Thinking differently about EV charging

Summary: Many analysts think EV charging is something that will happen at night and at home, adding to electricity demand. But researchers at Stanford argue that shifting EV charging from home to work, and night to day, could cut costs and help the grid by matching demand with the supply from solar and wind. This could change which business model is the winner.

Why this is important: We should be using the cheapest and greenest source of electricity generation we have available for use in EV charging.

The big theme: Investing in the infrastructure required to charge the growing number of EV’s should be a massive opportunity, potentially allowing investors to make a real difference to the transitions and earn a fair financial return. But what if the big opportunity isn't in at home EV chargers and/or fast chargers on motorways, but actually mid-sized, mid-speed chargers that can be used at workplaces and at travel and/or shopping destinations - integrated with battery storage and demand management tools!

Summary of a story from Stanford University:

Researchers from Stanford University, in a research paper snappily titled, “Scalable probabilistic estimates of electric vehicle charging given observed driver behavior” looked at how EV driver charging behaviour could increase future stress on the Western United States electricity grid. In a little over a decade, they found that rapid EV growth alone could increase peak electricity demand by up to 25%, assuming a continued dominance of residential, night time charging.

Shifting current EV charging from home to work, and night to day, could cut costs and help the grid. How does this work, put simply, California has excess electricity during late mornings and early afternoons, thanks mainly to its solar capacity. If most EVs were to charge during these times, then the cheap power would be used instead of wasted (curtailed). If most EVs continue to charge at night, then the state will need to build more generators – likely powered by natural gas – or expensive energy storage on a large scale.

Why this is important

Investing in the infrastructure required to charge the growing number of EV’s should be a massive opportunity, allowing investors to earn a fair financial return and to make a real difference. There are a number of companies doing well supplying “at home” chargers, a growing market. And there is some demand for fast chargers, often partly funded by the auto OEM’s or via governments. But one question we regularly ponder is - what if the big long-term opportunity wasn’t at home EV chargers or fast chargers, but actually mid-sized, mid-speed chargers that can be used at workplaces and at travel and/or shopping destinations! Maybe bundled with onsite renewables or set up as charging as a service (CAAS).

This question is driven in a large part by thinking about when people will want to charge their EV’s and how we can best provide the electricity to enable this. We should be using the cheapest, and greenest, source of electricity generation we have available for use in EV charging. The logic of charging at night might make sense in a few markets, which have high levels of low carbon base load that can/has to run constantly, so hydro and/or nuclear. But as the Stanford article highlights - for most markets “current time-of-use rates (ie cheaper at night) reflects the time before significant solar and wind power supplies”, which have dramatically changed the supply/demand balance. And even small increases in demand in the peak periods can be expensive in terms of adding both generation supply and related grid strengthening capex.

Most research we have seen implicitly assumes that where possible EV drivers will use private, at home charging. They see the role of public charging as being to enable EV owners to undertake long-distance journeys (such as on highways), and for EV owners without access to a home charger.

"charging at home and workplace are likely to supply much of the demand overall, but the number of public chargers still needs to expand ninefold and reach over 15 million units in 2030, if customers are to be provided with adequate and convenient coverage."

IEA Global EV Outlook 2022

In looking at the question of electricity demand, in the 2021 version of the report, they make the point that while 2030 electricity demand for EVs is projected to reach 525 TWh in their Stated Policies Scenario and 860 TWh in the Sustainable Development Scenario, this only accounts for about 2-4% of global electricity total final consumption. But, that the share of EV charging in peak demand could rise to as high as 4-10% by 2030 in the main EV markets (People’s Republic of China, European Union and United States), assuming unmanaged charging. Why this is can be seen clearly from the chart below, showing the average weekday load profile, again assuming mainly at home nighttime charging.

The various IEA reports look into how these peaks could be flattened by pushing demand from the high evening peak, out into the quieter periods after midnight. But we guess the question that needs to be posed instead is "if, in the future we expect to be generating surplus, i.e. nearly free, solar electricity during the day, why not encourage EV drivers to charge then, rather than at night? And if we look out beyond 2030, as EV numbers rise further, this problem will only become more material.

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