whose market share decreased by more than 5%. Those are Tesla and GM. Tesla has encountered some well-publicized delivery issues but still has more customers than vehicles so it can anticipate growth.
GM is the other one that dropped by I believe 6% and that’s because sales of the Volt - its flagship model - dipped in the latter half of the year, that people think there might be consumers waiting for the newer 2016 model.
This is also meant to show that there are more vehicles than just the Leaf and the Volt and occasionally a Tesla. There are a lot more vehicle options and people are buying them and there will be newer EV manufacturers that will impact the market in the future.
Well, that will take - that’s on the next slide, right - so here you see the number of vehicles that are available to all consumers so in blue are all battery electric or all-electric vehicles and plug-in hybrid electric vehicles and extended-range electric vehicles are in orange so back in 2010 there were two and those were the Leaf and the Volt.
The number has grown to currently 21 models. Now all of those models would be available in California and the value that you see - the green line that’s also growing - that is the number of vehicles that are only available in the zero-emission vehicle states. Those are states that have agreed to follow California’s zero-emission vehicle program.
Some auto manufacturers choose to only deploy the vehicles in those states so that should be eight right now, eight models are only available in zero-emission vehicle states but the remaining vehicles the 13 are available nationally.
Now it should be said that even though they’re supposed to be available nationally, there may be some limiting factors which could be dealer training or ability to certify dealers so it is these vehicles are available nationally. There might be some mitigating factors locally.
Now the number of models made available for purchase nationally will continue to rise as the automakers continue to explore the EV market and that’s in spite of low oil prices.
Tesla is introducing two new all-electric vehicles in the next few years so the Model X has been the one they’ve been advertising. Elon Musk said that would be available in the summer but we’ll see about their delays but it should be available at least by this fall.
There are also a spate of new 200-mile battery range vehicles that have been announced. There’s Tesla’s Model 3 and the Chevy Volt as well as a model by Nissan that has been confirmed to exist or at least be in development but no specific details have been confirmed about it.
These are going to cost under $40,000 including tax credits so they’ll be much more affordable and have a greater range than currently available vehicles. On the upper end Audi and BMW are developing more luxury all-electric vehicles so should compete with the Model S and those should hit the market by about 2017 or 2018.
So here you can see the overall market between all-electric vehicles and plug-in hybrids. Going back to 2012 you can see the diverging paths from time to time of vehicle sales. The orange is plug-in hybrids and the blue is all-electric vehicles.
Now about one year ago in January the sales of the two models were equal but since August of 2014 all-electric vehicles have outsold plug-in hybrid electric vehicles. Right now it’s about a 2-to-1 ratio. Now we’re not exactly sure why that trend has started.
The downturn of Volt sales has likely contributed but tax incentives towards electric vehicles may also have influenced buyers beyond the early adopters and several states do offer incentives that help reduce the expensive up-front costs and make all-electric vehicles more affordable.
For instance California offers $2500 for an all-electric vehicle whereas it’s only $1500 for plug-in hybrids. Georgia has a pretty well-advertised $5000 for all-electric vehicles and only $2500 for plug-in hybrids. There are a few more for instance Washington has a sales tax exemption for all-electric vehicles but not for plug-in hybrids.
Also on this graph you’ll see a bar graph. That’s the year-over-year percent change so that shows how vehicle sales compare to previous years. While you’re looking at this by the way, it’s worth noticing that the bottom axis is off a little bit and that’s not starting at negative sales.
So 2012 shows tremendous growth because sales were picking-up quickly but also in part because the EV market was so small at the time the sales percentages were amplified. Growth can consistently continue to rate near or over 100% until the end of 2013 when growth percentage settlements were in a range between 25% and just over 50%.
But since August you’ll see - of last year - year-over-year percentage growth has consistently been in the teens with one month actually showing a negative change so sales have flattened but contrary to reports of them being very negative, that’s not true. They are flat right now though.
Now the automakers have recently announced that they’re joining the movement to expand electric vehicle infrastructure. What you see here are two maps. The map on the upper right shows Tesla fast-charging stations. These are only DC fast-charging stations. The map on the left was taken from the AFDC Website and that shows all fast-charging stations that are not Tesla.
And what this means to show is that though there is large charging network in the United States there are still travel corridors that only Teslas can access but this is where the recent announcements by automakers are starting to fix that problem. They’re taking the initiative to build DC fast-charging stations and by investing in this infrastructure the companies are addressing both the chicken and the egg.
They’re putting EVs on the roads but also surround them with fast-charging infrastructure that reduce range anxieties so for instance a joint venture by BMW and Volkswagen will build-out fast-charging stations along two travel lanes, one along the East Coast from Boston down here to D.C. and the other from Portland, Oregon, down to San Diego.
The objective is to leave no stretch of that highway with a gap of 50 miles or more. The fast-chargers will also have dual-compatibility with SAE combo, the American and European standard and [empty] which is the Asian standard and those charging stations will also be equipped with Level 2 charging outlets.
Nissan just soon after announced that it will be building-out its own fast-charging network. The announced goal is to have a total of 1700 installed fast-charging stations within the next year which is about the same timeframe as the BMW and Volkswagen venture.
Nissan’s initiative will more than double the number of [empty] -compliant fast-charging stations which is approximately 800. The Nissan fast-chargers will be spread across the country and will not be limited to particular travel corridors. There will also be dual compliance with SAE combo. Electricity or sorry, electric utilities are also getting into the action.
You can see here a table of proposed ventures that electric utilities would like to engage in so this has been made partially possible in California. You see on the left that there are three very large ventures, Pacific, Gas & Electric and this San Francisco are has a venture for over $600 million to install 25,000 [empty] available chargers.
Now the California Public Utilities Commission had previously been the only utility commission to prohibit utility involvement but they actually reversed their course in December of 2014 saying that utilities could on a case-by-case basis engage in electric vehicle charging deployment.
One that stands out as well is Kansas City Power and Light and we’ll talk about that in a little bit but it would make the metro area one of the densest charging networks in the country. One interesting one up top is Indiana Power and Light. They wanted to work with the French company Bollore to start an EV car-sharing venture in Indianapolis.
That was only partially approved to charge the actual station but rate pair funds were not permitted to fund the whole project. Now let’s talk a little bit about the actual communities that we spoke with so Nick mentioned in 2011 that the DOE announced grant funding for 16 projects to prepare EV community readiness plans.
