Public charging infrastructure for plug-in electric vehicles: What is it worth?

Highlights

• Public charging has value to users and can support PEV adoption.

• For PHEV, public charging displaces gasoline use.

• For BEV, public charging enables additional driving.

• Estimate functions of willingness to pay for public charging infrastructure.

• Existing charging infrastructure in CA is worth thousands of dollars per user.

Abstract

Lack of charging infrastructure is an important barrier to the growth of the plug-in electric vehicle (PEV) market. Public charging infrastructure has tangible and intangible value, such as reducing range anxiety or building confidence in the future of the PEV market. Quantifying the value of public charging infrastructure can inform analysis of investment decisions and can help predict the impact of charging infrastructure on future PEV sales. Estimates of willingness to pay (WTP) based on stated preference surveys are limited by consumers’ lack of familiarity with PEVs. As an alternative, we focus on quantifying the tangible value of public PEV chargers in terms of their ability to displace gasoline use for PHEVs and to enable additional electric (e−) vehicle miles for BEVs, thereby mitigating the limitations of shorter range and longer recharging time. Simulation studies provide data that can be used to quantify e-miles enabled by public chargers and the value of additional e-miles can be inferred from econometric estimates of WTP for increased vehicle range. Functions are synthesized that estimate the WTP for public charging infrastructure by plug-in hybrid and battery electric vehicles, conditional on vehicle range, annual vehicle travel, pre-existing charging infrastructure, energy prices, vehicle efficiency, and household income. A case study based on California’s public charging network in 2017 indicates that, to the purchaser of a new BEV with a 100-mile range and home recharging, existing public fast chargers are worth about $1500 for intraregional travel, and fast chargers along intercity routes are valued at over $6500.

Introduction

The adoption of alternative fuels and vehicles is hindered by the “chicken or egg” problem: consumers are reluctant to purchase alternative fuel vehicles (AFV) unless there is refueling infrastructure, but fuel suppliers are hesitant to build that infrastructure until enough alternative fuel vehicles are on the road to make it profitable (Sperling, 1988, McNutt and Rodgers, 2004, NRC, 2015, Gnann and Plötz, 2015, Melaina et al., 2017). In the early stages of market development alternative refueling infrastructure tends to be underutilized (e.g., EV Project, 2014, EV Project, 2015) and the development of sufficient demand can take decades (NRC, 2013, 2015). As a consequence, unless the private benefits of AFVs are compelling, public policy intervention is necessary to initiate markets for AFVs and related infrastructure and sustain them during the early phases of development (NRC, 2013). This is especially true when there are important public benefits, such as reduced greenhouse gas emissions, improved local air quality, and energy security.

Quantifying the value of public charging infrastructure to current and potential owners of plug-in electric vehicles (PEV) is essential to weighing its benefits and costs, and predicting its impact on future PEV sales.¹ In this paper, we focus on the value of the existence of public charging infrastructure to the consumer, apart from any charge for using it (Greene et al., 2019). In this sense, our estimates correspond to the economic concept of willingness to pay (WTP), as explained in section II. At this stage of the market, utilization rates of public charging are low, their business model is uncertain, public and private roles are not well defined, chargers are subsidized in many instances, and cost of charging varies widely geographically and temporally (e.g., Klass, 2018, Lee and Clark, 2018, Muratori et al., 2019). The cost of using public charging is obviously important but it is not included in our WTP estimates.

Estimating WTP via stated preference experiments can produce valuable insights but also has limitations. Given the novelty of PEVs, their small market shares, and motorists’ lack of familiarity with recharging a vehicle, it is difficult for respondents to provide valid answers to survey questions (Lee and Clark, 2018, p. 46). In this paper we develop an alternative framework for estimating the tangible value of public PEV recharging infrastructure that has its own limitations but may still provide useful insights. The method focuses on estimating the ability of public charging stations to enable additional electric miles (e-miles) of travel. Infrastructure also enhances the visibility of electric vehicles and creates confidence in their viability and permanence, which can also influence adoption (Bailey et al., 2015). Public chargers can potentially make it possible for those without home/workplace charging capabilities to own such a technology. However, such benefits are not included in this analysis.

Simulation analyses making use of geographically and temporally detailed vehicle travel data have quantified the ability of charging stations to enable additional e-miles. Econometric analyses of the value of infrastructure and especially the value of PEV range allow us to infer the value of enabled e-miles. By combining insights from existing simulation modeling and econometric analyses, we develop functions that estimate WTP for charging infrastructure by type of PEV, as a function of its electric range, drivers’ annual vehicle travel, pre-existing charging infrastructure, energy prices and efficiency, and household income.

The value of public charging infrastructure is defined in terms of WTP in Section 2. We distinguish between two types of PEVs and three types of infrastructure because they affect WTP in different ways. The tangible sources of value for plug-in hybrid electric vehicles (PHEVs) and all-electric or battery electric vehicles (BEVs) are described in section III, and the costs of access and charging time are considered. Our method of estimating WTP is presented in section IV along with supporting empirical evidence. Section V presents the functions relating WTP for public charging stations for PHEVs, and BEVs in intra- and inter-regional travel. Section VI presents a case study, estimating illustrative WTP for charging infrastructure, leveraging data representative of California’s PEV market and charging station availability.