EVgo Demonstrates Viable Business Model As Owner-Operator Of Fast-Charging Network
By Bob Stojanovic
At this relatively early stage of the EV transformation, no organizational structure for a charging-station operator has emerged that meets the needs of every location. It is unlikely that any single solution will prove a perfect fit everywhere, as each has its strengths and weaknesses. EVgo* has advanced an approach as a non-utility system owner-operator that has garnered national reach — in fact, the EVgo network is currently the largest public fast charging network in the United States.
Alternative approaches are in use on a smaller scale. Utilities are forming partnerships with charging network operators, as Southern California Edison is doing in California, to build out the grid infrastructure needed to support EV charging networks. Ownership models vary, but the goal is the same: growing EV infrastructure to support EV adoption at scale.
The utilities’ status as regulated monopolies adds challenges — particularly with regard to the process of adding investments to the utility’s rate base and the utility’s own decision-making cycles. Both can slow down the flexibility needed to grow and adapt to a fast moving industry. Moreover, a utility’s regional boundaries can limit the potential for expansion of a charging network it owns.
EV charging also represents a new business venture for utilities. A company whose public mandate is the regulated sale of electricity may not have the flexibility to invest in the charging network where it makes the most sense for drivers, or relevant experience in networking and customer service. Partnering with — rather than potentially displacing — a third-party charging network operator may be more appealing.
The independent or site-based owner-operator takes on all the responsibilities of site selection, procurement, and installation of chargers that are not part of a broader regional or nationwide network. This model may prove useful in some under-served areas where charger utilization time is typically low yet may need additional partnership support to make the economics work.
This model is not just challenged by the need for significant investment with no clear assurance of a profitable return but lacks the benefits of scale that a larger network has. For example, large networks can more easily amortize the commercial costs of consumer engagement, payment processing, and charger maintenance across a larger asset fleet.
Yet another approach is to have the owner of the charging assets partner with an operation company to run the network. This implies lower costs for the operator, but also puts the operator between the asset owner, the technology provider(s), and the end-user such that priorities like charger placement and maintenance could fall out of alignment.
The Owner-Operator Model
The EVgo business model is multidimensional, encompassing various types of arrangements and partner collaborations, but with a central focus on owning and operating the system. One of the core benefits of the owner-operator model is the alignment of interests between customer and charging network — the customer desires reliability in public fast charging equipment, and the network similarly values uptime and reliability in order to maximize revenue.
EVgo owns and operates almost all of its more than 1,200 fast chargers across 60+ metropolitan markets, but the company also works with a variety of stakeholders to maximize deployment of public charging infrastructure. In Arizona, for instance, EVgo has partnered with the Salt River Project, a public power utility in the Phoenix area, to install DC fast chargers in a co-branding program.
One benefit of close collaborations like this is the ability to take advantage of learnings to adjust programs and incent mutually beneficial customer behavior. With usage data readily available through the joint network, Salt River Project can operate its generators more efficiently, enabling it to offer attractive rates for overnight at-home charging, when electricity demand is normally low. The same data helps to manage demand peaks at times like early evening when EVs typically return home and plug in.
Based on a utilization-driven model, EVgo has sought partnerships for some facets of its operations, including with utilities for “make ready” work to build the grid infrastructure needed for EV charging. The company has also forged partnerships with a diverse portfolio of site hosts, ranging from retail stores to major commercial property owners. These partnerships significantly streamline and expedite the development process. As a result, EVgo’s public fast chargers can meet drivers where they already plan to be, including those who don’t have or want home chargers (e.g., apartment-dwellers).
In one innovative project, EVgo partnered with the city of Sacramento, California, to install six ABB DC fast chargers in a public-parking curbside plaza. These sites are at a public park right downtown in Sacramento, unlocking EV access for downtown Sacramento residents and attracting more residents and visitors to public space in the state capital.
Additionally, EVgo has installed dedicated charging facilities for EV drivers working in GM’s Maven Gig ridesharing service, which provides short-term vehicle rentals for people looking to drive for Uber, Lyft, Postmates, etc. EVgo also works with other ridesharing and carsharing partners to support their drivers on EVgo’s public network. There is a symbiotic relationship between ridesharing businesses using EVs and charging network owner-operators: both are keen to see fast charging networks delivering reliable charging services to support high mileage (and therefore high charger utilization) drivers.
Branding and the User Experience
A crucial element of the owner-operator model is building brand equity by offering chargers that are easy to use, have high uptime, and offer a high degree of interoperability for payment systems. To meet those critical needs, EVgo formed a close collaboration with ABB as a technology provider for chargers and network operating systems. Additionally, EVgo has focused on a customer-centric experience to provide access to its chargers and make sure that drivers of all fast-charge-capable EVs know they have reliable fast chargers in and around cities and metro communities.
Drivers can purchase EVgo charging services using an RFID card or the EVgo app, or even pay by phone by calling EVgo’s 24/7 call center. EVgo’s chargers are open to all EV drivers, with pay-as-you-go per-minute pricing or a monthly membership to unlock discounted charging. EVgo also recently announced a series of bilateral interoperability partnerships and continues to expand access to its chargers for more drivers.
For commercial success as well as supporting EV adoption, the user experience is paramount. EVgo’s charging stations are even given names rather than just hard-to-read serial numbers, so a customer calling a help line for assistance can say, for example, “I’ve plugged into William but I’m not sure how to make the charging start,” or “I think there may be a problem with Valentina, can you check it out?” EVgo can quickly assist the customer, including with a remote start of a charging session, or diagnose and commence repairs as necessary.
Summary
EVgo’s business model of owning, operating, and maintaining the charging equipment allows for the best customer experience and the best alignment between network operator and consumer. For utilities, the model provides the opportunity to work with an operator whose incentive – and focus – is maximum in-service time. That creates an added revenue source for the utility through load growth without the complexity of supporting a new retail business operation.
About the Author: Bob Stojanovic is the Director EV Infrastructure North America, Carlsbad California. Bob started his career at ABB in 1999, and assumed the role of Director of EVI North America in 2017. In this role Bob is the local product group manager for EV Charging Infrastructure, which includes responsibly for manufacturing of EV Charging equipment in North America as well as Sales and Marketing of EV Chargers in the USA.
*This post was sponsored by ABB. Images used with permission from EVgo/ABB.
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