Those projects will allow recipients to create a plan to prepare communities for the deployment of EVs and EV-charging infrastructure and those - the activities that they could do that through - would include streamlining the permitting process or revising codes.
If you want more information, it is available on the DOE’s Clean Cities Website so we spoke to four of the grant recipients about the current state of EV and EV-charging infrastructure deployment in their communities and about the actions they’re taking to promote further deployment in those communities.
We chose those recipients because their readiness plans and recent actions all highlighted different aspects of promoting EV and charging infrastructure deployment through alternative financing mechanisms.
So you can see circled here four grant recipients we’ll highlight today are Project Fever which serves the State of Colorado, the Texas River Cities Plug-in Vehicle Initiative which serves the Austin and San Antonio corridor in Central Texas, the Clean Energy Coalition which serves the State of Michigan and the Metropolitan Energy Information Center who’s Electrified Heartland plan serves the Greater Kansas City region.
So here a quick snapshot of Colorado and the Project Fever shows that there are 4000 EVs on the road today with 185 public Level 2 and 20 DC fast-charging locations for a total of 404 total public charging ports.
So Colorado quite notably provides up to $6000 as a tax credit for alternative-fuel vehicles and the total credit for EVs is based on vehicle purchase price and battery capacity.
Based on the total credit on the battery size means that plug-in hybrids are also eligible for the credit as goes to other credits that specify drivetrain types. A percentage of the EV purchase price also factors-in to the total credit. Each state also has unique needs.
As you can see in the second bullet, Coloradoans if that is the word active lifestyle may require longer vehicle ranges to access destination trips such as skiing, hiking or rafting. In addition to battery range, consumer concerns about battery performance in Colorado’s cold winters may also be limiting EV deployment.
Outreach is very important. The relatively low deployment of EVs in the state particularly in relation to the sizable state tax credit opens-up the opportunity to reach out and educate the public about the benefits of driving electric.
Georgia has a smaller tax credit for instance that has led to it’s being the second-largest EV market in the country so Colorado has similar opportunities for deployment with such a tax credit and then corporate partnerships were identified as a useful asset, working with businesses to open access to EV charging make charging and vehicles visible to the public.
So the organization’s currently working with municipalities to apply for funding through the state-run Charge Ahead program so Project Fever helps municipalities navigate the application process and to successfully site new charging stations.
Also reaching-out to consumers to advertise the tax credit and to work with a stakeholder group to produce research and documents such as the Colorado EV Market Implementation Study which was just released this winter and then as I mentioned in the last slide, businesses can provide a great conduit to reaching-out to the public.
The Department of Energy has workplace charging challenge to provide such a means. Businesses in the region have stated that workplace charging benefits them by advertising to prospective employees that care about employee happiness and that they’re on the forefront of new technology.
So the Charge Ahead Colorado program as I mentioned above will be expanding EV charging locations to travel corridors outside of urban areas mostly those currently exist within travel corridors and enabling access outside of the urban areas will allow EV drivers to reach those destination trips that we discussed earlier.
The EV tax credit may also be amended to be first less complicated since it depends on the battery size and the purchase price of the vehicle but they may also be made an up-front point of purchase rebate, getting consumers money more quickly is always beneficiary to getting them to purchase these vehicles and then the organization’s also continuous outreach.
Next we have the Texas River Cities Plug-in Electric Vehicle initiative and that serves the Austin and Greater San Antonio areas so the snapshot here has 1600 EVs on the roads with 218 public Level 2 charging stations and two DC fast-charging stations.
So what we’ve learned from this organization is that well first I want to specify that these values that I just provided are specific to the Austin area. The overall deployment would be greater when accounting for San Antonio.
That being said, electric utilities are valuable and effective partners. They can provide outreach, advertising as well as charging services depending on the state. Municipal utilities are able to provide local charging services and can and do invest in EV charging service networks.
You can see here the lack of diverse body types among EV use may limit the EV market. Even in more urban areas such as Austin and San Antonio, pickup trucks are a very large segment of the overall vehicle market.
Many of the best-selling vehicles in the United States are pickup trucks including the Ford F-150 which has traditionally been the best-selling vehicle in the U.S. so pickup truck consumers have no viable electric vehicle comparison at the moment but this recipient has been very successful, has bucked the trend of the recent flattened growth.
Some of the local activities I’ll show you in the next slide may be helping that market so Austin Energy provides and that’s the main municipal utility in the area provides a 50% rebate on public charging installations up to $4000 and has a monthly membership program for public charging station access.
Interestingly the monthly memberships charge a flat fee for unlimited charging and that includes the regional DC fast-chargers. Those were installed by Nissan. To encourage accessibility though, the utility also does still permit single-use charging fees to non-members.
The organization is working with 50 regional stakeholders and that is the Central Texas Fuel Independence Project which took over from the Texas River Cities Plug-in Vehicle Initiative. This coalition of stakeholders advances the suggestions from the community readiness plan.
And then the stakeholder group is also working with auto dealers and manufacturers to help the public better understand the operations and benefits of EVs so in spite of the community’s efforts, many people in the area according to the grant recipient still don’t know how EVs work and what they offer.
So looking down the road but future actions Nissan will be installing DC fast-charging stations as part of its network expansion that will connect regional travel corridors and expand public charging access as a whole.
Right now traveling in an all-electric vehicle is difficult between the regional centers so first linking San Antonio and Austin and then other regional travel corridors will ease range anxiety and open the region to greater EV accessibility.
There has also been a recent pilot project at Austin Bergstrom International Airport to put out heavy-duty EV work vehicles. Twenty companies have each purchased terminal vehicles as well as dedicated charging stations for those vehicles as part of a pilot project to determine how successful electric vehicles can operate as medium and heavy-duty machinery.
So working with that pilot to measure and advertise the results could be very helpful to deployment in the region. Next we also spoke with a Michigan recipient, the Clean Energy Coalition. This snapshot here is 4000 EVs with 252 public Level 2 charging stations and two DC fast-charging stations.
The actions that they’ve been taking includes working with clusters of EVs as an effective way to leverage the infrastructure. Because Michigan is such a large area, these clusters refer to regions or cities. Targeting particular cities or regions that are the most prepared for EV deployment is a valuable way to spend resources and to achieve the greatest results.
