Demand Charge Mitigation Strategies for Public EV Chargers
Executive Summary
Introduction
Electric utility demand charges can significantly impact the business model of electric vehicle (EV) charging stations, especially those employing direct-current fast charger (DCFC) technology. Demand charges are fees based on the highest level of electricity demand during a specified billing period and are designed to recover costs related to peak power demand.
Key Challenges
Public-access DCFC stations often have high peak demands relative to their total energy consumption, leading to high operating costs and making it difficult for charging station hosts to operate profitably.
Mitigation Strategies
Utilities, solution providers, and charging station hosts are exploring various strategies to mitigate these costs. These include:
- Pricing Discounts: Offering discounts during off-peak demand periods.
- Battery Energy Storage Systems (BESS): Using BESS to store electricity for peak-demand periods.
- Demand Response (DR) Programs: Enrolling in DR programs to manage peak demand and reduce energy expenses.
- Special Rate Tariffs: Creating special rate tariffs or "holiday" periods that reduce or remove demand charges.
Stakeholder Impacts
The study evaluates the potential effects of different mitigation strategies on various stakeholders:
- Electric Utilities:
- Reduce or Eliminate Demand Charges: Can attract more station development but may lose revenue in the short term.
- Cap Energy Costs: Limits revenue loss but may still pass costs to ratepayers.
- Station Hosts:
- Eliminate Demand Charges: Reduces energy costs and improves margins.
- Cap Energy Costs: Makes energy costs more predictable but may still pass costs to ratepayers.
- EV Drivers:
- Lower or Eliminated Demand Charges: Encourages investments in EV charging infrastructure, potentially leading to lower energy costs in the long term.
Table ES-1: Qualitative Summary of Net Cost or Benefit of Each Mitigation Strategy by Stakeholder Group
| Mitigation Strategy | Electric Utilities | Station Operators | EV Drivers |
|----------------------------|--------------------|------------------|------------|
| Eliminate Demand Charges | - | + | + |
| Cap Energy Costs | - | + | o |
| Co-locate BESS | o | + | o |
| Manage Charging | o | o | - |
Conclusion
Different strategies impact stakeholders differently. While no single strategy is universally preferred, the study aims to provide insights into the potential benefits and costs to various stakeholders as the EV market evolves.
