U.S. Electric Vehicle Fast-Charging Deployment Slows Amid Utility and Charging Company Disputes, with a Huge Demand Gap

The transition to electric transportation in the United States requires large-scale deployment of fast charging stations, but the debate over whether utility companies should own and operate charging infrastructure is slowing this process—analysts on both sides of the issue agree on this point.

According to a June 2023 study by the U.S. National Renewable Energy Laboratory (NREL), increasing the share of light-duty zero-emission vehicles, currently about 10% of new car sales, to the national target of 50% by 2030 will require changes "unprecedented in the history of the automotive industry." Utilities and charging service providers generally agree with NREL's assessment of the enormous public charging demand, but they differ on who should be the primary supplier to meet this demand.

Many stakeholders believe that utility investment can accelerate fast charging station deployment, especially when regulators allow them to conduct forward-looking infrastructure development based on planning and recover costs. However, Frank Lacey, founder of Electric Advisors Consulting, points out that utilities recovering charger capital costs through electricity rates means that non-EV owners, including low-income customers, will subsidize high-income EV owners. Lacey, co-author of a May 2023 paper opposing utility ownership of chargers, said: "These subsidies suppress private sector investment by giving utilities a competitive advantage over other charging service providers."

Phil Jones, executive director of the Alliance for Transportation Electrification (ATE), responded that new policies, funding, and goals supporting transportation electrification have "changed the rules," leading many stakeholders to accept the costs of charging infrastructure growth. Jones, co-author of a June 2023 paper advocating for expanding the utility role in charger deployment and a former Washington state utility commissioner, added that utility distribution system investments have become a necessary and critical "market enabler" in this transition.

Many stakeholders say that fast charging station deployment must align with charger utilization rates to protect the financial viability of charging infrastructure investments, which requires policy reforms, including forward-looking utility planning and procurement practices. However, advocates both for and against utility ownership of chargers acknowledge that whether utilities must own and operate chargers to meet future demand remains a contentious issue.

Cost coverage and intensifying debate

NREL estimates that supporting the projected 33 million EVs in 2030 will require 182,000 public DC fast charging (DCFC) ports, with cumulative costs reaching $27 billion to $44 billion. A May 2023 Atlas Public Policy report found that capital commitments from U.S. private investors, governments, and utilities have already exceeded $20 billion. The 2022 Inflation Reduction Act and the 2021 Bipartisan Infrastructure Law provide "substantial" further support.

But ongoing policy debates, such as the utility role question, "do not do much good for customers, reliability, or affordability," said Cisco DeVries, CEO of distributed energy aggregator OhmConnect. Autumn Proudlove, deputy director of policy and markets at the North Carolina Clean Energy Technology Center, reported in the center's Q1 2023 EV policy update that recent state policy developments in some states allow utility ownership of charging infrastructure, but more commonly restrict utilities to owning infrastructure up to the charger or only allow ownership for serving underserved customers. Similarly, legislators and regulators have followed both reasonable arguments for restricting and not restricting utility ownership of charging infrastructure.

Private market?

"Customers need public DCFC sites that are conveniently deployed and available at all times," said Lacey, whose May 2023 paper was funded by the National Association of Convenience Stores. But he said the competitive advantage of recovering charger capital costs through electricity rates could lead utilities to build charging infrastructure at sites that are easier to develop but have lower traffic volumes, to convenience drivers. Convenience store owners want to invest in charging stations, Lacey said, but competing with "subsidized utilities" could dampen investment and slow the urgently needed expansion of public charging. Restricting the utility role in charging infrastructure ownership can protect utility customers from "charger operation and maintenance costs that can be better handled by charging service providers," Lacey said. However, utilities can support charging service providers by designing new EV charging rates that limit the impact of demand charges, "while charger utilization is too low to significantly threaten demand peaks," he added.

Justin Wilson, senior director of utility partnerships and regulatory affairs at ChargePoint, a charger hardware and software provider, agrees that demand charge reform is necessary. Identifying and implementing new demand charges has already created common ground between utilities and charging service providers. Regulators in Utah's Rocky Mountain Power (RMP) and Arizona's Arizona Public Service (APS) have approved their ownership of public charging infrastructure, and both utilities say they are implementing new demand charge rate designs. But Wilson argued that EV charging "should ultimately be done by the private competitive market," providing fast charging at most future parking spots. "The best role for utilities is to complete grid connections as quickly as possible and deploy distribution system infrastructure up to make-ready," Wilson added. Make-ready refers to the hardware utilities build to connect chargers.

"The private market is good at deploying capital to accelerate charger installation," Wilson added. But grid connection is a significant bottleneck hindering capital, and regulators should require utilities to accelerate infrastructure upgrades and streamline grid connection processes for policy-priority technologies like EV chargers. Additionally, regulators can accelerate electrification by approving cost recovery for utilities to proactively procure system infrastructure to meet anticipated planning needs, Wilson said. As the debate over EV charging station ownership continues, utilities are not waiting idly.

Utility control

Despite opposition from some charging service providers, utilities like RMP and APS are entering the charger ownership space in partnership with one of the largest private charging service providers in the U.S., which some stakeholders see as potential common ground. James Campbell, RMP's director of innovation and sustainability policy, said early projects allowed public charging site owners to choose charger and maintenance service providers, but RMP research found "a pattern of poor consumer charging experiences due to poor maintenance by private service providers." Utah's new RMP-supported H.B.107 bill allows utilities to own, recover costs for, operate, and oversee DCFC maintenance, he said. Electrify America subsidiary Electrify Commercial was selected to deploy RMP-owned and branded DCFCs due to its next-generation technology and proven ability to meet high maintenance standards, Campbell added. APS also selected Electrify Commercial for similar reasons, launching a smaller but similar public DCFC program in January, said Tony Perez, APS energy innovation program advisor.

