The real challenge of electric vehicles
Much has been made about the rise of electric vehicles (EVs). That should be no surprise. After all, the UK Government has indicated that diesel and petrol powered cars will be phased out by 2040 as part of its commitments under the Paris Agreement, which will remain binding whatever happens on Brexit. What has received less attention, however, is the charging infrastructure that needs to be available to make the move to electric practical.
In short, far more thought needs to be given to how the necessary charging infrastructure will be delivered – both for new developments and retrofit for existing properties. According to Chris Paul, Real Estate Partner at Trowers & Hamlins, it’s an area that developers and landlords are only now starting to get to grips with in a serious fashion.
"The decisions our clients make on the capacity of electricity connections and the route of supply cables for new developments will have a real impact on what they can provide in their car park spaces over the long term,” he says.
“So, it’s about asking those questions early enough so that we don’t end up digging up carparks and public realm in 10 years’ time to add more capacity.”
With new developments, decisions may soon be taken out of developers’ hands. The draft New London Plan, due to come into force next year, contains strong policies on EV charging points. For residential parking, this includes a requirement that at least 20% of new spaces are to have active charging facilities, with passive provision (ie electricity supply) for all the remaining spaces. “The New London Plan is already having an impact on how client’s view the requirements for new-build schemes,” says Paul. “The requirement for spaces to be enabled for EV means that these decisions need to be made now.”
Of course, there is a world beyond London. The development of a national charging network is one of the key aims of the Government’s current policies, and the Automated and Electric Vehicles Act 2018 is an important step in facilitating the necessary infrastructure. However, Paul believes that the lack of charging infrastructure remains a significant barrier to general take-up of electric vehicles. “If you look at where the charging points are at the moment, there are more per square mile in London than there are in other cities,” he says.
"But the availability of charging infrastructure outside our major cities remains a real concern - we’re at a tipping point and that will have to change.”
One issue that still needs further consideration is how the market delivers smart charging points (e.g. managing demands to avoid overloading local electricity networks). Unlike choosing a mobile phone provider, the need for integrated infrastructure means that this cannot be left to individual consumer choice – it is simply impractical. “What you can’t have is lots of competing charging companies in the same space because it doesn’t work very easily,” says Paul. “If you allow pepper potting of different charging providers, you’ll end up with cables everywhere and your substation getting overloaded because the systems can’t talk to each other.”
Instead, what is needed is a more strategic approach from developers and landlords whereby they grant a longer-term concession to a charging provider, which is then responsible for operating and maintaining charging points within a development and recovering their investment from their customers. “That way you will get an integrated installation and it is going to work properly,” says Paul. “It’s much easier to manage performance and from a tenant’s point it’s simple – if they want a charging point they sign up with the appointed provider. It is important that landlords properly manage charging arrangements to ensure performance, fair terms and reasonable tariffs. All those issues should be addressed in the contract documents to help give comfort about the issue of choice and monopoly.”
Installing EV charging points for existing detached and semi-detached housing presents fewer difficulties – it is simple enough for a homeowner to install a charger and run a direct connection to their parking space. Retrofitting apartment blocks is more problematic, however, not least due to the fact that existing leases are unlikely to consider EV charging issues. As Paul puts it: “landlords won’t want to invest in the infrastructure as they have no way to recover the cost – looking at EV infrastructure as a potential new service charge issue is going to be a non-starter for existing leases.”
Instead, Paul predicts that charging providers will look to target residential block managers and residents with a similar concession model to the one proposed for new developments. Providers would need a certain number of residents to sign up in order to make the business case for the installation of the primary infrastructure but given the increasing popularity of EVs he doesn’t predict that will be a problem for long. “It’s much better if it’s structured as an opportunity,” says Paul. “I can imagine providers engaging directly with tenants and if they get enough signing up at a site then they will make the leap to invest.”
If charging providers are investing in the necessary infrastructure, then they will want exclusivity to make a return. Alongside a long-term concession contract, they may also need the additional security that comes through property rights. It’s an issue Paul is actively working on resolving with the Trowers Real Estate team. “You can imagine charging providers saying to a management company that they will put it the infrastructure at zero cost to the landlord, but that they will need a long-term agreement, a lease of the plantroom and connected easements,” he says. “That requirement for property rights is where it gets tricky again and we’re working on that now because the retrofit market is potentially enormous. Whoever cracks it will roll out retrofit at scale.”
Charging points are only one of the ways in which our cities need to adapt to support the rapid technological change, not just with the roll out of electric cars but with the roll out of 5G and the broader smart city agenda. With a recent article from the National Grid stating that capacity demand will increase from 103 GW today to between 189GW and 268 GW by 2050, possibly even greater a challenge is how we generate and store the electricity needed to power the charging infrastructure.
Real estate is a key consideration for installing EV charging infrastructure. “Put simply an EV charging provider cannot install its equipment on someone else’s property without a lease, licence, easement or other land interest in place” says Paul.
"Developers should consider the requirements at an early stage, and make sure that both designs and property structures can deal with large scale EV roll-out.”
There is no doubt that Trowers have the necessary expertise and experience here, having acted for developers and landlords dealing with utilities connections, district heating concessions and connected property issues on a range of schemes.