Here it mentions that there are two difficulties on working with those clusters. The first is that multiunit dwellings provide challenges for zoning and planning and those are most multiunit dwellings whether it reside within those clusters.
So one example would be renters’ ability to install a dedicated residential charging space that a renter would need a landlord’s approval so working with the metropolitan clusters to deploy electric vehicles and charging infrastructure requires addressing multiunit dwelling issues.
Also state regulations prohibit the resale of electricity which has limited the number of DC fast-charging stations deployed in the state. You can see that there are two locations in the state and one of those DC fast-charging locations is a Tesla which does not charge for its use.
Now Detroit is a renowned auto manufacturing hub, the largest in the U.S. and auto manufacturers according to the recipient have a great opportunity to embrace domestic energy to revitalize the local economy through EV manufacturing and charging deployment.
The recent announcement that Chevrolet will be manufacturing the Volt the 200-mile battery range vehicle in a plant just outside of Detroit may be a step towards that goal.
So the Michigan Coalition is currently engaging with Redevelopment-Ready Communities to promote energy efficiency measures such as EV zoning, planning and policies and now Redevelopment-Ready Communities is an organization dedicated to revitalizing Michigan’s towns and cities by promoting development measures that make communities attractive to new investment.
The organization promotes energy efficiency measures as part of the project which includes EV readiness. The Michigan group is also hosting a series of educational and promotional workshops in these targeted high-EV density areas or clusters.
As I mentioned, those outreach programs advertise EVs and explain their uses that helps improve consumer confidence. They’re also promoting municipal ordinance toolkits that reduce cost of charging infrastructure installations.
The installation of EV chargers can be costly but these toolkits help reduce those costs through effective planning. For instance retrofitting a building for EV charging is a much more expensive proposition than installing a charging station in a building that was designed to accommodate EV charging so planning is really useful and the toolkit is a great asset for that.
And finally they are providing technical assistance for the Michigan Energy Office’s Level 2 charging grant program. The EV grant is up to $2500 per Level 2 charging station and requires investors to match at least 70% of the cost so it could be a great opportunity.
Now looking down the road, the stakeholder group they’re working with is working to introduce a bill that would provide $60 million to support alternative fuels including the expansion of EV charging infrastructure.
It’s a diverse group that’s come together for this bill which is close to being ready for introduction but no date or firm next step is in sight yet so I’m going to look forward to see what happens with that.
And finally the last grant recipient we’re going to talk about is the Metropolitan Energy Information Center and that serves the Kansas City area. The snapshot here is that there are 2500 EVs in that area with 91 public Level 2 and 12 DC fast-charging locations.
There was a huge announcement recently that Kansas City Power and Light will install over 1000 public Level 2 charging stations and 15 DC fast-charging stations through a partnership with Nissan and that’s within the next year. It’s important to note that this is a massive undertaking but that it also complements recommendations made by the organization’s Electrify Heartland plan.
The KCP&L network which will be called the Clean Charge network is going to make Kansas City a metropolitan leader in terms of EV charging. One interesting aspect of Kansas City is that it presents a complicated situation because the metropolitan area spans two states.
Regulations and state programs may affect one side of the city and not the other which could lead to uneven EV deployment so it should be noted that so far that hasn’t been the case. Also the metropolitan area’s sprawling built environment limits adoption so Kansas City’s not a dense area meaning that drivers have to travel long distances which puts a strain on battery range.
So even though there have been some taxi companies for instance that have expressed interest in using electric drive technology, their current battery ranges don’t support those company needs unless there’s an interest in developing the nation’s first all-Tesla taxi fleet but Nissan’s deployment of 15 new fast-charging stations may support something like a taxi fleet initiative.
So the Metropolitan Energy Center is currently reaching out to companies through the Department of Energy’s Workplace Charging Challenge to deploy these charging stations throughout the expansion of the regional EV charging network creates an opportunity to get businesses interested in offering EV charging to employees.
They’re also engaging with the school districts, the universities and local governments to install the EV charging infrastructure. These entities specifically provide a great opportunity to offer large groups of people access to EV charging at only one location and finally they’re hosting EV events notably ride-and-drives to engage customers directly and personally. The personal interaction with EV technology help build consumer confidence and the peer-to-peer advertising that occurs within a ride-and-drive event builds an extra layer of trust.
So in the near future there’s a company called Orange EV which is closing-out on contracts to produce zero-emission electric terminal trucks. This company has spoken with large terminal truck fleet operators so it’s not just smoke and mirrors for now.
The terminal trucks also for those not familiar are heavy-duty trucks that operate within smaller spaces such as airline terminals and don’t reach highway speeds so the trucks deployed in Austin’s airport are obvious examples.
Orange EV could lead to the development of Kansas City as a heavy-duty manufacturing hub. Also Kansas and Missouri the utility commissions will determine later this year if Kansas City Power and Light will receive rate recovery for installing the EV charging stations.
So far they’ve built them at their own expense and requested rate recovery which has to be approved by the commissions so that could absolutely impact how EV charging infrastructure is deployed but to wrap-up the lessons that we learned as a whole from these four grant recipients, there’s that regulation may affect EV charging infrastructure deployment.
Some states prohibit the resale of electricity. That means that charging service providers can’t receive payment for providing EV drivers with access to charging services which effectively kills the business case for offering EV charging.
Infrastructure deployment in Colorado which not only permits charging service operators to receive payments but permits them to set their own rates has taken hold at a much higher rate than in Michigan which prohibits the resale of electricity.
Also alternative financing partners are diverse for EV infrastructure so the partnerships as you see here may include utilities or government programs or automakers and they span the country so alternative financing has lots of opportunity.
Each of the recipients have stated that outreach efforts are crucial. Consumers need a better understanding of how EV technology works, where EVs can be purchased and what the benefits of driving electric are.
And then finally one interesting fact that came up was that Clean Cities Coalitions benefit from continued staff presence that can speak knowledgeably about projects, maintain relationships with regional stakeholders and to use a March Madness basketball term, to keep up the full-court press so the institutional knowledge within each coalition is a valuable asset that should be preserved and now Nick will join-in to talk about some work he’s been doing on business models. Nick?
LINDA BLUESTEIN: I’m wondering Dan if we have any questions about the market portion of the presentation because I thought we discussed maybe having some folks ask questions right now so…
DAN WELCH: Sure.
