If governments want to bring on a wave of EV ownership, they need to encourage flexibility and free-thought among the risk-takers eager to build charging networks.
The young companies eager to build the charging infrastructure that will fuel the masses of electric vehicles set to roll onto our streets are keeping a secret as they hold out their hands. “There is no [EV charging] industry without subsidies and there will be much consolidation once all these guys realise there is no money in pay-per-use.”
That’s the verdict from Adrian Kinderis, who made his fortune in IT and is putting together Linga Network, a growing family of AC and DC chargers for drivers who want to take a stroll as they top up.
“As everybody knows, the only reason this industry exists is through government subsidies.”
Government money is welcome, as all the charging start-ups know, but if EV charging is the government’s job to get right, it should not restrict the commercial instinct of the entrepreneurs who are counting on it. “Governments should be careful they are not too restrictive over the ability for the industry to monetise charging stations,” Kinderis tells EcoGeneration.
The pay-per-use model is “tenuous at best” until EVs replace petrol-powered cars, he reckons, having looked at it from every dimension. Even after receiving government grants, the cost of installing a charger, maintaining it and supplying it with electricity does not stack up as a rational economic decision. “Having one car charging at one location once a week doesn’t get you a very strong return on investment on boxes that are incredibly expensive,” he says.
Layers of value
There are various ways an EV charger can make enough money to stand up for itself as a commercial proposition, especially if it’s one of many in a robust network supplied by one distributor. “Sadly, however, what governments are doing is giving out grants and allowing individuals to set up charging stations and then saying, OK, but it must have tap-and-go, for example,” he says.
That may sound reasonable enough to drivers who like anonymous transactions at petrol bowsers but Kinderis says it misses an opportunity for monetisation. “If someone comes in, pays with tap-and-go and leaves, you have no idea who they are,” he says. But when the driver has most probably only located the charger thanks to their smartphone, the stage is set to grab some data and start looking for ways to squeeze value from it.
“For example, if I know that every person coming into my town then goes to charge in the next town, because I’ve seen that trending [using data analytics], I can offer you advertising for that next town to say, hey, while you’re in that town make sure you go to this cafe which is known for its vanilla slices.”
These little layers of value will be easily apparent to owners of charging networks who may be naturals at sniffing out revenue streams and are geekish about activating them via algorithms.
“If all we are doing is setting up individual charging stations throughout Australia, that is impossible to do,” he says. “You can’t network that, you can’t see any trends and you can’t say, hey, government, look at this: during the tourist season this is where all the EV drivers are going.”
A well-connected EV network that is tuned to capture data could provide many more services than electrons, and provide them to many more people than drivers and passengers.
Thinking, fast and slow
According to Kinderis, it costs about $100,000 to buy and install a 50kW DC fast-charger. “It will take a long time to get a return on that when electricity is so cheap, especially for a charger located well out in the regions,” he says.
The owner of that charger could simply add a big margin to the electricity, but that’s no good because “everybody knows how much electricity costs because everybody gets an electricity bill at home.” The public will soon figure out that the price of charging can be far less opaque than the game that’s played at petrol stations.
If fast-charge gear is expensive and not much is known yet about how drivers will charge — quick top-ups or deeper, longer charges — it makes sense perhaps that slower AC technology shouldn’t be off the menu. (Kinderis says an 11kW AC charger costs about $10,000 and can be installed within a fortnight.) And yet the NSW government has developed a planning map to be used by networks that calls for DC charging at 50kW or more.
There is a lot of tax-payer money on offer with very little evident return, he says. “This money is going out there and it won’t come back.” Yes, NBN was horribly expensive and lumpily delivered but it provides a service pretty much to everyone. Grants for charging networks only go to EV drivers (which, eventually, you’d expect, would include everyone).
To get it right, Kinderis says, the government should be seeking a level of uniformity. That could include safety guidelines, installation standards, some sort of audit process, a list of recommended technology and service providers. That could also lead to a more homogenous experience for drivers, so they don’t end up with “50 different apps on their phones”.
“Providing some sort of regulation within there is going to be necessary,” he says. “You can’t set up a petrol station; that’s a heavily regulated industry. But right now I can buy a charger, put it out the front of my place and open that up to the public.”
Anything can happen
As with any emerging market, the early entrants will make breakthroughs and mistakes. Some will fail and others will form partnerships or be bought by incumbents in related sectors, in this case most likely energy retailing or distribution. The cost of charging could then be tailored to a customer’s home load profile and be included as an item in their quarterly bill, say. “It’s a very easy customer acquisition model for them [the large retailers] to chase down anybody with an EV because they know their energy utilisation is going to be increasing,” Kinderis says.
If payback periods for large-scale DC chargers are about five years (on Kinderis’s reckoning), they will become longer still if electricity prices rise and competition among charging networks sees margins tighten. With petrol, the fuel and delivery method never changed. With EVs, anything can happen — new battery chemistry, sharp advances in energy density, different plug types, wireless charging, cheap home-charging systems … anything.
Back to the NSW map, Kinderis wonders if it shouldn’t be wide open to AC alongside DC, fast or slow. Every council should be thinking about how they should support EVs, he says, and they should feel included. “If you’re not on that map, how are you feeling right now?”