Overcoming the barrier of prohibitive charging infrastructure costs

By Naomi Jane Nye, Head of Sales at Drax Electric Vehicles ?

Though only half of UK businesses have installed a charge point to date, organisations nationwide recognise the need to switch to EV fleets with supporting infrastructure.

The urgency’s clear. The ban on the manufacture and sale of internal combustion engine vehicles (ICEs) is fast approaching – and the need for visibility of sustainability commitments is ever-growing.

The benefits are clear, too. Electrification provides a boost to organisations’ environmental, social and governance (ESG) and their corporate social responsibility (CSR) credentials. EVs offer lower fuel and maintenance costs and avoid clean-air-zone charges. And we’ve found they also contribute to driver satisfaction and attracting new employees.

But cost remains a huge blocker to adoption, as our research has shown – 51% of respondents listing it within their top three electrification barriers...

I feel that might be about to change.

Upfront costs

The upfront cost required to transition to EVs can be a hefty one. Before you can think about choosing electric operational, maintenance and executive fleet vehicles to buy or hire, you need to make sure your charging infrastructure will support the switch.

Upfront infrastructure costs include electrical site surveys, potential site electrical capacity upgrade works, hardware and installation. You’ll need to make an allowance for ongoing operations and maintenance costs, too.

Given the extent of these costs, it’s not surprising that organisations often feel they simply can’t afford electrification.

The alternatives to electrification, however, have a very limited shelf-life which, in my opinion, makes them non-starters.

Why financing is the solution

Financing options enable you to split upfront costs over a period of years. This spreads the outlay and avoids one financial year’s balance sheet having to take the hit.

For some organisations, the right financing model will mean the difference between battling with the logistics of the alternatives (see inset) – and a fully functional EV fleet. For others, it’ll provide the opportunity to expand or upgrade their intended investment.

A more comprehensive EV infrastructure, covering more locations, could simplify operations and serve your organisation for longer. Similarly, upgrading the hardware specifications or including functionality like active load balancing could increase efficiencies and reduce ongoing energy costs.

Being able to afford under-the-ground preparatory works – which might include unexpected electrical capacity upgrades – will also reduce potential future installation expenses.

Managing the risks

Investing in EV infrastructure via a funding model – and selecting which model suits you – is a case of managing risk.

Knowing how much you’ll be paying towards your infrastructure on a recurring basis across a five-year contract (for example) can help you manage finances. Such funding solutions not only let you lock in current prices for the contract duration, they bring clarity as to how much you have available to spend elsewhere.

Of course, I recognise there’s a flipside to this. A change in circumstances when you’ve agreed to a long-term contract could see you either sitting it out or paying penalties to exit. Funding contracts are legally binding and many don’t offer the opportunity to benefit from any residual value the hardware may hold.

Which funding model suits you?

Different funding specialists offer different funding models. These models can cover varying aspects of the upfront infrastructure costs. While they’re likely to include installation and hardware expenses, only certain solutions will support with infrastructure upgrade and operation and maintenance costs.

It’s worth considering your organisation’s answers to questions like the ones below to help you determine what type of funding model will work best for you.

• Do you lease your business premises?
• Do you want to own your EV charging assets?
• Do you want to minimise the risk of owning out-of-date technology at the end of the funding contract?
• Do you have some upfront capital that you’re prepared to use to reduce the ongoing contractual payments?
• Have you installed any charge points already? If so, do you need to release capital to in order to invest it elsewhere?
• Do you want the simplicity and convenience of an all-in-one funding contract to include operation and maintenance costs?
• Don’t forget that you might qualify for governmental support with the cost of your EV infrastructure – check our article on government grants to learn more about them.

Find out more

You can read more about the financing options we offer through our finance partner, Horizon Energy Ventures, on our website. There’s further information about the three funding models available, including details of upfront costs, hardware ownership and end-of-contract choices.

If you want to talk through your circumstances and the options to better understand how to proceed, complete and submit this form or call us on 01473 632533. We’re looking forward to helping you find out what’s possible with Horizon’s funding support.