Welcome to Carpool Chats, a podcast brought to you by the Fuels Institute.
John Eichberger (00:07):
Hey everybody, welcome back to Carpool Chats. I'm John Eichberger with the Fuels Institute. Today we're going to have a conversation with Tammy Klein with Transport Energy Strategies. Tammy put together a paper for us we published in the summer of 2021 to help people figure out if you want to get into offering EV charging services, how do you start, how do you go through the process and how do you actually get to a point where you can flip on the power switch and start selling electrons to this growing market? So Tammy, thank you so much for joining us on Carpool Chats.
Tammy Klein (00:42):
Thanks for having me, John. Great to be here.
John Eichberger (00:44):
When we first started talking about this project, I think I came to you and said, "We need to understand from soup to nuts," from the time you go, "You know what? I think maybe I'll put out a charger in front of my business to actually making it happen, because there's so much that goes into it." Can you give us a quick overview of what you found when you're putting this paper together and the highlights of what people need to be thinking about at the very early stages of that concept of, "Hey, I think I need to get into this business." Where do they need to start? What should they be thinking about?
Tammy Klein (01:16):
Yeah, it was a really, really interesting project, and actually it's really a unique project, because yes, there's best practice guides out there for different entities, but there's really not a whole lot out there for business people and others that are considering putting in charging, like really practical user-friendly guides. So that's what this project was about. And I think one of the big things that I found is that if you are considering putting charging in your space, you really need to do your homework, which sounds super obvious, but it's homework in different levels. It's really creating a business case, and that business case needs to not only take into account, "Oh, I'm going to get incentives, and the equipment only costs this much."
Tammy Klein (02:17):
It's a bigger question than that. It's knowing, yeah, the costs of your equipment. It's knowing, if you have different locations, where you're going to put that charger. It's what you're going to have to charge. It's figuring out how to work with your utility on everything from interconnection to other sorts of putting into place infrastructure that you may need simply to be able to actually put the charger into place, to actually figuring out what your locality may require. So there may be a whole permitting process in there. So it's a much bigger question, and I think that this guide really takes you through step-by-step-by-step, how one can build that business case and cover the basis. The great thing is the experiences from utilities and third-party charging companies, retailers, and others that have broken ground here that I think also helps inform the work.
John Eichberger (03:33):
So it takes a little bit more than just throwing an extension cord out to your parking lot?
Tammy Klein (03:37):
Exactly. There's no extension cord, or "I'm going to apply for incentives, and it's going to be free, and it's going to be easy." Oh my gosh, I've even gotten this year, from several folks that have written me saying, "I got to get in on this build back better. I'm going to get these charging infrastructure incentives, and I'm going to make a killing." It's like, well, you've got to consider things like demand charges, and you've got to consider topics that are just coming to the fore like soft costs. That it might only cost you X amount for the equipment, but it might cost you thousands of dollars in lost time dealing with permitting or breaking up concrete, because you need to put conduit in certain places so that you can put your charging station in a certain place. So it's a much more complicated analysis than, "Hey, there's money out there." There is money out there.
John Eichberger (04:36):
That's one of the challenges. The government's throwing a bunch of money out there to try to build out this infrastructure, which is done to be supportive. But you know what? Writing a check and helping fund the equipment is not the entire story, there's so much more that goes into it. I worked in Washington for years with government. Thinking it through to that next step is not their strength. I don't think they recognize that just because you throw money out there, not every site is suitable for charging, not every site should have charging. We don't know quite how many we need yet. So, let's say I'm a business owner and I'm thinking I want to put in a charger. What do I need to be looking at on my property to figure out is this even feasible for what I want to do? One, do I have the space, do I have the power? What are the things I need to be really thinking about before I even take that next step?
Tammy Klein (05:25):
Yeah, those are the exact things that you need to be looking at, just the short list is does the locality have, where you're at, the city or the county, are there parking space requirements? Are there Americans with Disability Act requirements? How do complying with those requirements fit with putting in charging and where would that charger be located on your property? You don't want to be putting your charger in by ... power may be located at the back of your store let's say by the trash cans, and folks are not going to be feeling real great. Especially, I would submit as a woman driver, oh, let's go charge your car at night by the trash cans at the back of the store. That's just not going to work. Third party charging companies, if you're working with them, aren't going to be feeling that either.
Tammy Klein (06:25):
So you've got to figure out things like that, parking requirements, parking space allotments. You've got to be figuring out what the potential power demand is and whether you may need upgrades at your facility, and what additional, again, there may be where your charger's going to be located or where you want to put the charger, you may be breaking concrete to run conduit and that's going to cost. Or you may need other sorts of, where you're breaking ground and it could get really, really costly. So those are the kinds of things that you need to consider.
