Biden admin has $7.5B to spend on EV charging. How can it get it right?

The U.S. is preparing to spend up to $7.5 billion in federal infrastructure funds to build out a nationwide electric-vehicle charging network. Now federal and state agencies and community and private-sector partners need to figure out how to spend that money fast — and spend it wisely.

A National EV Charging Summit last week highlighted how the federal government intends to manage this historic investment. It also underscored how much of a lift it will be to direct money authorized by last year’s bipartisan infrastructure law into state-by-state plans that can meet the Biden administration’s goal of deploying 500,000 EV charging stations by 2030, up from the fewer than 47,000 such locations across the entire country today.

“We’ve got a lot of work to do,” Energy Secretary Jennifer Granholm said in opening comments. ​“Many Americans do not have access to EV charging right now, and so many Americans live in what’s called a charging desert”— a place with almost no charging available — ​“especially in low-income neighborhoods, rural areas or communities of color.”

Eliminating those charging deserts will be a critical step to give families, businesses and governments the confidence to switch from fossil-fueled to battery-powered cars, vans, buses and trucks, and hit the administration’s goal of having EVs make up half of all new car sales by 2030. It could also create enormous economic and job growth opportunities, Granholm said.

This will require moving quickly to invest more money into EV charging in the coming years than governments and utilities in the U.S. have spent on it over the past two decades. The infrastructure law dedicates a total of $5 billion to help every state build charging networks along major transportation routes. It also contains $2.5 billion in funding for competitive grants for projects that could include EV charging or alternative vehicle fueling stations offering hydrogen, propane or natural gas; the grants will be open to states, local governments, territories, tribal governments and other entities.

The initial emphasis will be on getting the $5 billion out to states to build ​“a truly nationwide network,” said Michael Berube, deputy assistant secretary for sustainable transportation at the Department of Energy. The joint office created by the transportation and energy departments to manage the program expects to issue initial guidance for states to apply for funding by February, with the ​“hope to start seeing initial chargers [deployed] this year,” he said.

“In six to eight months from now, we will have 50 state plans covering the country that lay out the next five years of EV charging” deployment, Berube said.

Filling the gaps in nationwide charging 

It will be a challenge to fill in the gaps between states that have already made significant investments in EV charging and those that haven’t.

To date, a handful of states, led by California and New York, have passed laws and policies that have led to the vast majority of the $3.3 billion in government spending and $3.4 billion in utility investment into EV charging, as Nick Nigro, founder of Atlas Public Policy, noted in a presentation during the summit. Texas, the second-most-populous state, doesn’t even make the top 15 in terms of investment in chargers made so far.

Pavel Molchanov, director and equity research analyst at Raymond James & Associates, made the same point in an interview. California and much of the East Coast have taken greater strides to deploy EV charging commensurate with their populations, he said.

But much of the Midwest and South lag considerably, as this map of state-by-state EV-charging deployments indicates.

It’s ​“a textbook ​‘chicken vs. egg’ situation,” Molchanov said. ​“EV sales are low, so the charging companies are reluctant to invest capital in charging sites. But without those charging sites, the EV adoption curve will remain slow. Federal funding will be the most obvious solution to this dilemma.”

Building it fast, building it right 

The goal now is to quickly get charging investments out to all states. But while speed is crucial, there’s also significant pressure to ​“do it right,” Berube said. Some previous federal investments in EV-charging infrastructure produced less-than-stellar results — for example, the company Ecotality received $100 million in stimulus grants during the Obama administration only to go bankrupt and leave behind poorly maintained and inoperative charging stations after federal funds ran out.

Federal guidance issued late last year asks state agencies and other applicants to develop plans that include not just buying and installing EV charging equipment but also ​“proper operation and maintenance” and data-sharing. This will ensure that broken-down or malfunctioning chargers don’t leave EV drivers stranded or stuck waiting in long lines for chargers to open up.

The guidance also calls for ​“reaching all areas,” Deputy Transportation Secretary Polly Trottenberg said, from major transport corridors to underserved urban and rural communities. Federal funds spent on charging systems need to align with the Biden administration’s Justice40 Initiative, which pledges that 40 percent of the benefits of federal clean energy investments, including those in sustainable transportation, accrue to disadvantaged communities.

Chargers built with federal funds should also be open to the public, serve all kinds of EVs and accept payment via a variety of methods, the guidance states. 

“Accessibility, equity, affordability, reliability — we’re hitting all those key priorities,” Trottenberg said. 

