The Western States’ Plan for EV Charging Infrastructure – Lessons Learned and Things to Watch

by Stoel Rives LLP
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Introduction

On October 4, 2017, the Governors of a number of western states signed a memorandum of understanding (“MOU”) to lay the foundation for work on a regional electric vehicle (“EV”) infrastructure development plan called the Regional Electric Vehicle Plan for the West (“REV West Plan”). The MOU was initially entered by Colorado, Utah, Nevada, Montana, Wyoming, Idaho and New Mexico, and later Arizona. [1]  The MOU calls for the participating states to work cooperatively to establish policies that will support the development of EV charging stations along 11 major transportation corridors that link their states together, spanning a total of 5,000 miles.[2] The MOU mainly focuses on interstate highway infrastructure including East-West Interstate 10, 40, 70 76, 80, 84, 86, 90, 94 and North-South Interstates 15 and 25.

The signatories to the MOU anticipate a future with much higher levels of EV usage. To support this greater EV usage, the MOU calls for efforts by the states to:

  1. Coordinate station locations, thereby maximizing use and minimizing inconsistency across charging station infrastructure;
  2. Develop practices and procedures that will encourage more people to adopt EVs, including addressing “range anxiety”;
  3. Develop operating standards for charging station uniformity;
  4. Explore ways to incorporate EV charging stations in the planning and development processes;
  5. Encourage automakers to stock a variety of EVs in participating states; and
  6. Collaborate on funding and finding opportunities for the network.[3]

Building on the Experience of the West Coast Electric Highway

The concept of a regional EV charging network along corridors is not entirely new. In October 2013, the governments of California, Washington, Oregon and British Columbia signed an agreement called the “Pacific Coast Action Plan on Climate and Energy,” which included a commitment to transition the West Coast to clean modes of transportation. Part of this plan involved the creation of an electric highway, called the West Coast Electric Highway.[4]  Specifically, the West Coast Electric Highway was intended to be an extensive network of DC fast-charging stations, also equipped with Level 2 chargers, located every 20 to 50 miles along the major north-south corridors along the West Coast, as well as other major roadways.[5]

In 2014, the states of Oregon and Washington took the lead in installing the Pacific Northwest portion of the West Coast Electric Highway.[6]  California then followed in 2015 and 2016 with two grant solicitations administered by the California Energy Commission, seeking to provide funding for private developers to install DC fast-charging stations along I-5 and Route 99 from Oregon border to Oceanside, as well as portion of U.S. Highway 101. To date, more than $20 million in funding has been issued for installation of 191 DC fast-charge sites and 123 Level 2 charge sites throughout California.[7]

Things to Watch with the REV West Plan

The experience with the West Coast Electric Highway provides some lessons learned of relevance to the REV West Plan. Below is a list of key things to watch:

1. Political Support.
Strong political support will be crucial to carrying out the REV West Plan, especially because it will require efforts from numerous state agencies as well as the private sector. For example, in California, Governor Brown signed an executive order in 2012 to establish a long-term goal of bringing  1.5 million zero-emission vehicles to California’s roadways by 2025.[8]  This has galvanized the state and provided a target that all state agencies could work toward. The Governor’s office has continued to stay actively engaged with this effort, releasing an updated action plan as recently as last year[9] to continue to drive and coordinate the efforts of all state agencies involved. Even so, 5 years have passed since the executive order was enacted, and while significant progress has been made on many fronts, the DC fast-charging corridors are just getting their infrastructure installed. It will take a similar level of consistent political will from the Governors of each of the signatories to the MOU to accomplish its goals.

2. Funding.
A second major issue is how the infrastructure will be funded. The West Coast Electric Highway used a public/private partnership model that leveraged public funds at the state and federal level with matching contributions made by private developers.[10]  In building the Pacific Northwest portion of the West Coast Electric Highway, the states of Washington and Oregon used Federal funding for the majority of the equipment and installation costs, and in-kind funding provided by the developer — AeroVironment, Inc.[11]   California used a similar model, awarding grant funding to developers and requiring matching contributions for the purchase and installation of DC fast-charging infrastructure along select corridors.

The MOU does not specify any funding model or level of funding to be allocated to the program. Statements from the Governor of Colorado indicate that some of Colorado’s funding will come from the $68.7 million Volkswagen diesel emission scandal settlement.[12]  Like the West Coast Electric Highway, each state will need to decide on the level, source, and method of funding for the portion of the network to be installed in that state.

