Connecting the dots between electric vehicles (EV) and energy storage solutions (ESS) is easier than you might think. With Tesla selling more and more cars and Amazon’s order of 100,000 electric vehicles hitting the road soon, all these new EVs entering the market will require charging stations across the grid, from dense urban cores to weak-grid locations in rural areas and along remote highways. These new charging stations will, of course, connect to the grid and will require an ever increasing amount of power to the point of potential overloading of the local system. Historically, utilities have solved the problem of needing more power by building more transformers and bigger substations. By adding ESS to projects, utilities can generate renewable power during the day when demand is low, store that power in batteries, and then release that stored energy at peak EV charging hours such as commute hours when electricity is expensive to produce and buy.
To understand the challenges and opportunities of modernizing the grid to meet the future demand of EV charging, we spoke with Stem VP of Market Development, Tad Glauthier to learn more about EV policies and what it means for the future of eMobility. Tad is one of the founders of Stem and is responsible for defining the company’s commercial product vision. He also oversees the utility sector development of the business and is considered a respected thought-leader in the industry.
What Federal EV policies are at play today?
The federal government has $16 billion aimed at EV charging. On November 15, 2021, the Infrastructure Investment and Jobs Act was signed into law, including EV infrastructure investments valued at $7.5 billion. This money will go to charging and fueling infrastructure grants and a national electric vehicle formula program.
The Build Back Better (BBB) Act, as part of the Reconciliation package, includes a $9 billion EV infrastructure package focused on installing home and business chargers, helping underserved and disadvantaged communities, and it also includes various rebates. The funding and rebates are geared to spur the growth of building EV charging infrastructure along highly-dense corridors, into rural areas, and into low-income neighborhoods. Additional federal funding will support driving down technology costs through R&D, which in turn will decrease energy storage installation costs. (Click here for a quick recap on how BBB can impact the industry.) Importantly, BBB also includes a Federal Storage Investment Tax Credit (ITC), which will support the deployment of energy storage across the nation in the same way that the ITC has done for solar for the past decade.
How do current policies benefit energy storage solutions and EV adoption?
There’s both a direct link and an indirect link as to how current policies are influencing the deployment of ESS. Directly, there are policies that provide tax credits at both the federal- and state-levels that involve installing batteries and energy storage solutions. Indirectly, these federal policies and tax credits are spurring on EV adoption, which will increase the density of charging loads, especially where fleets of passenger vehicles need to charge simultaneously, or where multiple medium- and heavy-duty trucks all need to charge at the same depot at the same time. This increase in demand on the grid is going to happen very, very quickly.
Utilities know upgrades to the grid are required to support the predicted increase in peak charging demands. Adding a battery strategy to their options for grid upgrades is a wise decision. Batteries will mitigate grid upgrade costs, they can be partially paid for through various state programs as well as federal tax credits, and an ESS will also enable increased renewable energy usage by allowing a utility to store renewable energy during periods of low demand and then quickly release that energy during peak charging hours to keep both passenger and EV truck drivers fully charged while avoiding outages.
What role can utilities play in developing EV charging infrastructure and policy?
California and New York utilities are leading the way when it comes to installing EV charging stations through Make Ready-style policies. In New York, the goal of ConEd’s Electric Vehicle Make-Ready Program is to support the development of electric infrastructure and equipment necessary to accommodate an increased deployment of EVs by reducing the upfront costs of building charging stations. Through this program, entities can earn incentives that will offset a large portion of, or in some cases, all of the infrastructure costs associated with preparing a site for EV charger installation.
In July 2021, Southern California Edison (SCE) announced a $436 million Charge-Ready program with a goal of installing 38,000 new electric car chargers over the next five years, the largest initiative of its kind by any investor-owned utility. The program focuses on installing EV chargers at multifamily apartment and condo buildings with at least 2,500 EV charging stations in underprivileged neighborhoods. SCE will provide a “turn-key” program that picks up most, if not all, of the costs.
