High-Power Charging Stations Have the Highest Usage of TOU Rates
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Fast charging station operators in the US use time-of-use (TOU) rates at a significantly higher percentage for DCFC stations with chargers of 201 kW power or higher. This is a finding of a recent analysis of our Paren DCFC charging station pricing data.
While not very surprising, the fact that CPOs use TOU rates at well more than one-third of US DCFC stations with higher-power chargers suggests that this pricing approach will only continue to grow and could dominate in the next few years. TOU rates are especially common in high-utilization markets such as California, and busy metropolitan statistical areas (MSAs) in several states.
There are two main reasons for the growth in use of TOU rates: First, in some high-utilization markets, CPOs are seeing drivers having to queue during peak mid-day and early evening hours. Secondly, electricity costs are higher in the afternoon and early evening during these same peak utilization hours. And as a result, this high energy usage can lead to extremely costly utility demand charges.
As a result, CPOs use TOU rates to help reduce congestion and to incentivize EV drivers to charge during non-peak hours when profit margins are actually higher due to the lower energy costs. One major CPO recently told me that congestion was becoming a significant challenge for them and so I would suspect that pricing tactics such as use of TOU rates, idle fees, and state of charge caps may become pretty standard in high-utilization MSAs.
The relatively low use of TOU rates at stations with charger power of 200 kW or less is not surprising as stations with lower power chargers are often not going to be located in the busiest markets, nor see high utilization from rideshare drivers, and other drivers seeking the quickest charging session.
That said, two major CPOs are using TOU rates at stations with power levels of 100 kW or less. EVgo actually uses TOU rates at 100% of these stations (in fact, they have rolled out TOU to all of their EVgo native chargers, regardless of power level). And Tesla is using the TOU pricing approach at 88% of its Urban Charger stations.
Stations with DC fast chargers of 20 to 100 kW have the highest use of flat (a flat dollar fee for the session) or time-based (e.g., per minute or hour) pricing. A lot of these can be older stations, stations operated by municipalities, auto dealers, utilities, and others as opposed to traditional national or regional CPOs. Operating charging stations is not their core business and they may pay minimal attention to the performance of their charging stations, let alone pricing and marketing approaches to increase utilization and maximize profits.
Want more data and insights on DC fast charging pricing approaches and optimization? Join me and Paren CTO Bill Ferro for our webinar — Trends, Tactics, and Optimization: Leveraging Fast Charging Competitor Pricing Data — Wednesday June 18 at 10 am PT/1 pm ET.
We'll dive into the latest pricing strategies used by leading CPOs across the U.S., examining everything from per-kWh vs. per-minute billing to the rise of dynamic and location-specific pricing.
We’ll also showcase sample datasets from our competitive pricing platform to help you visualize how your organization can use this data to strategically optimize pricing at individual charging sites.
By Loren McDonald, Paren Chief Analyst
