Over the better part of the last decade, electric vehicle (EV) charging stations have become one of the topics of conversation within the construction industry. The rise of the EV charging market has been nothing short of staggering – with the industry set to grow from $17.6 billion in 2021 up to $112 billion in 2028. The construction industry is at the center of this market growth with some states and cities requiring developers to include EV charging stations in new projects and many other commercial builders eager to add stations as an amenity for their customers.
The U.S. government is also signaling a growing commitment to becoming a catalyst for this industry: earlier this year, the Biden Administration announced a $7.5 billion plan, dispersed through the bipartisan infrastructure law. Additionally, the government is buying an increasing number of EVs that will be reliant on charging station infrastructure, now and in the future.
Though the funding is a welcomed addition to a field that is truly starting to take off, there are still complexities to be resolved—though money is set to flow, the broad ecosystem is still left with challenges for designing and operating these stations. Additionally, those firms who are beginning to take on federal projects will also have to continue driving forward on private projects in their queue. The near-term “winner’s problem” for construction and engineering firms could create logistical challenges as well.
Following are critical questions stakeholders in the construction industry should keep a finger on the pulse of as funding and resources continue to grow.
When will EV charging station funding be disbursed?
States have already submitted plans and been approved for highway EV stations; funding disbursement is anticipated over the next 5 years. In fact, $1.5 billion of funds is already available—which is ahead of schedule, according to the Department of Transportation. Additionally, the government has provided a funding table and additional information on future plans. Despite this information, stakeholders should pay close attention to any logistical changes or challenges as the program continues to roll out and adjust plans accordingly. The fact that significant funds have already been distributed—as evidenced by President Biden’s recent announcement of the release of $1.5 billion to cover 75,000 miles of highway—signals a smooth rollout of this program.
Will there be supply chain challenges with materials and labor necessary for EV charging stations?
It is no secret that supply chain challenges have emerged for nearly every industry, from semi-conductor shortages to raw materials for building supplies. What’s more, over 90 percent of construction companies have cited labor challenges that are driving up costs and delaying projects. EV charging stations will prove challenging given the skilled labor they require, including electricians, which are also in a shortage.
What other challenges are ahead for private companies contracted to work with federal and state funds?
Coordination between Federal, State and private subcontractors frequently comes with logistical challenges. However, in this instance, private companies that are already delivering EV charging stations will likely be contracted by State DOTs for the installation of the federally funded EV charging stations. As part of the infrastructure bill, the Joint Office of Energy and Transportation was formed to help coordinate and streamline the activities between the U.S. Department of Energy and the Department of Transportation. From there, State DOTs are required to submit requests for funding.
That said, there could be other unforeseen logistical challenges. For instance, it could be difficult to meet standards for monitoring network connectivity requirements and enabling secure remote monitoring, diagnostics, control and updates from state to state, among other things.
What does this mean for private sector EV charging development moving forward?
To date, the EV charging marketplace has been dominated by private sector investment and development. Now, as public funds are set to be disbursed, the investment raises questions about private sector development moving forward. But very little is likely to change. As more EVs hit the roads, demand will continue to soar, opening new opportunities for charging stations once the $5 billion in funding is tapped out. This includes launching charging stations in new highway locations and other “local” charging options.
In addition, perhaps the biggest opportunity for private growth is in rural and areas outside of the more affluent areas currently driving EV growth. Once EVs become more affordable, more EV charging stations will be needed nationwide rather than in a handful of EV hotbeds. Therefore, even though the public sector is currently driving development, the private development space will play a significant role in adding to the foundational charging network being built today.
What about power generation and transmission?
Beyond just the nuts-and-bolts elements around EV charging stations themselves is the uncertainty around the proverbial elephant in the room: where is the electricity going to come from and how is it going to get to the stations themselves? When it comes to generation, many have pointed to the amount of available roof space that western cities have for solar electric production as a ready-made solution. But, even if panels are deployed en masse, this doesn’t address the fact that the electric grid underpinning it all—and the related regulatory oversight—will need to be updated to cope with demand.
We have seen guidance in states like California and Washington that call for the installation of electrical panels for chargers, plus wiring between the panel and the electrical service entering the new facility. However, without firm dispatchable power—an electrical power system, such as a power plant, that can be turned on or off and can adjust power output supplied to the electrical grid on demand—these codes are unenforceable without enough available power to keep the lights on and EVs powered up.
Will there really be enough EV charging stations for widespread national adoption of EVs to make private and public fund investment worth it?
There is likely to be a backlog of projects to work through when it relates to EVs and charging stations—and while the direction of the future is clear, it may take time to get there. Additionally, questions remain about which areas of the country will be best served by EV charging stations. A recent article in The Wall Street Journal highlights the challenges faced with the EV charging network, particularly in rural areas. Critics note that though EV sales are rising, they are still a fraction of regular vehicle purchases, while proponents argue that making charging stations more accessible and common will make consumers more comfortable with purchasing. Time will tell how this scenario balances, but construction industry stakeholders should keep watch across demographics and geographies to best service those areas in highest demand.
Needless to say, how these questions are going to be answered successfully needs to be a foremost priority for every stakeholder involved. As the EV landscape continues to expand, stakeholders across the board have challenges to solve for—and rewards waiting at the end of the finish line.
