Automobile manufacturers’ ongoing announcements about plans toproduce more electric vehicles suggests private industry is reacting to the push for clean-energy transportation. Volkswagen, Honda and Porsche each announced plans for EV expansion last week.
What’s leading them to shift gears on EV often are federal government incentives and state regulations and proposals supporting EVs to reduce fossil-fuel emissions and lower the carbon footprint from transportation. The Biden administration’s goal is a “nationwide network of 500,000 EV chargers by 2030 that ensures a convenient, affordable, reliable, and equitable charging experience for all users,” according to the U.S. Department of Transportation.
But government support of the public sector, including utilities, in the EV charging space also threatens to compete with existing fueling competitors like convenience stores.
The Inflation Reduction Act, the Bipartisan Infrastructure Law and government grant programs such as the National Electric Vehicle Infrastructure (NEVI) Formula Program and the Charging and Fueling Infrastructure (CFI) Discretionary Grant Program are nudging forward the EV movement.
The NEVI Formula Program provides $5 billion in public funds to states to cover up to 80% of the cost of non-proprietary EV charging stations to build a national network along Federal Highway Administration “Alternative Fuel Corridors” or other locations accessible to the public.
The NEVI funds “are optimal if they are used wisely to jumpstart private investment in the nascent EV charging marketplace,” said Morten Jensen, vice president of operations at Circle K–Grand Canyon. But he suggested it’s too soon to tell whether the incentives will be money well spent or wasted on innovation consumers won’t support.
- Alimentation Couche-Tard is No. 2 on CSP’s 2023 Top 40 update to the 2022 Top 202 ranking of convenience store chains by store count. Watch for the full 2023 Top 202 in June.
CSP Daily News asked Jensen what opportunities and challenges convenience stores face as government programs encourage EVs.
CSP: Will the government funds be sufficient?
Jensen: Public money cannot build all of the infrastructure we need to charge vehicles. The best use of public money is to bring the private sector to the table so it can invest. If the money is spent with that in mind, it can be very effective. But if it’s used to create government- and utility-run chargers in unattractive places without the amenities that drivers expect, the money will be wasted on equipment that people won’t use.
The NEVI Formula Program Guidance gets it right when it says, “The purpose of public funding is not to discourage private investment, but instead to catalyze additional private investment and supplement and fill gaps to provide a convenient, reliable, affordable, and equitable national EV charging network.”
CSP: What would you like to see happen at the federal government level, if anything, to pave the way for EV charging at more Circle K locations?
Jensen: For retailers like us to expand our EV charging operations, three essential policy reforms need to take place:
- Entities selling electricity should not be regulated as a public utility. This policy, which pre-dates EVs, has been updated in most states, but in a handful of states commercial entities cannot sell electricity for EV charging without being regulated by the state’s regulatory body. The practical result is the private sector just can’t sell electricity to drivers.
- The regulatory bodies that oversee power companies need to establish a standard rate for the sale of electricity used in EV charging. Right now, businesses that offer EV charging incur significant demand charges—a fee based on the maximum amount of electricity pulled at one point during the billing cycle. Because EV charging uses a significant amount of electricity all at once, these fees can make a business’s power bill double or triple. This means retailers lose money when someone charges an EV at their locations. That needs to change.
- Government sanctioned monopolies should not be allowed to use their monopoly status to drive out potential competition in EV charging. Right now, power companies all over the country are using ratepayer funds to build, own and operate utility-owned EV charging stations. No private business can compete against a monopoly with such massive competitive advantages. If we want a thriving and competitive EV charging marketplace, power companies should not be allowed to do this.
These policies typically are decided at the state level, but the federal government could make decisions so every state moves in the right direction.
CSP: What’s been the primary stumbling block to date?
Jensen: The primary stumbling block so far has been the involvement of power companies.
Circle K has stores in 47 states. In some of these states, power companies have been very active in trying to take control of the marketplace. This includes increasing electricity rates for all customers (regardless of whether they own an EV) to subsidize the cost of utility-owned-and-operated charging stations or hitting the operators of EV chargers with unsustainable demand charges.
Even where the power company has not taken any steps to corner the market on EV charging, very few states have laws that prohibit utilities from doing so. The uncertainty in the marketplace this creates is a major deterrent to any private investment. Businesses need some level of certainty in order to invest. If fuel retailers know the power company could install a ratepayer-funded charging station across the street, they are less likely to risk their own money to get into this marketplace.
CSP: Is the market ready for EV chargers at convenience stores and are consumers prepared to pay for it or is the government pushing this too much at this point?
Jensen: Drivers want to come to convenience-store locations to fuel their vehicles with electricity or traditional motor fuel. We have the amenities they have come to expect, including good food, beverages, restrooms and more. If we remove barriers from the market, this will work well and consumers will be able to drive whatever vehicle they like and get the service they want for it. If government policy tries to mandate or force what consumers do or want, it will backfire.
CSP: How would the addition of EV chargers at Circle K locations affect your overall energy/fuel offerings?
Jensen: We are always looking for additional goods and services our customers want. Adding EV chargers to our lineup of offers will help expand the appeal of our locations to more customers – as long as government policy doesn’t get in the way.
CSP: Would you have to eliminate some valuable fueling space now in demand for gas-powered vehicles or where would the EV chargers go?
Jensen: Space questions need to be evaluated on a site-by-site basis. There are plenty of convenient locations with the space to create this new offer.