California is proposing a major investment in electric vehicle infrastructure: Here’s what you need to know

This summer, California made national news by adopting a rule that will require all new passenger vehicle sales to be zero emission by 2035. At the same time, the state is also considering a complementary rule to replace medium- and heavy-duty trucks and buses to also be zero emissions. To support this transition, California will need to make a major investment in electric vehicle charging infrastructure.

The California Energy Commission estimates that by 2030 California may need up to 1.2 million EV chargers to support an estimated eight million passenger electric vehicles and an additional 157,000 chargers to support non-passenger vehicles, such as trucks and buses. There are currently over 1.2 million electric passenger vehicles on California’s roads, and significantly fewer chargers than will be needed in 2030. The charging needs of trucks and buses are vastly different from those of private cars — in terms of power demands, locations and access — just to name a few. Unlocking both private and public charging for these vehicles will be a foundational investment to ensure the transition to zero-emission vehicles happens as quickly as possible.

To supplement the over $6 billion of recently authorized state taxpayer funds and funds from the federal government (at least $383 million dedicated for California from the Infrastructure Investment and Jobs Act plus more monies coming from the Inflation Reduction Act), the state’s utility regulator is poised to authorize $1 billion of new ratepayer funds between 2025 and 2029. This is in addition to $1.8 billion of ratepayer funds already allocated. From these major ratepayer investments, the utility regulator in California is preparing to create a rebate program to promote electric vehicle infrastructure deployment. The proposal contemplates utility customers throughout the state being able to leverage multiple funding sources by drawing simultaneously on federal and state funds as well as the new utility rebate programs.

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This proposal is not brand new — the agency has been working intensively with stakeholders to develop this rebate program for several years. Under the proposal, California plans to prioritize investment in low-income, underserved and tribal communities to ensure that customers who lack access to the benefits of transportation electrification will be able to participate. Approximately 65% of funds are to be set aside for customers in these communities. In addition, the rebate program places heavy emphasis on medium- and heavy-duty vehicles, specifically indicating that it is in the public interest to concentrate these infrastructure investments on heavily polluting trucks because they have an outsized impact on local air quality. The rebates for medium- and heavy-duty vehicles will be different than those for passenger vehicles, which makes sense since the power demands are more significant. These are positive steps forward.

Unfortunately, not all aspects of the proposal are perfect. A lot of the implementation is being deferred to a handbook development process, which could be another significant delay in this process that has already been ongoing for four years. In addition, the proposal does not yet have clear metrics or targets, so it will be hard to judge if we are on the road to success or hitting a dead end. As with all rules, the details matter, so deferring to a handbook is concerning. And in some cases, the proposal would commit to pathways that are flawed in ways that are already foreseeable. For example, the proposal would prohibit any funding for Fortune 1000 companies on the grounds they do not need rebates. While the idea of focusing resources on smaller fleets that may not have access to capital is a laudable goal, the facts on the ground suggest that such an outright ban will backfire. Given the local air quality and other non-energy benefits of electrifying all commercial fleets in the state, there is a critical role for ratepayer support to electrify fleets of all sizes. Moreover, large fleets are expected to face earlier electrification requirements as part of the soon-to-be-adopted Advanced Clean Fleets rule, and in any event are typically first movers deploying the newest vehicles, charging technology and distributed energy resources — thereby helping to facilitate expansion of the market. Rather than banning these companies’ program participation, the program could set aside a portion of the funds to ensure the right balance between small and large fleets.

Another likely misstep is a proposal to prohibit electric utilities from owning any behind-the-meter charging infrastructure. While limiting utility ownership may be appropriate in most circumstances, with a state this size there are bound to be places where the private market will not supply the needed infrastructure. As we recently argued, electric utilities should be able to play a leadership role in the transition to a zero-emission vehicle future. Instead of a total prohibition, the program should allow utilities to request an exemption for specified circumstances if there is a compelling case for utility ownership.

Other changes to the proposal should also be made, including establishing clearer program goals and metrics, and ensuring an annual equity review. All of these changes will help shape the ratepayer investment in a thoughtful and prudent manner. Decision-makers should incorporate these changes before adopting the final program framework later this month. Each of these changes will make California’s transportation electrification journey more successful.

Michael Colvin, Larissa Koehler, Cole Jermyn and Pamela MacDougall contributed to this blog

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