With the EV charging market expected to exceed $823 billion by 2030, owning and investing in EV charging stations has attracted the interest of business owners and entrepreneurs. One of the biggest draws is that EV charging stations can be operated as either a standalone business or a value-added feature of an existing business.
So how can you maximize your returns from owning an EV charging station? Here are some factors to consider that have an impact on ROI calculations.
1. Tax Incentives and Rebates
The Alternative Fuel Infrastructure Tax Credit, which provides a 30% tax credit against the installation costs of commercial EV charging station infrastructure up to a maximum of $30,000, expires at the end of 2022.
However, the Biden Administration’s Inflation Reduction Act, signed into law in August 2022, resurrected the credit effective January 1, 2023, and more than tripled the maximum credit available to $100,000.
The new Alternative Fuel Infrastructure Tax Credit provides a Federal income tax credit of 30% of the installation cost of a public EV charging station (or 6% in the case of property subject to depreciation). Permitting and inspection fees are not included in covered expenses, and certain conditions apply. For more information, visit the U.S. Department of Energy site regarding the tax credit.
In addition, there are dozens of federal laws, programs, grants, and incentives related to EV charging station installation. See the complete list here.
The National Conference of State Legislatures reports that as of July 2021, at least 47 states and the District of Columbia offered public legislation or private utility incentives to support the deployment not only of EVs but also of supporting infrastructure. Learn more here.
2. Installation and Operational Costs
Equipment and Installation: Current baseline cost to install a Level 2 charger is $500-$800 for equipment and $800-$2,000 for installation, for a total of $1,300-$2,800. In other words, a three-charger station costs between $3,900 to $8,400 to install. These costs don’t include building or parking lot renovations to accommodate the charging station, permitting, and related expenses.
Networking Fees: Charging stations require networking to provide smart capabilities such as payment processing, access control, session limits, and more. There are a variety of network providers, such as Amp Up, Chargepoint, Enel X, and others.
Although some charging equipment does not require software, you will need equipment that does require it because software is necessary to bill the cost to the EV user. Software costs vary based on various service factors but generally cost $100-$300 per port per year.
Ongoing Maintenance: Periodic maintenance of your equipment and site will be required to maintain the best possible uptime and reliability.
Cost of Energy Sold: The cost of energy sold per kWh will vary based on location, time of use, and other factors. You can obtain this information from the utility serving your area.
Operating Costs: This includes payroll, advertising, etc. Overall, EV charging station operating costs are low.
3. Flat-Fee Charging vs. Metered Billing
Flat-Fee Charging: A straightforward payment system is flat-fee charging, or “pay as you go” charging. Users pay one rate regardless of whether they plug in for 30 minutes or a couple of hours.
Customers are willing to pay for charging capabilities when out and about, especially in areas where charging is in high demand, due in part to range anxiety. A survey from early 2022 found that EV owners are willing to pay $3 per hour for charging – and a significant number (12 percent) up to $4 per hour – even though they could charge at home for $0.75 per hour.
Metered Billing: With metered billing, drivers pay only for the charge they need, calculated by charging time, parking time, or energy used. If your chargers aren’t powered by solar energy, charging by energy used may work best (especially if electric rates are high in your area). However, metering by charging or parking time may be best for retail locations, where drivers come and go, and you have a steady stream of customers each day instead of recurring visitors.
On its website, Evbox offers an informative summary of five standard charging models for EV charging stations, including charging by kWh, charging by time, charging by a combination of kWh and time, charging by flat rate, and offering free charging services.
4. Payment Structure
Decide how you want to bill customers. You can:
- Bill by the amount of energy used (ex: 20 kWh used x $0.30/kWh = $6.00)
- Charge a flat hourly rate (ex: 2 hours x $4.00/hour = $8.00)
- Combine the two (ex: $0.25/kWh + $2.00/hour.= $7.00), giving a lower net rate while also encouraging the user not to loiter in the space when done
The actual amount of revenue earned will depend on the location and frequency of station use. For example, charging stations near a block of hotels will draw a higher percentage of customers who plug in for hours at a stretch, and chargers at a gas station will attract more users who just want to plug in for 15-30 minutes.
Property managers can offer free charging to loyal customers while billing other one-time visitors, link charging privileges to membership in a group or club, or restrict use to residents of multi-family properties owned or managed by the same company. You can set up the ability to charge certain user classes differently in your charging station software.
5. Increased Business Profits
Business owners can increase profits by adding an EV charging station, increasing their ROI. Many EV owners choose which businesses to patronize based partly on EV charging access. Having an on-site station thus gives you a built-in competitive advantage. Studies have shown that EV charging stations not only bring in new customers but also increase the time people spend inside the business and the amount of money they spend. Increased profits can cover some of the regular operating and maintenance costs.
6. Increased Property Resale Value
Charging stations provide a highly valued service to customers and tenants who are accustomed to visiting the property regularly for that purpose. Adding EV charging can increase Class A property values upon resale.
Helpful Tools:
- Energys offers an online tool to estimate how much you can earn from owning an EV charging station.
- Evbox offers several helpful tables demonstrating revenue calculations for different sizes and locations of charging stations.
- Evrange provides an online tool that you can use to estimate net revenue for the first two years of ownership.
Final Thoughts
Many factors go into the ROI of an EV charging station beyond station revenues. Tax rebates and incentives, installation and operating costs, billing methods, increased revenues at associated businesses, and increases in property value and marketability all come into play.
Are you interested in learning more about how to maximize the ROI of your EV charging station? Join us at the EV Charging Summit & Expo!
