Recent research published by McKinsey reveals that Public Charging is 3 to 4 times more expensive than that of Home Charging. During October 2022, when household electricity prices were relatively high at 2.28kr per kWh, the same kWh cost between 8 and 8.5kr.
But could there be more to this problem of Public Charging than just extortionate prices? And how could these profits be redirected in a way that increases EV adoption?
Spare A Thought For Those Who Cannot Charge At Home
With prices so low for home charging in Summer 2023, as little as 0.33kr per kWh in Oslo, it seems almost incomprehensible that public charging, on the same network that McKinsey used in their comparison (Recharge), the price per kWh is now 7,49kr. More depending on whether you use the app, RFID or other payment methods. Charging at a slower speed of 22kW is slightly easier on your wallet, at 5.99kr. Even taking the lowest price as a benchmark, a driver will pay 18 times as much as they would to charge up at home; 599kr vs 33kr for 100kWh battery.
McKinsey also projected for Norway the split of profits and usage of different charging methods. According to them, Public Charging (‘On-the-Go’) will comprise 21% of the power consumption of all charging, but rake in 45% of profits. Destination charging will make a more modest 28% of total profits whilst demanding roughly the same amount of TWh. Home Charging will consume the largest demand for power at 25% of all power, but take only 12% of profits.Assuming that both ‘On-the-Go’ and Destination charging could be considered Public Charging, 73% of all profits in the future will be taken by only 40% of the electricity sold.
In Defense Of Public Charging Companies: They Don’t Have it so Good
At first glance, it may seem that the reason Public Charging will be so profitable in the future is because they still charge a gargantuan markup on the price of electricity, refusing to pass on the reduced wholesale cost to consumers.
There is, however, a good reason behind this. Charging stations, particularly those with rapid, ultra-rapid and high total kW outputs are painfully expensive to build and run. With high electricity prices in recent times and new fees based on peak usage, many of these sites are likely to have lost heavily in 2022.
The price of installation of a single charging point becomes exponentially expensive the faster the kW rate. For example, a standard fast charger for home costs roughly 10-15,000kr including installation, for a speed of up to 7kW. For a DC Rapid Charger delivering 150kW that soars to upwards of 500,000kr, excluding grid upgrades, parking construction and specialist high voltage engineers. To look at it another way, 2,200kr per kWh for Home Charging vs 3,333kr per kWh for Public Charging. It is easy to see why Public Charging networks might be hesitant to lower prices any time soon.
Accelerating Towards What, Exactly?
Aside from the higher cost per kWh, the experience for drivers is quickly proving to be less than popular. If Public Charging networks wish to make a return on their investment in rapid and ultra-rapid EV charging, they will need to consider the experience they provide and, at least for now, drivers are less than satisfied.
Multiple headlines of confusion over memberships, apps and methods of payment are a headache for drivers. There are even apps that aggregate other charging networks’ apps. All of which requires a fee, which in turn raises the cost per kWh.
The benefit of Public Charging, at least for rapid charging and faster, is that whilst cost is higher speed is better. However, increased charging speeds are not necessarily the improvement drivers want to make owning an EV more palatable..
Of the relatively few vehicles which can charge at speeds of 250kW and faster, this still falls far short of the 5 minute refueling experience for petrol and diesel vehicles. The degradation of batteries from high speed charging varies and manufacturers generally speaking admit they do not know the full effect of frequent rapid charging until more data becomes available in years to come. But the real pain for drivers is that despite the increased cost, a modest 50kWh battery will still take 12 minutes to fully charge, that is, providing all the 250kW can be delivered consistently from the grid.
This puts drivers in an uncomfortable ‘twilight-zone’; twice as long as combustion engines to refuel yet not long enough to leave and do anything else with their time.
There may be time to get an expensive coffee. But missing the end of your session even by a minute will damage the profits of the rapid charger operators just as much as it will make you deeply unpopular with those in line behind you who are kept waiting.
Nobody Wants to Eat Dinner at 2am
The increased speed of delivery and increased cost per kWh means that downtime is significantly more costly. For these high capacity chargers, the minute that it takes for the driver to unplug the EV and leave the spot and the next driver to move in, using the Recharge network as an example, that’s 33.29kr (4.1kWh) lost in ‘downtime’. A 7kW charger, even at 7.99kr per kWh would need over 30 minutes unused to achieve the same opportunity cost. And its not just the lost time to change overs and delays as people return from the bathroom. Research shows that most refueling of vehicles is done within a 14 hour window; how much would be lost when these kinds of chargers lie vacant at 2am?
To use an analogy; imagine a scenario where 50%, that is the estimated number of people who rely on Public Charging, cannot cook a meal at home. Restaurants (Public Charging) exist to serve these people. The food is identical to that at home, in both quality and quantity. But the difference is in both the significantly higher prices and the fact that your food is delivered to your table in a matter of minutes, whereas those who can cook at home (Home Charging) must put their food in the oven for several hours.
There is another downside; mealtimes are incredibly busy. The food may arrive in minutes, but you must wait in line at meal times; usually an hour. It might be fast service, but this doesn’t include your queueing time.
There’s no time to sit and chat as you eat either. There are dozens of people standing in line waiting for your table and they are all hungry, bored and frustrated. To make sure that no table sits empty, as to do so would result in a loss, there has to be a constant flow of patrons. More tables could be brought in, more chefs hired and even other restaurants built, the only problem being that these will sit empty and run at a loss outside of mealtimes.
You can of course come when it is quieter, but these are outside mealtimes, and nobody wants to eat dinner at 2am.
Similarly, this is the problem with fast charging speeds; high prices to pay for the infrastructure, long wait times when it is busy but unsociable hours when it is quiet and the exact same electricity that you could get elsewhere for far cheaper.
Rapid Charge EV Adoption, Not Public Charging
Additionally, for those with the ability to charge at home, it is arguable that this “waiting time” is actually nil, due to the fact the car charges when it is parked and not in use. This seems to be a more desirable and less disruptive solution for EV drivers, but many still have no access to off-street Home Charging.
The charging network requires some rapid and ultra-rapid charging. But with such high costs and comparatively low satisfaction to that of Home Charging, solutions that focus more on increasing the mere 12% share of profits for Home Charging could be more beneficial for the future of the EV.
Towards the end of 2022, there were roughly 500,000 EVs on Norway’s roads and 22,000 public chargers, giving a ratio of nearly 23 cars to every charger. To reach the EU’s target of 1 charger to every 7 EVs, almost 50,000 chargers will need to be installed by the end of 2024. That is of course, excluding the newly registered EVs in 2023 and 2024 which, judging by the 150,000 added in 2022, would bring the total number of EVs to 800,000 and push the requirement for additional Public Chargers close to 100,000.
This adds even more weight to the argument that opening up Home Charging for those who have extra to sell (and research shows that only 2 of every 7 days in the week are used by most drivers), rather than expanding expensive Public Charging would in turn increase EV adoption.
Whilst there may be a profit to be had by ‘On-the-Go’ and public charging networks, the projected profits shifting to Home Charging could be just one of many ways that the EV experience can be improved.