Tammy Klein (07:07):
Doing the homework, we present some very clear ways. There's online tools out there that are already established by National Renewable Energy Laboratory, other parts of DOE, others out there that help you evaluate location and the actual, should I put it at this store or should I put it at that store? But then when you dig deeper, you need to be working with your utility at the front-end. When you actually think about, "Hey, charging might be nice. I might want to put a charger here." That's the time you need to call your utility. Many utilities, as we talk about in the guide, they're creating transportation, electrification on teams. They're really beginning to get, some are way far ahead, but others are just this process and putting into place specific contact people or specific teams that you can start with where they will come out, they will do a site evaluation, they'll look and see what you have, what you need, and what that timeline is for them so that they can work with you from the start.
Tammy Klein (08:18):
And many localities are starting to do that as well, although, I think there's some lag time there. You have localities that are really expert, especially some of the ones in California and you have others that are like, "Charging what?" So working with that as well. But those are the kinds of the things that we talk about in the guide. Right out of the gate, those are the things that you need to consider for both, if you have different stores or different locations, and then individual locations as well.
John Eichberger (08:54):
You also mentioned a couple things when you started referring to network charging providers. So I think in the guide, you identified there's two paths forward. You can go your own, you can do all the work yourself, you can own it, operate it, or you can outsource it to a third party provider that comes in, takes care of all that for you. Can you walk us through, if I'm trying to figure out the best path forward for me, what do the two options provide for me in terms of opportunities?
Tammy Klein (09:20):
Well, there's definitely upsides and downsides. So the upside, if you're working with a third party charging company, if you're going this route, I think in many cases, if not most cases, it's really going to be an amenity for your site. So many fuel retailers, as you very well know, they're going this route because it reduces risk for them. They can offer it as an amenity at their site. They're seeing the future, they want to bring in the fact that a driver will be down at least 20 minutes, if they have fast charging at the site. That means they have 20 minutes to spend in a store where they can grow and retain and whatever that customer.
Tammy Klein (10:11):
So that's a huge upside. It's really not so much the charging, it's offering it as an amenity and really gaining or keeping the existing customer and increasing their spend, as you very well know. The upside also is, aside from reduced risk, it's one stop shopping. They take care of everything. When the unit is down, if that happens, they have the customer service resources and the technical resources to be able to deal with that. That's not something that service resources and the technical resources to be able to deal with that. That's not something that, if you're on your own, you've got to figure that out yourself. So it's really like one stop shopping. They've got everything, they've got the customer service they'll come in and they will do their own site evaluation. Where's the most advantageous place to put the charger? They'll have it all nicely packaged. They'll have the ballards or whatever. They're in charge of compliance.
Tammy Klein (11:16):
Some of these companies, or if not most of them, they have a lot of experience at this point. So they can even work with you if you have a series of locations. They'll work with you in terms of placing that at the most advantageous location, and they'll do it at the site. Where is the best place to put this on the site that also complies with whatever environments are in place like ADA, like I was talking about before. So there's really some upsides to going the third party route. If you're on your own, you're doing that all yourself, which you can do and people do, and people have done successfully. However, you are bearing the risk.
Tammy Klein (11:56):
But on the flip side, one of the things that we talk about in the guide that I think people need to keep in mind is if you're part of programs or it's your charging station, may be able to participate in and generate credits, let's say under a low carbon fuel standard program. And there are other states, as you know that either have followed Oregon, Washington is going to be the next one, but other states are considering as well. So if you're in a state that has such a program or is considering such a program, you would own the environmental attributes.
Tammy Klein (12:31):
In the other situation, most likely, the third party charging company would own the attributes, which can be very lucrative. And so one of the points made in that guide is, "Hey, why give the attribute away? Why don't you keep the attribute and you can generate revenue based on that?" So I think that's one of the things that's kind of, I think, is interesting that I haven't really seen a lot in the literature, but as a real world situation that I think those that might want to host-
John Eichberger (13:04):
When I think about it myself, third party network provider, you're right, you de-risk it. They take care of everything, you don't have to deal with the permitting, you don't have to deal with the utility and your connections. They take care of it all. Very, very attractive to a lot of companies. But not only are you giving up the potential access of the environmental attribute credit, you're also outsourcing your customers to a third party. And maybe that's fine, maybe that's fine, maybe that fits your model, not a problem.
Tammy Klein (13:34):
John Eichberger (13:34):
It's just something I know a lot of people are thinking about, saying, "I really want to own that customer and manage that relationship at every point of contact." But then you compare it to the time, the effort, the expense and all, there're two very good choices. And being able to weigh your comfort with each one is important. I think the guide does a good job of laying that out for you.
