What do you need to know to run a viable public charging business?
This blog was written by Abhishek Sampat, Principal Analyst
We recently spoke to Ole Henrik Hannisdahl (CEO of Mer Norway) on our Talking New Energy Podcast about the key aspects to keep in mind to build a profitable charging network. As Norway has been the early adopter, then market testing playground for EVs, the world has been watching to see what works, and what doesn’t.
The key points I think are important to building, running and scaling a charging business are:
- Market need and suitability
- Business Model
- Customer experience
- Cost control and management
Depending on positioning and strategic intent, being involved in the public charging space can have you playing one of the following roles: Chargepoint Operator (CPO), eMobility Service Provider (eMSP), Location host, Chargepoint Manufacturer or Energy supplier. Each one of these roles comes with its own unique challenges, with varying levels of CAPEX required for set-up and go-live. More than one role can be played, for better vertical integration, and we are seeing varied examples of this across all the key EV markets.
Market need and suitability is key to understand before investing into a market and also a charging location. You need the right kind of EV customers in the market, and target charger installation accordingly. Installing public chargepoints where people live is as, if not more important than en route charging, as the next wave of EV drivers will not have dedicated off street parking and will be reliant on locally available solutions. A location with high vehicular traffic and high demographic density is the sweet spot. A high utilisation rate of a charger is fundamental to profitability of a charging business and at a micro level, the chargepoint location.
The Business Model aspect links directly to the market need and suitability aspect of a chargepoint business - you need the customers, and utilisation rates need to be high to unlock business models. Today customers pay for kWh, sometimes at different kW rates. The initial drive to capture customers by mandating memberships or downloading apps to access chargers created a myriad of different requirements just to use public charging. This is being phased out with adoption of more pay as you go solutions using just a credit/debit card or other forms of contactless payments, making charging more accessible to users.
A customer is likely to sign up to a membership for chargers on a network they often use, where membership comes with payment benefits and use pay as you go solutions when needed.
Bundling retail and other value streams at a location where the customer is likely to be stationary is another key revenue generator, a model that has existed at petrol station forecourts for decades. Bundling these propositions can be done via partnerships and in-house solutions. An example of this is the Gridserve business model – on site charging, energy services, food, retail, vehicle leasing and entertainment. As Ole put it – getting in the retailer mindset, not just infrastructure provision is vital.
Customer experience is often overlooked when new technologies come to market, but its importance cannot be overstated. Simplification is key – paying for kWh, different kW rates and per-minute are understandable concepts by new customers. The price needs to reflect what is provided to the customer in terms of charging service. As mentioned above, price models are also complicated – a straightforward, easy to navigate, complication free charging experience is the baseline upon which other aspects of the charging business model can be built.
As with any infrastructure based business with land, set-up and unit costs, understanding Cost control and management is important to building the commercial offering. As a part of our EV Charging Service at Delta-EE, we have broken down the aspects of cost for a public chargepoint location – which can also be scaled up for a public charging business.
You can listen to the podcast referenced below or on your favourite podcast provider, and learn more about our EV charging research here.