DRAFT DISCUSSION PAPER ON THE COST OF PUBLIC E.V. CHARGING
A POTENTIAL IMPEDIMENT TO RAPIDLY DECARBONISING ROAD TRANSPORT
SUMMARY
Rapid decarbonising of the transport fleet, and especially light vehicles, is a paramount climate strategy.
The pricing structure for charging electric vehicles (EVs) at public charging stations could (and should) provide a major incentive for the transition off fossil fuels (by rewarding the currently higher capital outlay with lower running costs[1]). However, current pricing structures potentially represent serious over-pricing of public charging, with a common cost starting at well over 60 c/kWh (over twice a typical domestic tariff and perhaps four or more times the commercial tariff station operators are likely to pay).
This level of cost then becomes a significant, but at present under-recognised, impediment to the widespread uptake of EVs, and is especially likely to act contrary to a just transition by further penalising the lower socio-economic sector.
Preliminary calculations (below) suggest there is considerable scope for reduction in the overall cost/kWh to the public, with an associated substantial increase in incentives to change rapidly to EVs.
This is seen as worthy of urgent investigation and policy consideration. The thrust of such policy would ideally match a typical domestic tariff (say 30c/kWh) but otherwise a) tie delivered kWh charges to a realistic increment above relevant commercial purchase rates, and b) relate time-based costs to fair returns on capital outlay, site rental etc.
CURRENT SITUATION
Climate imperative
Rapidly decarbonising our transport fleet is recognised as one of New Zealand’s most pressing climate issues, with transport emissions being close to those of the dairy sector but rising much more rapidly. The Climate Change Commission’s Advice to Government gives emphasis to this.
Resilienz Ltd. is active on climate issues across a wide front, has engaged in many ways with decarbonising our transport system, and regularly champions the role of New Zealand’s “team of five million” in adopting various personal climate strategies.
A major intersection of the above issues (decarbonising transport and motivating individual action) is in the uptake of electric vehicles.
Potential issues relating to public charging infrastructure.
Currently, of the various historical impediments to EV uptake, some have been at least partially overcome[2], while motivation to overcome others may be helped by potential government policy (such as the feebate scheme on vehicle imports, EECA support for low-emissions initiatives, or through ETS and carbon price impacts on fossil fuel costs[3]).
However, for some time ahead, and notwithstanding government incentives, the cost premium of buying an EV is likely to be significant, and that will be a barrier to purchase, especially for less-well-off sections of the community. Highly competitive recharging facilities have the potential to mitigate this cost premium, and so make EV purchase and operation more attractive.
But what is currently less well-known is that typical public charging stations, through a tariff basis that integrates electricity delivered with time spent connected, can result in dramatically higher charging costs than would normally be expected.
Typically, these charges are of the order of 25c/kWh delivered plus 25c/minute connected, which in our experience commonly result in rapid[4] charging rates (say up to 80% of full charge) of about 64c/kWh but as high as 82c/kWh. The new Hypercharger at Bombay is reported as 60c/kWh plus a (shorter) time-based charge. Given that most EVs drive from 5 to 7 km/kWh, that equates to a price/km of around 10-13 c/km, or broadly comparable with a very efficient small petrol car. (By contrast, an EV charged at home at a tariff of say 30c/kWh would be driving at about 5 c/km.)
Escalating factor, especially on seeking a just transition
However, there is a sting in the tail: for technical reasons EV charging slows dramatically, typically above 80% full, meaning that the time-charge component of the cost becomes progressively, and sometimes dramatically, greater. At times, charging can then cost several times the “rapid” rate. (This cost escalation is one of the reasons why, along with prudent battery management, it is common to stop charging EVs at 80% on public stations)
This aspect is especially relevant to seeking a just transition, because it is a greater issue for the shorter-range EVs that may be the most accessible to less-well-off sections of the community. (Because EVs with smaller, or partially deteriorated, batteries will be lower in price. Consequent range limitations then lead to more frequent charging and/or a greater incentive to charge right up to 100% rather than stopping at 80%).
Although evidence shows that battery performance over time is generally better than originally expected , declining at about 3% p.a. an 8-year-old 24 kWh Leaf would have an expected best range of maybe 100 km (down to say 75% of say 130 km), a distance that can readily motivate recharging to 100% (rather than the recommended, more cost-effective 80%).
Additionally, poorer sections of the community may be less well placed to have safe home-based charging options, and thus may be more dependent on public charging stations.
Notional example.
This is generally based on conservative figures (i.e. not penalising the EV charging structure).
Assumed parameters:
· Rapid charge to 80%
· Billing based on analysis of prior statements (@25c/kWh, 25c/minute charging).
· Rapid charger Installation cost $70,000 (“Total installation costs range from $50,000 to $70,000 per Rapid Charger.” Source: ecotricity).
· Notional charger usage: say 5 charges/day (low except at inception).
· Commercial electricity tariff 16c/kWh based on 2018 rates.
· 10% servicing cost is assumed.
· Domestic tariff 30c/kWh (from MBIE).
· All figures include GST.
Results:
Indicative charge cost to customer: $16.00 for 25 kWh. (Equates to 64c/kWh)
Installation cost of charger and site outlay: say $70,000.
Cost of servicing last: 10% p.a. (likely high), $7000 p.a., $140 p.w., $20/day
Electricity cost to charging company to deliver 25 kWh: $4.00.
Total notional cost to charging company: electricity + servicing = $8.00
Equivalent cost of same charge at home: $7.50 on domestic tariff of 0.30 c/kWh
Typical time connected to charger: 39 minutes (from charging records for 25 kWh).
Time needed to recoup servicing cost: 80 minutes @ 25c/minute. (i.e., two 40 min charges)
Conclusion on example:
Based on this conservative scenario[5], a $16 charge amounts to a 100% mark-up on the already-generous combined costs for both electricity and equipment, and over 100% above equivalent costs of charging at home. This differential will increase notably for slower charging above 80% of battery capacity and for more favourable costs to the charging company.
Transition and supplier issues
At the early stages of a major transition, such as electrification of the vehicle fleet, pioneering companies such as ChargeNet are to be complimented on their work in this arena, and they deserve for such enterprise to prove profitable.
This is especially so early in the transition period when commercial uncertainty is greater and the customer base smaller.
However, this situation goes far beyond the profitability of a few companies and extends to our critical ability to rapidly reduce fossil fuel dependency, one of the major contributors to an existential threat, and to especially look after the most adversely affected sectors of society in the process.
In that context, and accepting the notional basis of the above example, there seems likely to be considerable room to move on the current pricing structure of public charging stations. There is also considerable incentive to do so, and to ensure that a resultant position is established that is strongly directed at maximising the quantitative transition off fossil fuels, while supporting a just transition and not being inequitable on the operators of public charging stations.
As a related supplier issue, it is noted that Government scrutinises margins on fossil fuels (which are lower than those described above), and additionally it would be expected to receive loud protest from the public if petrol stations started also charging for time on the pump! (The latter comparison must be treated with caution as the time to recharge an EV is far longer than filling the equivalent range at the pump.)
Furthermore, Government has a potentially influential stake in wholesale electricity prices and should be willing to exploit this if needed to ensure attractive rates at public chargers. As noted above, a notional $1200 p.a. energy saving is a significant help to covering the additional capital outlay of an EV and/or paying off a low interest (government?) targetted loan.
CONCLUSION
Rapidly decarbonising the vehicle fleet is a critical climate strategy, and doing so in a way that assists a just transition is not only prudent from an equity perspective, but will also assist maximising EV uptake, with resultant longer-term benefits to the wider community.
The above discussion indicates a situation that is potentially inequitable at large and, if not rectified, risks becoming a disincentive to EV uptake generally, and of specifically penalising poorer sections of the community.
Government is urged to consider this issue in advance of the major expansion of electrified transport that undoubtedly lies ahead.
[1] For comparison, a recent model 1.6 l Nissan Sentra is rated at about 12 km/l, or say 18c/km (@pump price of say $2.15/l). A recent Nissan Leaf is rated about 6km/kWh, or say 5c/km (@ domestic tariff of 30c/kWh). Over a year’s driving of say 10,000 km, the Leaf would save some $1200 p.a. in energy. Under current public charger tariffs, this saving dramatically reduces).
[2] e.g. EV range and battery life have both improved substantially – see graph above - and charging infrastructure is improving in many locations.
[3] At a current carbon price of say $NZ36/tonne (3.6 c/kg), and petrol emitting around 2.5 kg CO2e/litre used, the present raw carbon price impact on petrol would approach 10c/litre, or say 0.5-1c/km for most cars.
[4] Rapid charging is rapid delivery by DC power, as against slower options with AC power, including from domestic power points, that are converted to DC by the vehicle’s system. “Normal” rapid charging is at 50 kW, but the new Bombay “hypercharger” can deliver 300 kW – about equivalent to 150 domestic power points, and more than any single NZ vehicle can currently receive.
[5] Rapid charging with no slower-charging time premium; lower end of the typical rapid-charge tariff range; relatively few charges per station per day; high buy-in electricity tariff; high capex on charger and generous allowance for servicing capex.