Putting the utility brand on chargers makes it necessary to protect system reliability, Campbell said. Non-utility charging facility owners primarily focus on "profit maximization" approaches, but system planning enables utilities to deploy efficiently and manage charging load "for the benefit of the system," he added. Electrify America owns and operates more than 850 DCFC sites with about 4,000 ports at highway and commercial sites in urban, suburban, and rural areas, which has generated key insights, said Aaron Young, commercial network and fleet manager. "Utilities want to own charging infrastructure but need expertise or scale to do so cost-effectively, which led to Electrify Commercial," he said. Eliminating utility concerns about maintenance services, reliability, and customer experience is critical because "U.S. investment is still far from sufficient" for DCFC deployment, Young said. Electrify America can handle these on behalf of utilities, and other charging service providers are also exploring this opportunity, he added.

"The California Public Utilities Commission's ruling on forward-looking construction of EV charging infrastructure may also be significant in other states," Young said. Utility advocates say utility ownership has other benefits. Kellen Schefter, director of electric transportation at the Edison Electric Institute, said the "unique" aspect of utility investment is "patient capital" that can invest with a long-term perspective and fill "gaps" where third parties do not see a value proposition. Utilities are "accountable under formal regulatory oversight," Schefter said, and their regulatory standards for identifying and addressing reliability challenges have a "track record" that is "a skill that can carry over to EV charging infrastructure." Despite differences, utilities and charging service providers are collaborating successfully in states that require cooperation.

Moving forward together?

As the need for rapid charging deployment becomes increasingly evident, many utilities and private charging builders are finding that cooperation is the way to address the challenge. Similar to RMP and APS, but without direct utility control, Ford is developing its BlueOval Charge Network with "leading charging service providers," a "network of networks" comprising about 1,800 DCFCs, said Emma Bergg, Ford's director of communications for EVs and BlueOval City. Austin Energy, a municipal utility, recognized as early as 2011 that "it's annoying to have chargers without cars, but it's worse to have cars without chargers," said Cameron Freberg, Austin Energy's EV and emerging technology strategist. "Public charging is becoming an expected convenience," Freberg said. But "the best utility spending is on make-ready because they are long-term assets," so Austin Energy has shifted its early charger ownership strategy to building make-ready for private charging service providers that commit to its "site host agreement" and allow monitoring of operational performance to ensure reliable charging, he added. Utility customers driving EVs are moving from a "if you build it, they will come" attitude to "we will go where the charging is," Freberg continued. They will be dissatisfied with utilities that do not support charging deployment, in whatever form best serves them, he added.

Drivers' demand for more and better charging is exactly why "all options for utility deployment of charging infrastructure, including building make-ready and owning and operating chargers with or without charging service provider partners, should be decided by state regulators," ATE's Jones added. Jones acknowledged that if private charging service provider investment is sufficient, in regulated utility markets, utility grid modernization capital expenditures or building make-ready may be the best approach. Most utilities want to invest in distribution system situational awareness to safely integrate growing EV fast charging, but may "tend to avoid the time and cost of charger operation and maintenance," he added. Southern California Edison (SCE) is an example of this approach. It "primarily builds make-ready rather than competing with charger owner-operators," said Chanel Parson, SCE's director of electrification. But it still takes steps to protect customer experience, she added.

SCE's approach shows how stakeholders with different business models can move toward the same goal of reliable charging. To connect to SCE make-ready, charger owners must contractually commit to keeping each port operational for 10 years and provide monthly operational data reports, Parson added. These practices are described by RMP's Campbell (utility-owned program) and ChargePoint's Wilson (charging company best practices). Similar to SCE, National Grid New York focuses on "delivering electricity to chargers through make-ready" because it does not want to compete in "markets where the private sector is already active," said Brian Wilkie, National Grid New York's director of transportation electrification. But a key concern for National Grid is obtaining broader regulatory approval for proactive procurement and development of system infrastructure that utility planning and forecasting studies show will be needed as charging load grows, Wilkie said. Long-term underinvestment means distribution systems need modernization, agreed Ken Munson, CEO and president of Rhythmos, a distribution system software provider. "But as the EV adoption curve rises, it is outpacing utilities' ability to upgrade assets," he said. Private charging service providers like ChargePoint also agree. Utilities cannot meet policy-mandated EV growth timelines "if they have to do distribution system upgrades at 10 MW of new load and then again at 20 MW," he added.

The time factor

Despite emerging consensus on demand charge relief, grid connection reform, and new methods of utility cost recovery, the debate over the utility role in EV charging infrastructure deployment is still missing something, stakeholders say. "Utility distribution systems are now the pathway for new technologies like EV charging to realize value, and utilities should now have the right to choose how to optimize that value while protecting reliability," ATE's Jones said. But if policymakers do not prevent utilities from leveraging their competitive advantages, charging will be too "economically inefficient" to attract investment, and EV adoption will be hindered, Lacey said. The charging market is "still forming," and stakeholders are still "learning the best approaches," Rhythmos's Munson said. Over time, "utilities have built the existing environment," and future solutions from utilities and private service providers "will be extensions of existing value," he added.

Correction: This story has been updated to clarify that Electrify Commercial has not partnered with regulators or any other party to allow utilities to build and recover costs for EV charging infrastructure.