Three Approaches to Investing in Electric Vehicle Charging Infrastructure
Policymakers who aim to speed deployment of electric vehicles have proposed significant investments to expand charging infrastructure. RFF Senior Fellow Joshua Linn explains why smaller-scale pilot programs can guide these investments and avoid wasting precious resources.
How should federal, state, and local governments invest in charging infrastructure to support electric vehicle (EV) goals? Up until now, investments largely have taken the form of pilot projects that deploy tens to hundreds of stations in strategic locations.
Recent announcements from California and New York signal a more aggressive approach: last summer, New York approved a $701 million program to support construction of more than 50,000 charging stations in the next five years, and the California Public Utilities Commission dedicated $437 million to build 40,000 charging stations in Southern California. The latter is intended to help meet the state’s goal of 250,000 charging stations by 2025, which would cost approximately $2.5 billion. At the federal level, President Joe Biden has proposed investing in 500,000 charging stations across the country, while the Senate is considering bills that would invest heavily in charging stations. Given the ambitious nature of these goals, making investments in charging infrastructure as quickly as possible might be tempting, but starting gradually and experimenting with different investment approaches would lead to a more cost-effective transition to EVs.
One argument for making large infrastructure investments now—at a time when EVs make up only about 2 percent of the new vehicle market in the United States—is that adding charging stations could boost EV sales. But the evidence supporting that case isn’t particularly strong, because it’s hard to disentangle confounding influences on EV demand. For example, a state may build charging stations at the same time it subsidizes purchases. And a recent RFF survey of prospective car buyers finds that difficulty charging isn’t among the most important barriers to purchasing an EV. Instead, perceived safety, costs, and performance appear to be the primary obstacles hindering consumer interest.
Even with uncertainty over how charging station investments might affect consumer adoption of EVs, we can still try to figure out where to invest in charging infrastructure and how much money is sufficient. One approach is to analyze how people drive and charge their EVs, and then use that information to predict what they will need in the future. The National Renewable Energy Lab has taken this approach with its Electric Vehicle Infrastructure Projection Tool (EVI-Pro), which planners can use to estimate the number and type of charging stations needed based on personal vehicle travel patterns, EV attributes, and charging station characteristics. The International Council on Clean Transportation uses a similar method to quantify charging needs based on EV market growth, charging availability, and driver behavior patterns.
The main problem with this approach is that, while we have some information about how current EV owners are charging their vehicles, we don’t know if future consumers will behave the same way. For example, most EVs on the road now have all-electric ranges of 50–200 miles, which is the distance they can be driven in all-electric mode. Future EVs could allow for much longer driving distances, which would reduce the need to charge away from home, but it’s hard to predict how battery technology will evolve and how much range manufacturers will be able to offer.
Another possibility is to assume that most charging will take place at home or at work, as is currently the case. Under this scenario, an EV driver would just need some occasional charging for long-distance needs—for instance, along the highway. Policy would focus on home, work, and supplemental charging. The downside is that this strategy could make it difficult for people who park on the street to have EVs. Roughly one-third of housing units in the United States lack a garage or carport, according to the US Census Bureau’s American Community Survey—and that share is much larger in particular regions. Relying almost entirely on home or workplace charging is unlikely to result in the desired elimination of all gas or diesel-powered vehicles on the road.
A third way forward is to continue with experimental approaches, such as smaller-scale pilot programs, to observe how much drivers use charging stations and how the existence of charging stations affects EV sales. Not all charging stations will be built at once, so planners can locate stations strategically and compare what happens in areas with similar attributes, with and without charging stations. Lessons learned from early investments could then be used to determine where to make future investments.
Economics favors this last approach. A lot of uncertainty exists about how future consumers will use charging stations, and investments are irreversible: once a station has been built, the costs can’t be recovered by closing the station. Without telling us exactly how to proceed, economic theory makes clear that it’s better to proceed slowly and gather more information to avoid wasting resources. By collecting real-world data on which investment strategies work and which don’t, we can avoid misusing scarce government resources and speed the transition from a nearly all-gasoline fleet to an all-electric fleet.
Source : resourcesmag
