December 10, 2021
The Transportation Energy Institute will publish a report in early 2022 analyzing the efficacy of programs and policies aimed at supporting the installation of EV charging infrastructure. In this episode, Jonathan Norris with ICF, one of the leaders of the project, discusses what they learned about which programs seem to be the most effective and why. This episode and the upcoming report should be instrumental in guiding EVSE program designs. Listen in as ICF discusses the report in more depth and be sure to download the report from www.fuelsinstitute.org when it is made public early 2022!
Jonathan Norris, Consultant, ICF
Speaker 1: Welcome to Carpool Chats, a podcast brought to you by the Transportation Energy Institute.
John Eichberger: Hey everybody. Welcome back to Carpool Chats, I’m John Eichberger with the Transportation Energy Institute and today we’re going to be talking about something that’s on the mind of so many people, talking electric vehicle charging infrastructure. Recently, the Congress passed some legislation giving the administration quite a bit of money to build out the infrastructure. The Transportation Energy Institute started working on this a while back, we contracted with ICF Consulting to do an analysis [00:00:30] for us to find out what type of policies and programs and the Senate actually had been successful in deploying charging stations in the United States. And I am pleased to have Jonathan Norris, the lead transportation energy consultant at ICF who helped build that project for us to talk to us a little bit about where we’re going, what the possibility is and what our options are. Jonathan welcome Carpool Chats.
Jonathan Norris: Thanks for having me.
John Eichberger: Before we get started, why don’t you tell the listeners a little bit about ICF? We’ve worked with you quite a bit but maybe they’re not familiar with your firm.
Jonathan Norris: [00:01:00] Sure. Yeah. ICF is an international consulting firm. We’ve got over 7,000 consultants that work in policy, economics and a host of other different fields. Not only here in the United States but also abroad in several other countries. I work in ICF’s transportation line of business. And so in addition to clean transportation, clean fuels, electric vehicles and whatnot, we also do transportation demand management type of work and a host [00:01:30] of other transportation projects. Happy to be here with you today, John.
John Eichberger: I’m glad you can join us. The project we’ve worked with you on right now and hasn’t been published yet, it’ll be published after the first the year but it was really looking at how do we create programs that can help us build that infrastructure? We’re talking about electrification of the transportation market, everybody in the administration’s focused on infrastructure. President Biden says we need half a million chargers by 2030. Don’t know if that’s the right number but when we’re starting [00:02:00] to think about how we spend billions of dollars in money from the federal government, using those resources correctly, effectively is going to make the most difference we can possibly imagine. We asked you guys to take a look at variety of programs that exist today. Walk us through a little bit what you guys did and how you started taking a look at this big subject to help us figure out what the best plan forward might be.
Jonathan Norris: Sure. Yeah. We looked at this from two different perspective. We used a mixed methods approach. We [00:02:30] did a quantitative statistical analysis as well as interviews for industry stakeholders that included state government agency officials, utility representatives, representatives from EV charging station providers and so on to really get at this question of understanding, well first, what are the major policies and programs, incentives and regulations that have been passed in the last four or five years on electric vehicle charging infrastructure? And [00:03:00] then second, which ones have been most effective and why? And so through those two different types of research methods, we’ve aimed to get at those two questions and really understand a bit more about what makes policy effective, especially given today’s market for EV charging.
John Eichberger: And I think the reason we’ve worked with you guys on this is I’m really concerned. We’re going to throw a bunch of money at the infrastructure and if we don’t build the programs in a way that works for the market, [00:03:30] they’re going to fail. We’ve seen this happen before. We see these big incentive programs and the money just sits there because quite frankly, the programs are too cumbersome for anybody to navigate. They just don’t work. When you start looking at this, what were the kind of the major takeaways? What are the biggest lessons that we can learn from the last five years of experience with programs like this?
