While the task of planning and implementing a healthy and robust charging infrastructure throughout your city is no small challenge, pricing dilemmas such as whether or not charging should be fee-based or free to drivers are surfacing as a common question across the nation. Cities are changing to meet the needs of the electric car movement. But should they offer free EV charging?
There’s a lot that goes into the ROI of charging, both direct and indirect. Some cities are expanding their charging infrastructure with pay-per-use models to help offset installation and maintenance costs. Some are looking to develop revenue streams. Others are committed to offering free charging stations to encourage tourism, commerce and to motivate their population to purchase EVs, helping the city meet its carbon reduction goals sooner.
Free EV Charging Model
Free charging may incentivize drivers to plug ‘n charge without concern for the price. This is advantageous for cities that want consumers to shop and enjoy the sites without limiting their patronage because their EV charge is included in their trip expenses, limiting the dollars they’ll spend in the local economy. It’s also a draw for residents who may see free EV charging as an additional benefit of attending events in your downtown — getting them out, about and participating in the local economy. And just as residents new to your city may choose where to live based on crime rates and school districts, access to electric charging stations may become a significant factor as well.
Advertising is also a benefit for businesses. Being able to say something like, “this free charge is brought to you by, [insert business name]” can be helpful for companies looking for more visibility and who want to show off their commitment to their environmental initiatives. Plus, selling advertising can be a way to recoup some of the installation and maintenance costs without extending that cost to the consumer. If nothing else, cities get to showcase their environmental commitment to reducing the city’s carbon footprint by installing free stations throughout the city.
Subscription
On another hand, you could require a monthly or annual subscription fee. For some, these are brand-specific, such as Tesla which has shifted to the subscription model for Tesla owners. Other subscriptions are regional, similar to buying a bus pass from the Department of Transportation (DOT) in your region. This may be attractive to businesses in your city that want to offer free charging stations in their parking lots, or offer to pay DOT subscription passes as part of their employee benefits package.
The subscription option helps support businesses that want to add to their incentive package to attract better workers, which will add to the local population base. This is also useful for sprawling cities and commuter towns where consumers may need to get the occasional quick charge between destinations but who might be less likely to top off if they have to go with a per session or other paid model. With the subscription option, cities can get some money from the consumer to cover maintenance costs without limiting access in the way per session, per hour.
Per Session
While consumers of course prefer free charging, it’s more common for cities to offer pay-as-you-go options. One way to do that is the pay-per-session pricing model. Some stations are high-efficiency, while others are much slower. Depending on the location, this option offers drivers the ability to shop or participate in local events while waiting for a full battery without watching the clock. It makes the most sense for rural areas that expect to attract drivers who need a full charge between destinations, such as road trips and distant destinations. Topping off or other brief visits will render the ‘per session’ model too expensive.
Per Kilowatt Hour
Similar to the per-gallon charges at gas stations, the per kilowatt-hour pricing model allows the consumer to see a connection between time and wattage. This will understandably play into drivers’ decisions about which charging stations they’ll use as they see pricing fluctuations, similar to consumer discernment regarding nearby gas stations. This also draws a direct line to electricity as a resource, bringing the consumer into the conversation about rates, resource sustainability, tariffs and more. This pricing model is complicated by the fact that consumers can charge at home or will often be able to charge for free at work, which may put some demand controls in the lap of the consumer to keep prices low.
Per Hour
Similar to parking meters that limit your parking time to the number of quarters you have on-hand or the credit card you enter at the parking lot payment station, there are EV charging stations that dispense electricity for a period of time, regardless of the number of kilowatts. These are useful in cities or rural routes where there is minimal competition between high-efficiency and low-efficiency charging stations. When there are many options, drivers are more likely to charge at stations that will give them a full battery faster. This option is only feasible where companies and citizens can operate as electricity resellers or where there are limited restrictions on capturing and selling electricity, potentially in competition with local utilities.
Pricing Model of EV Charging Stations Final Thoughts
While some cities have begun to share the cost of EV charging directly with consumers by ending free charging, this may or may not last. The pay-to-charge model is meant to recoup maintenance costs, meaning cities are using fees as a way to share overhead with consumers. But offering free EV charging can be a great way to encourage more EV adoption and demonstrate a commitment to sustainability. While not a long-term plan to create an additional revenue stream, it’s worth considering one of the many EV business models.
By sharing installation and overhead with utilities with businesses and stakeholders through advertising, sponsored charging units, and requiring EV charging stations and maintenance as part of a building permit, similar to handicap spaces, many cities expect to see more revenue. In these regions, removing EV charging fees from drivers’ shoulders ensures more equitable access and higher revenue as the volume of EVs increases.
One thing is for sure, the demand for EV charging stations is accelerating. Will you be prepared? Or will you be playing catch up this decade?
References
Guidehouse – Light Duty EVs Primed for Growth Over the Next Decade
International Energy Administration (IEA) – Electric vehicles
Government technology – Cities End Free Rides at Electric Vehicle Charging Stations
