Security and predictability over revenue remains the most challenging aspect of securing investment for EV infrastructure, but the prospect of a government grab to replace fuel duty could change that in the future.
Those were the key takeaways from a panel discussion on emerging EV infrastructure investment trends at today’s Everything EV conference, where a packed room of delegates heard from finance professionals about how EV infrastructure business models were evolving.
Stirling Habbitts, senior lead for project finance at ethical bank Triodos, said that forecasting revenues remained the most challenging aspect of financing EV charging infrastructure with few long-term contracts available.
This, Habbitts added, had led to investments becoming a “location play”, with charge points based near high-demand areas such as taxi ranks and bus depots emerging as the direction of travel given their expected demand.
“This goes a long way to providing the comfort we need [to invest],” Habbitts said.
Axel Jaegle, commercial finance specialist at the government’s Infrastructure and Projects Authority, echoed Habbitts’ comments, adding that “big uncertainties” remained over demand.
This led Jaegle to conclude that kilowatt-hours “can’t be the only income stream” for EV infrastructure, alluding to the use of battery storage and flexibility capabilities as additional revenues to justify investments.
Jonathan Maxwell, CEO at Sustainable Development Capital, disagreed however, suggesting that ongoing fleet electrification in urban areas and increasing demand from the last mile economy offered “so much predictability” over asset utilisation that concerns could be alleviated.
But the panel was dealt with a further question by moderator Chris Pritchett, head of energy at law firm Foot Anstey, who raised the prospect of further regulatory risks on the horizon.
As electric vehicles replace conventional counterparts, HM Treasury is facing the real possibility of a collapse in revenue from fuel duty. If HMT wanted to plug that hole, Pritchett asked, could the government seek to add a tax on EV electricity consumption that could impact on future business models?
The panel appeared split over that prospect, and Habbitts concluded that such a tax grab could be “fairly likely” and would feasibly be included in the regulatory risk of any business model.
Maxwell was of the opinion however that given the air quality benefits of decarbonising road transport, HMT may be wise to resist the urge to replace fuel duty with an electric alternative.