Making the most of EV charging investment opportunities. 16 January 2019

Transcription

1 Making the most of EV charging investment opportunities 16 January 2019

2 2 Today s agenda Introduction Meet the presenters How to ask a question Opportunities in electrification Context Government targets and policy Charging Infrastructure investments market outlook Novel concepts for charging infrastructure and smart grids Introduction to the Smart Hubs project Innovations & Challenges Some Legal Issues to Consider Things to think about with CIIF Properly conducted/focussed due diligence Panel Discussion

3 3 Today s presenters Contact us for any questions after the webinar Denis Naberezhnykh Ricardo Energy & Environment Simon Terry Ricardo Energy & Environment Ross Fairley Burges Salmon LLP Technical Director Sustainable Transport Expert on vehicle technologies and charging infrastructure denis.naberezhnykh@ricardo.com Principal Consultant Energy Infrastructure Expert on UK electricity networks and smart grids simon.terry@ricardo.com Partner ross.fairley@burges-salmon.com

4 4 How to ask questions? Everyone s microphone is muted Questions can be submitted at any time and will be answered at the end. If your panel is minimised, click the orange button to expand it. Attendee control panel Welcome to the CRC Compliance Webinar Type your question here Successful CRC Compliance webinar

5 5 What to consider when making investment into EV charging infrastructure? Denis Naberezhnykh Ricardo Energy & Environment

6 6 Introduction Context Government targets and policy National City and local Clean Air Zones (CAZ) Leeds Nottingham Derby Birmingham Southampton Emission Controlled Sites Heathrow Airport Ultra-Low Emission Zone (ULEZ) in 2025 Other Controlled Emission Zones (Includes planned) Brighton and Hove Bristol London ULEZ in 2019 Oxford World s first ZEZ Norwich Manchester Glasgow Edinburgh Future Controlled Emission Zones 24 Local Authorities in Defra s new Air Quality Plan exceeding NO 2 emission levels Over 700 Air Quality Management Areas (AQMAs) across the UK No restriction on implementing a CAZ

7 7 Introduction Support for charging infrastructure Legislative Financial July Autonomous and Electric Vehicles Act become law Charging Infrastructure Funding Schemes Home Workplace On-street domestic Ultra Low Emission Taxi Schemes Low Emission Bus Scheme Other, air quality-related schemes (e.g. Early Measures Fund, Clean Air Fund, etc...) Large fuel retailers to provide public charging Public charger operators to provide transparent data and ad-hoc access to all users Charging points sold or installed in the UK to be smart Domestic EV chargers (funded by the government) to be smart from July 2019 CIIF Up to 400million (50% government) fund to support deployment of charging infrastructure Expected to close Early 2019

8 Market outlook European and other regulations require automotive OEMs to shift to zero emission vehicles Normalised CO 2 targets g/km CO China Pass Car US Pass Car EU Pass Car Pure ICE Efficiency limit for Pass Cars Targeting ~5% of all new vehicles sales to be plug-in Likely Future Trajectories Increasing degrees of electrification to recover and re-use energy <60 Source: ICCT (International Council on Clean Transportation), Ricardo analysis 8

9 % of Major Manuf. Models 18% 25% 31% 32% 54% 36% 9 Market outlook OEMs state they are committed to electrified and electric vehicle introduction; the number of models available is increasing rapidly Model 3 enters volume production To launch first electrified products on Efficient Modular Platform (EMP) All models to be electrified Plan joint EV platforms First full EV 20 new allelectric and FCEV models Targets 1M sales of electrified vehicles Plans 15-25% of sales to be electric Ricardo analysis: Over half of the car models and a third of van models responsible for the majority of sales will have electric variants by 2025 All vehicles will be hybrid Generic models accounting for >90% sales 60% 50% 40% 30% 20% 10% 0% Cars Vans Cars Vans Cars Vans % vehicles will be electric All models will be electrified 40% of global models will be electrified 13 new electrified models To have 7 PHEV and 4 BEV models on EMP Announced plans to produce up to 15 million electric cars over the next few years. Expects 27 electric models in production by 2022 Expects 50% of models to be electric Expects 15-25% of models to be electrified Plans 30 new EVs accounting for up to 25% of sales Plans to sell 1M electric vehicles per annum Electrified will include hybrids Expects 2/3rds of models to be electrified FCEV = hydrogen fuel cell electric vehicle

