New money and standards for EV charging stations
The $1.2 trillion infrastructure bill that President Biden signed into law in November includes an unprecedented federal investment in electric vehicle charging infrastructure.
The law authorizes $7.5 billion in federal spending on two new programs for such infrastructure.
The money will go to state and local governments, which are expected to contract, in turn, with private companies. The contracting structures may vary from state to state, but will create opportunities for project developers and equipment manufacturers.
The federal investment is supposed to serve as a down payment that will marshal additional state, local and private- sector capital behind a national EV charging network. Some industry sources estimate that the United States needs $50 billion to develop an EV charging network fully.
The first program is a $5 billion “national electric vehicle formula program” that will allocate funds to states using certain pre-determined formulas based on state plans for building out EV charging infrastructure in designated “alternative fuel corridors.”
The second program, the “grants for charging and fueling infrastructure program,” is a $2.5 billion discretionary grant program to be run through the US Department of Transportation. Grants will be awarded to state and local governments not only for EV charging infrastructure but also for hydrogen, propane and natural gas fueling infrastructure.
The law also imposes federal standards on EV charging stations that are paid for partly with federal funds.
Some states, such as California and New York, are already developing or supporting EV charging infrastructure networks. These states may be in a position to move more quickly to tap into the new federal spending. However, the promise of federal funding should help spur investment in EV charging infrastructure and development of strategic plans for state-wide EV charging station networks in other states.
EV Charging Formula Grants
The $5 billion under the first program will be distributed to states using pre-determined statutory formulas.
The money may be used to pay for acquisition, installation, operation and maintenance of EV charging infrastructure and data sharing. The federal share of the cost of projects funded under the program is 80%.
States may use money to contract with private companies, in which case the remaining 20% of the cost may come from the private sector.
States must submit plans to the US Department of Transportation describing how they will use the grant money. The plans will be made public together with a DOT assessment of how the plans will help build out a national EV charging network. Funded infrastructure must be in designated “alter- native fuel corridors” and must be available for use by the general public. The designation of alternative fuel corridors and other federal standards for EV charging infrastructure are discussed below.
DOT has until February 13, 2022 to issue program guidance.
The guidance will help states develop plans that are aligned with federal objectives for EV charging infrastructure, and will take into account, among other things, the distance between publicly available EV charging infrastructure, the proximity of existing travel centers, fuel retailers and small businesses to the EV charging infrastructure, and the availability of EV charging infrastructure in rural corridors and under-served or disadvantaged communities.
The guidance will also take into account connections of the EV charging infrastructure to the electric grid, vehicle to grid integration, alignment with electric distribution interconnection processes and plans for use of renewable energy and storage.
The government will be looking for ways to encourage private and public-private investments and proper operation and maintenance of the infrastructure and to avoid creating stranded assets. It will take into account existing programs and incentives and will be focused on meeting current and anticipated market demand.
Refueling Infrastructure Grants
The law authorizes $2.5 billion for a new discretionary grant program to deploy publicly accessible EV charging stations along designated alternative fuel corridors and in certain other locations.
The $2.5 billion can also be used for the deployment of hydro- gen, propane and natural gas fueling infrastructure along the same corridors.
The money will be awarded on a competitive basis, rather than by formula, unlike the $5 billion awarded to states under the national electric vehicle formula program.
The grants will be made to state and local governments and certain other non-federal public entities. Funds may only be used to contract with private companies for acquisition and installa- tion of publicly accessible charging or fueling infrastructure that is directly related to charging or fueling a motor vehicle.
Program funds may be used to help with operation and maintenance costs for the first five years after installation in cases where the charging or fueling stations are not expected to generate enough revenue to cover such costs.
For infrastructure that is forecasted to generate excess revenue once it is operational, the private company may be asked to enter into a revenue-sharing agreement with the state or local government that is the grant recipient. The state or local government may then use the shared revenue to fund other eligible projects.
The federal share of the cost of a project funded under the program is 80%, and the private company is required to pay the non-federal share.
The law directs DOT to have the $2.5 billion discretionary grant program open for business by November 15, 2022.
A number of important factors will need to be addressed in applications submitted by state and local governments, and public officials may look to private companies interested in partnering with them to provide some of this information for their applications.
Applicants will need to describe how the proposed investment considers public accessibility to the charging or fueling infrastructure, including with respect to the connector types, public information on real-time availability and payment methods that ensure secure, convenient, fair and equal access.
The state or local government’s collaborative engagement with stakeholders will be an important factor, including engagement to foster public-private or private investment in EV charging or fueling infrastructure, to protect personal privacy and ensure cybersecurity, and to ensure that a properly trained workforce is available for such infrastructure.
The location of the EV charging or fueling infrastructure will be important as will availability of onsite amenities for vehicle operators, compliance with the Americans with Disabilities Act, height and fueling capacity requirements for facilities that charge or refuel tractor-trailer trucks and other large vehicles and geo- graphic distribution to avoid redundancy and fill network gaps.
Applicants will have to describe how the proposed deployment of charging or fueling stations will be affected by future advances in technology and operated and maintained to avoid stranded assets and protect the investment of public funds.
Applications will also have to include an estimate of how much greenhouse gas emissions will be reduced using the “Alternative Fuel Life-Cycle Environmental and Economic Transportation (AFLEET)” tool developed by the Argonne National Laboratory.