LINDA BLUESTEIN: If anybody has questions, you can put them in in the Q&A area on the screen. I think we may have one or two already and also somebody could explain how to call-in with questions.
COORDINATOR: Sure. The phone lines are open for questions as well. If you’d like to ask a question, please press star 1 and record your name. If you’d like to withdraw your question, press star 2. Thank you.
NICK NIGRO: So this is Nick. I don’t see any questions just yet so why don’t we just give it a minute so the people can chime-in before I jump-in to the other topic?
COORDINATOR: We do have a question in the queue from (Stephanie Weisenbach[empty] ). Your line is now open.
(STEPHANIE WEISENBACH[empty] ): Hello, thank you. I was wondering when you listed the numbers of electric vehicles in the areas of the EV readiness grant recipients, were you counting those hybrid plug-in electric vehicles and the all-electric vehicles in that number?
DAN WELCH: That’s right, yes, those are both types. They don’t include hybrid, just standard gas-powered hybrid electric vehicles but they are all plug-ins.
(STEPHANIE WEISENBACH[empty]) : Okay, thank you.
DAN WELCH: You’re welcome.
NICK NIGRO: Also just a friendly reminder, these slides are going to be made available to all the participants following the Webinar so in case you want to use some of it for your own purposes later, we’ll make sure that gets distributed out to folks.
LINDA BLUESTEIN: I think we have another question. It’s from (Curt Folkman[empty]) . Can you please repeat the differences in Colorado and Michigan regulation that is impacting the number of charging stations? That would be for Dan.
DAN WELCH: Sure and Nick if there’s anything you want to chime-in, feel free but the ability to sell electricity is what allows charging service providers to be able to make a profit from their activities so currently Michigan says that charging service providers can engage in that practice so you’re able to provide free charging like Tesla does but charging service providers can’t get into that market to put up a station and then charge for those services.
NICK NIGRO: Yes.
DAN WELCH: Whereas in Colorado, oh…
NICK NIGRO: No, go ahead, go ahead, sorry Dan.
DAN WELCH: ..oh yes and then Colorado that activity is both permitted and has also been revised to allow charging service providers to receive payments to over what you’re using charge too much, they can receive payments per kilowatt-hour provided so that allows charging service providers to set their own rates.
They don’t have pre-established rates or they don’t have to charge maybe a certain amount for an entire day’s use so that makes their business model and the amount that they can get from that much more targeted. By setting their rates they’ll be able to either establish their own profits or make rates more competitive.
NICK NIGRO: So, yes, I was just going to say so I sent a link to all the folks that are on the Webinar to a map that we have that kind of spells this out across the country.
For the most part 35 states out of 50 regulators, the public utility commissions or the public service commissions including the one in Michigan haven’t really given charging service providers or third parties the ability to resell electricity as a charging service without the certainty of whether or not they’re going to become regulated like an electric utility.
And so you can imagine that that’s a pretty steep hill to climb for a startup company that’s just trying to sell kilowatt-hours. Now it doesn’t necessarily kill all business models but it does hurt the business model that where you’re trying to sell the charging service on a kilowatt-hour energy basis.
You can still sell parking and provide charging and you can differentiate your parking pricings by the ability to provide that charging service but for many in the industry the selling of the energy or the charging services is an important regulation that, you know, they need that certain regulatory certainty for them to be able to enter the market.
LINDA BLUESTEIN: Yes, this was rated as one of the top three things by the National Electrical Manufacturers Association that need to get done. It’s a major barrier to this business along with adoption of some of the NIST standards that are coming-out about exactly how you sell electricity and the metering that’s used for it so it’s one of the top things that can be done at the state level to clear the way for electric vehicle use and businesses.
So it’s something that if you have a chance to work on something like that within your state, you probably want to join forces if you want the electric vehicle market to grow.
NICK NIGRO: Well said, well said so we got another question from (Alma[empty] about transit agencies and the question is have transit agencies or DOTs participated with any of the grant recipients for charging stations at park-and-ride lots and you know, unfortunately I don’t have that answer off the top of my head. Dan, do you know the answer to this question?
DAN WELCH: So far in this project I’ve spoken to eight recipients. None of them have mentioned that specifically but that doesn’t mean that’s not happening. I haven’t heard of it though.
LINDA BLUESTEIN: May I just chime-in here? I have heard some anecdotes about this particular model at the park-and-rides and I would say that in some cases you have to really look at your statistics and the data from your area in terms of travel because there are some instances where people are traveling very short distances to a park-and-ride and the model for electric usage is not a good one.
In that particular instance, people won’t use the charging system if they’re going a short distance so you have to look at kind of the average commute and if it is long enough to justify a charging event then maybe you have something.
NICK NIGRO: I think that’s a good metric to use. (James[empty]) , we’re going to take just a couple of more questions. I just got an e-mail from somebody who’s on the Webinar who shall remain nameless. Maryland is doing this according to this person so I guess we can look into what Maryland is doing at park-and-ride lots.
LINDA BLUESTEIN: And actually that I think was an anecdote that I got from Maryland.
NICK NIGRO: Nice, okay, so all the dots are connected now so a comment about Texas. Texas allows charging for charging pricing on charging by the hour but not on the kilowatt-hour which makes the business case bad especially for slow-charging vehicles.
I believe that it depends on what part of Texas that you’re in. Texas is a pretty complicated market because it’s so deregulated. On our map we have some information about that.
Another question, could you repeat how the policy providing free electricity to EV consumers in Dallas works? Does this free electricity only apply to vehicle charging or is it for all electricity consumption and that’s for you Dan?
DAN WELCH: Yes, absolutely, so yes, that was from TXU. They have some excess capacity with wind generation so they’re able to actually offer free nights and weekends for all electric or sorry, for all electric subscribers so that’s not specific to electric vehicles.
There are some other utility programs that offer specific EV charging but the free nights in Texas was not one of them. That’s a Dallas-based utility.
NICK NIGRO: Okay, let’s move on for now. If you still have additional questions, please type them in and we’ll get to them after I finish running through these slides about business models so like I said earlier, we’ve been doing this work on business models for EV charging for the last few years.
Most of it’s been in a partnership with the National Association of State Energy Officials NASEO through a DOE grant and in addition we completed a project for the state legislature in Washington that they commissioned us to do about last May.
And essentially what we’re trying to do is figure-out, you know, why is private investors not terribly interested in investing in electric vehicle charging especially in public at the moment and what can we do about it to try to encourage more private investment in providing this infrastructure?
