As I have discussed in an earlier post, planning can reduce the investment for EV charging infrastructure significantly. The cost optimization is important (and again, the question is not only minimizing the costs, but optimizing it in terms of coverage, capacity and service), but in the case that the EV charging is a business for the infra owner, we also need to consider the revenue side of the equation. Revenue targets and financial projections are needed for return on investment calculations and for planning the future expansion of the charging infrastructure.
There are no right answers to the question on how to make money with EV charging, but it is obvious that providing free charging is not a great business model (unless you manufacture Teslas). However, in order to find the right business model one needs to consider a few things that have an impact on the revenue and earning potential:
- utilization rate is the key to profitability
- kWh is not the right measure of the value of the service
- EV charging is not the equivalent of “pumping gas”
- Flexible pricing is an effective tool for managing customer behavior
I will look into these in more detail in later posts, but the key finding overall is that the whole issue of pricing and customer service needs to be re-thought. It is likely that these factors will work slightly differently in various countries and that tweaking is required to satisfy the needs of the customers, but the pricing mechanisms will differ from the ones used traditionally in the electricity business. An obvious example is the kWh metering, where quick charging and slow charging will put the same amount of kWhs in the battery, but the value of the service is not the same, since making a four hour stop along the Interstate is not going to be feasible, while recharging for 15-20 minutes is OK over a cup of coffee.
Introducing these types of capabilities for EV charging requires new IT capabilities. The user experience needs to be seamless and will need to work in the same way regardless of the manufacturer of the EV charging equipment. Therefore the functionality needs to interface with the equipment through an open interface and needs to also be able to output the results into various different types of billing and/or customer relationship management (CRM) solutions. These are the principles that AC2SG Software has used in the design of our solutions for pricing the charging transactions (EVPricer) as well as in the business analytics software (EVIntelligence).