Across the nation, there’s a growing chorus of politicians, automakers, and salespeople telling everyone and anyone about the need for electric vehicles (EVs) and the charging infrastructure to make them a viable alternative to combustion engines. Plug-in electric and hybrid vehicles are key in the fight against climate change and much better for the environment than conventional vehicles, which is the main reason they’re being pushed so much by the Biden administration and governments worldwide. EVs produce zero tailpipe emissions, and widespread adoption could considerably improve air quality in many towns and cities. In the U.S., an increase in electric vehicle ownership can also reduce the need for domestic oil and gas production and imported oil. The U.S. transportation sector currently accounts for 70 percent of nationwide petroleum consumption, according to the U.S. Department of Energy (DOE). Increased use of energy-efficient electric and hybrid vehicles could significantly reduce dependence on imported oil and fossil fuels.
Commercial building owners may have heard the buzz about electric vehicles and that adding EV charging stations to their properties could come with several benefits. Automakers and the Biden administration are heavily investing in electric vehicles at the moment, and there’s been much research suggesting there will be an exponential increase in EVs on the road within the next decade. For example, General Motors says it’ll stop selling diesel-powered vehicles by 2035, and Toyota announced it’ll have 70 electric vehicle models available by 2025. EVs accounted for just 1.8 percent of all new vehicle registrations in the U.S. in 2020. But, the number is rising fast and, according to a recent IHS Markit study, EVs will command 10 percent of the American auto market by 2025.
For property owners, organizations like CBRE have suggested that electric vehicle charging stations will one day be an expected workplace amenity, no different than free Wi-Fi or snacks in the breakroom. The same may go for multifamily properties, where tenants will expect or demand a certain amount of charging stations when searching for a new place. EV charging stations will likely soon become part of the conversation for every type of property, and real estate owners who invest in and install them can now get ahead of the curve. While electric vehicles and their charging stations may become much more popular soon, the property owners who have already looked into them, though, may tell you this: they aren’t exactly the simplest things to install. Setting up EV charging stations can be a complicated process, and it can also come with many hidden costs.
In many cases, property owners can get state and local utility rebates that cover a considerable portion of installing EV charging stations. But according to a recent McKinsey report, the costs of charging hardware, power distribution, and software and services will typically far exceed the hardware cost of the charging station alone. These hidden costs can add up. McKinsey’s report said hidden costs like electrical installation and on-site upgrades could account for 50 to 75 percent of total upfront costs depending on the type of charger. Electric grid upgrades are necessary in most cases if on-site power availability is inadequate. Trenching and boring projects may also be needed to retrofit a building that was designed before EV charging was ever considered. However, the largest ‘hidden’ cost is the increased electricity use, especially if EV owners are charging vehicles during peak demand times when utility rates are highest.
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Consultants say now is the time to install EV charging at commercial properties, but remember it will take a good bit of careful planning and scheduling. Charging units aren’t cheap, and they come with hidden costs, but delaying installations could lead to more expensive retrofits in the future. Property owners should consider planning early and thinking long-term with EV chargers by integrating them into their capital planning process. There are definite challenges to installing EV charging stations, but a wait-and-see approach could backfire. If the electric vehicle forecasts come true and they’re ubiquitous by 2030, early investment and working through the challenges now will pay off significantly.
The hidden charges of EVs
There are many things to consider before adding EV chargers, and the first one is the level of the charging station. Level 2 stations are the most commonly used in workplaces and other commercial properties, as they provide about 20 miles of range per hour and take between three to six hours for a full charge. Level 2 stations cost between $1,000 and $4,000 per port, and the installation costs can range from $2,000 to $10,000. Thanks to federal, state, and local incentives, property owners usually don’t have to pay the full price. For example, a commercial Level 2 charge station and installation in Michigan can qualify for up to $5,000 off per station, according to Green Lancer, a solar design, EV, and engineering firm. But, don’t forget about the hidden costs we mentioned.