And so a quick overview of what I’m going to speak about, first just to give a sense - people an understanding - of you know, why this challenge exists and then I’ll run through an example of a new business model and a method by which you can try to capture some of the indirect value of providing that charging services or by value I mean revenue from another company.
And then I’ll show what it’s like to apply those business models to charging projects, if and how they help the financial performance of a charging project and then what’s the role of government so all this information is actually available on our Website too at c2es.org.
So if I’m speaking too quickly or I’m not telling enough about what you need and you can’t get the answer in the Q&A part, I encourage you to visit our Website and there’s lots of reports and materials on this topic on there so the project that we’ve been working with NASEO on is funded by the Department of Energy’s Clean Cities Program.
It’s also in partnership with the Transportation Energy Partners TEP who I’m sure is familiar with a lot of you folks and along with (nicerta[empty]) and the Colorado Energy Office and what we’ve been doing is try to develop strategies and new business models to show how we can increase private investment in alternative-fuel vehicles and fueling infrastructure.
We were really, you know, private capital kind of investor experts here at our nonprofit so we assembled a group of advisors. We call them the AFV finance advisory group to help us along the way.
The list of the folks that are participating in that group are on our Website but they include, you know, finance professionals, automakers, infrastructure providers, public officials, basically everybody under the sun that would be involved in a charging project has been giving us advice along the way.
So why? In a nutshell this graph that I’m showing you now is why the private sector currently can’t fund its own charging network. This is a graph of the financing for a single DC fast-charging station but the financing problem exists for Level 2 as well in public in particular.
And what you can see is up-front costs that orange bar, capital costs, buying the equipment and installing it is terribly expensive right now for DC fast-charging and is expensive for Level 2 charging.
And over time you know, if you charged for the charging service assuming you lived in a state where that was possible, you’d get some revenue depending on how much usage you got and that’s the green, the revenues over time.
But you also have operating costs for, you know, maintaining the station, operating the station, paying for the electricity, etcetera, and the cost of debt, the cost of funds which could come in the form of debt or equity depending on how the project was setup and that also costs money.
And in a nutshell what you can see is the numbers just simply don’t add-up right now for DC fast-charging or for Level 2 charging in public right now when the only source of revenue for you is selling the charging service directly.
In the case of this example for DC fast-charging it’s a loss of about $45,000 net present value meaning accounting for the future value of money. Level 2 projects also are a net negative currently in this case, this sort of direct revenue business model.
But for simplicity’s sake and for the interest of time, I’m only just talking about DC fast-charging so that’s the problem. That’s sort of the problem statement so let’s talk about how we can get more money into the market from the private sector’s point of view without any sort of government intervention.
And the way to do that is to capture the indirect value or the indirect revenue t that private-sector companies can gain from the provision of these EV-charging services so there’s lots of examples of that out there and I’m sure a lot of you know about these things because perhaps you’ve been involved in projects that deploy charging stations.
But one example is the increased sale of other products so think a retailer like a Kohl’s or a Target puts a charging station out at their facility and the customers spend more time in their shopping mall or shopping store making purchases so that extra dwell time is value for a retailer so there’s value there.
Tourism is another example so you could image a fancy winery in Washington State let’s say near the Walla Walla region where there’s somewhere near 300 wineries there.
There’s a dearth of a shortage of electric vehicle charging in that region currently and you can imagine if some of those wineries step-up and start to install charging infrastructure, they might get a boost in tourism from one of the several thousand EV drivers that live in that state. That’s another example.
And of course publicly-available charging infrastructure is necessary to help increase electric vehicle sales so the automakers are also a player in this space. In our work so far we’ve focused on three particular key private-sector partners, the auto, the electric utility because in a lot of cases they make more money or more revenue as a private company when they sell more electricity and also the retailer.
And if these partners if you could figure-out how much that charging service is worth to them and if they were willing to share a piece of that action essentially with the charging service provider - that owner-operator - that could really help to improve the business case.
And that’s been our approach effectively is to first try to figure out how do you quantify that? What is the value to these different folks and how would a business operate to take advantage of that additional value and there are two effective ways that those partners could contribute to a charging project.
One is to simply subsidize the up-front cost of the charging equipment, think an automaker sees a benefit of deploying all this charging infrastructure because over the next 10 years the life of the equipment they’re going to sell a few hundred extra cars.
By subsidizing the up-front cost of that equipment they’re lowering the cost of initial capitalization for the owner-operator in making that ROI a little bit easier to read. In addition a retailer for instance could take a different approach and share a portion of his or her indirect revenue from the charging station use on their site with the owner-operator over time.
In that case, rather than providing some sort of up-front investment in a charging project, they’re basically increasing the annual revenue for the owner or operator by sharing a piece of the additional revenue the retailer receives.
So to figure-out, you know, how this all works and what it looks like in dollars and sense, for the project we did for the Washington State legislature, we worked with (Cadmes Group[empty]) to develop a Microsoft Excel-based tool we called the EV Charging Financial Analysis Tool that allows us to do all kinds of combinations of these business models and public sector interventions and see how they would affect the financial performance of any number of charging projects.
I’d like to think it’s a fairly straightforward tool to use but it has 100 or so inputs so it can be pretty complicated and quite flexible and it’s worth highlighting that this tool is completely open and free and available to download on our Website at c2es.org so if you are interested in exploring more with these ideas, you know, feel free to go to our Website, download the tool and prove it and share it with us.
So again in the interest of time, I just wanted to go through one example of going through, you know, a business model, how it affects the financial performance and then to take a look at the role of government.
So this business model example is a business funding partner helps to deploy a charging network along a major roadway. Think a significant interstate in your region is not really electrified at this point but on either end of it are two key metropolitan regions that EV drivers would like to travel to.
The example we’ll be using you’ll see in a moment is in the State of Washington and the value proposition of this business model is a large business say an automaker benefits from that expanded access to charging and subsidizes the deployment of a DC fast-charging network.
So the source in this case we’re focusing on the increased sale of EVs for an automaker but you can imagine another large company could value the marketing and brand strengthening opportunities of providing a subsidy for this kind of network and like I said they basically just give an up-front grant to the charging station owner-operator to lower those initial capitalization costs.
