The kingmakers of EV charging infrastructure

Getting to grips with the EV charging value chain and the opportunities for landlords to be aware of

As battery technology continues to develop, the use of electric vehicles (EV) for personal and commercial use is increasing, and in response to that the deployment of EV charging infrastructure (EVCI) is becoming a more common feature at commercial real estate.

The EV charging value chain is occupied by various companies all fulfilling different roles. Firstly, there are the charging hardware manufacturers and software developers, who are responsible for the production and development of the sectors infrastructure and technology. The second group are the charging hardware installers and charge point operators (CPOs). The final group, and arguably the most critical and often overlooked category, are the landlords who own and / or control the power supply and space necessary to provide charging services which all EV users need.

In this context, landlords are critical to the development of EVCI across the UK and Europe and can play an active role in enabling EVs usage and in turn improve financial performance while making social and environmental improvements to their real estate. In essence, they are kingmakers in the EV charging space, and the sectors prime mover.

Why is EVCI important?

EVCI brings a mixture of economic, social, and environmental value to a landlord’s commercial real estate.

Economic value can be created by the generation of supplementary income from the sale of electricity. Depending upon the business model, demand profile and market conditions, this can be the equivalent of an increase in base rent by 2-10%, which if acting as a long-term and secure source of income, can be capitalised as part of a site’s overall valuation.

Furthermore, for Industrial and Logistics assets the value of the property can be future proofed by having in place an implementable strategy for how to design and retrofit EVCI in the units parking and dock areas. In the coming years, fleets are expected to electrify not only for environmental reasons, but because it will allow operators to save 10-20% on the lifecycle operational cost of their fleet. Consequently, landlords that cannot cost effectively enable electrification of these fleets, have the potential to see drops in value as valuers reflect both a greater risk of reletting and sale, plus make an allowance for outstanding future capital expenditure in the coming years to bring the unit up to modern standards.

Social value conversely is generated from the amenity benefit EVCI brings to visitors and occupiers of a location, allowing them to have access to safe and reliable charging. Moreover, the increase in EV usage offers a quieter working and living environment for occupiers as their breakout and rest areas are not disturbed by loud vehicles.

Linked to this, environmental value is generated through an increase in a sites air quality for nearby locals and occupiers making it a healthier location to visit, work and relax. What’s more, the provision of EVCI can be a meaningful way to help reduce occupier’s Scope 3 emissions because it helps facilitate the movement of personal and commercial vehicles to electric which supports the UKs transition to a low carbon economy.

Landlords lack an EV strategy 

Landlord’s ability to access the benefits of EVCI is enhanced by their powerful role in the EV value chain. As kingmakers, landlords can choose their position in the value chain based upon the income they want to receive, matched against the associated costs, risks, revenue and operational complexities / roles and responsibilities that come with each position.

Surprisingly however, nearly all landlords lack the clear strategy required when making EV related decisions and setting their organisations goals across their real estate portfolio.

The consequences of this, landlords can end up losing control and value to CPOs through signing long-term leases which can often result in a suboptimal customer experience, and value leakage as no long-term vision is in place describing how EV charging will be delivered across their estate.

So how does an EV strategy help?

An effective EV strategy takes a landlord’s objectives, value drivers and portfolio level boundary conditions and delivers an output which defines the preferred end user EV charging user experience, hardware and software requirements, electrification timelines and associated capital and revenue expectations. As each asset type attracts different end users, each will have a different EV charging need, and strategies are focused on asset types, typically broken down into retail, workplace, residential and commercial fleets.

The outcome being landlords and their counterparts become armed with a clear understanding of what EV charging looks like across the different elements of their portfolio and what EVCI they need to deploy to achieve their ambitions and meet stakeholders demands. The consequence, as the EV market develops, landlords can effectively engage with their stakeholders and navigate the changing landscape across all asset types with confidence 

Final thoughts

EV usage in the UK is increasing, and with it so is the demand for reliable public / private charging, and whether they know it or not, landlords are kingmakers in the EV charging value chain.

Because of this, a robust EV strategy is increasingly important for landlords so they can simultaneously safeguard future property value and increases revenue opportunities, while also supporting their stakeholders through the mobility energy transition.

As the demands for EVCI now begins to increase, landlords are likely to face increased pressures from tenants, investors, and regulators to put in place an EV charging strategy. As this pressure builds, landlords will experience increased interactions from CPOs who are looking to agree a partnership whereby a landlord gives over control of their real estate’s EV charging services to a specific CPO for the next 10-20 years. Significantly however, in these situations CPOs are not true independent advisors, and therefore before engaging with them, a landlord needs to fully understand the EV user requirements for their site, alongside the market and technological developments to make a fully informed decision.

In the face of these challenges, our suggestion to landlords is to pause and reflect by using the time still available while the demand is manageable, to determine what role they want to play in the EV charging value chain. In the coming years, the ability for landlords to respond in a proactive way that develops economic, social, and environmental value across their estate is going to become a distinguishing feature of whether their real estate is the dynamic and adaptable type required in the late 2020’s and beyond.