Deploying the right chargers 

Direct-current fast-charging ports, which can charge up vehicles in under an hour, are particularly important to give consumers and companies the confidence that they’ll be able to travel and move freight without running out of juice.

Most of the fast chargers in the country have been deployed by Tesla via its proprietary Supercharger network. Other major providers include EVgo, which has partnered with General Motors to deploy more than 2,700 chargepoints across the country by 2025, and Electrify America, the company investing $2 billion in U.S. EV charging as part of Volkswagen’s Dieselgate settlement agreement.

But the pace of fast-charger deployment still lags behind what’s needed, said Britta Gross, managing director of the Carbon-Free Mobility program at nonprofit RMI. (Canary Media is an independent subsidiary of RMI.)

“We’re doing about 600 installs every quarter for [direct-current] charging ports,” she said. ​“We need to get to about 10,000 ports per quarter to get to the numbers we’re talking about.”

But fast chargers aren’t the best choice in all cases. Level 2 chargers are about one-sixteenth the cost of direct-current fast chargers, meaning that many more of them could be deployed with the same amount of money. This interactive map from the nonprofit think tank Third Way breaks out how many chargers each state could deploy with its projected share of the $5 billion, depending on the mix of fast chargers and Level 2 chargers.

“We know that people will want to charge quickly and be on their way,” Alex Laska, Third Way transportation policy adviser, said in an interview. ​“People want that gas-station experience. On the other hand, the vast majority of charging will be taking place at home or at work,” where slower but cheaper Level 2 chargers are much more cost-effective.

Building equity and access into EV charging 

Companies focused on Level 2 charging, such as ChargePoint, Blink and Volta, have made the case for directing a significant share of federal funds toward charging at garages and parking lots at workplaces and shopping centers.

But that could leave some people out. As Laska put it, ​“What if you don’t have access to a garage or off-street parking at home? Then you really need that charging to be public.” Curbside chargers could help meet the need for publicly accessible charging infrastructure in places such as New York City.

Trottenberg, who spent six years as commissioner of New York City’s transportation department, said there’s ​“no one-size-fits-all strategy” to making EV charging available in urban areas or for people who live in apartment buildings. Solutions require coordination between states and utilities, as well as ​“city leadership and input from the local community.”

Berube noted that half of the $2.5 billion in competitive grants is earmarked for community grants, which could be well suited for bringing charging to dense cities and multifamily housing developments. ​“We want to focus these dollars on places where private investment would otherwise not go,” including serving ​“people who don’t have easy charging at home.”

Federal agencies will be sharing plans for serving these more challenging settings, he said. The Department of Energy is also hoping to develop a framework for state and local agencies to apply when they deal with siting, permitting and interconnecting EV chargers, much like DOE’s SolarApp program has done for rooftop solar installations, he said. Local permitting limitations can significantly slow installations, he said.

Today, EV chargers are concentrated in neighborhoods with high rates of EV adoption, which typically means wealthier neighborhoods. That disparity in charging access could end up discouraging the switch to EVs by lower-income drivers, including those who work for ride-share companies like Lyft and Uber that have promised to make the shift to all-electric fleets over the coming decades, RMI’s Gross said.

Finding ways to boost the deployment of EV chargers in lower-income areas is a vital part of meeting the Biden administration’s commitment to social justice, said Don Cravins, chief operating officer of the National Urban League.

“Too often, poor and disadvantaged communities are unfortunately the ones that suffer the most from environmental harms but benefit the least from the economic and technological fixes,” he said.

Expanding access to EV charging isn’t just about where the chargers are located, added Leslie Aguayo, climate equity program manager for The Greenlining Institute. It’s also important to allow drivers to use multiple forms of payment, including prepaid cash cards, instead of limiting use to customers who’ve signed up for subscriptions with individual charging networks. She cited the positive example of new regulations in California that call for publicly accessible charging networks to accept a variety of payment methods.

Utilities are a vital partner 

All this charging will be a massive new strain on the power grid, meaning that electric utilities will play an integral role in siting and supporting it, as well as making sure lack of grid capacity doesn’t slow down deployments or raise their costs.

“You can have your plan for what you want to do on the streets, but if your utility isn’t teed up with the capacity to make the investments to meet your needs, that plan can slow down considerably,” Deputy Transportation Secretary Trottenberg said.