Tammy Klein (14:01):
Yeah, that's right. That's right. It's something that the business or organization in question, it's something that they will have to weigh based on their own, uniquely for them internally. But I think we give some good guideposts to look at. Another issue that was our doing, but also is something that if you go at alone is future-proofing. That's something that I know that you've worked on a lot this year, this comes up in the guide, where you need to consider what that might look like in the future. So for example, many localities, cities and counties are beginning to put into place EV ready, EV capable regulations, where, if you are building a new, let's say a new store, for example, they're already automatically future-proofing. You have to put that infrastructure in, regardless of whether you offer charging at that time. So that's something else that I think we talk about in the guide that also figures into the calculus about what an organization should do as well.
John Eichberger (15:23):
And I think tying into that future-proofing. So that's preparing your site for potential installation later. But also when you're getting into the business, you mentioned demand charges and utility costs. There is a balance between what the demand charge is and what your throughput is. If you have a lot of customers charging frequently, you can spread those demand charges across your customer base. It can be overcome. But a lot of markets aren't going to have that kind of demand anytime soon. So I really think that there's an opportunity here to get into the business, put out a couple chargers. You have to figure out what capacity you want, what kilowatt capacity you want for your charger.
John Eichberger (15:58):
But scalability, think about, I'm going to start with two, I'm going to start with four. Do I have the space to expand to six, to eight, if the demand is there? So thinking about what are my immediate needs, and then the scalability to the next, as the market grows. You have to grow with it because the demand and the needs of the market are going to change so much over the next 10 to 15 years. That's something that people really need to think about.
Tammy Klein (16:23):
Yes. And I know let's say fuel retailers and others have been experimenting with this because that's what they're trying to do. They're trying to learn, and they're trying to plan for the future. I've heard people say, "I'm going to offer it, I'm going to offer at all my locations," not having necessarily done the homework. But if you look at in many use cases, like some of the fuel retailers, they started out small. Also, they started out small with owning and operating charging stations on their own, and also experimenting with various third party charging companies. So they've done both. They haven't tried to offer it at every place that they own, they've just experimented where it made the most sense for them.
Tammy Klein (17:20):
And I think that is valid. It allows you to learn, learn as you go, but also begin to prepare for the future. Because the other thing is, we talked about this a little that in the guide, technology is changing. And so as charging will scale, as electric vehicles will scale, charging will continue to scale, but the way in which we charge, technology will also scale along with that. And so, to be prepared for that and to be able to scale accordingly, I think is really important.
John Eichberger (18:06):
Yeah. I talked to a lot of people and we talk about where do you need level two chargers? Where do you need 50 kilowatt DC fast charters? Where do you need 350 kilowatt. It's not a one size fits all. The advice I've given to companies who have asked me for any guidance on this is, know your customers. What are your customer behaviors dictate their needs to be? If you're on a commuting route, maybe on a highway, you need a high speed DC fast charger. If you are in a local community where people only drive 20, 30 miles a day, if there's a lot of apartments, maybe an L2 or a 50 kilowatt DC fast charger makes sense for you. You have to customize your infrastructure to satisfy your customer's needs. Otherwise, you're going to under build or overbuild and now you got stranded assets. So it really comes down to really knowing your customer and your market and building to suit.
Tammy Klein (18:54):
One of the things that came up in the case studies that third party charging companies, utilities, fuel retailers, store retailers, others contributed to is exactly that question. So if you are owning a hotel, for example, people are staying there, going to be located there. It probably doesn't make a lot of sense in many cases, although there could be variations to put in DC fast charging or 350 kilowatt hour charging because people are going to be there. So L2 probably makes a lot of in the hotel case.But just as you were saying, if you're on a highway, then probably DC fast charging does make the most sense. So yeah, you really need to know your customer and you really need to know their routes, what you're offering, your business.
Tammy Klein (19:55):
Another thing that came up is, like at airports. We had a case study from, I think, Dallas/Fort Worth Airport. And that was one of the things that they said was, L2 for us probably makes a lot of sense, because people are coming and going. Fast charging, maybe not. So know who your drivers are, whether you're a business or you're an organization like Dallas/Fort Worth Airport. Critical.
John Eichberger (20:25):
So Tammy clearly a ton of work went into this guide. And for you guys listening at home, if you want to find the guide and read it, I encourage you to download it. Go to fuelsinstitute.org and go to the research page. You can find it right there. And Tammy, you're doing so many other things, not just writing papers for the Fuels Institute, but doing so many other things for your company. Where can people go to get caught up on the different initiatives you have going on?
Tammy Klein (20:46):
So you can go to my website, transportenergystrategies.com. I also have a newsletter that'll keep you posted on what's going on globally, not just in electric vehicles, but across the whole transport energy spectrum. So you can sign up there on the website.
John Eichberger (21:01):
Awesome. Tammy, thank you for joining us today. Really appreciate it.
Tammy Klein (21:03):
Thank you, John.
John Eichberger (21:04):
And all you guys back home, thanks for joining us on Carpool Chats. We'll see you time.