Friday, April 14, 2017

Emerging Issues for Electric Vehicles: Road Use Taxes and High-Demand Charges for Fast-Charging During Peak-Usage Times



Emerging Issues for Electric Vehicles: Road Use Taxes and High-Demand Charges for Fast-Charging During Peak-Usage Times

In one of my previous posts I wondered about lost taxes from liquid fuels when there is a bigger trend toward EV adoption. Well, one proposed solution is now happening: the leveling of annual road tax fees for EV owners. The DeSmog Blog article notes that ten states have adopted road use taxes for EVs, typically around $150 annually. Proponents of the taxes say it is fair since EV owners have not been paying their fair share for road use and maintenance. However, others note that since EVs are lighter vehicles they cause less road damage and their lack of tail pipe emissions contributes to a public good – reduction of pollution – that has a social value that should be taken into account. The article also notes that state incentives for EVs have been dropping, with the help of lobbying from Koch and Exxon-Mobil funded groups like Americans for Prosperity. AFP was active in opposing the very high $6000 tax credit for EVs in Colorado. ALEC was active in opposing the $5000 credit in Georgia that was rolled back and in imposing a $200 road use fee there. This resulted in a massive drop in EV sales in Georgia. Monthly sales of the Nissan Leaf went from 9152 in 2014 to just 300 in 2016. Currently, only sixteen states maintain incentives for EVs in the form of tax credits and rebates. This is in addition to the federal incentives. Earlier in this decade up to half of states offered such incentives. Those who oppose the large state incentives once provided by Colorado and Georgia also complained that they gave plug-in EVs an unfair advantage over other low emissions and clean-energy vehicle formats such as electric battery-hybrids, NGVs, NGV hybrids, and plug-in hybrids. In terms of life-cycle emissions of EVs it depends where one purchases the electricity. If it is from states that get a lot of power from coal like Kentucky then emissions are much higher – so one could make the argument that state EV tax incentives there would actually be subsidizing coal! Opponents of the EV road use taxes say that there are so few EVs that the income they generate is miniscule compared to increasing the gasoline tax by 1 cent. I must admit I did not see these type of taxes coming so soon – at least not until EVs came down in cost enough to the point they were actually economically competitive with conventional vehicles with only the federal subsidies and they gained a more widespread adoption. Clearly, like many renewable energy technologies, EVs are currently quite dependent on those direct subsidies. As such, they are affordable only to those with disposable income – those who can pay the extra $7500 and wait for their tax credit. There are other future tax issues as well. Will EV charging stations pay fees to rent space and to the cities and towns where they are located? Will they pay high demand time electricity charges like big businesses and factories do?

The high-demand/peak-usage-time charges are happening now. Green Tech Media reports that a recent study by the Rocky Mountain Institute of charging fees charged by utilities to the largest public EV fast-charging station company owner EVgo shows that this is the case. These fast-charging stations include the ones being developed by malls and shopping centers. The costs are apparently so high that the charging companies do not think they have a viable business case. The high-demand charges are quite variable and depend on where and when they are used. The report noted one extreme example where one charger had a monthly bill that was $1938, of which $1362 was demand charges. Some states and utilities are aiming to waive these demand charges to some extent. Others think that EV charging infrastructure should ideally be owned by utilities and any demand charges applied directly to the users’ electric bills. Others note that some chargers bill by time rather than by kWh and can be higher in cost than gasoline. Others say low-demand-time night charging at places like apartment complexes should be emphasized over fast-charging. Due to the currently typical low mileage driving range of EVs there is a need for availability of fast-charging stations or else some areas are simply off-limits as too far from fast-charging infrastructure. 

Integration of EVs onto the grid, providing for road maintenance fees, and other issues will likely increase in the future as EV use increases. Vehicle-to-grid (V2G) protocols have yet to be developed as hoped. In these scenarios EVs can be used as temporary storage to be drawn upon at high demand times. There is much to be worked out in such scenarios. In those cases, EV owners can sell electricity to the grid at high cost and charge up for driving at low cost. It is not clear how availability commitments of EVs as storage will be structured. Many seem to think that the 2030’s will be the big decade for widespread EV development and usage, with longer driving ranges expected, more widespread fast-charging, rate structures agreed upon, road taxes and fees ,and protocols for demand-times.  

References:

States Ramp Up Attacks on Incentives for Electric Vehicles – by Ben Jervey, in DeSmog Blog, March 13, 2017


Report: Public Electric-Car Chargers Are Being Crushed By Demand Charges – by Katie Fehrenbacher, in Green Tech Media, April 6, 2017


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