Building UK’ Biggest EV Charging Hub with Unique Business Model

In the past year, we've covered and analyzed news about the electric vehicle charging infrastructure as we're seeing more and more pressure coming from administrations to increase deployment and charging points. However, despite efforts, the public sector is still struggling to deploy the number of chargers needed, and the space they're leaving is being filled by the private sector. In September 2023, we saw the launch of a big project with the opening of the UK's biggest EV charging hub, operated by BP Pulse, but developed by The EV Network. To learn about the project and their unique business model, we spoke with the company, which in 2021 raised £400 million to build EV charging sites. Reza, we're seeing private entities dominating the EV charging industry. We normally hear from companies that either develop the chargers or deploy and operate them, but you're kind of in the middle of that. What is your business model? The EV Network is an independent infrastructure developer and investor in ultra-fast charging network with a very unique business model where we find the sites, we develop the site, we construct the site and all the chargers and associated electrical infrastructure. We pay for everything, but we don't operate the site. We appoint CPOs or Charge Point Operators to operate the site on our behalf on a 20 year license. Our business model is designed in such a way that we call it long term predictable cash flow, and that means we obviously don't take utilization risk as the owner of the infrastructure. In effect, we are as a company, we are provider of infrastructure as a service. Let's talk about your big project in Birmingham. You recently launched there a charging hub that has been dubbed the biggest in the country. You've leased a two acre plot from the National Exhibition Centre for 30 years and now it has 180 EV chargers, 32 of them ultra-fast. There was obviously a strategy behind where to place it because it's right in the middle of the country and in the NEC, which has some 7 million visitors each year. It's near big motorways and something key is that it's adjacent to a primary electric substation. Access to power is normally what makes things tricky, right? When we're talking about charging infrastructure, you have experience deploying ultra-fast chargers, bearing in mind how much the EV infrastructure relies on utility infrastructure, how important was it to have this substation right next to you for this project? Obviously, we had to engage with the local utility, DNO, Western Power Distribution and luckily the power was available and we had to pay for additional equipment, which needed to be installed, substations, transformers, LV pillars and all the infrastructure that is required for something like this. When we assess a site, we look at the location to see if it fits our profile, footfall, traffic count, etc.. The next thing we look at before we even go to any discussions with the landlord is we check availability of the power within the parameters of cost and the business model. So location is key, but so is choosing your partners. I know that you start building a site after you've already reached an agreement with the partner. In this case, you went with oil giant BP, which is investing heavily in EV charging infrastructure. But what are the roles exactly and in general, what partners do you look for? Our job is to design, integrate, build and supervise our EPC contractors. Their role is to buy electricity and to sell electricity to the drivers. That's basically their role as a CPO. As I said, they take the utilization risk whether one car comes to charge or 50 cars come a day, we get paid the same amount of money as a fixed term contract. In our business, we take counterparty risk rather than utilization risk, and we only work with large oil and gas companies. Utilities and companies, typically partners who can stand behind a 20 year contract with no break. The project in Birmingham had a cost of £6 million. Investing that much means that there will be rewards. So when will you get that return on investment and start seeing and earning profits? Those kinds of information, we don't disclose because they are proprietary financial information. But to give you a broad answer, return on investment on an infrastructure project like this is between 7 to 10 years. I'd like to end our conversation with what was your experience like raising £400 million in something that is growing more and more, like EV charging needs? Our unique business model attracted large infrastructure investors because we don't take merchant risk, we don't take utilization risk. Our raise was actually quite easy. If I'm honest with you, we had 11 management presentations to 11 different investors and we had 11 offers on the table. And it's purely because our business is built based on long term, predictable cash flow for our investors. As we see administrations struggle to deploy EV charging infrastructure, with the UK still not using the £1 billion they pledged for building charging points three years ago, or the US struggling despite billions being available for municipalities to build a network, the private sector will play a bigger role in electrification, especially big companies like oil or utilities. And business models like that of The EV Network will continue to catch the eye of investors, who will feel reassured with the fact that there's no utilization cost risk, it's a fixed rate, and partners, who will skip the lengthy process of looking for sites and building. These types of partners can invest heavily and commit to 20 years, a cost the public sector wouldn't be able to face. So these companies will be doing the heavy lifting of the EV charging infrastructure.