22 June 2020
By Daniel Lechner
As part of Longevity’s EV Survey, respondents stated what they considered as key barriers to implementing EV infrastructure strategies within their organisations. We use this opportunity to discuss and deconstruct the top four barriers identified in the survey, and identify planning strategies to mitigate or bypass such challenges.
Barrier 1: Cost of installation and operation
Initial cost of installation is a significant investment for organisations, which is hard to overlook. Equipment, capacity upgrades, installation and other physical works can quickly add up, and if overlooked in the planning stage can result in an unhealthy surprise for aspiring site hosts. However, there are ways to minimise this through site prioritisation, thoughtful placement on-site, and very importantly, selecting the right equipment for your needs and capacity. Operation and maintenance itself represents relatively low comparative lifetime costs when planning installations.
For most site hosts, the majority of installation costs can easily come from required connections and capacity upgrades rather than the equipment itself. Depending on the size of the installation and the necessity for capacity upgrade work, non-equipment costs can represent between one-half and two-thirds of the overall upfront project costs. These costs can be mitigated by thoughtful identification of installation points to minimise trenching and cabling, and where possible procuring equipment with load management capabilities to minimise required capacity upgrades while meeting specific site host charging requirements. This might mean more up-front planning and the purchasing of more expensive charger units, but for a standard bank of 10 level 2 chargers, placement and capacity control can easily result in cost savings of tens of thousands of pounds.
Barrier 2: Fear of underutilised assets
Hand in hand with concern over steep costs of entry to supplying EV charging is the fear that such costs will be wasted due to underutilisation of charging assets. This fear plays out differently depending on the intended site and use case for charging installations, as well as goals for managing electricity expenses and revenue targets.
For fleets management and the management of employee and customer (free charging) sites, upfront scoping and project planning will be all that is necessary to allay usage fears and to size installations appropriately. Planning installations to serve fleets depends on hours of operation, required distance travelled, extent of fleet electrification, and vehicle down time. Proper appraisal and integration of daily electrified mileage is an essential step to avoiding underutilised assets and avoid inflated project costs.
The same principle goes for planning charging installations intended as a free-for-use employee, resident, or customer benefit. While underutilisation may not affect revenue generation for sites intending to provide charging as a free service, making sure stations are deployed with reference to the size of its use-base is important. Take the time upfront to determine current usage and future ownership trends for your intended user base in order to size your installation appropriately. View EV uptake trends in your area or conduct resident or employee surveys to get a sense for demand before making your investment.
Revenue generating sites
For more profit driven installations, relevant scoping and project planning is also essential, though broader questions on uptake still factor into usage estimates over equipment lifetime.
Luckily, for many nations across the world, EV ownership is growing rapidly. The Society of Motor Manufacturers and Traders (SMMT) reported a 60.2% increase in battery electric vehicle (BEV) registrations between 2018 and 2019 in the UK. This trend has continued to pick up speed, with January to May registrations for BEVs reported at 131% higher in 2020 than in 2019. EV charging infrastructure has also seen accelerated growth, though the pace of this growth is slower. Identifying EV hotspots amidst this strong growth, and conducting local customer behaviour research, can help profit oriented projects to reduce risk of stranded or underutilised assets in the short and mid-term.
This, however, will certainly become less of an issue over time, as policy pressures add increasing imperatives for entities operating within city environments with high pollution levels, as well as nationwide. The UK’s recent move to shift its ban of internal combustion engine (ICE) vehicle sales forward to 2035 is just one of the many similar bans being implemented across nations and municipal jurisdictions in Europe and North America in the 2020s and 2030s.
Given this steep year on year rise of EVs as a percentage of total vehicles across Europe and North America, and increasingly across the globe, site hosts seeking charging revenue will have to focus less on whether there are EV drivers in their region, and more on whether they are providing the right service for a growing pool of EV drivers. Here are two broad goals to keep in mind:
Ensure you provide the right level of charging required by your intended user base. Charging stations vary considerably in their speed and functionality, and each level of charging is well suited to particular use cases. Low level charging is used to maintain steady load profiles and serve long-dwelling customers such as residents in apartment buildings or employees at office buildings. Fast chargers are better suited for transport corridors and short-dwell hubs, such as along highways or rest stops. No EV driver will want to stop a journey for hours to charge their vehicle, and likewise no driver would want to pay a premium for fast charging when they could easily charge overnight. Knowing your base is key to having your stations used as they were intended. For UK site hosts interested in finding out what is in their area, here is a useful tool.
Provide charging at an appropriate price for kWh that matches your intended user base. One key benefit of owning an EV is that charging will under almost all circumstances be cheaper than fuelling an internal combustion engine (ICE) vehicle. This, combined with decreased lifetime maintenance costs and a variety of tax and tariff incentives, means EVs are increasingly attractive to new buyers. For site hosts intending to generate profits from the operation of their stations, a key reminder is to identify not just a competitive price comparative to petrol, but also competitive to charging stations around them.
Barrier 3: Difficulties defining optimal charging services
The range of products and service options for EV charging can be overwhelming for many organisations seeking to install for the first time. Indeed, the market and range of services is rapidly expanding and is hard to keep pace with.
In order to properly assess the usefulness and additional value of services and equipment offerings in a rapidly evolving market, it is vital that potential EV charging participants understand their specific needs and develop a bespoke scenario which suits these needs. Building a business case, understanding cost redlines, understand how those using the site’s intended services will benefit from and manage EV charging now and in the future. From there, selecting equipment is a matter of connecting the dots and speaking with shortlisted suppliers meeting stated criteria. The upfront legwork is worth it.
Load management, connectivity, payment options, advanced vehicle-to-grid capabilities, data management, and smart or timed charging requirements should all be considered when devising an optimal service for customers, employees, or the general public. For potential site hosts in the UK, the EVSE association provides valuable insights for scoping services and developing procurement guidelines.
Barrier 4: Not convinced by the business case for EV charging
A fear that there is not a strong business case for the installation of EV charging infrastructure draws on the three concerns previously discussed. Each site is unique and requires a detailed approach to managing costs and optimising charging services, so it is understandable that the lifetime benefits of such installations can feel difficult to calculate in a meaningful way. It is important potential site hosts know their user base, know their site, and know their goals. A few points every site host should make sure they address as they consider EV charging:
1. Know your site plan and talk to your utility or grid operator before you decide where you want your chargers
2. Make plans (and plan Bs) to reduce costs associated with increased demand profiles
3. Identify full-service requirements before selecting suppliers
4. Be on top of regional and local incentives and regulations
5. Do not be afraid to spend more on equipment – it may result in overall lower costs K
6. Know your user base and local competitors when selecting charger type and building a business case
Your insights on the challenges and opportunities associated with the installation of EV charging infrastructure for your organisation helps us to meaningfully approach the challenges of a shifting transportation and energy sector. If you have yet to add your voice to these insights, our survey is still open for you to give your perspective. For more information on new regulations in the Dutch EV market, you can read last month’s article by Ralf van Santen. Reach out to Longevity Partners for assistance in achieving your EV charging goals.
Further Longevity articles on E-Mobility