TeraWatt Infrastructure targets a nationwide charging network for electric vehicle fleets

Who is going to build the equivalents of the gas stations, fueling depots and truck stops needed to charge the electric vehicles set to take U.S. roads by storm in the coming decade?

Neha Palmer, former head of Google’s energy strategy, sees a major business opportunity for companies that can answer that question as quickly and cost-effectively as possible. TeraWatt Infrastructure, the company she now leads as CEO, unstealthed on Wednesday — and it claims to have a good chunk of that crucially important work underway.

The San Francisco-based company announced it has more than $100 million committed from backers Keyframe and Cyrus Capital. That money will go to acquire property rights and to finance and manage EV charging infrastructure for fleet owners, charging network operators and others relying on a massive buildout of charging infrastructure to facilitate the switch from fossil-fueled to battery-powered passenger and freight vehicles.

TeraWatt also lays claim to ownership or site control at key logistics hubs and along highway corridors in 18 states — although Palmer, who spoke to Canary Media in an interview this week, wasn’t yet ready to specify the sites or partners the company is working with.

This is just the beginning of what Palmer sees as a coming land rush for EV charging sites to meet the country’s aggressive electrification goals. President Biden’s $2.2 trillion jobs plan includes $174 billion in investments to ​“win the EV market” over the next decade, with a target of about 20 million EVs and 500,000 public chargers by 2030.

Decarbonization experts have determined that the U.S. may need an even faster EV deployment than this in order to reduce transportation greenhouse gas emissions fast enough to prevent the worst impacts of global warming.

California, a vanguard in vehicle electrification, has directed $2 billion to date in utility and state incentives toward building out a charging network to meet its goal of having 5 million EVs on the road by 2030, but is expected to need quite a bit more.

“We believe the amount of capital required to truly support electrification at scale is in the hundreds of billions of dollars,” Palmer said.

The race to scale U.S. EV charging

But so far, the U.S. lags in EV charging behind world leader China and the fast-expanding European Union. New research from Bloomberg New Energy Finance pegs the U.S. charger supply at one per 20 EVs on the road, compared to one charger for every five EVs in China.

“This transition is coming, it’s coming at scale, and we are not ready in terms of infrastructure,” Palmer said.

Making up that gap will demand a massive and rapid buildout of charging infrastructure. So far, the country’s leading EV charging networks are just getting started on the expansion.

Electrify America, the EV charging network launched with funding from the Volkswagen Dieselgate scandal, has about 2,200 direct-current fast chargers deployed across the country, largely in partnership with state and local governments. This week it announced the latest $200 million installment of its $800 million commitment to build out EV charging in California.

Two other U.S. companies that are playing major roles in the buildout of EV charging infrastructure are EVgo, with about 30,000 chargers including about 800 fast chargers, and ChargePoint, with more than 18,000 chargers including about 150 fast chargers. Both have gone public via reverse mergers with special-purpose acquisition companies (SPACs), giving them access to capital from public investors to fund their infrastructure deployment roadmaps.

But careful planning and management of this rollout are vitally important to avoid the risk of unforeseen costs and delays that could turn the EV charging land rush into a public spending boondoggle — and a money-losing proposition for the private sector.

In a January interview, EVgo CEO Cathy Zoi described the tricky process of picking the optimal sites for its DC fast chargers, mostly sited in commercial parking lots and designed for use with passenger vehicles. The challenges range from selecting sites with divergent lease and purchase costs across geographies, to planning and allocating the cost and time necessary to secure grid interconnections.

All of those costs, plus the ongoing costs of operations, maintenance and managing the pricing and rate structures for the electricity it sells to customers, must be balanced against a seven-year payback period from chargers that may not see full utilization until the volume of EV drivers ramps up significantly, which could take years.

Barriers and bottlenecks to the expansion of EV charging

Palmer’s experience building out Google’s data center fleet gave her an in-depth understanding of the issues and obstacles involved in siting and developing high-intensity electrification sites.

“I’ve spent the past decade learning how to interconnect very high-demand electricity sites to the grid,” she said. ​“The energy-intensity of that business has [determined] where people have chosen to build.”

Selecting sites for EV charging presents the same issues, only at a much broader and more dispersed scale. Picking the right ones requires serious data collection and analysis chops. TeraWatt has ​“developed techniques and algorithms to determine which of those sites will be most advantageous” for its varied customers, she said.

Palmer is also drawing on her on-the-ground experience with potential bottlenecks like backlogs in utility interconnection and grid-upgrade queues. ​“We’ve already anticipated this, and we’re looking at things like how long it might take to interconnect to a specific location.”

This becomes particularly challenging for medium- and heavy-duty fleet vehicle charging hubs with grid loads in the range of 10 megawatts or more. Fleet operators with major electrification goals, such as FedEx and Amazon, are eager to take advantage of the lower lifetime costs of EVs versus diesel-fueled vehicles. But they also face significant pressure to avoid costly delays, whether in building the charging they’ll need or in getting vehicles charged quickly and often enough to travel their daily routes.

Optimizing the buildout of fleet charging equipment

For companies and agencies that want to switch to electric buses, vans or trucks, the upfront costs can be significant. Amply and several other startups have sprung up with ​“charging-as-a-service” models that bundle the costs of charging infrastructure and electricity rates into a predictable monthly fee. Others including Highland Electric Transportation and Proterra are bundling the costs of the electric vehicles themselves, or the batteries inside them, into deals with school districts or transit agencies.

TeraWatt is planning the same ​“develop, own and finance” model for its charging hubs, backed by an as-yet-undisclosed amount of capital to be made available through Keyframe and Cyrus Capital, which jointly manage portfolios with more than $3 billion in assets.

“A lot of companies want to electrify their fleet but don’t want to put out the capex to buy the infrastructure and the siting,” she said. TeraWatt is also considering the addition of on-site solar power and battery storage to mitigate the costs and bottlenecks of grid electricity supply, according to Palmer.

Fleet charging will be an early focus, with clearer pathways to link vehicle owners with centralized charging sites, Palmer said. That could include shifting existing logistics hubs to sites that are more amenable to high-intensity charging.

On-highway charging for longer-haul and independent trucks is ​“a little more nascent” in terms of opportunities, although Palmer says she and her team are ​“going to be spending a lot of time thinking about how to flesh that out.”

Overall, ​“the demand [for EV charging] will far outstrip the supply…particularly in the early years,” she said. But the costs and paybacks for fleet owners or charging hub hosts will vary widely from customer and customer and region to region. What’s more, the values for investors in managed charging infrastructure and operations are hard to predict, since ​“it’s an asset class that hasn’t existed before.”

Still, as head of a Google energy operation that has expanded into gigawatt-scale wind and solar procurements, participation in wholesale energy markets and pledges to shift its data centers to round-the-clock clean energy use, Palmer has ​“spent the past decade looking at what happened with the grid and how corporates could influence what’s going in,” she said.

The shift to electric vehicles is ​“a very similar transition,” with many companies ​“centering their sustainability efforts around fleets,” she said. ​“Thinking about this problem at scale…is a key component of making the transition happen.”

(Article image courtesy of Daimler Trucks North America)