The California Public Utilities Commission has cleared the way for electric car charging companies to sell power, which, ironically, is something that might help kill most of them. The decision has been expected.
Until the ruling, only utilities could sell power in California. (The rule applies in most other states, as well.) Carving out an exception for charging stations will essentially allow them to erect public charging stations and sell power by the kilowatt-hour. Pull into 7-11, get some Slim Jims and a Big Gulp, charge up the car: there's your Brave New World moment for the day.
Charging companies have been planning to get around the issue by selling 'services' to consumers. Consumers would pay companies like Aerovironment, Coulomb, Better Place or Ecotality $20 to $60 a month under a subscription plan. For that, consumers would get electricity, access to rapid chargers or benefits from rental car companies.
The challenge is that this is a market with few existing customers, low barriers to entry and high capital costs. To top it off, most consumers will charge their cars at home, where the power will come from their local utility. Consumers will rely on public charging stations -- at least for the next several years -- infrequently. And when they do, they might opt for the free chargers set up by hotels and retailers to attract customers.
Why is the ability to sell power not so good for these companies? Subscriptions are more lucrative than opportunistic charging. A Nissan Leaf has a 24 kilowatt-hour battery pack. Power costs 10 cents a kilowatt hour on average. Even if you bumped it up to 30 cents a kilowatt hour -- the usual convenience store markup -- a full fill-up would only cost $7.20. And because fully charging the car would take close to five hours, most consumers will likely use public chargers to top off, reducing the amount spent.
The subscription model offers advantages and many consumers will opt for it. It makes sense. Better Place will lease batteries with their subscriptions, which could be attractive. The services may also get bundled in when they buy their home charging station, which consumers will need. But if consumers find they don't use the public charging stations much, they might decide to scale back on the subscriptions after a while and just risk using the "Hot to Go" charging station.
Either way, that $7.20 is less than $20 a month for a subscription fee.
Consolidation in this market looms.