How EV-Charging Microgrids Can Pencil Out for Car Dealers, Without the Solar, EV Tax Credit

As the number of such installations increases, it’s possible to make microgrids pencil out without the ITC, Fields said. That’s because the dealerships can take advantage of utility demand response programs and other grid services options to slash operating costs by up to 90%, depending on the program, Fields said.

“This is the world we’ve all known was coming,” she said. “It takes a while for utility models to catch up. Utilities are increasingly realizing they have batteries where they need capacity and can call on them,” she said.

While the solar and EV tax credits will soon be phased out, batteries still qualify for the ITC, but Foreign Entity of Concern (FEOC) restrictions from the federal government will make them more difficult to access from China starting in July 2026, when FEOC restrictions take effect, she said.

State programs that incentivize EV charging with microgrids

In the meantime, state programs that benefit microgrid-charged EV deployments are on the rise.

Load management technology, either software or hardware, is essential for shifting EV charging to avoid peak system times, said Devi Mohan, section manager, Con Edison (ConEd). The utility offers several incentives that support EV chargers operating as part of a microgrid, she said. They include:

• PowerReady Light-Duty Vehicle Program provides funding and support for the installation of EV charging infrastructure.
• SmartCharge Commercial Program rewards commercial EV charging operators for off-peak energy use and network peak avoidance, which reduces grid stress.
• SmartCharge Tech supports the deployment of load management. technologies–including software, battery storage and hardware–to optimize EV charging.

Also, a state program in New York State, the Value of Distributed Energy Resources (DER), offers compensation based on how much DER resources contribute to the grid and reduce customer costs.

It’s also possible to take advantage of incentives in California and other states–including the Self-Generation Incentive Program.

To make the most of these types of incentives, Sprocket Power deploys an “integrated” microgrid that includes rooftop solar and battery storage.

The role of batteries and storage in cutting charging costs

The battery and solar can take advantage of demand reduction incentives and time-of-use rates by capturing solar when utility prices are low and releasing it when they’re high, for example, said Dennis Quinn, co-founder and president, Sprocket Power.

Along with the New York dealership microgrids, Sprocket Power has five projects on Long Island, including Hampton Jitney, a regional fleet operator beginning to electrify its fleet. Forty more projects have been proposed in the Northeast, Mid-Atlantic and California, Fields said.

How Sunrise Toyota met Toyota’s call for DC fast chargers

Another example is Sunrise Toyota, a dealer that was grappling with rising and volatile utility bills and power outages. In addition, it needed to respond to Toyota’s request that New York Metro-area Toyota dealers adopt DC fast chargers to respond to faster-than-expected sales of Toyota EVs. Initially, Toyota has required that dealers install only level 2 chargers, Fields said. Toyota also rewards auto dealers for focusing on clean energy.

In the Sunrise Toyota case, 75% of capital costs were offset by incentives, and the dealer experienced a 75% cut in utility bills, yielding a return on investment of 75%, she said.

As more utilities see their dealership customers add fast charging, they’ll see the benefits of microgrids and storage, she said.

“ConEd is big and sophisticated and has a commercial model that allows these microgrid projects to stand on their own two feet economically,” Fields said. “The basic economics will prevail in other utility areas as well when they see the value of storage.”