So this is a project we’re looking at. This is a Gap charging Gap in the State of Washington along I-90 between Seattle and Spokane. The magenta color - the purplish-looking color to the right of the map - is the places you can’t currently travel with relying on DC fast-charging in Washington State.
And the cyan portion of the map - the part on the left closer to Seattle - is a part that you can so you were an EV driver in Spokane, you couldn’t go to Seattle or you couldn’t get to Ellensburg or frankly you can’t get to the southern part of the state in the Walla Walla region where all those wineries are that I was talking about.
So this is a deterrent from vehicle adoption and so to fill that gap to sort of electrify the rest of I-90 would take about six DC fast-charging stations.
So if we apply that business model that I was talking about where an automaker provides an investment into the charging project owner-operator and subsidizes effectively the cost of the equipment, for six stations that works out to be about a $42,000 subsidy according to our estimate of what the automaker would value that station at.
So even with that $42,000 subsidy from the automaker right up-front, the project is still a loser effectively. It’s got a net present value from the owner-operator’s perspective of negative $118,000 which is not insignificant so there’s no payback effectively for the owner-operator.
The automaker on the other hand as a partner in this business model does make money because the stations are out there, they’re being used and the automakers, you know, get additional sales of EVs because of that additional infrastructure that’s put out into the public.
When you combine those two perspectives and you look at the overall project perspective, you can see it’s still a net negative because the owner-operator is losing so much money.
So it doesn’t look that great but what we can say for sure is that they’re losing the owner-operator would lose a lot less money because of that subsidy from the automaker than they would have if they were just trying to fund it in the capital markets by borrowing money and taking investors in equity.
So the business case is improved but it’s not quite good enough to make it a slam dunk for any sort of private investor so what we concluded and this is with not just this particular project but others in similar projects using other business models is that they’re unlikely to succeed in the near-term without some sort of public-sector support.
And so we’ve taken to illustrating that and how the public sector can help the private sector implement some of these sustainable business models by looking at some key questions. For instance what combination of public subsidies or policies are necessary in order for an owner-operator to get a five-year payback on a project?
Five-year payback’s kind of like a rule of thumb for private investors. If they can get payback within five years, it looks like a good deal for them and then we also wanted to figure-out well, so let’s say the government does help out with these business models to try to get more infrastructure out there and more private capital into the market.
What do these models look like in the near future once there are more EVs on the road in theory and the equipment cost of charging goes down a bit and these policies are implemented? What does the business case look like for future projects, we look at that as well.
So if the government was interested in doing this like in the State of Washington and they provided some level of support public-sector intervention such as a loan, $110,000 using the state’s borrowing cost of funds at 5.4%, a grant of $220,000 not insignificant but not 100% which is what governments have been needing to pay in some cases to get infrastructure out there.
And in the case of Washington if they extended the sales tax exemption that Dan had mentioned earlier on battery electric vehicles for five years, what would the project look like? What would the financial performance look like in that charging infrastructure gap along I-90?
Just for folks’ information, that sales tax exemption in Washington is slated to expire in just a few months and it’s being considered - extensions are being considered - right now in the legislature so what does it look like?
If you look on the right of the chart if the government steps-in and tries to start helping and the private-sector automaker continues to make its investment, you can see that the owner-operator all of a sudden goes from a pretty significant negative to a positive of $136,000 and a payback of five years meaning the investment looks like it’s starting to make sense.
So what we’re showing with this slide is basically if you can get some public-sector support - not 100% of the cost of the equipment or anything like that - but if you can get some real public-sector support in the near term, business models that capture and direct revenue sources can make money for the private sector and encourage more investment.
Now the other key question I mentioned earlier, you know, what happens in the future? Let’s say those public subsidies are put in place in the near future, more EVs are sold, the equipment costs of charging gets to go down a bit as scale goes up.
What do these same business models look like doing these same kind of projects and along Interstate 90, what do they look like five years in the future without any public subsidies? Well, it turns out if the market continues to grow as expected, these models start to work on their own without government intervention.
You can see here the example that we’ve been running through in Interstate 90, the net present value for the project for the owner-operator is $115,000 profit with a payback of five years meaning that basically the business model is sustainable from a private-sector investment point of view so what does all this mean?
Well, our key findings are the private-sector entities can gain indirect value or indirect revenue from EV charging station deployment and they’ll play a critical role in improving the financial performance of publicly-available charging projects in states around the country.
Currently if they do that, it’s still difficult to make that investment look attractive to the owner-operator because you can’t get a payback within five years with just private-sector investment alone.
However, and if the public sector is able to enable these new business models in the near term by providing some level of support and if the EV market continues to develop, you know, our analysis shows especially in the State of Washington and perhaps in other states the role of government can really be scaled-down to next to nothing when it comes to infrastructure in about five years.
Okay, so that’s my talk about business models or our talk about business models. This is just a slide to show you some additional resources on the community readiness project that Dan was talking about the Clean Cities program, the great sponsor of this Webinar, the alternative fuel data center on DOE’s site and also some of the work that we were presenting here at C2ES.
So we’ve got about nine minutes or so for questions and why don’t we turn back to the Q&A or either on the phone or through the Webinar software.
LINDA BLUESTEIN: Thank you. You have some already on the software.
NICK NIGRO: Okay.
LINDA BLUESTEIN: Okay, how about from (Paul Tanaka[empty] , the business model proposal assumes that there will be additional customers with EVs that spend more time and money shopping. Who accepts the risk of that not coming to fruition?
NICK NIGRO: So (Paul[empty] ’s) got a great question so risk is one of the key things about business models that, you know, you’re trying to mitigate and spread out as much as possible so that you can attract more investors. In the case of the retail business model that we mentioned but didn’t really talk about in detail on this Webinar, the risk is really all on the owner-operator side.
Because the retailer is essentially not committing to contribute to the funding of that charging station unless that additional revenue appears. The business model in that case is just a retailer would share the anticipate or expected annual revenue so every year effectively it would be giving a cut to the owner-operator of what it either received or expected to receive.
So most of the risk in that case would be borne by the owner or operator or whoever is lending the money to the owner-operator or investing in the owner-operator for that project.
You can imagine that you could do it a number of different ways but that’s just the way that we looked at it.
LINDA BLUESTEIN: Okay, this question is from one of our Clean Cities coordinators Mark Bentley and he’s asking for the Spokane Seattle project, how much is being charged the consumer to charge their vehicles? What level of charge per use would it take to turn the figures black?