DOT will be interested in whether proposals will provide redundancy to meet excess demand and reduce congestion in high-traffic locations. It will also be interested in proximity to intermodal transfer stations for shipping freight.
Half the funds awarded each year are reserved for “community grants” that target projects in rural areas, low- and moderate- income neighborhoods and communities with a low ratio of private parking spaces to households or a high ratio of multi-unit dwellings to single-family homes.
Individual community grants may not exceed $15 million and can be used for infrastructure located on public roads or in other publicly accessible locations, such as parking garages or lots in public buildings, schools and parks or in private parking garages that are publicly accessible.
Federal Standards for EV Charging
The infrastructure law imposes two standards that all EV charg- ing infrastructure installed using funds provided under the federal programs must meet.
The first standard is that the infrastructure must provide non-proprietary charging connectors that meet applicable industry safety standards. There are different types of connec- tion interfaces, or plugs, that run on direct current electricity. Three plugs are in widespread use today: combined charging system (CCS), CHAdeMO and Tesla. To access public funds, it appears that the CCS and CHAdeMO connectors would have to be installed at the site, given that Tesla’s plug is proprietary and can only be used by Tesla vehicles.
Unlike refueling of internal combustion vehicles, which takes place at gas stations, today most EV charging takes place at home, but the goal of the federal EV programs is to increase the number of public chargers. Since the chargers will be available to the general public, they should be accessible by as large a swath of EV users as possible rather than limited to users of one make of vehicle. In addition, the requirement for non- proprietary chargers could boost competition in the market- place for chargers.
The second standard is that the charging infrastructure must use payment methods that are available to all members of the public and are not limited by membership to a particular payment provider.
EV charging service providers use different business models. Some of them lock in subscribers to use chargers within a closed network and do not allow payment by debit or credit card, but rather require subscription to a service where the user pays a monthly fee or has a specific account associated with charging. Those sorts of arrangements would probably not meet the standard required for federal funding.
Alternative Fuel Corridor Designation
Another requirement is that any EV charging infrastructure installed with a grant under the $5 billion formula program must be located along a designated “alternative fuel corridor”.
An alternative fuel corridor is a section of the national highway system that can sustain long-distance travel for electric vehicles and other alternative fuel vehicles such as hydrogen, propane and natural gas.
The US Federal Highway Administration, an agency within the US Department of Transportation, designates national alternative fuel corridors based on nominations from state and local officials. The alternative fuel corridor program was created by statute in 2015. To date, the FHWA has designated EV corridors on approximately 59,000 miles of the national highway system in 48 states plus the District of Columbia. South Dakota and Mississippi are the only states lacking an EV corridor designation.
Leading States For EV Charging
A number of states offer tax credits, rebates and grants to lower the cost of EV charging stations.
California is considered to have some of the most favorable policies in the nation to facilitate electrification of the transportation sector. California Governor Gavin Newsom issued an executive order in September 2020 setting a goal of 100% of in-state sales of new passenger cars and trucks to be zero emission by 2035. Other states have adopted more modest EV sales rules that require automakers to sell more EVs in state. For example, Colorado requires at least 5% of each automaker’s new car sales in Colorado to be EVs by 2023.
The California electric vehicle infrastructure project — called CALeVIP — is a statewide initiative administered by the California Energy Commission that offers incentives for installing public EV charging stations. In some cases up to 75% of total project costs can be funded through grants and rebates under CaleVIP, depending on where the chargers are located. More funding is available for charging stations in rural counties and disadvan- taged communities. CALeVIP currently has $149 million in funding from the state and also receives funding from “partner” contributions.
The low-carbon fuel standard, or LCFS, program, which is administered by the California Air Resources Board, was amended in 2018 to allow LCFS credits to be awarded for in-state EV fueling stations. The program is supposed to reduce emissions in the transportation sector by promoting the use of low-carbon fuels like electricity. Owners and operators of EV charging stations can be awarded credits not just for EV charging activity but also for installing chargers, regardless of utilization.
LCFS credits are available for DC fast-charging infrastructure located in California and open to the public for charging. Charging equipment at the site must support at least two of the three fast charging connector types: CHAdeMO, CCS and Tesla. “Open to the public” means no obstructions or obstacles exist to prevent drivers from entering the premises, no access cards or personal identification (PIN) codes are required to access the chargers, and no formal or registered equipment training is required for individuals to use the chargers.
Clean fuel programs that incentivize the use of electricity and other low-carbon fuels have also recently been enacted in Oregon and Washington state. Credits can be earned under both the Oregon and Washington programs for installing EV charging stations.
New York legislators have also been mulling enactment of an LCFS program. However, LCFS bills that were introduced in the New York state legislature last year stalled in part due to opposition from environmental groups who argue the program allows polluters to purchase credits instead of switching to cleaner fuels. New York has several EV charging rebate programs that aim to lower the cost of publicly-accessible fast charging stations. The largest program, called the “New York make-ready program,” awards incentives that offset a large portion or, in some cases, all of the infrastructure costs associated with preparing a site for EV charger installation. It was established in July 2020 and is currently funded with $701 million and will run through 2025.
New York has a zero-emission vehicle goal of having 850,000 electric vehicles in use in the state by 2025.