Understanding Utility Rates for EV Fleet Charging

Understanding electricity tariffs is essential to picking the right charging strategy and infrastructure.

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Utility rates for large industrial or transit users are usually far more complex than for simple residential or small users. Electricity will become a substantial cost (displacing fuel) for fleet operators, so understanding how it is priced can help cut costs. Unlike diesel, electricity usually has the time of day and peak use components. A difference of 30% or more between peak period and off-peak period electricity price is not unusual.

This means applying operating strategies to defer charging until cheaper off-peak periods or to minimize peak demand can dramatically cut utility costs - in some cases by tens of thousands a month. Utilities are starting to introduce many new EV-focused charging tariffs (even to MW-power levels used by large fleets). By adding price incentives, users are motivated to charge at times that are favorable for the utility. This creates a win-win situation in which the fleet operator can realize substantial savings, while the utility makes use of underused off-peak assets.

Energy, Demand, and Fixed Charges

Large utility tariffs usually have three major components and a variety of smaller riders or variables:

  • The first is energy, (kWh) (power over time); this is the method for charging consumers for energy in their homes and includes the total energy use, sometimes categorized by time of day.
  • The second is demand (kW), which is the peak instantaneous power used, usually over a month. This is standard for industrial electricity customers but is rarely imposed on private customers.
  • Third, there is a fixed monthly rate for the connection. The fixed-rate is usually quite a small amount and covers the administrative overhead of reading the meter and invoicing.  
  • Additional smaller fees or adjustments for elements like poor Power Factor are also applied.  

The utility bill will usually be the sum of the major variable elements of energy and demand, a fixed monthly fee, and smaller adjustments.

Energy Charges (/kWh)

Energy charges are usually charged by the generation provider per kWh (kilo-Watt-hour), but the distributor may add a small tariff. The energy is the integral (sum of the power at each time), or area under the curve on a plot, of the power used over time. For example, 1kWh could be either 1kW for 1 hour or 2kW for ½ hour. Energy charges are the component of the bill people are familiar with paying privately at home. They are often tiered by the time of day, so 1kWh during peak daytime may cost much more than 1kWh late at night.

Charging can often be deferred to late at night when the costs are typically lower and allow considerable savings. The total energy required will be related to the distance traveled by the fleet each day. It will vary daily and seasonally as more energy is used for heating, air conditioning, or varying passenger loads. Reducing the total daily amount of energyrequired by the fleet only occurs by improving the overall efficiency of the chargers, vehicles, and operations. A reduction in daily energy costs can be achieved through charging at smarter times for an equal amount of energy.

Demand Charges (kW)

Demand Charges are often key in optimizing fleet charging. Demand charges are based on the highest power in kW (kiloWatts) drawn at any time over a given period. Typically, the maximum power is measured, averaged over a fixed time window (often either 15 or 30 minutes) by the utility meter. The demand charge is then set to that maximum for the full billing period (usually a month), even if it only occurs once. In some cases, the tariffs charge all or part of the demand charge over several more billing periods. such as a year. This can mean that the facility drawing more power in a single occurrence can result in a much higher energy bill over the year.

The peak demand for EV charging without any charger management tools can easily be double the demand charge with management tools. Without any energy management, the chargers and buses charge as needed and reach a peak of almost 9MW. Using charge management software could easily keep the peak under 4MW with no impact on bus availability. A 5MW difference in demand charge could easily cost $25,000 or more a month.

Without regulation, the peak will also vary seasonally as the energy demand changes with heating and other loads. The cost of EV fleet charging can be cut substantially by reducing demand charges and capital installation costs, by finding the right charging infrastructure, management software, and controlling load limits.

Flattening Peak demand with smart charging

Other Fees

There are a few other riders that typically impact service costs. If a secondary power feed via a redundant route is required, extra costs will be incurred usually based on a percentage of the first power feed. There is often a premium for poor Power Factor (PF). Power Factor is a complex property of the load, usually measured by large utility service meters, which can make it less efficient to deliver energy due to the way the load consumes energy during the AC cycle. Power Factor is usually indicated in percent, with 100% being ideal and below 95% usually incurring extra fees.

Alternately it is measured as the total reactive (in effect, useless) power in kVAR (kilo-Volt-Amp-Reactive) or energy kVARh (kilo-Volt-Amp-Reactive-hour); in both cases, less is better, zero is ideal, and less than a few percent of the real power (kW) or energy (kWh) is typical. Typically, modern DC chargers have built-in power factor correction and provide a very good power factor, so although this is unlikely to be an issue, but it is worth confirming in charger tender requirements.

Distribution and Generation

In some markets, the utility market is deregulated between distribution and generation. The distribution (DSO or Distribution System Operator) company is responsible for getting the electricity to the customer, but the customer can buy the energy from another generating company. In some cases, both the generator and distributor will have complex tariffs with the elements discussed below. Typically, principle distributor costs are for the demand charges which drive the costs in their system, while the generator costs are based mainly on the energy costs.

At the extreme end, energy can usually be purchased on exchanges with prices that change hourly and are occasionally even negative. For most sites, the choice of the distributor is dictated by the location, and rates are regulated. Generation is often open to more providers with a choice of plans from a single flat rate to rates updated hourly based on market conditions.

This is not intended as financial or technical advice and ChargeSim accepts no liability for actions taken based on it. Always consult a professional about your specific situation.