3 ways to help EV charging bloom in ​‘charging deserts’

Source: by Jeff St. John for Canary Media

For EV chargers to take off in disadvantaged communities, we’ll need public-sector support — and private-sector innovation to make the economics work.

It’s hard to get EV chargers to bloom in ​“charging deserts.”

More than seven in 10 EV chargers in the U.S. are in the country’s wealthiest counties, according to recent research, while many rural, low-income and disadvantaged communities have few if any places for EV drivers to plug in.

There’s a reason that EV chargers are concentrated in the richest, and whitest, parts of the country: That’s where most EV owners live today. Without enough EV drivers to pull up and plug in, charging companies can’t make enough money to justify the cost of installing and maintaining EV infrastructure.

State and federal EV charging programs have set aside hundreds of millions of dollars to install chargers in disadvantaged communities, but those programs haven’t necessarily tackled the biggest challenge for charging deserts: finding ways for charging sites to thrive in locations that currently have low EV ownership.

Building chargers in underserved communities is a vital part of making sure that EVs are a practical option for everyone, not just the rich. And while EV ownership in these communities is low today, experts say it’s crucial to build reliable infrastructure now so that people living in these areas can confidently switch to an electric vehicle when they’re ready.

Though they are still costlier upfront, EVs are cheaper than gasoline-fueled cars to fuel and maintain over the long run. Tax credits and other incentives can help defray some initial costs for lower-income car buyers, but the long-term benefits of owning an EV depend on easy and reliable access to charging. EV owners typically do most of their charging at home, but many people in lower-income communities live in rental housing or lack home garages for convenient at-home charging, making public charging even more important for them.

But building chargers in places with low EV adoption isn’t viable without a strategy to keep the stations financially healthy until utilization rises. Doing so is a recipe for under-maintained or broken-down charging stations, an outcome that would add insult to injury for communities already burdened by underinvestment and pollution.

Canary Media talked to companies working on strategies to overcome these gaps. Each of them relies on public funding and community engagement to get off the ground — but they’re also bringing private-sector innovation to try to solve problems that policymakers can’t solve on their own.

As an electric-vehicle ride-share company, New York-based startup Revel has an unusual opportunity to break the chicken-and-egg barrier to building EV charging sites in urban centers and disadvantaged neighborhoods: making its employees its anchor customers.

Over the past four years, Revel has become the biggest provider of high-speed EV charging in New York City behind Tesla, with 40 stalls at two Brooklyn sites and another 15 at a just-opened site in Long Island City, Queens. While all are open to the public, their primary customers are the more than 300 EVs in Revel’s ride-share fleet — and most of the drivers working for Revel live in areas designated by the city as environmental justice communities and charging deserts.

Demand for EV charging is set to grow dramatically under the city’s recently enacted Green Rides program, which requires all for-hire vehicle rides to be either zero-emissions or wheelchair-accessible by 2030. That’s about 80,000 ride-share vehicles, operated by companies like Lyft, Uber and others, that will need to charge quickly to stay on the road. Extrapolating findings from federal research, Revel estimates the city will need about 5,000 EV fast-chargers to serve those vehicles.

Revel CEO Frank Reig likened his company’s approach to that of Tesla, which built the country’s largest public charging network in the country primarily ​“to sell cars. We’re doing a similar thing: building a network of charging infrastructure in the densest cities to sell rides.”

Revel plans to have more than 300 chargers in New York City by the end of 2024, and it is expanding to build 200 fast-charging stalls in the San Francisco Bay Area by the end of next year. Building in dense urban settings is expensive — each Revel fast-charging stall costs about $100,000, he said, or roughly double the average national installation cost for a DC fast charger — and ​“you have to make sure enough revenue is generated via electrons sold to pay that back.”

For Revel, that payback point is having EVs charging about a quarter of the time, or in industry terms, a 25 percent utilization rate, he said. That’s a lot better than the average U.S. public EV charging utilization rate of 7.5 percent in 2022 excluding California, as reported by consultancy McKinsey. But it’s in line with the utilization rates at commercial fleet-charging depots — which is a good way to think of what Revel is building.