Jonathan Norris: Sure. Well, we found first of all, that a number of different policy types were shown to have a statistically significant positive impact on a measure of charging [00:04:00] market development that we developed. That’s good news because of course the United States is a very varied sort of place. Every state is a bit different. There are different political realities and different conditions that EV charging infrastructure deployers, policy makers and so on have to contend with. The first takeaway is really that one, that there are options for not only the federal government but state and local government officials [00:04:30] in how they can go about moving the needle on EV charger deployments. You could group that into two major categories. Incentives is the first big one and so grant programs, rebates, tax incentives, loans and leases and utility incentive programs, all were shown to have a statistically significant positive impact on charter deployment. We also found that law and regulation also had an impact. In particular, there were two types of programs. [00:05:00] Both of them were focused on concerted efforts to reduce transportation related emissions, to improve air quality, to combat the effects of climate change. And often those sorts of programs entailed interstate collaboration. And those were also shown to be some of the most effective ways at really moving the needle on charger deployments. And I’ll also add, it wasn’t necessarily the case that simply the presence of those programs increased [00:05:30] charger deployments but rather that they set up a framework for multi-state collaboratives and even intrastate agencies to work together, to set policies that would enable charger deployment. We’re talking things like streamlining permitting processes, incorporating EV readiness into building codes, identifying through site assessments where it would be most effective, where you’re going to get the biggest bang for your buck to deploy charging infrastructure and really to collaborate in [00:06:00] solving this big puzzle. Those were two of the biggest groupings of policies we found to be effective.
John Eichberger: And so you talk about incentives and a lot of people think any problem can be solved by throwing a bunch of money at it. That’s the Washington way. Let’s throw a bunch of money at it and magically everything’s going to happen the way you want it to but I have talked to a lot of site hosts who said, “The grant structures are so cumbersome, so difficult to manage.” Yet politicians, government officials, they think, well just do [00:06:30] grants. You got to apply for it. You got to meet certain criteria. We’re going to give you money, you go do it. But I remember when we’re walking through the whole process, putting this paper together, grants aren’t always the most effective. There are other ways to go about using the funds. What kind of insight did you get from program managers and recipients in terms of what are the criteria that works best to get the money into the right hands in the most effective way possible?
Jonathan Norris: Yeah, you’re absolutely right. You would think that just simply putting money out there is really what would do the trick but that money has to come with [00:07:00] certain care and caution in the way that you’re going to administer it. We, as part of the project, I mentioned, we interviewed a number of different stakeholders and they shared this concern. They said a few things. One, lack of flexibility in program design can be a detriment or ineffective om dispersing this sort of money for infrastructure. Giving the administrative rights and privileges to organizations or agencies that don’t have prior experience [00:07:30] and knowledge of EV charging infrastructure was also cited as ineffective. Much better to work with agencies that have experience doing this sort of work or related sorts of programs. And then overly prescriptive standards for funding programs.
For example, requiring that chargers have to use a certain communications protocol like ISO 15118, which is often used as a standard for bidirectional vehicle to grid communications. Interviewees [00:08:00] cited that that sort of general overly prescriptive approach can turn people off. Lengthy application processes can be a detriment as well. And so those are sort of the things you want to avoid. On the flip side, they also shared that encouraging flexible program design, encouraging simple application processes and as I mentioned earlier, making sure that you are assessing where this infrastructure and where this funding is going to go is [00:08:30] also important so that you get the, again, the most bang for your buck and strategically disperse these funds where it’s going to have the biggest impact.
John Eichberger: You also mentioned the regulatory environment, whether you have a low carbon fuel standard or some sort of emissions mitigation program requirement tied into funding seems to make a more effective model. I think what struck me from the paper as I’ve read three or four times now, of course, is that a single program alone isn’t going to solve [00:09:00] the challenge. And I think we get so lost sometimes in our political discussions that one size fits all, one solution fits all needs. It really is the combination of multiple facets, multiple layers, all kind of integrated working together. You mentioned citing and permitting authorities. You mentioned officials who have experience in EVSC. I’m hearing from people all the time going, “Man, I went to get a permit they and they didn’t even know what an EV was, let alone be able to streamline [00:09:30] the process to get me into the ground faster.”
When you looked at it, what type of combinations seemed to have the greatest impact? If I’m an official, I’m thinking, how do I do this? What kind of levers I want to flip and switch? Which ones do I want to avoid? And which ones I really want to amplify?
Jonathan Norris: Sure. Yeah. In general, in a more broader sense, we found that states that employed a broader range of policy types really have had the highest measures of market development. These were states with [00:10:00] 10, nine, eight of the different policy types, the categories that we were looking at in our study. And so in a general sense, using all of the options or many of the options that are available to you seems to be one of the most effective ways to go about it. When you get into specific policy types and the combinations thereof, combinations of funding programs to get the money out there. Grant and rebate programs or tax incentives and utility incentive programs in addition [00:10:30] to one of those two types of law and regulatory sorts of initiatives that I mentioned. The ones that are focused on concerted efforts to reduce transportation related emissions, improve air quality, meet a very specific EVSE deployment target. Combining those together seems in the data to be one of the most effective ways to move the needle on charger deployments.