Jigar Shah, head of the Energy Department’s Loan Programs Office, agreed that grid capacity will drive where and how much EV charging can be deployed. ​“Switching out gas stations for EV-charging stations is what everyone has in mind — and that will absolutely not work,” he said. ​“We don’t have 3 megawatts or 5 megawatts of additional capacity” at most gas stations, shipping distribution centers or other locations where vehicles now go to fuel up.

Charging hubs can use batteries to store energy from the grid and cushion the impact of charging many vehicles at once, which can help with the grid-capacity issue. Shah cited the example of fast-food restaurants in California that are working with startup ChargeNet to combine fast chargers with batteries and solar-roofed carports.

In an interview, ChargeNet CEO Tosh Dutt said that the biggest challenges his company’s projects have faced so far have been complex interconnection processes. ​“Creating a replicable process that’s familiar to each utility, where each [project] looks just like the last one,” could help smooth the path to broader adoption, according to Dutt.

But installing batteries at EV-charging sites is a costly workaround, Jonathan Levy, chief commercial officer of EVgo, said in an interview. It would be better to get utilities to share grid data and plan ahead to beef up infrastructure where charging is needed, though that’s not an easy feat to pull off. ​“The best way we can handle this is by having as much transparency on the planning side as possible,” he said.

Utilities should also design rate structures that don’t penalize chargers that place infrequent but heavy demands on the grid, Levy added. Currently, demand-charge tariffs across the country do exactly that.

The DOE’s Michael Berube added that ​“smart charge management [with] both EVs and the grid working together” will be vital to ensuring that EV-charging loads can be modulated to avoid overloading the grid. Fast-charging hubs are likely to have less flexibility to reduce charging to serve the grid, since they’re designed to charge vehicles quickly, but Level 2 chargers have more flexibility, he said.

Utilities have much to gain from the increased electricity sales that the shift to EVs could bring, so they’re in a strong position to drive investment. The National Electric Highway Coalition, a group of more than 50 utilities organized by trade group Edison Electric Institute, last year pledged to coordinate the buildout of fast-charging infrastructure along major highways over the next year. Similar consortia have been formed on both coasts.

Making the program work for the public and the private sectors 

While $7.5 billion is more than the U.S. has ever spent on EV charging, it’s ​“only a fraction of what’s needed this decade” to achieve a truly nationwide charging network, according to Nigro of Atlas Public Policy. His firm forecasts that $90 billion will need to be invested in EV charging to meet the administration’s goals for moving from fossil-fueled to electric vehicles. Other studies have projected the need for even bigger investments.

The federal government is aware of this. The initial federal funding, which can cover up to 80 percent of the cost of projects, is geared to drive even more private investments. 

“It’s pretty easy to say that utilities or governments should pay for all the infrastructure, but that’s not going to create the scale [or] the efficiency we need,” said Richard Kauffman, the board chair of Generate Capital who’s held a variety of top energy policy positions in New York state government. ​“We don’t need a bunch of stuff put into the utility rate base, and there’s never enough government money.”

That means federal and state agencies face a balancing act. One of the chief goals of the $7.5 billion is to help bring chargers to areas where the commercial proposition for them isn’t yet strong enough to attract private companies. At the same time, government funding plans need to ensure that the chargers they help deploy can earn enough to survive after government funding stops.

“We need to have the federal dollars, just as we have state dollars, leveraging private dollars to go further,” EVgo’s Levy said.

To get the most value out of this pump-priming investment, state and federal agencies should allow companies like EVgo to begin early-stage work such as site acquisition and permitting before funding is finalized, since that will save time and reduce costs, he said. They also shouldn’t be ​“overly prescriptive” about where private companies deploy EV-charging equipment, he argued.

At the same time, part of the federal government’s mandate is to push private companies to go where they haven’t yet gone, said Garrett Fitzgerald, senior director of electrification for the Smart Electric Power Alliance trade group.

“EV chargepoint operators and EV network service providers have only recently started to turn a profit on their most highly utilized station locations,” he said in an email. That’s why they’ve concentrated in urban and wealthy areas, creating charging deserts near rural and lower-income communities. But putting chargers in places where they won’t see a lot of demand in the early years is necessary ​“to instill consumer confidence” that EV owners will be able to ​“travel freely.”

All in all, there are a lot of factors to balance, with the potential for missteps along the way. But ​“we’re not starting from scratch,” Berube said. ​“We’re going to deploy what we think is a forward-looking set of guidelines, and eventually requirements” for states to follow.

Molchanov at Raymond James added that states such as California and New York can share their experience with other states that aren’t as far along in EV charging. ​“There’s no need for federal agencies to reinvent the proverbial wheel,” he said.