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Fast Charging, High Costs: Eliminating Demand Charges Won’t Solve the Problem

August 2, 2023

Fast Charging, High Costs: Eliminating Demand Charges Won’t Solve the Problem

Utility Dive – High electricity costs and an antiquated electric grid are slowing the national transition to electric vehicles. A frequently proposed approach to overcome this challenge — eliminating demand charges for EV charging — will ultimately slow the long-term transition to EVs, cause unnecessary strain on the grid and distribute costs to all ratepayers.

According to the federal government’s Joint Office of Energy and Transportation, 182,000 publicly-accessible fast charging stations are needed by 2030 to support EV adoption and meet the demand for charging. Fast charging stations, also known as direct-current fast chargers, or DCFC, have the unique ability to charge an EV in less than 20 minutes. This technology is imperative to successfully electrify the transportation sector because it reduces EV driver range anxiety and promotes equitable adoption of EVs for those that do not have access to charging at home or work.

However, an EV charging station requires a massive amount of power, similar to what’s required for a small factory or big box store. The California Public Utilities Commission estimates that California alone will have to spend $50 billion by 2035 in distribution grid upgrades to meet its ambitious electrification goals. Chargers ranging from 150 kW to 350 kW are now becoming the norm at public charging stations, and under the National Electric Vehicle Infrastructure Program, sites must provide a minimum of 600 kW of power output to charge four EVs simultaneously. As such, fast charging stations can incur very high energy costs, namely in the form of demand charges. These high energy costs threaten the economic viability of fast charging stations.

Download FreeWire’s white paper, Utility Rate Design: Sustainable Solutions for Managing EV Charging Costs and Grid Modernization.

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