Electrify America Navigates Patchwork of Rates, Regulations
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If Jigar Shah doesn’t do his job correctly, the company with the second-highest number of fast-charging electric vehicle plugs could lose money or EV owners could have to pay more to fill up.
As director of energy services at Electrify America, Shah is in charge of navigating a wide range of rates charged by more than 200 electric utilities in areas where the company has stations.
Electrify America, a subsidiary of Volkswagen formed as part of the settlement for its diesel emissions cheating scandal, has more than 3,600 fast-charging plugs in the U.S. and Canada. It’s second only to Tesla with more than 22,000 ports.
Shah talked about the cost of charging and regulations that vary by state and local government. His comments are edited for length and clarity.
Q: Fast-charging stations often need line extensions, transformers and other things because they use a lot of electricity. How do you work all of this out?
A: We have relationships with utilities to go through the line-extension process. We make capacity requests to say we’re putting in four chargers with approximately a megawatt worth of demand, and how long is it going to be and how much would it cost. So there’s definitely this matching game that happens between assessing how difficult from a timing and cost perspective it is to get utility infrastructure in that area versus pivoting to another location that may be more grid-friendly or already has infrastructure nearby that may be more cost-effective. I’m responsible for everything after the point that the site is live and managing all our energy costs.
Q: You have to worry about fluctuating rates, including costs that rise with higher demand?
A: One of the key variables is something called a utility demand charge. This is very different from what you’re used to in your home electricity bill. You typically just pay for kilowatt hours, plus a few fixed charges. In the commercial world, usually utilities have a demand charge, which is based on peak kilowatts drawn in usually a 15- or 30-minute period in a given month or sometimes a year. If I have four vehicles charging at once for 15 minutes and a station shut down for the rest of the year, my costs from that one 15-minute amount may be above a quarter-million dollars. Four vehicles, when they draw that amount of power at once, that could be approximately a megawatt of demand. So you get billed based on that spike and that’s carried through the rest of the year. We take that risk as a company to provide fast-charging availability that’s crucial to EV adoption, because when you’re pulling up in a vehicle on a highway route, you’re not thinking about all those variables. You want that fast charge as quickly as your vehicle can accept it.
Q: Do you try to negotiate better rates?
A: Many of those quarter-million-dollar examples, for example, are now zero because of testifying in front of public utility commissions to have rate reform to support direct current fast charging. We also use behind-the-meter energy storage to bridge that gap. We have over 160 deployed, so 35 megawatts worth. Think about a different rate for that one megawatt peak that I was describing. Instead of all that coming from the utility at once, most of that will come from the storage system next to our chargers. Once those vehicles leave, the storage system will charge back up again.
Q: Can you say what your monthly electric bill is?
A: It’s fair to say it’s in the millions.
Q: How does this affect what EV owners pay per charge?
A: We’ve recently announced that we’re going to site-specific pricing. There are a lot of utility areas where some of those rates weren’t designed to support this type of fast charging. There isn’t the state backing the mission to support EV adoption. Some of those rates are problematic even with the storage systems. So we are increasing pricing in certain areas to accommodate what our actual economics are, and in other cases we’re reducing prices substantially to accommodate that policy movement.
Q: What’s the cost per kilowatt hour now?
A: It’s around 41, 42 cents per kilowatt in kilowatt hour in some states. In certain states, there’s a price per minute, and that’s 30 cents per minute.
Q: So I don’t know how much this is going to cost me when I roll up to one of these?
A: It’s on the Electrify America mobile app. That pricing will always be transparent to the customer, especially before they start charging, so that there’s never a case where there’s a surprise bill. We recommend that when we’ve made the change to site pricing, that people look at the app to see what it is in advance.
Q: Does putting lithium-ion battery storage units on your sites slow your expansion?
A: Any time we’re making an investment in energy storage, that is an investment that could have gone to more fast-charging deployment. One thing to keep in mind is 70% to 80% of charging still occurs at home. And so folks are using our DC fast-charging network primarily for long distances. It’s important to keep in mind in terms of the price premium compared to charging at home and the service and experience that we provide.
Q: Automakers will cite going from 10% charge to 80% in a certain amount of time. Any idea how much it costs to recharge my battery to get it that 80%?
A: It varies highly by vehicle, but it’s around $20 or so to get that kind of a jump.
Q: Do you have solar generation that can kind of offset some of this?
A: We do have solar canopies on certain locations, combined with energy storage. We entered into a financial arrangement to build a 75-megawatt solar plant. That plant is producing at an annual rate of 225,000 megawatt hours that will be sent back into the grid.
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