Can used batteries be the key to unlock EV charging profits?
EVgo is testing onsite storage at a pilot electric vehicle charging station, aiming to reduce demand charges and make its stations more profitable.
Earlier this year, Rocky Mountain Institute released a study examining electric vehicle charging stations and the tariffs they utilize. As California and more states look to electrify their transportation sectors, the business case must pencil out for all parties. Developing rate structures that accommodate charging infrastructure's unique needs essential to expanding transportation networks.
RMI's study came away with one overarching conclusion: that demand charges do not work for public electric vehicle charging stations. They draw a large peak demand, but have inconsistent consumption. It's a combination that can be devastating to station economics (if there are demand charges in place).
The RMI analysis revealed demand charges can be responsible for over 90% of a charging station’s electricity costs — the equivalent of EVgo, the nation's largest fast-charging system, paying about $20 for a gallon of gas it sells it to the end customer.
The report examined charging sessions last year on all 230 of EVgo's 50 kW DC fast-charging stations in California. But while researchers concluded appropriate rate structures were needed to ensure a business case for charging stations, EVgo has been working on another solution: pairing used, or "second-life" batteries from electric vehicles, with charging stations to help avoid demand charges.
"We believe there will be a lot of second-life batteries availability in marketplace in the coming years," said EVgo Vice President of Market Development and Product Strategy Terry O’Day. It's a potentially symbiotic life-cycle, with charging stations made more profitable by utilizing repurposed parts from the cars they serve.
"When they're done being used for cars, that doesn't mean they are now useless batteries," said O'Day. "It just means typically they don't put out the same horsepower." For a stationary applications, he said the batteries could have another eight to 10 years of life remaining.
The basic idea works like this: Demand charges are based on a customer's peak use, designed to account for local transmission costs necessary to serve that customer. By installing batteries at a charging site, EVgo (or another company) can pull some energy from storage rather than the grid when a customer is charging, and thus reduce the peaks.
"We think the opportunity to flatten out the load curve does produce a return on investment," O'Day said. "What we've been trying to figure out is, what are the products and what are the costs, to determine exactly what that return on investment would be and at which stations make sense."
Expanding on a partnership with UC San Diego
EVgo partnered with the University of California San Diego last year, installing storage at a four-port charging station connected to the university's microgrid.
At the charging stations, the storage includes pair of 30kW, 50kWh battery cabinets, which each housing two second-life battery packs and one converter. In addition, there is a 12.6 kW solar canopy which at night is fitted with LED lighting for driver illumination.
The installations also include a Schneider-built three-phase automatic load management system, and a site controller to impose power limits on the charge stations so they will: not exceed pre-set limits, protect the circuit from overload, minimize overall demand, and control charge and discharge of the battery.
All of that infrastructure takes up space, says O'Day. And real estate can be even more expensive than the batteries. While the pilot program at UC San Diego has proven the addition of storage can work to reduce demand charges at EV charging stations, there are limitations.
"Shaving the peak in a territory like San Diego, where very significant demand charges exist, this could really provide some value for us and others who are deploying fast charging stations," O'Day said. But expanding the program takes money.
"It's not so much authorizations, you just need the costs to install these stations. You also need the real estate," he explained. "Most of our fast charging stations are in retail shopping centers, and that's fairly valuable real estate. Parking is really the lifeblood of retail."
The battery storage essentially doubles the size of the charging station's footprint, and at least in the pilot is situated behind a not-attractive fence. Adding storage also means the more space on the transformer, O'Day added. "Because for the utility, it looks like an additional load, even though it can be offsetting."
More than likely, EVgo will look to add storage to new stations rather than existing charging locations.
3.5 use cases
"There are three and a half different ways we think about using storage with EV stations," O'Day said.
As the pilot has shown, peak shaving can be used to reduce demand charges. It can also be used when the station is under a time-of-use rate, allowing it to optimize its storage discharge to be most economical. And third, EVgo is also considering "tariff shifting."
Under some structures, the charging station might be on a variable rate until it exceeds 75 kW (for example), when it would then incur demand charges. "The battery can shave to ensure you don't exceed the peak, so you always stay on a variable rate," said O'Day.
The "half" business case is the ancillary service markets, which are not well developed around the country "and certainly not in California," O'Day said. EVgo participated in the first commercial transaction for frequency reserve in the country, but that was in the PJM marketplace, he said.
"We're not sure how much value there will be, and to the extent those markets do develop there's probably much bigger resources out there than us," he said. "We'll be a price-taker."
Demand response is a "tough one," said O'Day. "We're not going to turn off our stations for demand response because people need to charge their car when they have to charge their car."
If batteries were added to a residential or workplace charging station, however, where cars sit for longer and charge at a slower rate, demand response could function more effectively.
"When I look at demand response pricing and considered putting batteries in for that reason, it doesn't pay for itself at all ... but it is additional value you could add on" to a station where you've already deployed storage, O'Day said.
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