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Electric Charging: How to Stay Competitive Amid Rising Electricity Prices?   

Electric vehicle (EV) registrations continue to rise sharply, with 23,984 new registrations recorded in April 2022 (source: AVERE). Both individuals and businesses are increasingly opting for electric vehicles. This acceleration can be attributed in part to the growing competitiveness of EVs, as the total cost of ownership for an electric vehicle is now lower than that of a traditional combustion engine vehicle. This competitive edge is largely due to the fact that the average cost of charging an EV is significantly lower than the cost of fueling a conventional vehicle.

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Source AVERE

The Electrification of vehicles Will inevitably lead to increased electricity consumption in France. To give you an idea, RTE’s study "Development of Electric Vehicles" estimates that by 2035, with a fleet of 15.6 million vehicles (high scenario), EVs will account for 48 TWh/year of electricity consumption.

There are many solutions to manage this increase by 2035. However, in the short term, amid the current energy crisis, with electricity prices skyrocketing to unimaginable levels on the markets, the issue of electricity consumed during charging presents a more urgent challenge. With retail electricity prices rising, how can we maintain the economic competitiveness of charging, whether it’s private (at home or at the office) or public? That’s what we will explore in this article.

Game of Charging Stations

The number of private and public charging points is increasing at a rapid pace. High-power public charging networks are beginning to cover the country, enabling fast charging. Numerous players, including energy giants (EDF-Ivizia, Total Energies), new entrants (Allego, Bump, Dream Energy), and various regional SEMs, are investing heavily in fast public charging — a critical component for enabling long-distance electric mobility. These various actors are engaged in fierce competition to secure the most sought-after locations, those with enough vehicle traffic to ensure the profitability of investments in charging stations.

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Source : Ministère en charge de l'énergie

But beyond traffic, it is the ease of connection to the electrical grid that makes a location more or less attractive. The existence of pre-existing connection capacities is a strong asset. Indeed, connecting a charging station to the Enedis network in a location where there is no substation with sufficient capacity, as is the case with some highway rest areas, is a long and costly process. Co-locating charging stations with renewable energy plants, thus sharing costs, or limiting the power demand of the station through regulation devices or batteries, are therefore interesting operations. This approach can be found at Dream Energy, Driveco, Kallista, and NW Energy.

On the business fleet side, charging stations are also multiplying with very different characteristics depending on their use. Companies that install charging stations to allow for the recharging of company cars or employees' personal vehicles generally opt for low-power "slow" charging stations, where vehicles remain parked for several hours. For companies with delivery vehicles or various utility vehicles requiring fast recharges once or twice a day, the stations are of higher power, which again can involve significant installation/connection costs.

 

Therefore, properly sizing the company’s needs is very important, and integrating a charging station project with solarization and/or battery projects can also make sense.

Securing the price of electricity: a new challenge

As important as the investment in charging stations and their connection may be, the cost of electricity used in charging is by far the largest expense. Each charging station is a mini energy-intensive site. However, most charging operators are still far from deploying the level of sophistication that energy-intensive industries use for their electricity supply.

Charging network operators often settle for signing "classic" fixed-price supply contracts. This lack of attention to energy management can lead to strong fluctuations in charging prices or eroded margins for charging operators. If your fixed-price contract signed in 2020 is now expiring, you're in for quite a surprise in your OPEX.

To smooth out price fluctuations and secure their margins, public network operators can implement several strategies. Signing long-term CPPAs or self-consuming renewable energy is interesting to ensure a stable supply price over time. However, complementary market coverage is necessary, and an effective risk management strategy is essential to absorb market movements.

For the largest/most ambitious among them, it is interesting to become the energy supplier for their sites, which would allow them to manage their supply more finely — i.e., better management of their coverage and ARENH rights.

On the road to smart charging

Electricity purchases can also be optimized in the short term by shifting charging to times of the day when the spot price is lowest — at least in the case of "slow" charging — this is commonly known as smart charging. After years of being limited to pilots and smart-grid initiatives, smart charging can finally take off commercially. Without intervention, charging at home or at the office generally occurs during the evening peak between 6-10 pm when individuals return home and company EVs are parked. By automatically shifting vehicle charging to the cheaper hours, charging generally occurs in the middle of the night. In any case, the EV is ready for use the next day.

The current energy crisis has not only increased prices, but it has also widened the hourly price differential and thus the value of smart charging. Even if absolute price levels were to drop (end of the war in Ukraine, etc.), it is very likely that the hourly price differential will never return to what it was. Indeed, the replacement of conventional thermal power plants (closure of coal plants, reduced nuclear availability, etc.) with renewable capacities whose production is variable will naturally create moments when the system is either in surplus or deficit of electricity, leading to strong price movements from one hour to the next. The greater the price differentials during the day (especially between the evening peak and the night), the greater the benefit of a smart charging strategy.

If we look at the gain associated with a smart charging strategy valued on the spot market, which shifts a 6 kWh charge (an EV consuming 0.17 kWh/km and driving 36 km per day) that would have taken place between 8 am and midnight, we obtain a gain of €457 in 2021 and €667 in 2022 as of August 31. These figures are considerably higher than during the 2017-2020 period, where smart charging gains ranged from €150-200 per year.

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Gain cumulé du smart-charging sur période 2017-2022

Problem: there is no supply offer in France that allows for the valorization of smart charging, as exists in Germany or the United Kingdom. Sites with a capacity below 36 kVA are automatically profiled (a national profile is used to reconstruct their hourly consumption), making it difficult to extract the benefits. Another constraint is that the technological investments for suppliers can be significant: indeed, forecasting and automatically controlling the charging of EVs requires strong technological expertise.

Further down the road, V2G (vehicle-to-grid) and V2H (vehicle-to-home), where electricity is reinjected into the grid or used for domestic purposes, respectively, could also generate additional value. If the worst were to happen this winter and power outages occur, it's very likely that V2H will interest many EV owners to ensure that the lights stay on in their homes.

For fast charging operators, smart charging is impossible. Consumers want to leave as soon as possible (no one wants to spend the day at a highway rest area, no matter how picturesque it may be), and the operator also wants them to leave quickly (to free up space for the next customer). However, a certain level of intelligence can be applied to managing charging prices in order to encourage some consumers to visit the station at specific times of day. Imagine free charging when electricity prices are negative on the spot market: a frequent customer might decide to charge earlier or, conversely, delay charging if prices are high. In addition to price signals, congestion elements could be added (the customer gets a preferential rate if they charge when there is little traffic). Charging prices then become dynamic, similar to airline/train ticket prices or an Uber ride.

Whether you are already a supplier or want to become one, Company can help you build smarter supply offers for the charging stations in your portfolio. Combining a technological platform and robust models, direct access to the spot market, and a balancing perimeter with RTE, we are the only player capable of managing the optimization, control, and balancing of your charging stations, end to end.

For more information or any additional questions, please contact us at the email address :  sales@augmented.energy

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