10 10 Demand for EV charging Charging infrastructure is available to support different recharging behaviours and business models Source: Ricardo analysis

11 CARS LOCATIONS USERS 11 Market outlook Matching appropriate infrastructure to cars, locations and users is important 3-7kW (AC) 11-22kW (AC) kW (DC) 350kW+ (DC) Suitable for all cars Limited (requires a 3-phase charger) Likely most of future EVs Most EVs 50kW New models are going above, Likely 100kW+ for future EVs Only cars designed to use 800V No indication that this is a focus for OEMs Overnight charging at home and work Off-street and on-street Public convenience/ destination charging (after short/local journeys) Rapid (super) charging for en-route, destination and depot charging Dedicated ultra rapid charging hubs (mostly on the highway) All users at home and work All users at work and public top-up charging Taxis, car sharing, commercial fleets, private users on longer journeys High end super cars and luxury car drivers, future HGVs and some commercial vehicles

12 Number of cars 12 Market outlook Charging Infrastructure current state of the market 200K PiVs (~60K BEVs) BEVs likely to increase in future years but unlikely to exceed 50% of PiV fleet by 2025 ~3 PiVs per 1000 population (large variability regionally) Total UK PiV registrations ~60K domestic chargers 93% of EV owners have off-street parking likely to continue to at least 2025 Year ~19K public chargers PHEV BEV Cumulative >4K rapid chargers) ~1:10 (public charger : EV ratio) Organisation Region European Council EU 1:10 NDRC China 1:8 1:15 Ideal public charger to EV ratio IEA Electric Vehicle Initiative Worldwide 1:8-1:15 EPRI United States 1:7 1:14 NREL United States 1:24 CEC/NREL United States 1:27 Sources: SMMT data, Hall & Lutsey, 2017)

13 13 Market outlook Charging Infrastructure likely market conditions to 2025 ICCT report (2017) found statistical correlation between number of charging points and EV take up CAUTION! Not a causal link Charger to EV ratios vary from 1:8 to 1:27 Evidence from Norway suggests that EVs are mostly charged at home (94-95%) Partly at work Rarely elsewhere (10% said they use public charging on a weekly basis) Public rapid chargers were mostly used by private drivers, sparingly and for irregular trips <10% use on weekly basis To make return on investment from EV charging infrastructure need clear understanding of target EV users and how charging provision fits into the broader charging ecosystem Not all is applicable to the UK

14 14 Conclusions Understanding of risks and opportunities around investment into EV charging is key to making the most of your investment Domestic and workplace charging Opportunities Biggest and most certain market Public charging Opportunities Growing market, high visibility Risks Low margins and competition from some OEMs Mitigation Bundling with other services Risks Low utilisation levels, uncertain revenue streams Mitigation Carefully targeted placement, partnerships Rapid charging Opportunities Higher value, captive market Risks High costs, very low utilisation Mitigation Commercial vehicles and fleets, carefully selected public locations, integration with energy systems Ultra rapid charging Opportunities Premium service Risks Very high costs, no demand Mitigation Carefully selected locations for premium charging, integration with energy systems

15 15 Novel concepts for charging infrastructure and smart grids Simon Terry Ricardo Energy & Environment

16 16 Introduction to the Smart Hubs project What is the project about? Solar Car Port What are the benefits? The solution will enable optimised energy use across the Smart Hub, minimising energy costs and offering grid balancing services (such as frequency response). Grid tied convertor Smart Hub EV charging (V2G) Battery energy storage Who are the intended customers? Smart Hubs are aimed at car park owners/operators with Distributed Generation and/or EV charging requirements that would require re-enforcement to connect to the grid.

