In multi-family apartment communities, it’s no question that electric vehicle (EV) charging stations are increasingly becoming the new must-have amenity to attract the highest quality tenants. This is no longer a speculative trend but a rapidly growing market with ambitious targets as every auto company from Audi to Ford is investing billions of dollars into new EV models hitting the road beginning 2021.
That said, unlike other amenities such as a vending machine with a simple pricing model of selling the soda for more than the purchase price, monetizing the energy consumed by electric vehicles (EVs) tends to be a little more complicated since electricity is a shifting variable cost.
There are plenty of companies that can manage some of the moving parts for you, but they don’t always do the best job at educating outsiders in a digestible way. This may have worked to date, but the next wave of EVs are geared towards renters, and the managers of these apartment properties tend to be diligent individuals that make financial decisions based on conviction.
Ultimately, educating the high level mechanics of EV charging will only boost confidence in green investments, enabling these investments to yield a greater ROI and encourage further activity in the private sector.
How it all Works
EV charging can conceptually be pretty straightforward. You purchase a certain amount of smart charging stations based on the size of your parking area. You can choose to purchase these stations from an end-to-end charger company like Xeal to handle everything from permits to equipment and installation. After installation, the stations are operational and self-managed with a smartphone app that enables EV drivers start the charger and pay a fixed rate (Ex: $2/hr or $0.32/kWh) for their electric consumption. The driver revenue is collected to monetize the electric costs that the building pays for charging at this amenity.
The more challenging part is monetizing the amenity effectively. The price of a soda bottle isn’t changing as it sits in the vending machine, but the variable cost of fueling an electric car fluctuates dramatically by two equal parts.
- Time-of-use (TOU) — Clear Cost
TOU is best understood on a macro level— Utilities charge time-of-use rates to balance energy distribution across a given region such as NYC or LA. TOU works with basic economics by charging higher rates when energy is in high demand and lower rates when energy is in low demand, such as overnight, to incentivize balanced behavior in a given region and avoid power outages or blackouts. No one wants to be the apartment building that experiences a blackout while tenants are streaming the final quarter of the Super Bowl.
The reason TOU is commonly understood is because utilities share these variable rates publicly and they tend to be predictable and consistent across a region. For this reason, it’s not very difficult to monetize this part of the equation.
2. Demand Charges — Hidden Cost
Let’s clear up one big misconception first — commercial electric tariffs are very different from your electric bills at home. At home, you might be paying a fixed rate for how much energy you use. Maybe the price varies at different hours or maybe the price varies after a certain amount of energy consumption. For homeowners, TOU is the only cost you need to worry about.
However, at your apartment complex when you deploy charging stations in a shared setting on a common area meter it most likely is on a commercial rate tariff with demand charges (um what?) This second component of your bill can be over 50% of your electric bills.
Demand charges occur on a micro level since this cost is specific to a building. The utility company essentially penalizes the property for going over their power limit, similarly to going over the limit on a cellular data plan at an amplified rate.
Peak demand charges occur when your gym is at full occupancy, the garage lights turn on, the elevator is on its way up, and your leasing office has the AC set on 71 degrees during a heat wave. At this moment, your building will be hitting its "peak" power use. We have seen this peak double at most apartments as soon as you add chargers, which effectively can double the electric bills. For reference, one charger uses the equivalent electrical capacity as an average size US home.
The reason demand charges are commonly disregarded is due to the fluctuating components in the equation that make it very difficult to manage.
- For starters, every car consumes a different amount of energy based on the battery size (aka total energy needed for a full tank), and the rate at which the battery consumes that energy (How long it takes for the car to chug electrons). This is the demand side of the pricing model.
- To make matters more complicated, every building is billed differently for electricity. This varies based on type and size of building, region, seasonal weather variables, number of appliances, power needed daily to run those appliances, and when those appliances are being used. This is the supply side of the pricing model.
The only way to eliminate this is to control both sides of the supply and demand equation. The unfortunate reason most charger companies don’t mention this hefty cost to property owners is because there’s nothing they can really do about it.
The New Status Quo
Xeal’s patent-pending technology takes a holistic approach to turn a cost center into a profit center. Our proprietary building-integrated software studies the building’s historical energy data and then syncs this data with our AI engine in an automated way to accurately predict building power supply 48 hours in advance.
This predictive data enables us to optimize power capacity with vehicle battery needs and deliver up to 3x faster charging, while delivering a substantially higher ROI for the building owner.
The exciting part is this is just the tip of the iceberg. With our building-integrated system, we can fit 2–3x the amount of charging stations on a property without any infrastructure upgrades, enabling disadvantaged communities with limited panel capacity to go electric.
Our goal is making clean energy accessible and equitable for everyone. We are thrilled to continue expanding our (net zero carbon) footprint and educating our community in the race to 100% electrification.