Leaving Money on the Table: What Fleets Need to Know Now About LCFS and EV Charging
Michael Terreri, EV Product Manager, AssetWorks
What is the Low Carbon Fuel Standard?
The Low Carbon Fuel Standard (LCFS) is a California program that allows fleets to sell their electric vehicle charging data in a highly lucrative, state-regulated compliance-credit marketplace. The program has proven so successful that as of July 2021, Oregon, Washington, and Canada are implementing similar programs of their own, and other regions are expected to follow. The number of credits (and therefore revenue) that a fleet generates is based on the amount of electricity used to charge and the carbon intensity of that electricity. Typically fleets that use electricity from renewable sources generate 15% more in revenues from credit sales, and for medium- and heavy-duty trucks that 15% difference can add up to thousands of dollars annually per vehicle.
Light-duty vehicles require less electricity (i.e., fuel) and so their revenues are less but a single Class 6 delivery truck, for example, can generate up to $7,000 annually. That is revenue that fleets can use to offset the cost of new trucks, infrastructure, network, and maintenance fees for chargers, and even electricity bills from the utility.
What is the LCFS Program?
The LCFS Program is a market-based compliance program in which petroleum importers, producers and refiners offset their own emissions by buying credits from entities such as renewable fuel producers and EV charging station owners. A metric ton of avoided emissions is equal to one credit which has typically sold for about $195 over the last year.
The number of credits generated changes based on the type of electricity used to charge.
Fleets can generate more credits by charging their vehicles with low-carbon electricity (i.e., from solar or the purchase of RECs, or Renewable Energy Credits). RECs, for example, can increase credit generation by about 15%. Fleets can also maximize the number of credits they generate by charging during off-peak hours. Many fleets are already adopting this practice to avoid higher time of use rates and reduce their charging costs.
Fleets do not need to sell their credits directly on the marketplace.
Fleets can sell their credits directly, but do not need to. Instead, fleets can use third-party brokers to aggregate and sell their credits on the market. This reduces or eliminates the need for specialized staff LCFS reporting and trader training. Brokers can also sometimes secure higher credit prices than smaller, individual sellers. Credit sale proceeds are distributed on a quarterly basis.
Networked Chargers are Key to Generating LCFS Credits
To generate LCFS credits, EV charging data must be recorded from acceptable data sources. These sources include:
- Utility bills from dedicated meters
- Customer-installed submeters
- EVSE (charger) meter data
However, there are also unacceptable data sources that will not help fleet organizations generate LCFS credits. These include:
- Utility bills from meters with mixed loads
- Estimates of electricity consumption
- Anything other than direct measurements of electricity
With the approved data sources, the following data is needed for credit eligibility:
- Kwh of electricity dispensed
- Equipment type charged
- Date and time information
- Meter number or EVSE serial numbers
- Pathway code (if using something other than grid electricity)
Fleets: Don’t Miss the Credit Train
Credit generation cannot be retroactive. In other words, there is a easily quantifiable ‘opportunity cost’ for fleets that delay in enrolling. Fleets do not want to miss out on potential credits because they weren’t registered for the program or recording all of the required data! There are no exceptions, credits must be claimed the same quarter that they are generated.
A growing problem with LCFS reporting is that fleets using multiple charging networks fail to report charging data from all their chargers across each network. It takes time to manually export charging session data from each network or to opt-in separately to each network’s own LCFS reporting service. Using an integrator allows fleets to capture data across multiple networks, avoid middleman fees and streamline into a single report. AssetWorks FuelFocusEV is unique in that it takes the process one step further and automatically send brokers that charging usage report each quarter.
It is generally best for fleets to not sign away LCFS credits.
Fleets can let EV network providers claim their credits for them in exchange for discounted hardware or services, however, it is not generally advised. It is generally more financially advantageous for fleets to sell or use a broker to sell their own credits. However, signing away LCFS rights may be an appropriate solution if fleets simply lack to the capital necessary to buy and install chargers.
To learn more about LCFS programs or fleet electrification, please fill out the form below: