PG&E may build nation’s largest deployment of EV charging spots

Source: Anne C. Mulkern, E&E reporter • Posted: Tuesday, August 30, 2016

The biggest utility in California will soon learn whether it can install as many as 7,600 electric vehicle charging stations, a controversial plan that would be the single largest deployment of plug-in spots in the country.

Pacific Gas & Electric Co.’s proposal would have ratepayers foot the $160 million cost. The utility would partner with charging companies but largely would build and maintain the infrastructure. PG&E would prioritize placements at workplaces and multifamily housing, including apartment buildings. A portion would go in disadvantaged neighborhoods.

The utility’s region stretches 70,000 square miles from Humboldt County in Northern California to Bakersfield in the Central Valley. There are 5,000 public chargers right now in PG&E’s territory. Supporters argue a shift is needed in the marketplace to get needed charging stations and attract more EV buyers, as the Golden States aims to cut the greenhouse gas emissions blamed for climate change.

Utilities need to get involved in charging to make EVs mainstream, said Max Baumhefner, an attorney for clean vehicles and fuels at the Natural Resources Defense Council.

“There’s a growing charging infrastructure gap, and a widening recognition that we won’t be able to fill it unless we have utility-scale investment,” Baumhefner said. “It would help move the electric vehicle market beyond the suburbs,” he added. Right now, “if you can’t plug in at home, you’re not going to buy a plug-in car.”

The California Public Utilities Commission (CPUC) must sign off on the plan. It could issue a proposed decision in the matter by Monday in order to vote on it at a Sept. 29 meeting. The agency could accept a settlement offer backed by PG&E and several supporters, pick a different option from a group of dissenters, or produce an entirely new blueprint.

PG&E’s proposal has won support from environmental organizations, automakers, labor unions and some in the charging business. A few charging companies remain opposed, saying it blocks competition and is too large. Two consumer groups also have concerns about the size and cost, as well as whether it actually would motivate purchases of plug-in cars.

“This is an experiment, and in our view it’s an oversized experiment,” said Mindy Spatt, spokeswoman at consumer group the Utility Reform Network (TURN). “We don’t know that these stations will be used, or will increase EV adoption. If we’re using [PG&E] customer funds to answer those questions, we should certainly start small.”

The CPUC’s decision has wide implications, said Anne Smart, director of government relations and regulatory affairs at ChargePoint Inc., the world’s largest network of EV charging stations and an opponent of PG&E’s proposal.

“There are several states outside of California actively reviewing the utility role in electrification transportation,” including Washington, Oregon, Nevada and Missouri, she said. Those places “will look toward California as precedent setting for the programs in their own states.”

California Gov. Jerry Brown (D) wants 1.5 million zero-emissions vehicles (ZEVs) — which include plug-ins — on the roads by 2025. Right now, there are an estimated 216,000 plug-in cars in California, according to the Plug-In Electric Vehicle Collaborative. That’s out of an estimated 28 million cars in the Golden State, according to the California Department of Motor Vehicles.

The CPUC already has approved EV charging plans from the two other big utilities, under a directive from state law S.B. 350. It ordered the agency to get utilities to enact plans that would increase EV usage, indirectly helping cut petroleum use.

San Diego Gas & Electric Co. (SDG&E) will spend $45 million and put 10 chargers at each of 350 locations, for a total of 3,500 units. It will use rates to test whether people will charge at desired times. Stations will be placed at businesses and multifamily homes. Los Angeles-based Southern California Edison (SCE) will develop the infrastructure leading up to 1,500 EV charging stations, but will let other companies build and operate the stations. Ratepayers will pay SCE’s $22 million cost.

Profit on stations low — developers

PG&E’s settlement offer, which has the backing of green groups and others, proposes adding about 7,500 Level 2 charging ports and 100 direct-current (DC) fast chargers to the grid over three years. Level 2 charging stations can fully charge a car in four to eight hours. Those would be placed primarily at workplaces and multifamily dwellings.

DC fast chargers will be put in locations like shopping areas or near highways. Those can power up an EV in 20 to 30 minutes.

By way of comparison, Tesla Motors Inc., developer of luxury EVs, owns about 4,000 DC fast charger stations, which its vehicle owners can use for free.

Utilities need to be involved in EV charging because largely it’s not profitable enough for private industry to build public stations, said Baumhefner and Tom Ashley, senior director of government affairs and public policy at Greenlots, a San Francisco-based company that sells software for charging stations and energy management. The biggest cost is digging needed trenches to run electricity to the spots, and installing electrical upgrades, if needed. It can cost several thousands of dollars.