NICK NIGRO: This is a great question and so our assumption right now for DC fast-charging in particular is the price consumers are willing to pay is approximately the price of gasoline and on an energy-equivalent basis and so what we do is take a look at the price equivalent of gasoline over the last year.
We’re not going to take like the most recent month because everybody knows gas prices jump up and down all over the place and so in the case of Washington it was about 50 cents a kilowatt-hour and I don’t know exactly off the top of my head what, you know, how many times a user would have to use a station for you to get payback without any additional investment.
But just for the record our assumption is that the DC fast-charging stations on this network were used about three times a day which depending on your experience with this might sound like a lot but in fact there are a number of stations DC fast-charging stations in the State of Washington currently that are used far more than that.
LINDA BLUESTEIN: Okay, then we have a question from Matt Stephens-Rich and the question is on the notion of quantifying value of indirect benefit of EV chargers. What impact would quicker charge times have on projected business/service revenue? Improving battery range and capacity could mean less charging needed outside of the home.
NICK NIGRO: What would impact so this is an interesting question and so our for the retailer business model going back to that, you know, time actually matters. Time is money. Our assumption is that every customer is spending about a buck a minute on average in a store like this.
But we also tried to be very reasonable in what we expected the retailer would, you know, guess the customer was going to spend while they’re charging their vehicle so by default we said that we would only get about $25 I believe is per charging session worth of additional revenue.
And so we kind of tried to I guess account for what Matt is talking about quicker charging times by saying, you know, we’re assuming that they’re not going to need to spend that much time charging and limit and try to be realistic in the amount of additional revenue a retailer would receive.
Oh sorry, just on that other thing about improving battery range and capacity, it’s true that, you know, if as you as an EV driver if you get more battery capacity, you don’t necessarily have to charge as much but it’s not necessarily true that you won’t have more charging demand as a charging service provider.
LINDA BLUESTEIN: But I think we’ll all be driving EVs a lot more.
NICK NIGRO: Yes, I think it’d be a great problem to have for the EV folks.
LINDA BLUESTEIN: Yes, longer trips, so Mr. Smith asks what capacity factor and retail electricity price are you assuming for the 2020 period to show five-year payback.
NICK NIGRO: So basically what we’re doing is for the case of retail electricity prices I think we just forecasted it at a pretty marginal increase in the price of electricity and we didn’t forecast an increase in the price of the service so the price of the service would stay about the same and the price of electricity would go a little bit higher.
When it comes to the capacity factor we basically forecast-out, you know, how many more vehicles do we expect on the road based on, you know, reasonable assumption about market growth so about 15% per year was our annual growth rate for utilization of the charging stations over the course of the five years with public-sector interventions.
And I think we said if the state would do the sales tax exemption, that would jump it about to 22% annual growth for capacity utilization growth and again we put a cap on that sort of thing to say that, you know, a station can’t be used 24 hours a day. It can only be used for DC fast-charging I think it was something like under 10 times a day was the most it could possibly be used.
And so again these are all things that are in our model, in our tool that people are free to download and customize and change. Those are all just inputs into the analysis.
LINDA BLUESTEIN: So we have a question from (Joshua Pritt[empty]), how can a large group of 35 EV owners or space coast EV drivers’ clubs help get more charging stations installed around the country? Just asking nicely doesn’t seem to be working so it sounds like they have to start demanding so I mean, I think Nick pointed out business considerations.
And that, you know, that’s cracking into those business models and utilizing them effectively is going to make a big difference and people wanting to host charging stations. I don’t know if you have anything to add to that Nick but that’s kind of what we were talking about.
NICK NIGRO: Yes, no, I think that’s a good answer. I think that what we’re showing in this analysis is that there is a short-term need for public-sector interventions in the publicly-available charging space. Basically the market’s too small right now to expect that the private sector is going to take ownership of this, you know, provision of charging services on their own.
And so, you know, what you folks out there could do if they’re interested in supporting the technology is to figure out how do you get, you know, the policymakers in your state to pay attention to this?
And just to follow-up on, you know, we did this work for this legislature in Washington and there’s about five or six bills in that state house right now being considered related to EVs. Some are very related, implementation basically of the study that we did.
Others are less directly related but there’s a lot of activity that is going on in the State of Washington right now and then part of it was because of this research but, you know, there was a lot of, you know, news in the state, in the press and in the media and attention being brought to the technology because Washington’s such a leader in this space.
And so I think that’s really what this space coast EV drivers’ club could do the most is try to bring more attention to it to make policymakers get focused on it.
LINDA BLUESTEIN: So that’s a great answer. Now I was just wondering did we have any phone callers that we needed to get to?
COORDINATOR: Yes, there is one question in the queue from (Sean[empty]) . Your line is now open.
(Sean[empty]) : Hi, I was wondering if part of your model included major employers in an area installing EV infrastructure?
NICK NIGRO: So these projects that we’ve been focusing on are just publicly-available charging and we do think that there’s value in focusing on major employment centers for the application of these models but, you know, in terms of who are the individual investors in these projects, we focused on and at least in the case of Washington we focused on the retailer and the automaker.
In the case of this project we’re doing with NASEO for DOE is also the retail and the automaker but, you know, but in Washington we took the Walla Walla region where all those wineries are and not just because of the tourism factor but tri-cities in that area, it’s a major employment center for energy folks and so that was another factor in terms of, you know, why we picked them.
LINDA BLUESTEIN: Nick, one person had a question about the price of electricity used for the calculations. They were wondering what that was.
NICK NIGRO: Yes, what types of electricity did you use for your calculations so for Level 2 in the case of the Washington project, we were assuming it’s about three - well, actually really in general we assume it’s about three times the retail price of electricity for Level 2 and the energy equivalent price for DC fast-charging.
So in Washington State the retail price for electricity is like eight cents or seven cents a kilowatt-hour and so the Level 2 charge for a customer using the service would be about 25 cents and in the case of DC fast-charging the average price a gallon around $3.50 a gallon over the last year and so that works out to be about 50 cents a kilowatt-hour.
So those were our kind of boundaries but depending on the state you’d end-up with different prices. It’s a pretty market-dependent, state-dependent kind of results. I see another question from (Aaron[empty]), why do we think that there are DC fast-chargers out there right now? Are they just testing the waters.
