BiGS Actionable Intelligence:
BOSTON — A government is far likelier to achieve clean energy goals when its policies resolve conflicting interests between different stakeholders — especially when the policies align the interests of those providing clean technologies and those providing the infrastructure.
That was the conclusion of Jonas Meckling, a climate fellow at Harvard Business School’s Institute for Business in Global Society (BiGS), and Nicholas Goedeking, a researcher at the German Institute of Development and Sustainability. Their study, recently published in the journal “Energy Policy,” compares electric vehicle (EV) adoption and EV charging infrastructure build-out in California and Germany.
A key finding: Significant deployment of EVs and other clean technologies isn’t possible without coordination among manufacturers, infrastructure providers, governments, and others that have a stake in successful deployment.
Also, the study found that California is ahead of Germany in electrifying transportation by several metrics, including the number of public charging stations, because California coordinated the interests of different parties, while Germany did not. Specifically, California utilities received a guaranteed rate of return for infrastructure build-out, while in Germany, there were conflicting interests between utilities and carmakers, and the government did not resolve the situation.
“When we think about the clean energy transition and decarbonizing, we think a lot about the cost of these new technologies and that's just one problem,” Meckling associate professor of energy and environmental policy at UC Berkeley, told The BiGS Fix in an interview. “But even if we deal with the cost problem, we have an abundance of coordination problems between new technologies and infrastructure.”
Further complicating the situation is a new Trump administration executive order, issued January 21, that revokes a non-binding goal set by former President Joe Biden that EVs make up half of new cars sold in the United States by 2030. The new order also seeks to terminate a federal exemption that allows California to phase out the sale of gas-powered cars by 2035. The federal exemption is important not only to California but also to more than a dozen other states that follow its nation-leading standards on vehicle emissions.
The lesson for clean energy applies across industries
The lesson for entrepreneurs and other businesses looking to enter this market?
“To be successful, they need to find some kind of collaborative strategy to overcome these coordination problems, otherwise there will be a stalemate between those providing clean technologies and those providing the infrastructure,” Meckling said.
The study findings apply to the deployment of many other clean energy industries, including renewables, energy storage, battery technology, transmission infrastructure, and hydrogen.
This has real implications for clean energy adoption as it moves from early stages to large-scale deployment, Goedeking told The BiGS Fix. The share of wind and solar alone in global electricity generation is set to double to 30% between 2024 and 2030. That’s almost three times the increase seen between 2017 and 2023 according to the Paris-based International Energy Agency.
“We no longer are in an early stage of the energy transition where it was enough to have just one policy instrument that says deploy some renewables,” Goedeking said. “We're in a different era where we change technology systems.”
In California, a strong electrification coalition emerged in the 2010s between automakers selling EVs and utilities and third-party firms providing charging infrastructure. Power market rules made capital investments for charging infrastructure instantly profitable for California monopoly utilities.
By contrast, in Germany’s liberalized power market, where utilities are paid for electricity sales, investing in capital-intensive charging infrastructure didn’t generate profits. As a result, utilities failed to emerge as a political force in the electrification coalition. Instead, utilities and automakers were in gridlock, failing to coordinate rollout of EVs and build-out of public charging stations.
Public EV charging stations needed for broader adoption
Regardless of pure market dynamics, functioning and convenient public EV charging stations are critical to reassure drivers that they can charge their vehicles away from home.
From the perspective of automaker giant General Motors, anxiety about EV charging is “an inhibitor to EV adoption,” Omar Vargas, GM vice president and head of global public policy, said in an interview with The BiGS Fix. GM has a target of an all-EV fleet by 2035. Broader adoption of EVs will require active communication between different public and private stakeholders, Vargas said.
“We're a part of those conversations and we're helping that kind of planning,” Vargas said. “We're pretty confident in the next couple of years, we're going to have a really vigorous EV charging network in the United States.”
Profitable EV charging stations require ‘Goldilocks level’ of use
Even when there is market coordination between utilities and automakers, striking the right balance on EV charging infrastructure is no easy task, Garrett Fitzgerald, senior director for electrification at the Smart Energy Power Alliance, told The BiGS Fix. The group represents utilities, electric cooperatives, regulators, and other nonprofits.
“Operating a profitable public fast-charger network requires hitting a Goldilocks level of station utilization: too high, and customers face long lines and a bad experience; too low, and utility demand charges overwhelm the limited revenue from just a few charge sessions,” Fitzgerald said. “Success lies in finding that sweet spot."
Several challenges facing public EV charging stations were detailed in a study by another BiGS climate fellow, Omar Asensio, published in The BiGS Fix in June 2024. The study found that drivers can successfully recharge their cars using non-residential EV equipment only 78% of the time. Furthermore, charging infrastructure has been hampered by price confusion, equitable access issues, inadequate infrastructure for commercial vehicles, and clashes between drivers of EVs and internal combustion engine vehicles over parking spots with EV charging stations.
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