And [00:11:00] I think that’s because remember, as I said earlier, these programs, these interstate collaborations are encompassing multiple types of policy actions, from the permitting side to the building codes, to identifying where the money should go. All of that paired with the pots of funding, really pairs nicely to deploy charging infrastructure.
John Eichberger: And I think that really, the key is we have to be thoughtful about this. And I think the [00:11:30] other thing we may want to think about, when we hear what you’ve reported in terms of inexperienced programs, inexperienced administrators and being saddled with this, the anecdotal information I’m hearing from people trying to deploy chargers and the soft costs they’re running into and regulatory, we call naivete or just immaturity in the regulatory structure. Maybe we need to take some of the funds that are being thrown out there and do some education and do some training of local regulatory officials to try to help them [00:12:00] support the market. The goal is a huge objective. There’s a huge lift here. For those who think we need to have a robust electric vehicle market, we’re not going to have that without infrastructure and learning from what we’ve experienced in the past is going to be really important.
I remember one of the things that struck me when we were having our weekly check ins, as you guys were interviewing some program administrators and recipients, it’s like California clearly is the most developed market out there, has the most elected vehicles in [00:12:30] the country, the most EV charging stations in the country. But what a lot of people said was that low carbon fuel standard credit made a huge difference. And I was really kind of blown away. Low carbon fuels doesn’t seem to line up of EVs in my opinion but what type of experience, what kind of lesson did to learn from those people who are saying, “That program in particular,” and you kind of lumped it into a more generic program type, “but what is it about program fight that really kind of gave a little more oomph to the needs to push [00:13:00] EVSE?”
Jonathan Norris: Well, you have to keep in mind that I think you alluded to this, California has a host of policies and they continue to develop more. They’re really if you are someone who’s going to or an that’s going to deploy charging infrastructure in the state of California, you’re really fortunate because not only do you have upfront capital to incentivize you and give you funding to actually deploy and pay the upfront cost [00:13:30] of deploying this infrastructure. But with programs like the low carbon fuel standard, you get an operating cost incentive as well. We saw this in some of our demand charge analysis. We examined the potential impact of demand charges on the deployment of DC fast chargers.
We looked at it at a zip code level. We aggregated demand charges into an average by zip code and then compared to the deployment of these DC fast chargers again by zip code. And what we found was [00:14:00] when you’re looking at demand charges alone, there seems to be little to no correlation between the two but other studies have shown and it makes sense that demand charges really can increase the operating costs of an EV charging station to the point where it’s cost prohibitive and not profitable. However, the data showed that in California, that sort of favorable policy environment, including the LCFS, served as sort of a hedge or helped dampen the effect of those demand charges. [00:14:30] And it’s because that program incentivizes the use of low carbon fuels. And one of the ways it does that is by paying out a credit for all of the energy that you give out of an EV charger. And so site hosts and charging station operators and owners really can benefit from programs like that, that not only incentivize and provide funding for the capital costs but for the operating costs as well.
John Eichberger: I think that’s such an important analysis you guys did because I [00:15:00] remember when we first talked about the demand charge, you showed me the statistical correlation between high demand charges and EVSE deployments that there really is none. And I thought that doesn’t sound right because everybody I talked to said, “Demand charges are the number one economic challenge to making the business case pencil out for an EVSE host.” And I think we’ve been working with, talking to utilities, just trying to find how can we make the situation more economically favorable for a charger host [00:15:30] when demand charges they’re legit, they need to be done at a certain level because you have to make sure you have the capacity. But how do we overcome that hurdle as we build demand? Because eventually when you get enough chargers, you can spread out the demand charges across multiple transactions. And it’s not that big of a hurdle.
But when you start thinking about trying to fundamentally change the utility rate structure for three, 4,000 utilities, there’s no way you’re going to get them all to agree on a process. What you guys kind of have analyzed in here is other options [00:16:00] that could be available to governments to help streamline the onboarding of EVSE in a way that doesn’t bankrupt the host, that actually allows those demand charges to be mitigated without having to go through the utility commissions to change this. That was just a fascinating finding you guys pulled out of this paper.