17 18 Project Background The Smart Hub consortium consists of: Leading the project, delivering the solar car ports, site management and V2G charging interface Providing the power electronics convertors Delivering the Battery Energy Storage system and Energy Management system Managing the lab demonstration Examining the revenue potential from grid services; and Providing project management and business case modelling

18 19 Demonstration sites The project is currently considering potential sites for demonstration including: Park and Rides Supermarkets Private Car Parks Hospitals Transport hubs Leisure Centres The trial installations are being selected to illustrate a range of potential applications, including different sizes and charging demand profiles

19 20 Benefits Smart Hub owners benefit from the ability to provide EV charging whilst Reducing energy costs Increasing revenue from grid services Avoiding network reinforcement costs Enabling operation of an EV fleet with capacity for multiple rapid chargers Users benefit from Increased access to charging facilities, including medium, fast and rapid charging Reduced charging and parking tariffs Maximising the use of renewable energy in their vehicles The electricity system benefits by Minimising demand at peak times Availability of balancing services Potential assistance with network constraints

20 22 Challenges Technical challenges associated with the requirement for bi-directional DC power flows Uncertainty of rapid charging standards (CHAdeMO and CCS) Ensuring a viable business case Price of final product Potential revenue streams

21 Some Legal Issues to Consider Some Legal Issues to Consider Ross Fairley Burges Salmon LLP

22 Some Legal Issues to Consider Burges Salmon and Transport Technology and Intelligent Mobility Environment ROAD Infrastructure Bus Infront / behind meter battery storage Hydrogen STORAGE Green certificates RAIL PORTS / MARINE Health and Safety TRANSPORT Freight IP / IT JV s / Partnering Procurement Grants EVs / CAVS Telematics V2G Energy supply Networks ESCOs ENERGY GAS NUCLEAR AVIATION Asset financing leasing INTELLIGENT MOBILITY ENERGY SERVICES Private wire Biofuels WASTE Data / Cyber Mobility as a service Policy / regulatory Corporate PPAs RENEWABLES Solar PV Wind Co location

23 Some Legal Issues to Consider Things to think about with CIIF It is Government money going in - what conditions flow from that? What will the CIIF invest in (what are the parameters)? This will be money on a commercial basis so due diligence will be important What will be the minimum ticket size? (linked to the ability to spend the fund) How much demand will there be? What will appeal to the CIIF- income streams Businesses will want a streamlined approach to DD / negotiation and investment

24 Some Legal Issues to Consider Properly conducted/focussed due diligence Investor To check the proposition. To understand how inevitable risks are managed. To ensure the value is correct Business To demonstrate your worth ahead of others. To bring focus to key risk areas and to show how you have managed them. To mitigate Seller business risk As an aid to help focus minds post investment

25 Some Legal Issues to Consider Some legal areas of particular focus Land rights lease / licence / security Ownership of the equipment / risk passing /buy out ability Operation, maintenance / interface risk / restrictions / co-location considerations Grants and the conditions attached to them Change in law Frameworks Consortia and understanding who does what and what risks that poses between the parties and the customer

26 Some Legal Issues to Consider This presentation gives general information only and is not intended to be an exhaustive statement of the law. Although we have taken care over the information, you should not rely on it as legal advice. We do not accept any liability to anyone who does rely on its content. Burges Salmon 2018

27 30 How to ask questions? Everyone s microphone is muted Questions can be submitted at any time and will be answered at the end. Attendee control panel If your panel is minimised, click the orange button to expand it. Welcome to the CRC Compliance Webinar Type your question here Successful CRC Compliance webinar

28 31 Today s presenters Contact us for any questions after the webinar Denis Naberezhnykh Ricardo Energy & Environment Simon Terry Ricardo Energy & Environment Ross Fairley Burges Salmon LLP Technical Director Sustainable Transport Expert on vehicle technologies and charging infrastructure denis.naberezhnykh@ricardo.com Principal Consultant Energy Infrastructure Expert on UK electricity networks and smart grids simon.terry@ricardo.com Partner ross.fairley@burges-salmon.com