March 17, 2019 from Zahari Shahan
Below is a chapter in our free report Infrastructure for charging electric vehicles: Guidelines for cities. This report was produced by a working group of EV charging and leaders of electric vehicles led by CleanTechnica and GreenWay.
No matter how EVS are currently registered in your city – much more come, and soon, and you need to prepare.
For you, this can mean investing in your own infrastructure, developing a plan or enacting laws or regulations to encourage the private market. There is a constant debate over whether to invest in infrastructure before the massive start of EVS, or wait until they have become more common – the so-called dilemma for chicken and egg in our industry. Even if it's just a charging station, we encourage you to get started now to get your own EV experience and the habits of your local drivers.
Basic elements in balancing costs and revenues
Whether for a public or private entity, there are a number of proven ways to fund an EV charging infrastructure, and then generate revenue from it. While we do not propose any specific approaches here, we consider it important that you have a clear understanding of the real costs and key drivers of the costs for these activities and sustainable business models.
- Fixed costs: Hardware, installation costs (capital costs), capacity costs
- Variable costs: Energy costs (energy and power), service, maintenance, operations (billing, invoicing)
Revenues come from a mixture of:
- Charging price, kWh, minute / hour of charging, and / or minute / hour of parking
- Utilization – how much the charging point is used
- Other uses of a charging station or surface – such as selling a charger and selling concessions
Infrastructure charging costs
Hardware and installation: First, it is necessary to find and choose the appropriate place, as well as appropriate approvals and agreements prepared for its use (landowner, SSO, energy regulator, etc.). Then you need to carry out appropriate construction work to expand or upgrade the electricity (where necessary) and determine the point where the charger will connect to the network.
When it's free, you need to pour concrete to fill the charger. Or it should
to be attached to the wall or other object.
Appropriate parking should be provided next to the filling point, kept and marked.
For external chargers, it's worth considering the coated canopy.
When it comes to the charger itself, there are two main types of chargers used for public charging:
Type 2 AC chargers: Costs for this infrastructure can reach the lowest level of € 500 if they are placed in private premises and are designed for one user or a closed user group. If they are public – which in the case of municipalities would be more frequent – the tenant would require more rigorous staffing and designs, and most likely they should have the ability to recognize and charge each EV user. Therefore, the charging point must be "smart" – equipped with information intelligence and capable of communicating with the IT system of the charging operator. In this case, the units will cost 1500 euros. These prices do not include installation costs. Significant savings on chargers are valid if you are together in a configuration (center), where several places use one intelligent central unit for communication and intelligent energy management.
Quick DC chargers: Despite the significant drop in their price in recent years, DC chargers remain expensive and cost more than 25,000 euros. It is a powerful equipment also translates into higher costs for physically connecting the charger to the network, or even upgrading the network for connection (transformer and other equipment). This could increase installation costs up to 40,000 euros. The second consequence of fast chargers is the high demand for electricity, and hence the high demand from the SSO on a monthly basis. These are fixed costs and are usually paid on a monthly basis, regardless of whether the charger is used frequently or not. Connection costs represent the most important part of operating costs and should be carefully considered along with energy costs and maintenance of the unit.
Capacities for capacity: Whether the fee is paid to the DSO based on the power supply KW. This expense varies considerably between countries and even between the various ODPs. This is different if you are connected to a low voltage or medium voltage line using your own transformer or not. In any case, it is a significant cost driver, especially in the case of fast charging technology. As a fixed cost, capacity costs have the most significant impact on the overall economy in low-utilized environments.
Energy costs: In the home and on the other, at the workplace, the price of energy itself is the largest – and sometimes the only – variable price. However, in terms of public infrastructure, it represents only a fraction of the overall cost structure, especially in the case of fast charging. This is why charging at home or work could be as cheap as € 2 / 100km, while the cost for a public AC or DC charge should be higher, as you can see in the table below.
Maintenance: Like any piece of machinery, charging stations require occasional maintenance – sometimes at the back of their IT software, and sometimes the physical unit.
Billing, invoiced and customer support: This body of work includes pricing, creating a billing and billing system for each user, maintaining this system and its security, and removing it when technical problems arise. Real-time customer support is also required. New people meet the system and routinely raise questions, and answering them clearly is vital for providing a positive user experience and satisfied customers. These are complex, time-consuming, and tasks performed by charging operators, which are critical to the successful operation of the service billing service.
Revenue from Infrastructure Charging
The main revenue drivers are the price you charge for energy or time in combination with the charging rate of the charger. Here's a simple table, showing an example of the cost versus the balance of revenue that the billing company should assess.
As you can see, the main variable inputs are the cost of the client and usage. Adjusting these will help you find sustainable operating costs.
(Note: these are illustrative figures only included for displaying costs and revenues, but not for sharing specific industry figures.)
Revenues can also be generated in other ways, such as:
A) Advertising the charging station.
B) Concessions. Depending on who owns the station and the nearby services, the total revenue generating capacity of the charger should include if people buy food and drink while they are charged.
Grants – such as the national government, the European Commission Directorate or the Executive Agency for Innovations and Networks (INNEA) – are one of the basic ways in which financing (or co-financing) infrastructure is financed (or co-financed) in Europe. The Creditor issues a Request for Proposals (RfP) for a specific project, companies register and the winner is selected on the basis of the specified criteria. Often, the grant is not for the whole price of each piece of infrastructure, due to which the private person should co-finance the rest somehow. However, especially in Central and Eastern Europe, this is a very common approach. Municipalities should encourage central governments to prepare specialized funding schemes specifically designed for municipalities and communities. The development of infrastructure for alternative fuels and the decarbonization of transport are one of the EU's top priorities and it is therefore appropriate to include various streams of the EU.
Note on the free charging offer
While the motivation of public authorities to provide an electric vehicle infrastructure does not have to be merely commercial, early introduction of fair prices for the use of chargers is important.
Free charging may seem like a good way to initiate a market – and that would be. However, this sends wrong pricing signals for the costs of charging / using electric vehicles and creates a need and drop in use later when the free / subsidized charging is complete. This undermines the ability of commercial operators to create a sustainable business in the community.
On the other hand, there are other commercial models in operation that do not require charging fees from drivers. For example, the Go To-U model includes local hosts / business owners who pay for stations and give them free for drivers as a way to capture the EV driving market. This model works very well for them.
The National Electric Charging Network of Scotland, ChargePlace Scotland, with 700 points of this writing, is also largely free to users over 20-year subscription. Otherwise, it is subsidized by the Scottish Government.
Related: 10 tips for charging EV for cities – #CleanTechnica presentation