Jonathan Norris: Yeah, absolutely. I thought so as well. And it’s not necessarily intuitive as you alluded to. You would think, well, of course, demand charges are going to have an impact. They make charging more expensive. [00:16:30] But it’s important to reiterate, we were looking at a very narrow equation. What is the impact of demand charges on the deployment of direct current fast chargers? Not the operation costs, nothing else, just the deployment and that’s where we saw no correlation but there’s so much more. And I don’t think that the takeaway from that result is that demand charges don’t have an impact. I think it’s that demand charges don’t operate in a vacuum. And there are so many other factors that people [00:17:00] or organizations that want to deploy charging infrastructure must contend with before making that deployment decision. They’re really looking at an overall business case that takes into account things like what is the local EV uptake in the area? What are the rates of charger utilization now and into the future?
And you’re also looking at risk and the willingness of owners to take a risk in deploying. Some may think that it might have a [00:17:30] particular site that has high demand charges might have a positive business case in the future and therefore they might be willing to take near term losses in anticipation of longterm gains. Others might not be willing to take that risk. And so it’s really just one component of a multivariable equation. And that’s really important to take that into account.
And then when policymakers are thinking about ways to make it easier and ways to [00:18:00] ensure that demand charges are not having such a negative effect, there are many options already in progress. Some utilities are introducing new EV rates. Pacific Gas and Electric has started a subscription based model that’s more akin to a cell phone plan than a demand charge plan. Some utilities are introducing demand charge holidays or freezes. And then there are also technological solutions that can be explored as well. Energy storage might be a way that [00:18:30] you can reduce demand charges by reducing the amount of demand that you have for grid provided power by using that as a buffer. There certainly are plenty of options.
John Eichberger: Yeah. And I think it all kind of comes together because we started off this conversation as you know, one size plan doesn’t fit all. Throwing money at it doesn’t fix all the problems because you may have enough money there in a grant or incentive or rebate to justify your capital investment into the EV charging station. But then you start looking at all these other issues. And [00:19:00] so understanding where the different programs are, where the offsets, where the revenue opportunities may be, where the programs are being developed to encourage EV adoption and in market charging, all these things come together and we have to make sure that we’re not looking at the EV challenge to build infrastructure myopically.
We have to look at all facets and I was in politics for a long time. I have some concern that they may not be the strength of our [00:19:30] elected officials but hopefully projects like the ones you get put together with the Transportation Energy Institute will help them realize that there are so many different things they can do to encourage market development and create a business case so that individual businesses say, “I want to get into this. I want to offer this service.” You’ve got a lot of the networks doing it and the third network providers because they’ve seen this. They see that there’s some EVSE credits from different programs that can help them offset their demand charges. Individual [00:20:00] companies and businesses need to be thinking that way too. And to the extent that these federal, state and local programs can be crafted in a way that addresses the myriad of issues that affect the business case are going to be important. And I think the paper you get put together for us really is going to help open their eyes and open the doors to opportunities that may have otherwise not been open.
Jonathan Norris: Well we sure hope so.
John Eichberger: Jonathan, thank you very much. If anybody wants to learn more about ICF, how can they find out what you guys are working on?
Jonathan Norris: Well, you can go to our website, [00:20:30] icf.com. We’ve got plenty of articles and case studies and plenty of information out there where you can learn more about our company, our offerings. In particular, our offerings around clean transportation and electric vehicles. This is something that I love to do, something my colleagues love to do and we really pride ourselves on doing really good objective research and work for our clients. Thank you for having me, John and that’s how you all, all the listeners [00:21:00] can get a hold of us.
John Eichberger: Well, it’s been a pleasure working with you guys and talking to you today and for you guys back home, the study right now, as you guys know, we go through a very robust peer review process. We’re about to go into our final round of review here soon and then we can hopefully get that thing polished up and ready to be released after the first of the year in January 2022, the goal. And once that’s available to be put everywhere you can possibly find it, we’ll make sure it’s free for download for everybody who wants to see it, make sure it gets in the hands that the government officials that are trying to help these programs. And again, I can’t thank you guys enough, [00:21:30] ICF, for all the work you guys put into this. For those of you back home, thanks for tuning in, we’ll see you at the next Carpool Chats. Take care.