Properties need to be prepped for EV chargers, and taking these first steps is often the most expensive. These expenses include installing wire conduits and connectors, pouring new concrete, parking lot restriping, and new signage guiding visitors to the stations. Ensure that an EV charging station quote includes the prices of all these necessary activities and materials. For Level 2 chargers, it’s usually always essential to upgrade the power supply and distribution transformer, which can account for up to 20 percent of the installation costs. Sometimes major grid upgrades are needed, and the lead times for completing the projects could add 12-to-18-month delays. Property owners can mitigate these extra costs and delays by planning for future EV chargers during construction and retrofits.
Other considerations for adding EV chargers to parking garages are even more unexpected. Because EV batteries are so heavy, electric vehicles can weigh considerably more than those dependent on fuel. For example, the Edition 1 Version of the GMC Hummer EV has lots of batteries for extended driving range and power and weighs more than 9,000 pounds, according to Road & Track. To put that in perspective, it’s about three times the weight of a Honda Civic. “You’d have to look at your whole parking structure with a building engineer,” said Chris McKenty, VP of Sales and Marketing at SKIDATA, a parking space management firm based in Austria. “Can the structure handle it if you have all these heavy electric vehicles parked on the top floor? You may be adding an extra 60,000 pounds onto the weight of that floor deck.”
As we mentioned, among all the hidden costs, the spike in electricity use can be the most. Peak demand charges can be significant in certain parts of the U.S. If all the EV owners are charging simultaneously, the costs can add up. McKinsey’s report notes that demand charges for a 16.8 kW charger in the U.S. can reach $1,600 per year, meaning that the cost represents about 30 percent of the EV charging station on a recurring basis. One solution for increased energy expenses is using energy management tech to control charger use, such as onsite power generation and stationary batteries. On-site batteries can charge from the grid when costs are lower, store the power, and then release it when demand from EVs is higher.
“Adding the low-amp charges is fairly easy, but when you start to look at volume, the key is how can you get power in that’s cheap?” said McKenty, whose firm, SKIDATA, has formed a partnership with Schneider Electric to integrate EV charging with parking garage management. “We’ve looked at alternative forms of power like with a client we have in Florida where we put a canopy of solar panels on top of the parking garage, and then we use one of the spaces below to put the batteries, so the garage is creating its own power. It’s a microgrid that enables the garage to not need as much power from its electrical grid.”
Pay now or pay later
In addition to the hidden costs and complexities of installing EV chargers, property owners also have to manage them once they’re set up. The maintenance will usually be the task of a facility or sustainability manager. It’ll be vital to set up clear guidelines in the areas of administration, registering EV charge users, liability, the sharing of the chargers, and pricing. Employees or tenants who use the chargers should register their vehicles and sign a standard waiver. There also need to be clear policies on what happens when there aren’t enough stations available to service the EVs that need a charge. Sharing options typically include assigning spots to specific employees or tenants, using an internal reservation tool, setting up well-enforced time limits, or letting people self-manage it through a dedicated intranet forum or listserv. All this seems pretty straightforward, but as anyone with experience in parking lot management knows, there’s potential for drama and conflict.
Another thing to consider is if you’ll invest in networked or ‘smart’ EV charging stations. These Wi-Fi-connected stations limit access to specific users (like residents of an apartment building), charge users for electricity consumption, monitor the station’s performance, and provide usage reports. Networked stations cost more than non-networked ones, but they may be worth it because they are easier to manage. A growing variety of EV charging equipment providers offer turnkey and user-friendly solutions. Many of these vendors will bundle everything together, walking through the steps from installation to management and maintenance of the systems. For example, with the SKIDATA and Schneider Electric partnership, McKenty says that when working with existing buildings, the companies get involved by “putting in new conduits, power lines, the EV charging systems, and setting the whole thing up.”
The benefits of adding EV charging station properties are numerous, and many people say now’s the time to do it. The Biden administration, automakers, and utilities nationwide heavily invest in electric vehicles and charging infrastructure, and more municipalities require EV charging in new construction. While adding charging stations is a wise move, don’t mistake it for an easy one. The key is to plan early for EV adoption and think of the big picture by building out electrical capacity during construction and planned retrofits. There are many hidden costs to adding EV charging stations, and these costs can be much higher if projects are delayed and retrofits are required down the line. Working through the challenges of adding charging stations now will prevent headaches in the future, when electric vehicles may be much more common.