Best practises for EV charging PPPs

The Scottish government has embarked on a PPP that will invest in developing electric vehicle (EV) charging infrastructure across the country. inspiratia takes a look at what the model looks like for the EV market

Earlier this month [4 September], Transport Scotland formed a joint venture (JV) with Iberdrola-backed Scottish Power and Scottish and Southern Electricity Networks (SSEN). The JV is expected to invest £8 million (€8.7m US$9.6m) in rolling out EV chargers across Scotland that will be integrated into the electricity network.

As recently reported, the public arm will commit £5 million (€5.4m US$6m) backed by £2.5 million (€2.7m US$3m) from the private side of the partnership.

SSEN will reportedly concentrate its efforts in the north, including adding new charging points along the Electric A9. Scottish Power will focus on the central and southern parts of Scotland.

Both companies will launch trial projects in the initial phases in order to identify where new EV charging infrastructure is most required. These are expected to take place between 2020 and 2021.

Scottish EV charging market

Scotland has been a high performer in the UK concerning its targets for EV charging, aiming to phase out new petrol and diesel vehicles by 2032.

The government has already invested £30 million (€27m US$33m) from 2011 to 2019 in EV charging infrastructure and installed over 1,000 charge points, 200 of which are 50KW rapid chargers. These were deployed by ChargePlace Scotland, a national network of electric vehicle charge points developed by the government.

According to Transport Scotland, the average distance between public charge points in any given location is 2.78 miles in Scotland compared to 3.77 miles in England. In addition, ChargePlace announced plans earlier this year [2019] to deploy 800 public chargers – via the Switched on Towns and Cities Challenge Fund and the Local Authority Installation Programme.

However, utilising a PPP model represents a new approach to scaling charging infrastructure investments in Scotland.

PPPs in EV charging infrastructure

PPP models are arguably a staple product in traditional infrastructure, a useful tool to achieve value for money in most well-structured projects. However, its use in EV charging infrastructure investments are rare, with only a handful of countries implementing PPP models.

Unlike traditional assets, EV charging infrastructure entails complex coordination with the power network and the transport and urban planning stakeholders. In addition, there is the risk of changing policies and technology as well as a constant shift in business models as the industry evolves.

According to a 2017 International Council on Clean Transportation (ICCT) report, PPP models have been used most successfully in Europe, China and Japan.

China case study: Anqing project

China has experienced a massive growth in EVs – aided by its large population – that exceeds the US and Europe. However, it has yet to curb the significant gap between the number of EVs versus available EV charging infrastructure as seen below.

Electric vehicles in proportion to charging infrastructure in 2010-2019

Source: Wang and Ke (2018), IEA Global EV Outlook 2019, inspiratia

Like its international counterparts, PPP models aren’t prevalent in China’s EV charging sector. The few that have been implemented do provide some learning curves for the country.

According to a research journal, Public-Private Partnerships in the Electric Vehicle Charging Infrastructure in China: An Illustrative Case Study, in 2017 China’s Ministry of Finance had on record a total of 14 EV charging infrastructure PPP projects. Only three were approved and another three prepared for procurement. The remaining eight were still at the identification stage.

Stage Project name Launch time Investment amount

(USD m)

Concession period Scope of work
Procured Anqing EV charging infrastructure 2016 $125m 13-years – 1,700 public charging stations

– Four 100DC bus charging stations

Liupanshui EV charging infrastructure 2016 $32.2m 20-years 396 public charging stations
Kaili EV charging infrastructure 2015 $16.6m 20-years – 12 big charging stations

– 100 small charging stations

Prepared Tianjin EV charging infrastructure 2014 $76.1m 20-years – 2,000 public charging stations

– 40 bus charging stations

Kuerle EV charging infrastructure 2015 $51.8m 30-years – 492 distributed charging stations

– 16 integrated charging stations

Quanzhou EV charging infrastructure 2017 $12m 10-years – 120 electric buses

– One integrated charging station

Source: Wang and Ke (2018)

The Anqing project, located in the Anhui province, was highlighted as the largest national demonstration project for PPP best practises in EV charging infrastructure.

The project aims to deploy 20,000 public chargers by 2020, executed in two phases. The first covers a 103km2 of the Anqing city whilst the second phase will include one city, Tongcheng, and six rural suburbs: Susong, Huaining, Qianshan, Yuexi, Taihu and Wangjiang.

The private party is a consortium led by Qingdao’s TGOOD Electric, and is responsible for the design, construction, financing and maintenance of the project. Under a special purpose vehicle, the private consortium and government – under the Tong’an Corporation – have a respective share of 90% and 10% in the project, according to the journal.

Revenues will be derived from usage charges – includes electricity fees and a charging service fee based on a government guidance price prior to 2020 – but the government will fund the gap between expected revenues and costs.

More specifically, the viability gap payment operates on the premise that if actual charging usage is within the threshold of greater than 85% and less than 115% then the project income is not enough to cover costs. In this situation, a government subsidy scheme will compensate for the gap. However, if the income exceeds aforementioned threshold, then the government will provide no subsidy and will not get a share in excess profits.

Should income be less than 85%, the government will pay up to 85% of the gap which, according to the case study, embodies risk sharing in the contract.

Costs are reportedly reduced due to the adoption of a regional concession which gives the TGOOD Electric-led consortium exclusive rights to the whole Anqing region. A short-term adjustment framework for work scope was also included in the contract to limit the risk of inaccurate demand forecasts.