Accelerating electric vehicle charging investments: A real options approach to policy design
Challenge and objective
- Fast charging availability in rural areas is insufficient.
- The commonly used Net Present Value method for understanding the economics of charging investment does not capture the role of uncertainty.
Work performed
- A model of investment that acocunts for future uncertainty.
Significant results
- Investors’ uncertainty about future EV demand can explain the relative lack of fast charging in rural areas.
- Investments would take place faster if policy makers mitigate investors’ risk exposure.
- Long-term contracts are an effective way to reduce investors’ risk and thus incentivize investment.
Impact for distribution system innovation
- A better understanding of future investments in fast charging stations.
- Name
- Magnus Korpås
- Title
- WP3 Lead
- Organization
Reference in CINELDI
