This original article was first published on the Convenience Store News blog.
Will electric vehicle (EV) charging be profitable for convenience stores?
It all depends. If the question is whether charging will make money for the entire industry — nearly 150,000 locations in the United States alone — there may be too many wild cards for a definitive answer, at least for now. (Admittedly, I haven’t asked ChatGPT.)
For example, the policies, fees and incentives of utilities and government agencies are a major variable in the pro forma for EV infrastructure, and yet these costs and constraints vary across the country and are changing rapidly.
Some utilities continue to tweak their rates to encourage charging during off-peak hours (they might drop their rates from midnight until sunrise, for example). And yet these policies create a drag for business models that count on daytime users topping off their batteries and then strolling into the c-store to buy meals and drinks.
Other utilities are slapping hefty, demand-based charges on c-stores that draw large amounts of power during peak hours. These fees can be a decisive factor in whether installing and operating chargers will pencil out. In many cases, they are high enough to force operators to pass the costs on to customers.
The lack of uniform standards on utility rate structures means a c-store company’s national or regional portfolio could contain a dizzying array of moving-target costs.
Benefits of Energy Modeling & Audits
The good news is that convenience store retailers can begin to get some answers — by starting small and focusing on specific locations and markets.
For years now, engineers have used sophisticated energy models to help c-store companies better understand their site-specific consumption patterns. Traditionally, this has applied to expenditures related to HVAC, lighting, refrigeration, hot water, fuel pumps, and food and beverage or other equipment.
Similar modeling techniques can be used to simulate the costs and consumption patterns associated with EV charging infrastructure. In the case of c-store owners, that could mean running building and site simulations based on the store’s locational characteristics and likely traffic patterns.
Models also can be used to game-plan different rate-structure scenarios based on conversations with utilities or regulators in specific markets. Energy audits of existing sites can serve as the foundation for such predictive modeling.
In addition to clarifying the EV charging picture, the energy modeling/auditing process can support the retailer’s design decisions, code compliance and operating strategies for sites and stores.
Diving Into the Details
The engineering and modeling team should account for the EV charging tech specs required by the local utility, which can significantly shape the cost of equipment, installation and maintenance.
For example, having one combined electrical service serving both the building and the charging station can be more cost-effective for retailers. Nonetheless, many utilities now require c-store operators to install a separate electrical service for DC fast chargers. This additional infrastructure can add cost and lead time for DC fast-charging projects, pushing back opening dates.
Engineers also should be able to advise retailers on the existing or likely trajectory of EV infrastructure and policies in the market. States like California and Massachusetts were already providing EV-infrastructure incentives prior to Congress’ approval of $7.5 billion for a network of up to half a million public, high-capacity DC chargers. Other states are still forming committees and figuring out how they will parcel out the money.
At the local level, meanwhile, some municipalities are more aggressive than others about enacting policies designed to promote decarbonization.
In state and local markets focused on accelerating the energy transition, c-store companies may be compelled to install a significant amount of charging infrastructure — for example, building code changes that require EV chargers and/or electrical connections in new or redeveloped parking lots. California, for one, has established three standards: EV Capable, EV Ready and EV Installed.
Moreover, convenience stores’ site-specific infrastructure decisions will increasingly be influenced by government policies and priorities on EV charging. The federal infrastructure law calls for EV fast-charging stations every 50 miles or so along certain transportation corridors. That means officials could prioritize grant making for some c-store sites and not others.
Smaller governments could exert pressure on c-stores as well to provide charging infrastructure in underserved neighborhoods. “Local and city governments have a better understanding of the mobility needs of their communities and how programs should be designed to promote equitable access to charging,” analysts from the Rocky Mountain Institute wrote in a February 2022 report.
Engineers focused on energy efficiency and EV charging can crunch the numbers for retailers on any new state-level building code requirements for charging infrastructure. They can also track any local policies that could affect site decisions and advise on emerging tech specs at the federal level. (Read “For Smart EV Charging Rollouts, Geek Out on the Tech.”)
Putting the Pieces Together
Industrywide changes clearly are on the horizon. For now, though, EV charging ROI needs to be a smaller-scale calculation.
Pilot programs allow retailers to install two or more fast chargers at a select number of sites. At low risk and low cost, they can examine the interplay of costs, regulations and incentives and watch how these installs affect sales and the flow of vehicular and pedestrian traffic.
In a possible side benefit, such efforts might also “future-proof” these locations by beating competitors to the punch at a time of severe material and equipment shortages and agonizing construction timelines.
From energy modeling to pilot programs, being proactive on EVs stands to yield valuable information without incurring the massive costs and risks that can be associated with portfolio-wide rollouts.
It’s a way for c-store companies to figure out what works, learn from their mistakes, and start piecing together what scaling up could look like. In my next column, I’ll focus on the journey taken by one c-store company with a regional footprint.
Scott West has partnered with multiple retailers on electric vehicle charging projects in his role as a senior mechanical engineer and commissioning and energy lead at HFA in Fort Worth, Texas. He can be reached at firstname.lastname@example.org.