Thought Leadership

5 Steps to Effective EV Charging Infrastructure Incentives

 

By Kinshuk Chatterjee

February 25, 2021

A major barrier to widespread electric vehicle (EV) adoption is the lack of public and workplace EV charging infrastructure. Federal funding to spur economic recovery and infrastructure development could help states overcome this barrier. Making the best use of funding will require a data-driven approach. Building on a decade of EV program experience, including administering California’s $200 million statewide EV charging incentive program, the Center for Sustainable Energy (CSE) recommends states follow these five steps to develop a network of EV charging stations:

1. Assess EV infrastructure needs and gaps.

Assess where EV chargers exist and where demand is unmet to inform where and how to direct incentive funding. This is a challenge without a national EV charging database. As a first step, CSE recommends using the National Renewable Energy Laboratory (NREL) EVI-Pro Lite modeling tool to determine baseline targets for the number of public and workplace Level 2 (L2) chargers and direct current fast chargers (DCFCs) needed at the state level. States can use this baseline data initially and then refine the program as they collect more data and implement more precise assessment methodologies. For example, the California Energy Commission (CEC) has prepared an assessment of the state’s EV charging infrastructure needs for the next several years, building on previous analyses conducted jointly by the CEC and NREL, and will add levels of granularity over time.

A state assessment should seek to ensure infrastructure is deployed in underserved communities. It should also determine how EV charging could impact the electrical grid. In California, the CEC prepared an assessment of whether EV infrastructure is deployed disproportionately with respect to geography, population density and income level. Additionally, as part of its 2020 Integrated Energy Policy Report Update, the CEC is working on the California Energy Demand 2019-2030 Forecast, which assesses how various sectors, including transportation, contribute to electricity demand.

2. Develop a block grant program to incentivize EV charging infrastructure.

Incentives drive down the cost of EV infrastructure and help the producers of these technologies achieve economies of scale, just as incentives for buying EVs help spur adoption.

States should identify and prioritize regions with unmet demand for infrastructure or where infrastructure investment could spur EV adoption, particularly if there are concerns about funding availability. Incentives can be quickly and efficiently distributed through a statewide block grant program, which enables the program administrator to award incentive funding to a diverse array of projects across the state. As the implementer for the CEC’s California Electric Vehicle Infrastructure Project (CALeVIP), CSE has tailored EV infrastructure incentives to regional needs and goals.

States can adjust funding allocations and incentive levels to account for unique regional factors, including demographics, geographic considerations, or specific charging applications. Regions with high levels of underserved or low-income communities may need higher incentive levels or increased marketing. More resources may be needed in rural areas where limited broadband prevents EV infrastructure from communicating with the network. Urban areas may require more fast charging infrastructure at high-traffic locations like airports or retail centers. Whatever the circumstance, incentive levels can be adjusted to solve specific challenges.

3. Assess and address equity concerns.

Incentive programs for EV infrastructure should address the needs of disadvantaged and low- and moderate-income communities. Technical assistance programs can provide on-the-ground support in assessing potential infrastructure sites and evaluating what electrical upgrades are needed in underserved communities, which may have older electrical equipment.

Culturally sensitive, multilingual marketing, engagement and outreach efforts can raise consumer awareness of incentive programs and the benefits of EVs in general. Where possible, initiatives should include partnerships with community-based organizations, which already serve as trusted resources within the community.

Incentive programs for EV infrastructure also should invest in programs that generate economic benefits, such as worker training and job opportunities installing and maintaining EV infrastructure.

4. Dedicate diverse funding streams to EV infrastructure.

Sustained investment in EV infrastructure will be needed to achieve widespread EV adoption. For states facing budget concerns due to the COVID-19 pandemic, leveraging public, utility and private funding for EV initiatives is key.

Statewide block grant programs can be funded through multiple revenue sources, including cap-and-trade auction proceeds, vehicle registration fees, utility system benefit charges, and general fund appropriations. These programs also can be co-funded through partnerships with local entities. The CALeVIP program includes co-funding agreements with regional planning organizations, air pollution control districts, and community choice aggregators (CCAs).

States can also authorize utilities to develop incentive programs using ratepayer funds to support parts of the EV infrastructure market. For example, utilities can identify sites where EV charging can be incorporated into planned grid upgrades. States can engage utilities on integrating renewables into EV infrastructure sites or planning charging depots for medium- and heavy-duty vehicles, which can introduce significant electrical loads.

Policymakers should be sensitive to concerns that utility engagement in the EV infrastructure landscape can hinder the development of a competitive market. To protect against this, CSE recommends that utilities be permitted to earn a rate of return on the sale of electricity, but not be permitted to own the infrastructure outright, except where there are no viable alternatives. This will ensure that all funding sources are fully utilized without developing a charging monopoly.  

In addition to public and utility ratepayer funding, private capital is needed to ensure that the EV infrastructure market will be self-sufficient in the long term. Since there has been limited private investment in the EV infrastructure market to date, CSE recommends that states establish partnerships with private sector entities – including EV service providers, automakers and financial institutions – to develop alternative financing solutions. Some charging providers have offered free charging at retail centers and have built a revenue model around advertising rather than the sale of electricity. As vehicle-to-grid integration (VGI) technologies mature and become more accessible, the value of grid services from EVs might be leveraged into the financial models for supporting charging.

5. Convene a working group to oversee and optimize EV infrastructure programs.

A combination of statewide assessments, varied incentive programs, and multiple funding streams will be necessary to transform the EV infrastructure market. Coordinating all of these initiatives will require sustained focus and oversight. CSE recommends convening a statewide working group to provide high-level guidance, prevent duplication of effort, and optimize limited funding.

The working group can make policy recommendations regarding eligible incentive categories and appropriate funding allocations. It also can propose and approve pilots for alternative solutions that do not fit within existing programs. For example, specialized programs could assist residents of multi-unit housing who may not have access to residential charging and may not qualify for other incentive programs.

The working group can facilitate information sharing and data coordination for initiatives like a statewide EV infrastructure assessment. It could convene industry stakeholders to ensure that requirements around charging connector types and communication protocols are standardized to facilitate consumer access. This lack of standardization has been cited as a barrier to widespread EV adoption. Lastly, the working group could harmonize interagency clean energy and transportation programs, such as recommending building code changes that encourage the development of make-ready EV infrastructure in new construction.

By following these five steps – conducting assessments, developing incentive programs, addressing equity concerns, dedicating diverse revenue streams, and convening working groups – states can streamline the deployment of EV infrastructure to support greater EV adoption. States that cost-effectively facilitate the transition to an electrified transportation system can reduce greenhouse gas emissions, improve air quality, and generate economic development opportunities for their communities.

Kinshuk Chatterjee

Transportation Policy Analyst

Kinshuk Chatterjee is a Transportation Policy Analyst who provides policy support and analysis for CSE’s EV and EVI initiatives.

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