Quoted Data: SDCL Energy Efficiency buys EV charging portfolio

General/ 06 August 2020

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SDCL Energy Efficiency buys EV charging portfolio – SDCL Energy Efficiency Income Trust has entered into an agreement with Electric Vehicle Network  (EVN) to buy a portfolio of 112 rapid and ultra-fast electric vehicle (EV) charging stations across the UK for a total consideration of up to £50m.

The EV charging sites will be developed and funded by EVN to the point at which they are contracted and construction ready, at which stage they will be acquired by the fund. The £50m will be drawn down in tranches to fund the implementation of projects, with the first draw down of capital expected to take place later this year with the full balance of up to £50m expected to be deployed over the next 12-18 months.

The construction period for each project is expected to be around 6 -12 weeks, at which point projects become operational and are expected to generate availability-based revenues.

Once operational, the EV charging sites will be contracted through 20-year, fixed price, CPI inflated energy service agreements to ‘charge point operators’ (‘CPOs’), which are typically investment grade utility companies. The EV charging sites will also enter into long-term land-lease agreements with the site-owners, which are large, established forecourt or car park operators on the same basis. EVN, through its subsidiaries, will also manage the construction and operation of the assets, via asset management and maintenance contracts in accordance with the period and terms of the agreements.

This is the company’s first project in EV charging infrastructure. The manager, SDCL believes that this project represents the first opportunity to invest in EV charging assets under a framework similar to availability style infrastructure projects, with long-term pre-determined service fee revenues. In addition to the initial 112 sites, EVN has plans to develop a further c.380 EV charging sites, requiring an additional £150m over the next 36 months, for which the trust has a right of first negotiation.

EVN was founded in 2017 and is a dedicated EV charging infrastructure development company that seeks to address the challenges faced by both landlords and charge point operators in rolling out a network of EV charging infrastructure in the UK.

[This is a really interesting investment by SDCL Energy Efficiency. As we transition to electric vehicles, one of the key stumbling blocks is going to be the availability of charging points. However, as this is an embryonic sector, it is hard to guess how drivers will use these – will they charge at the equivalent of petrol stations, or outside homes and offices? Will batteries allow drivers to go for much longer periods without a charge? How many cars will a charging station be able to service per day or per hour? Given this uncertainty, the contracts that EVN is entering into are ideal in that they take away a lot of the risk. The potential is vast – well beyond the £200m or so that the trust is mulling contributing to this area. One to watch.]