Electric vehicles, electrification, and soaring energy costs have been front of mind for the industry for the last few years and with the re-introduction of the ban of new ICE [internal combustion engine] car sales from 2030, this will intensify in the next five years.
Electricity demand is set to grow, as will demand for EV facilities. Estimates suggest there are 1,360,000 battery electric vehicles (BEVs) with 740,000 plug in hybrids, while around 30% of new cars registered in December were BEV – just under 20% of sales in 2024 – largely driven by fleet sales.
Finally, infrastructure will continue to be a major challenge. There are now estimated to be around 74,000 charging points, with at least 230,000 more required by 2030 to meet the government’s objectives. Even if fossil fuels remain front and centre for the short and medium term, electrification cannot be ignored, especially when it is reckoned that 27% of drivers don’t have access to off street parking and even those that do will still charge away from home and work.
So how should operators approach these changes?
The answer for some has been to let a chargepoint operator (CPO) lease space and let them handle installation and operation . At first sight, it is a similar model to valeting and other ancillary services. However, the valeting business is mature and we know it well. EV charging is still an immature market that continues to grow and evolve rapidly. With this model, while there is a capital expenditure saving, margins are small and there is a loss of control. The forecourt owner does not set the prices charged and may not know the price of the electricity used – so there is no access to margins. Finally, you do not control or influence the uptime or have any say in the maintenance. New regulations from November last year have sought to address maintenance issues by setting a 99% uptime threshold, as well as contactless payment on all terminals within 12 months and a 24/7 free to use phone service from customers and the requirement to display the maximum price of a kWh. Even if you are looking at doing your own install, it is vital to partner with a reliable CPO who can provide all these services to keep you compliant.
As an EV driver for just over a year, I do most of my charging overnight at home. On longer journeys I wouldn’t say I’m immune to ‘range anxiety’ but my sat nav works out where and for how long to charge. Sometimes that can be a 20% blast rather than a full charge to 80% which surprised me at first. I’m lucky that even an 80% charge is usually less than 20 mins but whatever the time involved there are some basic truths for me. I don’t want to get wet in the rain and after a few hours in the car, though sometimes I may be happy to stay in the car I really want the option to be able to grab a coffee knowing there is a seat and toilet to hand as well. Accessibility is often overlooked and retailers need to think about servicing a different driving experience. If time allows with the right facilities, I don’t always want to leave as soon as possible and am happy to spend 30 mins catching up on e-mails and calls while having a coffee. It’s all about catering for ‘use occasions’ and providing the variety of charging options customers want, perhaps more than just providing the fastest possible charge. I see it as similar to the pay at pump debate which has gone on for years. One size rarely pleases all and usually leaves margin on the table. Finally, the retail factors of ‘quick, available, welcoming, and clean’ apply equally to EV drivers as well as fuel and easy contactless payment will continue to be popular.
The big players have shown that with investment serious money can be made on charging, and with an estimated 850,000 EV drivers this is set to continue. However, building EV facilities is very different to installing new tanks or pumps, which we know and understand.
There are many moving parts and different stakeholders. Getting the right type of hardware and installation is an obvious one especially with long lead times. While there is a drive towards super-fast chargers, (350kW to 400kW), perhaps in part to replicate current fuelling behaviour, that might not be right for your site or location and it’s the car which actually determines how much power it can actually take, with the vast majority currently unable to charge at more than 100kW. Some suggest that with current technology 150 to 200kW units would be sufficient future proofing and a more affordable option, and why not look at a mix of options if there is space for more than one charger?
My second observation would be to do some research on the end-to-end process of installation and the new regulations that enforce new obligations on help desks and maintenance. The objective has to be a reliable customer friendly facility with appropriate reporting, maintenance and support you can manage with accurate, timely reporting on the sales margins and usage data so you can control and market your business as you want. The choice of a CPO to support you and your payment providers is a key decision.
However, the major issue is power and getting connected. There is no simple equation to determine the costs and timing on getting a grid connection. While installing a bank of rapid chargers will likely require a substation which will have a large cost, recently one operator secured a sufficient power for a 200kW charger on an low voltage connection for less than £50,000. The downside in both is the timeframe, in this example that was up to a 12 month wait. A virtually identical application at another site (with substation close by) came back with a similar timeframe but with a £350,000 price tag. The harmonics used by the charger can also impact on timings depending on the DNO (distribution network operator) infrastructure at the location, so it is vital to ensure this is covered in your charger selection process.
If you do nothing else, please investigate the power opportunity at your sites. The good news is it is pretty easy and cheap to do and normally will come back in two to three months. If you need help with this, the likes of Evenlode, which recently launched its Edison forecasting model on EV demand, can help
Grid access and infrastructure is a huge issue and recent work I have been involved with on renewables shows a similar story for generators trying to get power on the system. One developer had to pay over £3 million in 2021 before finally getting a connection at the end of last year to supply power and it is the same on the supply side. Connection costs for redeveloped sites, even before you include future EV demand and the timescales to get the supply, are only going to increase.
Depending on your view of the market, one option to secure longer time prices for your business could be to team up with a renewable provider to do a matched PPA (power purchase agreement) where you match your demand with their supply. This is a step up from a green energy supplier and is common in other sectors, so why not ours?
Looking at off grid energy is certainly now another method to offset reliance on the power network. Already many operators have installed solar. Decreasing costs in solar, especially if linked with AI-controlled batteries that react to market prices, and now the possibility of on shore wind may offer opportunity for landowners who are lucky enough to have space and the right conditions. Imagine on larger sites having the infrastructure to generate enough renewable power not only to offset base load demand, but with power to charge EVs and perhaps other local users of power through off-grid private wire connections.
Sure, that would not be cheap to set up, but neither is rebuilding a forecourt or building an new to industry store. The energy transition will present some of these opportunities and the industry has always shown that is ambitious and creative in equal measure.
Ramsay MacDonald owns RM Solutions Limited, and has been a consultant on Evenlode’s Edison service which forecasts potential EV demand at forecourt sites.