And, most recently on Monday, November 15, 2021, the California Energy Commission (CEC) approved a $1.4 billion plan to push the state closer to its EV charging and hydrogen refueling goals. When combined with SCE’s Charge-Ready program, the CEC’s plan will help enable the deployment of 250,000 chargers needed to support the goal of 1.5 million zero-emission vehicles on California roads by 2025.
California does require utilities to consider a battery in cases where the grid needs to be upgraded. The policy is called the Distribution Investment Deferral Framework (DIDF)—but it remains to be seen whether this framework will be overlaid with the Make Ready programs for EV infrastructure. In our view, it should.
How do Demand Charge Holidays slow ESS installation?
For small- to medium-businesses (SMB), such as convenience stores, installing an EV charger can at first appear daunting. Say, for example, a small business owner installs six chargers and customers happen to use all six at once, even just for an overlapping period of 15 minutes, during peak demand hours. The end result could be an electric bill with 3-6x higher demand charges than that convenience store had previously seen. To offset this legitimate concern, California utilities have a policy that allows for a demand charge holiday, where the customer is not charged for the first five years of EV charging. While this is good in the short-term for the SMB owner, what they don’t immediately realize is that an ESS will save them even more in the long run.
In the near-term, an ESS can save them money because their EV tariff includes Time of Use rates that a battery can help manage. And eventually, the demand charge holiday will expire and that’s when SMB owners may get a shock when they open their electricity bill, and realize that a storage solution can save them money by managing all this EV load. Savvy customers will install the batteries now during the initial construction phase to take advantage of credits like the federal storage ITC, and be able to design their charging station with storage in mind from the outset. In California there is also the Self-Generation Investment Program (SGIP), and more programs like it should be popping up across the country soon to provide credits and rebates when installing an ESS.
How can Stem help evolve EV Charging Infrastructures?
Supporting the electrification of transportation means recognizing the need to charge EVs when the drivers want them charged, and having both the power as well as the clean energy resources to supply that charging. The future winners of EV charging will understand the economic, social, and performance benefits that batteries can bring to meet these needs. Stem’s Athena® AI software is uniquely suited to address the intersection between EV charging and storage. Not only is Athena aware of energy and peak power costs, Athena is also aware of the greenhouse gas content of various sources of energy and can optimize fleet charging to advance corporate environmental justice and sustainability (ESG) goals. Stem’s Commercial EV Charging and eMobility offering makes it easy for commercial and industrial customers to electrify their fleets now and leverage Athena to optimize the economics over time.
This year, Stem announced an EV fleet charging pilot with Penske Truck Leasing. Now that California regulations require heavy-duty truck fleets to start transitioning to zero-emissions EVs in 2024, Penske had to rethink logistics around fleet charging and management and develop an appropriate investment strategy. To maximize project revenues, Stem’s Athena first modeled battery performance and charging behavior under a range of potential tariffs. Now Athena optimizes EV charging while providing a real-time window into system operations for Penske. Since starting the pilot, smart energy storage has driven a 40% decrease in Penske’s site peak energy consumption. Athena also ensures the project reduces GHG emissions in accordance with California’s SGIP. Perhaps most importantly, the project is informing Penske’s long-term fleetwide EV charging strategy.
Resilience will always be a hot topic while grid failure is a recurring reality and communities are forced to go without power. The benefits of including batteries in an EV charging station design are clear: without batteries that station will be down when the grid goes down. But adding batteries, especially when paired with a generation source like solar or a fuel cell, make that charging station far more resilient. EV charging enhanced by renewables and storage becomes the most resilient answer to safeguard EV charging and to keep America’s fleets on the road and commerce flowing.
Join us at the Energy Storage Association’s Annual Conference & Expo in Phoenix, AZ on December 2, 2021 at 10:30 AM MST where you can hear Mr. Glauthier on the Where the Rubber Meets the Grid: EVs as Energy Storage panel discussing Charging Infrastructures.