Does NRG have some secrets we don’t know? Well, I think we have to thank, you know, for a lot of the fast-charging equipment that’s been put into the ground to date it’s been because of the federal government program, the EV project and Charge Point America.
Those stimulus-funded projects put in a lot of the equipment that’s currently in the ground today. The NRG stations were not funded through those programs and it is a venture. It’s a subsidiary of a larger company EV Go but it is a venture and, you know, you’d have to ask them exactly what their business model is for making a return on the investment.
Right now they have a subscription-based model which is evolving over time where they charge people a monthly fee just to be a part of a network in addition to perhaps other charges related to the service of it so certainly they think that it will pencil-out for them at some point in the future. I don’t know if it does at the moment.
LINDA BLUESTEIN: I think somebody asked to hear what is the sensitivity to your calculations or the model you’re proposing to fossil fuel prices? I think that’s what they’re asking.
NICK NIGRO: Yes, that’s another great question. I’m sorry we now are over time but as long as people keep asking questions, we’ll stay online.
LINDA BLUESTEIN: Well, we can also follow-up with answers. I think we should only stay on for about another five minutes.
NICK NIGRO: Okay, okay.
LINDA BLUESTEIN: Okay?
NICK NIGRO: Okay, so sensitivity of fossil fuel price well so in terms of assuming we’re talking about gasoline prices based on what I’ve been talking about where we base the DC fast-charging price on the energy equivalent price of gasoline.
The sensitivity’s pretty great, you know, and you know, when you’re doing a direct revenue kind of model where you’re only making money on the selling of the charging service, you know, that price of gasoline has the largest effect on your profit margins.
As you start to add other indirect revenue sources like the retailer and the automaker values, you start to mitigate some of that, you know, dependence on the price of gasoline but in general the owner-operator for the time being especially in the DC fast-charging case is likely going be pretty dependent on setting a price based on the price of gasoline, at least that’s how it’s been going so far.
LINDA BLUESTEIN: Someone else is asking a question about the ads-supported, free to install, free to maintain and free to use the stations all over the country. Seeming like it might solve all the problems that we discussed and I guess just trying to find out if there’s an issue with that or what you think of that.
NICK NIGRO: Yes so, you know, we had done some workshops over the last couple of years, one was up at Harvard Business School with, you know, a bunch of the folks with our NASEO project and then we did another one in Washington State with the folks for that project to try to figure-out which models we think are most practical to analyze and pursue.
And people talked about this, you know, there’s clearly a way of making some money selling ads just, you know, what we tried to do was identify the ones that we could most reasonably quantify the value, that indirect value. What does the indirect value look like and that was just one that people didn’t think we could reasonably, you know, quantify at the time.
And if there’s data (Josh[empty] ) that you could share on what is the value, you know, what is the value of this ads-supported revenue, you know, that’s all possible to plug-in to the tool that we have and to see what that looks like to the business case.
LINDA BLUESTEIN: And I guess just finding-out if there are any other phone calls that came in and then I think we’ll take one more if we have one and then we’ll have to we’ll close shop after that.
NICK NIGRO: Okay.
COORDINATOR: I’m showing no further questions in the phone queue.
LINDA BLUESTEIN: Okay. I don’t think I see any other ones online.
NICK NIGRO: Well, I do see two more.
LINDA BLUESTEIN: You do, okay.
NICK NIGRO: Yes, okay so…
LINDA BLUESTEIN: Great, well pick one, pick a lucky winner there.
NICK NIGRO: Okay, so are there different financial implications for buildings that are part of a closed or exclusive network versus belonging to an open shared network? Well so that’s a really interesting question. You know, in the case of Washington we did not at all look at, you know, Tesla as being they’re an exclusive closed network.
We did not at all look at what they’re doing basically our, you know, in the case of the Washington project, in the case of the DOE project we’re looking at the value of providing openly and publicly-available charging infrastructure that would be open to anyone and so I’m sure there’s value in these private networks but we didn’t all try to quantify that.
LINDA BLUESTEIN: Okay, and the last question is about multi-unit dwelling segments. I don’t know if you did any work there but I just want to mention while I have a little time to plug it that our June quarterly plug-in Webinar is going to be all about multiunit dwelling models and it’s going to be with (Joel Poynton[empty]) who we’ve had on before who has talked about multiunit dwelling models and how to work through the issues with building owners and tenants and condo owners.
And then we’ll also have somebody who worked on our Minnesota project that dealt with overcoming barriers to multiunit dwellings so we plan to devote a whole session to this in June and we will get information out to all of you on how to attend that. Nick, do you have anything in closing or do you have any insight into multiunit dwellings?
NICK NIGRO: I actually think that, you know, multiunit dwellings was not again not one of the focuses but, you know, the concepts that we raise in this study that we did for Washington and the one we’re doing with NASEO is, you know, these are applicable to other places.
It’s not like you can’t - an automaker - is not going to just be interested in publicly-available charging. They’re going to value multiunit dwelling charging too if they can sell more cars and so some of these concepts are certainly applicable I think to other locations.
LINDA BLUESTEIN: Okay, well, I think we probably should wrap it up for now and anything in closing Nick that you would like to say or…
NICK NIGRO: No, well just that, you know, thank you for all who’ve been patiently, you know, waiting for us to get on this thing and we have lots of information on our Website at c2es.org about this research. I really encourage people to download the tool and to use it and ask us questions if you’re interested in learning more about this work.
LINDA BLUESTEIN: We also just I just want to mention at cleancities.energy.gov if you do a search under 2015 strategic planning, we have all the papers from our strategic planning meeting held here on February 25th. We had a lab paper done by Argon National Lab to identify market opportunities over the next five years for plug-in vehicles and you’re certainly allowed to look at that information on our website.
And the comment period for the strategic planning meeting is over but we do encourage you to look at the slides from the sessions as well as the white papers that were done which are all posted on that 2015 strategic planning area of the Clean Cities website.
And I thank everybody for sticking with us through our technical problems and we hope to hear from you or virtually in June when we do our Webinar on multiunit dwellings. Thank you very much and as we said we will have this information posted on the Clean Cities Website under the Webinar section.
NICK NIGRO: Thanks, thanks to (Marcy[empty] and Dan and Argon) and Linda at DOE for giving us this opportunity.
COORDINATOR: This concludes today’s conference. Thank you for your participation. You may disconnect at this time.