New York already supports EV charging deployments through state and utility incentives that include additional funding for projects in disadvantaged communities. The city is also funding its own rollout of charging to municipal parking lots.

Using ride-share electrification as the basis of an equitable EV charging infrastructure deployment strategy is a sound concept in cities or states, like California, that have ordered ride-share companies to make the switch to EVs, said Edward J. Klock-McCook, a principal with the RMI Carbon-Free Mobility team. (Canary Media is an independent affiliate of RMI.)

But private-sector capital will be needed to expand these government-backed efforts, Reig noted — and that investment ​“only makes sense if you have utilization.” Revel raised $126 million in February 2023, as well as $50 million in debt financing from BlackRock to deploy its charging hubs.

Looking ahead, more than 80 percent of Revel’s planned charging sites for NYC are in disadvantaged communities, Reig said. New York City has mapped the residences of ride-share and taxi drivers and found that the majority live in areas it has identified as environmental justice communities.

(New York City Taxi and Limousine Commission)

Queens Borough President Donovan Richards Jr., who attended the ribbon-cutting of Revel’s latest charging hub, highlighted the need for public transit and EV charging for his community, which has already suffered a heavy toll from climate change, including widespread destruction in the wake of Hurricane Sandy and subsequent storms.

“A lot of people want to transition to electric vehicles, but they’re scared that the infrastructure isn’t in place,” he said. ​“If you live near me, you have to drive into Nassau County,” a wealthier area outside the New York City limits, to find large-scale EV charging hubs.

Every EV charging project needs to get financed — and the cost and availability of that capital depends on how quickly the station’s utilization rate is expected to reach the scale needed to pay off the investment. In disadvantaged communities, that can create a vicious cycle: Since few people who live there are buying EVs, financiers won’t back charging projects there, which in turn makes it less attractive for local residents to take the plunge into owning an EV.

In Oakland, California, community energy provider Ava Community Energy and EV charging developer EV Realty are trying out a workaround to the chicken-and-egg barrier to charger access. Instead of putting all the ​“utilization risk” on the EV charging developer, Ava is taking on that risk — and as an energy provider that buys and sells electricity at bulk rates, it’s better positioned to bear it.

The project in question is at the city-owned City Center West Parking Garage between downtown and West Oakland, an area with well-known income and air pollution challenges. The fifteen 75-kilowatt dual port fast chargers and two 175-kilowatt fast chargers to be sited there will make up the largest single-site public fast charging hub in Oakland, and the second largest in Alameda County.

It’s the first of 12 sites that Ava (formerly East Bay Community Energy) is planning with partners EV Realty and Calibrant Energy, a distributed energy development joint venture of electrical-equipment giant Siemens and Australian infrastructure investor Macquarie Group. The projects are structured as 10-year ​“tolling agreements,” under which Ava pays developers a monthly fee to cover their investment and operations costs but supplies the electricity itself and chooses what it will charge customers for it.

These projects were originally conceived as a way to bring EV charging to rental housing residents, said JP Ross, Ava’s vice president of local development, electrification and innovation. Nearly half of residents in Ava’s service area are renters, many of whom struggle to access at-home charging.

“Besides the cost of an EV, the second most highlighted issue with people’s hesitance to buy an EV is access to charging,” he said. ​“You have to invest in the infrastructure to eliminate that concern.”

But building chargers is only the first step. Ross spent more than a decade in the solar industry, and ​“we learned lessons pretty early on” that incentives to build solar aren’t as effective as ​“ongoing incentives for production,” he said. It’s pretty simple — paying someone to build something, but not to keep it running, can lead to failed projects and stranded assets.

Ava is taking on the utilization risk, but its EV-charging partners also bear consequences for failing to keep them running. Its contracts include performance guarantees that allow it to impose penalties on EV Realty if its chargers aren’t available at least 97 percent of the time ​“to incentivize the operators to fix those chargers and make sure they’re available.”

That 97 percent ​“uptime” rating happens to be the same standard set by the Biden administration’s $7.5 billion in state and community EV charging grants. The goal is to correct the relatively poor performance reported by EV drivers using networks besides Tesla’s proprietary charging sites, which is becoming a potentially significant barrier to consumer EV adoption.

