Uncategorized

Delivery Models for Electric Vehicle Charging Infrastructure

By May 13, 2022 No Comments
eversheds-bdc90f31

Following the Government’s Climate Action Plan 2019, the Government has since laid out in its “Electric Vehicle Policy Pathway – Working Group Report” an initial roadmap for Ireland to reach nearly one million Electric Vehicles (EVs) on Irish roads by 2030.

The report acknowledges the ambition of this target and sets out the numerous policy levers that will be needed to support the required surge in EV uptake including targeted taxation, grant funding schemes, climate targets, procurement of EV public sector fleets and the role of building regulations and planning guidance.

All indications are that Government incentive regimes combined with consumer behavioural changes will result in continued acceleration of EVs on Irish roads. In turn, demand for EV Charge Point (“EVCP”) infrastructure continues and presents a real opportunity for Charge Point Operators (CPOs) and land owners (including retailers, forecourt owners, authorities etc.) seeking to be adopters of these critical public assets.

As a rapidly emerging sector we have seen a number of contractual models and structures utilised in the market to support the design, delivery and operation of public EVCPs. Here we briefly explore some of the most common models:

1. Own and Operate Model

Under this model the land owner enters into a contract with a CPO whereby the CPO is responsible for the design, construction and maintenance of the charging infrastructure (including procurement of the charging points) but critically the charge points are funded and owned by the land owner. As a consequence, the land owner receives all revenue from the charging infrastructure. The CPO is paid a monthly fee for operation and maintenance of the charge points and CPO performance is managed through a performance/KPI regime as set out in the contract between the parties.

The key benefit to the land owner under this model is that all revenue generated by the charge points is to be retained by the land owner. However, the upside of revenue comes with certain issues/risks for the landowner that require careful consideration including risk of fall in charge point usage, a need to front upfront capital cost, obsolescence risk of the charge points, performance of the CPO and fluctuations in long term maintenance costs.

2. Concession Model

Under this model the landowner will enter into a form of concession arrangement or collaboration agreement with the CPO whereby the CPO is fully responsible for delivering and managing the charge points.

The parties’ rights and obligations in relation to the risk/cost associated with the charge points and the proportional share of revenue will be project specific and set out in the agreement. Given the different variables of the risk/benefit share allocation upon which this model is structured, this model can undoubtedly be more complex than other arrangements. However, the collaborative approach has benefits to both land owner and CPO and it is a model that can be particularly well suited in projects where the CPO is seeking to manage of a suite of EVCP sites across a landowners’ estate.

3. Lease Model

At its core the lease model is a real estate arrangement whereby the CPOs lease whole/part of a site (commonly a car park) for a defined period.

Under this arrangement the CPO is solely responsible for the capital/operational costs of the charge points (including certain maintenance obligations on the defined site). Whether or not monies are paid from the CPO to the land owner (normally through a fixed rental payment plus any share over a certain profit threshold) or in the opposite direction from the land owner to the CPO will be determined ultimately by whether the site is considered to be revenue generating (i.e. whether the revenue from the charge points will be able to off-set the capital cost of the charge points over a defined period) or not.

This model allows the land owner to benefit from EVCP on its site (whether this be by meeting ESG/sustainability credentials, increased footfall or a guaranteed additional revenue stream) but ensures that cost/risk associated with delivering and operating these charge points is held by the CPO.

How Can We Help

The Eversheds Sutherland commercial team is well versed in dealing with the range of models used in the market for EVCP delivery and has a team of experts across a range of disciplines (energy, real estate, construction, procurement and corporate lawyers) able to support and advise our clients on a host of legal issues arising in the delivery of EVCP projects.