Here’s the secret to Tesla going mainstream

Fortune
June 11, 2015

By Nancy E. Pfund:

Mak­ing charg­ing sta­tions avail­able to dri­vers at home will be key to mov­ing elec­tri­cal vehi­cles beyond a niche mar­ket, and util­ity com­pa­nies are in the unique posi­tion to make this happen.

Like rooftop solar—now one of America’s fastest grow­ing indus­tries—elec­tric cars are poised to hit their tip­ping point. As we’ve seen with other clean energy tech­nolo­gies, each prod­uct gen­er­a­tion brings rapid improve­ment. Start­ing this fall, the sec­ond gen­er­a­tion of elec­tric cars will be arriv­ing at show­rooms —start­ing with the Tesla Model X and Chevy Volt – offer­ing greater range and more model choices.

As with renew­able energy, tak­ing the elec­tric vehi­cle mar­ket to the next level will require big invest­ments in cre­at­ing a robust net­work of pub­lic charg­ing sta­tions and cre­at­ing new busi­ness mod­els to make such invest­ments worth it.

It has been widely rec­og­nized that the lack of pub­licly avail­able charg­ing infra­struc­ture – includ­ing at work­places and apart­ment build­ings —is a key bar­rier to mass adop­tion of elec­tric vehi­cles. The infra­struc­ture gap is in large part a “financ­ing gap.” As a recent National Acad­e­mies of Sci­ence study on elec­tric vehi­cle bar­ri­ers con­firms, it is hard to iden­tify any stand­alone pri­vate sec­tor enti­ties that have an “attrac­tive busi­ness case for absorb­ing the full cap­i­tal costs of invest­ments in pub­lic charg­ing infrastructure.

Util­ity com­pa­nies are in the unique posi­tion to finance charg­ing sta­tions because they can cap­ture the grid-​​wide ben­e­fits of large-​​scale elec­tri­fi­ca­tion, espe­cially the ben­e­fit of greater uti­liza­tion of fixed assets. How­ever, the conun­drum for own­ers of charg­ing sta­tions is that while a safety net of more sta­tions is needed to drive sales and fur­ther reliance of cars using elec­tric­ity for their fuel, the vast major­ity of the charg­ing is still likely to hap­pen at home. By cre­at­ing incen­tives for home charg­ing to hap­pen duringoff peak hours, util­ity com­pa­nies can gen­er­aterev­enues that exceed their cost of ser­vice, even with time-​​of-​​use rates.This is because the dis­tri­b­u­tion sys­tem and other fixed assets are sized to meet peak loads and thus are under­uti­lized dur­ing off-​​peak hours.

To read the full arti­cle, visit For­tune.