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Electric vehicles charge ahead
By Alex Harrison
As the electric vehicle (EV) revolution continues, EV charging infrastructure stands poised to emerge as a wholly new investment asset class. But the range of revenue streams and technologies currently available means potential investors must understand the risks associated with the differing business models available in the market.
Potential charging revenues, for instance, include direct sale and installation fees, user charging fees (on either a pay as you go or subscription basis), a wide range of retail revenue opportunities "while you wait" (such as the sale of traditional forecourt items, advertising, parcel collection, connectivity, and media services), alignment fees from automotive sector players keen to support roll-out, as well as vehicle to grid (V2G), vehicle to business (V2B), and vehicle to consumer (V2C) electricity off-take and services revenues.
Debt financing offers huge potential to support the scaling of EV charging infrastructure to critical mass — but for deals to be bankable, lenders' exposure to demand and technology obsolescence risk will need to be effectively managed or mitigated.
With that in mind, commercial and public utility fleet solutions offer the best solution for debt financers. Debt can be used to support the installation, operation, and maintenance of EV charging points at fleet depots or charging hubs with demand for the charging infrastructure underpinned by a long term commitment from the credit worthy fleet host.
Obsolescence risk will also need to be managed to ensure that demand for installed charging infrastructure does not materially reduce or evaporate due to better charging solutions being available within an acceptable distance.
EV charging success will come in many different forms as distinct approaches to residential, workplace, commercial, fleet, filling station, and on-street charging solutions emerge. The winners will be those best able to manage and mitigate key EV project risks while enabling them to scale by attracting investment and finance.
