Inflation Reduction Act Aims to Boost EV Charging Infrastructure

However, supply-chain issues and permitting challenges remain.

August 12, 2022

ALEXANDRIA, Va.—The Inflation Reduction Act of 2022 includes incentives for businesses and individuals purchasing electric-vehicle chargers, but the Wall Street Journal reports that there are still permitting and supply-chain issues, and the financial support isn’t all-encompassing.

The bill was passed in the Senate, and the House is expected to vote on it today. If the bill passes the House and President Joe Biden signs it, the legislation would enhance and enrich federal tax credits that expired earlier this year. According to Atlas Public Policy, companies switching their commercial fleets to EVs and businesses installing large amounts of EV equipment are the most likely to benefit.

However, supply-chain issues regarding EV chargers are prominent, with charging manufacturers having trouble getting their hands on components needed to build chargers, especially computer chips.

“It’s fair to say that customers have had to wait, and then there’s been some delays in putting these in the ground,” Mike Calise, Americas president for Tritium, a charger manufacturer, told the Journal.

Calise believes the supply chain problems will subside over the next 18 months, and that chargers are crucial to an increase in EV adoption.

“In order to get this transition from just the early adopters to the mainstream buyers, and that includes passenger and fleet, you need to deliver tens of thousands of these units,” Calise told the Journal of EV chargers.

Budget estimators expect $1.7 billion in tax credits for chargers or other alternative-fuels equipment to be claimed over a 10-year period.

There are location limits to the bill, however. The tax credits don’t apply to chargers being built in wealthier communities as defined by certain Census tract data. Individuals are eligible for a 30% tax credit on the installed cost of an EV charger, with a max credit of $1,000. The individual tax credit is applicable in any community.

Some fuel retailers have been reluctant to offer EV charging, as these chargers offer little to no profit for the retailer. There are two reasons why, said Doug Kantor, NACS general counsel, on a recent NACS Convenience Matters podcast episode.

The first is that convenience retailers are hit with demand charges from electric companies because they are considered commercial users of electricity when customers use their EV chargers to juice their batteries. A demand charge is not just based on how much electricity convenience retailers use, but the highest consumption they have over a short period of time.

The second reason is that many electrical utilities have received approval to raise consumers’ electricity bills in order to pay for not only their own installation of chargers but also the operation of those chargers.

“I worry about the one person that comes through and suddenly I’m paying so much more,” Raina Shoemaker, general operations manager at Shoemaker’s Travel Center, told the Journal. “What if they don’t even come into the shop and buy anything at all?”

The Journal reports that Shoemaker has been weighing how to invest “early but not too early” in EV charging and said grants and tax credits don’t address the potential for wildly varying power bills. “They may help me get into the business, but they don’t necessarily fix what the business would look like,” Ms. Shoemaker said.

The NACS government relations team detailed the Alternative Fuel Refueling Property Tax Credit and how it impacts convenience-store retailers, along with other provisions in the Inflation Reduction Act of 2022 that have an impact on retailers.

The NACS EV Charging Calculator allows retailers to assess the cost and profitability of offering EV chargers at their sites. The calculator focuses on what retailer utility costs associated with EV recharging are and what the corresponding revenue must be to recover those costs after allowing for potential ancillary in-store visits and purchase profitability.