That’s “not something that site host can earn any sort of rate of return” on, Ashley said. Simply charging for the cost of electricity plus an operating expense “will never allow that site host to earn back what they invested in trenching, paving” and any electrical upgrades.

Adding EV stations owned by utilities would bring in more money, a good thing in the long run for electricity ratepayers, Baumhefner said. It will put downward pressure on rates, he said, because if more money comes in above what a California utility estimated when it asked for and received a certain rate, that revenue has to go toward a rate reduction.

The utility to find locations for the chargers first will approach businesses that have shown an interest in energy efficiency upgrades. Some companies are likely to reach out to the utility, said Ari Vanrenen, a PG&E spokeswoman.

“This work be providing them with another option” for a green solution and a worker benefit, she said. PG&E will hire providers to install the charging stations, as well as to perform maintenance and run the billing. The utility will own the infrastructure, with ratepayers paying the costs.

Soaking up solar power

The PG&E stations would serve multiple purposes, advocates said. The hope is that they will motivate people who don’t own homes to buy EVs. The charging stations at workplaces can help soak up some of the excess renewable energy produced in the state, as well, Baumhefner said.

Right now, there are times during the day when there’s more solar power than can be used in California. The excess goes to waste, he said. In the middle of the night, there’s plenty of wind-generated electricity. It’s an issue in other states, as well.

“There’s enough spare capacity on the electric grid nationally to essentially plug in all of America’s cars and trucks,” Baumhefner said. “If we were to do so, we could do so without building new power plants.”

That would bring in new revenue to utilities and help them avoid the “death spiral,” as customers add solar and no longer need as much power. In California, utilities do not make money by selling power but must justify the need for infrastructure that does serve as the basis for rate increases.

A utility can offer incentives for drivers to charge at times when there is excess renewable power. That benefits the entire grid and other ratepayers, said Ashley with Greenlots.

The proposal, if approved at its current size, would add a maximum $2.64 to bills in the first year, with costs estimated to drop somewhat afterward. That’s in line with the cost of SDG&E’s plan, which has been approved, Baumhefner said.

Spatt with TURN, however, said though that seems small, “it’s not the only thing a customer is going to see added on their bill. PG&E is continually justifying rate hikes by saying it’s just a dollar or two, but it all adds up.”

Opponents: Start smaller

ChargePoint and Volta Charing, consumer groups TURN and the CPUC’s Office of Ratepayer Advocates, Vote Solar, and a few others offered an alternative to PG&E’s proposal.

They want a much smaller initial pilot: 2,500 Level 2 chargers and 10 DC fast chargers at a cost not to exceed $87.4 million. That’s nearly the same as what an administrative law judge asked PG&E to come back with last year, after saying the utility’s initial offering was too large. PG&E at first had asked to build 25,000 charging stations at a $654 million cost.

Abdellah Cherkaoui, vice president at Volta, said his company under PG&E’s proposed model would not be able to partner with the utility on stations. Volta finds large companies such as Arrowhead Water or the Monterey Bay Aquarium to pay for a charging station in order to have advertising on it. The stations are free to the property owner — such as a grocery store — and the charging is free for the driver.

“Now suddenly you have a utility with money that is based on ratepayers,” he said. “That is completely unfair competition. You have a regulated company. We can call it a monopoly just because of the size of it.”

PG&E can install the stations where it chooses, “regardless of what the customer needs or not.” If the stations go in places where they’re not used and people see them sit vacant, “then it’s a backlash and it hurts EV adoption,” Cherkaoui said.

The Electric Vehicle Charging Association, a trade group, and ChargePoint have criticized the proposal as noncompetitive because PG&E would build all the stations. ChargePoint installs both EV station hardware and software. In addition, PG&E would only allow companies that want to partner to bid in once a year, which “locks out the ability of new products to come in,” said Smart with ChargePoint.

Greenlots disagrees. It said ChargePoint effectively has a monopoly because it was in the Bay Area early on. It received funding from the 2009 federal Recovery Act and installed infrastructure with proprietary software. Its stations cannot talk to other networks, Ashley said.

PG&E entering the business would offer new opportunities, he said.

“This program regardless of the size … will in fact open the Bay Area market to more competition,” Ashley said. Financial investment by PG&E “would significantly alter the amount of money on table” and would bring in more investment from hardware manufacturers, installers, “pretty much the whole ecosystem. We really see it as a great opportunity to bring new or smaller market participants into the market.”