May 18, 2017

EV adoption, fast charger operations, and project economics

One of the most important factors influencing adoption of battery electric vehicles (BEVs) is the availability of charging infrastructure. Adequate infrastructure can help to address one of the biggest disincentives to adoption of BEVs, range anxiety. DC fast chargers help with the issues regarding charging since users do not have to spend a lot of time charging their BEV in the middle of a trip. However, the business case for providing fast charging looks quite bad in the near term.

To be useful, the reliability and availability of the chargers must be good. Chargers need to be frequently available throughout and between the cities and they need to be reliable which means that consumers should not have to wait for a long time for them to free up. Unfortunately, the cost of deploying and operating DC fast chargers is high. In order to justify the costs of DC fast chargers for operators, they need to achieve high levels of utilization. High utilization is directly at odds with the reliable access desired by consumers.

Last year, Professor MacKenzie and I studied the tradeoffs between maintaining availability of DC fast chargers, waiting times, station utilization, and cost per vehicle served. We presented the resulting paper at Transportation Research Board conference in January 2017.

In order to study how these different factors interact with each other, we used a queuing model to simulate the probability of each user having to wait based on the characteristics of the station and the EV fleet. As shown in Figure 1, higher utilization means a lower probability that a charger is available for an arriving car. However, when there are more chargers at a given site, this tradeoff becomes less pronounced; you can achieve higher utilization while maintaining a given level of availability. Thus, co-locating multiple fast chargers at one station can help to achieve high utilization as market for BEV grows without sacrificing reliability of access.

Figure 1. Effect of co-locating multiple chargers on availability – utilization trade off

Next we looked into the cost of deploying DC fast chargers and other related costs and how net present value of a charging station investment would vary if we want to maintain different levels of minimum availability. Figure 2 shows that aiming for higher availability makes it harder to break even, and illustrates a “valley of death” for fast charging market growth. The “sawtooth” patterns in the diagram is created by the need to add another charger each time availability drops below the target level.

 

Figure 2. Net present value vs # vehicles served per month

Since the results are very sensitive to assumptions, we worked with undergraduate student Haley Cho to develop a web-based application to explore the effects of changing assumptions about key variables. The variables that can be changed in the app are as follow:

• Operating costs, which include electric utility rates and cost of maintaining the chargers;
• Operating revenue, which is based on the price per kWh, the charging power, and charging time;
• Hardware related costs include capital costs for each charger and installing costs;
• Station characteristics such as availability desired, charging time, stations operating hours per day, and charging power;
• Financial assumptions including discount rate, project life, and taxes.

The application is embedded here, or can be found by following this link: https://queueingmodel.shinyapps.io/queueingapp/

This project underscored how challenging it will be to get to a point where DC fast charging presents an attractive investment opportunity. Based on these findings, we note the following:

• In order to provide higher quality of service for users, more vehicles need to be served so that costs and revenue break even and investors earn their money back and profit. Serving more vehicles is the key to supporting more chargers per station, which allows for both utilization and availability to be high.
• Using information technology, such as reservable charging stations may help increasing utilization of the stations.
• Government and public utility companies can work on reducing utility demand charges. Even if it this cost reduction took place for a limited period of time until BEV fleet grows to the point that investors earn their money back, it could work as incentive and motivator for private sector investment.