The Biden administration funding does allow some money to be spent on maintaining chargers once they’re installed. But Patrick Sullivan, EV Realty’s CEO and founder, noted that its deal with Ava goes further by taking on utilization risk.

“From a developer perspective, you kind of break this chicken-and-egg utilization problem,” he said. ​“Everybody wants to install stuff that they are definitely sure people are going to use,” which tends to push developers to locations that already have lots of EV drivers.

Even if developers want to target areas where there are fewer EVs, they would typically have to convince their financial backers to bear the utilization risk that choice entails, Sullivan said — and more risk equals higher interest rates, making it even harder for charging projects in underserved areas to pencil out economically. EV Realty has raised $28 million in debt financing for its projects, and it needs to shepherd that capital carefully, he noted.

Having an ​“investment-grade counterparty” like Ava — a deep-pocketed energy provider that can secure debt financing at far more favorable rates — ​“gives our company a lot of comfort to make the upfront investment,” he said.

Similar logic is pushing utilities across the country to seek permission from regulators to own and operate EV charging infrastructure. Most investor-owned utilities earn guaranteed rates of return on the capital investments they make, which would include EV chargers. That would insulate them from the risks that private-sector charging providers bear in making money from electricity sales, and has led most regulators to deny utility EV charging plans on the grounds that they would unfairly undercut private-sector competition and force lower-income utility customers who don’t own EVs to subsidize charging for richer customers who do own them.

As one of California’s growing roster of local government-led community electricity providers — an unusual structure enabled under state law — Ava doesn’t get to earn back guaranteed rates of return on capital investments. In fact, it doesn’t own the poles and wires that deliver the power it buys to its customers.

Ross is hoping that Ava’s tolling-agreement structure could serve as a blueprint for fellow community choice aggregators in California to get charging into places where it can struggle to get financing today.

One of the first steps in implementing an equitable, workable EV charging plan is getting the data to inform it.

That’s the purpose of Charge4All, a geospatial EV site-suitability assessment software platform built by design and engineering firm Arup. Charge4All ingests data ranging from the location and capacity of power lines in relation to streets, parking lots and buildings — helpful in determining the cost of connecting new charging to existing electrical infrastructure — to the demographic data that can indicate where residents lack charging access.

“Over time, for the [EV charging] ecosystem to be flourishing, there must be recognition of which areas need more support,” said Cole Roberts, a principal at Arup — ​“where the ground isn’t so fertile because of histories of disinvestment or other burdens.”

Charge4All was built to support a project Arup did with the Los Angeles Cleantech Incubator and regional utilities to assess the potential for installing curbside EV charging in the L.A. area. That analysis helped the city pick the optimal sites for hundreds of pole-mounted chargers to attach to streetlights — a relatively cheap way to bring charging to areas where many people live in apartment buildings or homes without garages. Similar curbside-charging projects are now underway in New York City and other cities.

“Because there’s that possibility of leaving those communities behind if they’re not well considered, the policymakers — especially the planners and regulators — need a good picture of where those challenges are,” Cole said.

Arup is now working within the city of Pittsburgh, where utility Duquesne Light has been engaged in a wide-ranging set of data collection and analysis projects to decide where to prioritize spending to fix aging infrastructure and prepare for the risk of climate-change-intensified storms and flooding. Working with geospatial mapping company Esri, Arup has been mapping the overlap of existing and future EV adoption, air quality indices, the prevalence of multifamily housing and other data points that city and utility planners need to decide where to direct charging funds.

Community input is another vital data point, as the nonprofit group World Resources Institute highlighted in a September blog post on equitable EV charging. It highlighted the work done by Seattle’s municipal utility Seattle City Light and the city’s Department of Neighborhoods to involve about 50 stakeholder groups in deciding where to deploy 30 fast chargers — input that led to prioritizing charging for bus and truck fleets and ride-hailing vehicles.

A platform like Charge4All makes these kinds of community engagement processes a lot simpler, Cole noted. ​“Finding that data — having it more accessible — and allowing a community to participate in and see it along with planners is going to unblock a lot of costs involved with community participation and regulatory planning,” he said.