Charging Outlet Incentives

Why do we need a charging infrastructure? Some advocates of battery electric vehicles suggest that the only fueling infrastructure you need is a power cord from the local hardware store to charge a BEV from a residential outlet.

There are four sources of extra costs for providing electricity to charge PHEVs and BEVs as discussed in more detail on the fuel infrastructure page:

  • Home electrical charging outlets
  • Public charging outlets
  • The “last mile” electrical distribution system
  • Additional generation capacity to cover some on-peak, daytime charging

Government incentives required to jump-start the public charging outlet industry. In this model, we use the same methodology to estimate the government incentives necessary to incentivize public charging stations as we did to estimate government incentives to jump-start the hydrogen fueling infrastructure for FCEVs: We assume that entrepreneurs intall public charging outlets for PHEVs and BEVs and charge them a fee to use those outlets. Technically only regulated utilities can sell electricity, but these entrepreneurs would presumably charge a fee to pay for their investment over time.  We use the Electrification Coalition’s prescription for public charging outlets: this EV trade organization suggested that two public outlets for every EV will be required initially to encourage drivers to purchase PHEVs or BEVs, falling to one public outlet for every two EVs on the road later in time.  we used public outlet costs suggested by the Electrification Coalition and by the Idaho National Laboratory to calculate the total costs for installing public charging stations:

 We assumed all Type 2 public 220-volt outlets with a starting cost of $8,043 based on actual costs of installing 4,600 outlets by Coulomb Technologies [9] for $37 million, falling to the $1,875 per outlet cost used by the Electrification Coalition.

As with the distributed hydrogen fueling infrastructure, we assumed that private industry would cost-share with governments the investments needed to build the public charging infrastructure, recovering the cost of these private investments by charging a fee for EV drivers to charge their cars.  We used the same “hurdle rates” for the entrepreneurs who intall public outlets: 25% 15-year IRR initially, dropping to 15% IRR once there are sufficient EVs on the road to reduce the risk.

Note that utilities could install public outlets for EV owners and some state PUCs (California comes to mind) might let the utilities recover their costs by increasing electric rates for all their customers. In this manner wealthy electricity consumers who could afford expensive PHEVs or even more expensive BEVs would be subsidized by their less wealthy neighbors. Hydrogen has no such option, since the price of hydrogen is not (yet) controlled by public utility commissions.

With these conditions, the total private and government investments to support a public charging infrastructure are shown in this graph:

Total government investments over 50 years would total $41 billion, with a net present value (10% discount) of $3.31 billion. Industry invests a total of $234 billion between 2010 and 2056, with a net present value of $9.68 billion.

The resulting government subsidies for public charging stations are compared with government subsidies for hydrogen fueling infrastructure in this graph compared to the proposed subsidies for ethanol (which go off the chart at something like $26 billion by 2022):

In order for private industry to make the 20% IRR, they must charge the equivalent of 40 cents/kWh for the electricity as shown below, dropping to 17 cents/kWh in a mature market. This assumes that the outlet entrepreneur buys electricity at the industrial rates projected in the DOE’s Annual Enegy Outlook for 2010 (6.06 cents/kWh in 2017 is the current projection for industrial electricity.  If the outlet provider must pay commercial rates, then they would have to increase the charges to the BEV drivers.

 this graph also shows the number of public outlets in each city per BEV, which is analagous to the capacity factor for hydrogen fuleing systems. Thus if there are two public outlets per BEV, then by definition, there will be a most one BEV for every outlet, and the maximum capacity factor for outlet utilization will be 50%.  This is independent of the charging time and the ability of the outlet owner to synchronize the arrival and charging of multiple BEV owners.

These electricity rates (40 cents/kWh and 17 cents/kWh) are equivalent to gasoline selling at $3.70/gallon to $1.64/gallon on a range-equivalent (cent/mile) basis, assuming that a BEV is 3.5 times more energy efficient than a regular gasoline car.


Charging infrastructure cost assumptions. In this model we have accepted the Electrification Coalition recommendations that society should provide two public charging outlets for every PHEV or BEV on the road initially, in addition to residential outlets (we assume that 75% of all BEV owners have a garage, carport, driveway or assigned off-street parking place to install an outlet). Over time, the number of public outlets decreases to one for every two BEVs or PHEVs.  The model currently includes only the cost of the charging  outlets, but not the cost for replacing neighborhood distribution transformers (which EPRI indicates will be necessary in some cases) nor the cost of adding daytime peak generation capacity (Both EPRI and the Electrification Coalition suggest that daytime charging will be necessary to entice drivers to purchase PHEVs or BEVs.)

Each public charging outlet includes the necessary fault detection, vandal-resistant and weatherproof box, mounting hardware, controls, meter and card-swipe for billing purposes and the cost includes the necessary electrical cables and installation costs. We assume that public outlets cost $8,043 initially, dropping to $1,875 in larger scale deployments.

[7]Electrification Coalition, Electrification roadmap: revolutionizing transportation and achieving energy security, November 2009, available at

[8]Morrow K, Karner D, Francfort J. Plug-in hybrid electric vehicle charging infrastructure review. Final Report INL/EXT-08-15058, Idaho National Laboratory, November 2008, available at

[9]“Coulomb Technologies to Provide 4,600 free EV charging stations,” ConSENSEus energy for transportation in the U.S., June 7, 2010 :


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