3. The Role of the Utilities.
Comprehensive EV infrastructure planning requires a decision about the proper role of the local electric utility. Various options exist, from a passive role where the utility just provides permitting for new charging stations, to an active role where the utility actually installs, owns and operates EV charging stations, to somewhere in between (i.e., utility administering EV charging incentives and rebates, etc.). In a number of states, utilities have sought approval to invest in new EV infrastructure to be owned and operated by the utility. Those requests have met with mixed results. In California, regulators approved plans for the state’s major utilities to own so-called “make ready” infrastructure (the distribution lines and equipment to bring energy from the grid to the place where the charging station is installed), but denied requests for the utilities to own the charging station equipment itself. This balance was struck to enable utilities to leverage their low cost of capital for building infrastructure while promoting the market for third party EV station operators and technologies.

For the REV West Plan states, questions remain as to if and to what extent the utilities should own the fast-charging stations and the make ready infrastructure. Resolving this question will tell us much about the future of the market for EV infrastructure in the REV West states.

In addition, utilities exert an enormous influence on EV infrastructure development through the electric rates that they administer. One of the key electric rate concepts for EV station developers is the concept of a demand charge. A demand charge is a special charge based on the customer’s peak energy consumption over a certain period of time. In contrast to an energy rate that merely charges a customer for the total amount of energy consumed over time, a demand charge charges a customer a special charge based on the level of their peak demand. This charge exists to compensate utilities for the purchasing of electricity needed to meet these peak periods.

Demand charges are often the largest single component of the operational cost of an EV charging stations.[13] The REV West states should consider calling on the utilities to open proceedings at their respective regulatory commissions to set special demand charge rates applicable to EV charging.

4. Interoperability and technology.
To carry out a regional plan among various states for EV charging infrastructure requires seamless integration. Planners should coordinate on things like networking of stations for data gathering, monitoring, and interoperability. Above all, planners should remember the EV driver experience and avoid a situation where balkanized networks require different accounts and access cards when a driver crosses a state line.[14]

In addition, as battery technology has rapidly improved, the current generation of EVs are being equipped with much larger battery systems (to enable them to travel longer on a single charge). These next-generation EVs will require higher-powered DC fast-chargers than the current generation of EVs. REV West planners should consider how best to accommodate future charging station needs in this rapidly changing industry. Planners should consider installing the highest-capacity EV station equipment on the market and building extra electric capacity into the connecting equipment to facilitate a future with much higher utilization than today.

The REV West plan is the latest sign that electrification of our nation’s transportation sector is underway. As this discussion shows, however, much work remains for the planners in the REV West states to ensure that the REV West plan achieves its goals. Success will likely lead future states to look at the REV West states as an example, perhaps encouraging them to build similar regional EV networks in other major regions like the midwest and east coast.

[1] Arizona joins states to promote electric vehicle charging, October 13, 2017 https://www.washingtontimes.com/news/2017/oct/13/arizona-joins-states-to-promote-electric-vehicle-c/

[2] 7 Western States + Virginia Look To Expand EV Charging Infrastructure, Steve Hanley, October 11th, 2017, https://cleantechnica.com/2017/10/11/7-western-states-virginia-look-expand-ev-charging-infrastructure/

[3] Id.

[4] Zero-Emission Vehicles and Infrastructure, California Energy Commission – Tracking Progress, last updated on July 5, 2017, 7.

[5] The West Coast Electric Highway, Charles Botsford (Business Development of AeroVironment, Inc.), October 22, 2014, http://www.energycentral.com/c/sc/west-coast-electric-highway

[6] Id.

[7] Supra note 4 at 7-8.

[8] Supra note 4 at 1.

[9] See https://www.gov.ca.gov/docs/2016_ZEV_Action_Plan.pdf

[10] Supra note 5.

[11] Id.

[12] Supra note 2

[13] Fast-charging stations enable EVs to charge approximately 80 percent of their battery capacity in 30 minutes or less. See Id.

[14] Pacific Northwest Builds Out Rapid Charging Network for Electric Cars, Alysha Webb, February 18, 2014, http://www.plugincars.com/pacific-northwest-builds-out-rapid-charging-network-electric-cars-129392.html

 

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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