Welcome to the third instalment of our newest series, the R-EV-OLUTION, in which we will be tackling the key questions facing local authorities in the roll out of public EV charging infrastructure.
In this instalment, we consider the range of delivery models available to local authorities to deliver public EV charging infrastructure. The Government, in its 2022 electric vehicle infrastructure strategy, identified local authorities as having a critical strategic role in planning and ensuring the delivery of local charge point provision1. However, there is a recognition that successful rollout across the country will also depend on meaningful input from other key organisations (including charge point, fleet and energy network operators) and a mixture of public and private investment. With there being no golden rule for how to deliver a public EV charge point project, the key question remains:
How can my local authority facilitate the effective delivery of public EV charging infrastructure to meet the needs of the community and encourage innovative solutions?”
In this instalment, we will provide a high level overview of four core delivery models:
Public Ownership Model
Under a public ownership model (also known as an ‘own and operate’ model), the local authority takes on full ownership of all EV charge point infrastructure, including network connections, that it may install and manage itself or outsource to a third party operator.
With this approach, the local authority is responsible for all upfront costs and retains the full amount of any revenues. Fundamentally, the commercial risk of the project sits with the local authority. Therefore, this model is often used for small-scale or low-cost projects covered by grant funding, thereby limiting the authority’s exposure to financial losses. As discussed in our previous instalment, local authorities will often set up a special purpose vehicle to enable it to trade commercially using this model.
Joint Venture/ Strategic Partnership
The term joint venture or ‘strategic partnership’ can describe an array of commercial arrangements entered into by both public and private sector participants. Parties will work jointly to share control of the EV charging infrastructure and the risks associated with its performance. Whilst the formation of such arrangements can be complex and time consuming, they have the benefit of being flexible depending on the stakes in the venture and the needs of each party.
Recognising the need to work in partnership with other market participants, a joint venture or strategic partnership is most suitably used in larger scale rollouts where private sector capital injection and expertise is required to get a project off the ground.
In the context of public EV charging infrastructure, the award of a concession contract to a competitively tendered commercial operator enables a local authority to transfer the operating risk and reward in exploiting the charge points, exposing the commercial operator (rather than the local authority) to the vagaries of the market.
The operator may also fully-fund or match-fund the capital costs as well as taking on the operating costs of the project. A match funding model enables local authorities to ‘top up’ any grant funding received to overcome capital constraints, whilst a fully funded model will transfer ownership (and likely a high degree of control) of the assets and covers the ongoing costs and liability. These projects present a high level of commercial risk for operators, who will typically seek to set this off by investing in and owning the below ground infrastructure, as well as targeting larger scale projects with long contracts. In both circumstances, the local authority may seek to introduce profit share arrangements.
Finally, should the local authority wish to be less involved (and take less risk) in the development and implementation of public EV charge points, it may wish to lease available council land to commercial operators to exploit at their own risk and cost.
It is clear from the options outlined above that there is a sliding scale of delivery models, both traditional and innovative, available to meet the needs of public EV charging infrastructure projects.
Whilst the Government expects charge point operators to lead the majority of rollouts across the country, local leadership remains vital to ensure that the delivery methodology for such rollouts represents an effective and sustainable solution for the local area. Whether that is through public funding for the least commercially viable sections of the market, working with the private sector to limit taxpayer risk, or delivery strategies which knit these various elements together, choosing the right delivery model is at the heart of the long term success of a project.
Has this instalment sparked an idea?
If anything you’ve read here has prompted a question, generated an idea or got you thinking about the challenges affecting your local authority, it would be great to hear from you. Please use the box below to send us a question – and we’ll aim to answer it in the next instalment!
Next in the series:
We look at the funding opportunities available for local authorities to raise finance for its public EV charging infrastructure roll-out