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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