6.1 There are a number of different funding models and it is important that the most appropriate option for funding the scheme is used, taking into account grant funding opportunities available and looking long term to forecast potential returns on investment. Typical funding models include:
6.2 Own and operate: 100% investment from the Council, securing an income stream going forward.
The advantages of the ‘own and operate’ model above are that the council’s fully in control of the project and keeps the income generated from the charge-points. Management and maintenance responsibilities mean that the liabilities remain with the owning body. There are no grey areas or opportunity for dispute over liabilities, revenue shares or any other matter.
Disadvantages include high initial investment costs for infrastructure setup, ongoing maintenance expenses, potential challenges for finding suitable locations. Additionally rapid technological advancements may render existing equipment obsolete
Risk of inadequate demand leading to underutilisation; most optimistic forecasts suggest that the pay-back period on the capital will be significant, anything from 8-15 years.
6.3 Concession framework: Shared investment model with shared revenue return for the partner.
Upfront costs, running costs and revenues are shared between the Council and a commercial supplier on the basis of a contract.
Advantages of this model include the sharing of upfront costs and maintenance liabilities. Local authorities especially are under financial pressure to control running costs so anything that can help in this regard will be welcomed
- private suppliers will usually have greater expertise
- find the most cost-effective solutions to any problems arising
- knowledge of technical improvements and developments in the marketplace and will be well-placed to respond to change
- future-proofing of any installations
- responsive to the market
The disadvantages to the public sector partner are mainly in the area of financial returns, which will be reduced due to the maintenance burden falling to the private partner which has to be funded from charging revenues.
The council will regard the placing of EV infrastructure on their property as a non-cash contribution to the project. They will want assurances (in the terms of any contract) about the on-going liabilities and how these will be shared with the private partner. They will want clarity on the division of responsibilities between public and private partners and will want a clear exit strategy at the end of the contract. This may be a simple roll-forward if all parties are agreeable but it needs to be understood from the outset to avoid later problems.
Asset management is another ‘heads of terms’ matter that needs to be agreed - who owns the infrastructure including the software and therefore who is responsible for faults, breakages, equipment failure and customer support.
Finally, the concessionary approach needs openness in accounting for the revenue generated by the charge points and how it is distributed
6.4 Alternative model: Nil/low cost options providing small or no returns for the local authority partner.
If the objectives of the project are deemed to be social rather than economic an alternative model may be considered. The public body, as landowner, could choose to forego the revenue potential of EV infrastructure entirely, in favour of ensuring that access to charge points is spread evenly throughout the community.
This may be especially attractive in areas of high-density housing where EV owners do not have access to a private drive to allow recharging, or in rural areas where there is insufficient volume to stimulate private sector investment.
The landowner would typically pay the upfront costs of installation and enter into a contract with a private supplier to carry out all back-office and maintenance functions in return for being able to keep most or all of the receipts. Again the contract would need to be carefully drawn up to allow the owner to have some control over the cost of charging and for the supplier to have some security of tenure.
An agreement of this nature was the basis of the Charge My Street project in Cumbria and Durham which happened in 2019-2022. Charge My Street is a non-profit, community enterprise seeking to expand the availability of EV infrastructure in exactly those localities (high-density housing; scattered rural communities) described above.
6.5 Cumberland’s Choice of operating model
We have considered the above options and the Council will progress with a concession model via a framework where the upfront costs, running costs and revenues are shared between the Council and a commercial supplier on the basis of a contract.
This has the advantages that the private suppliers have great expertise but they will also be responsible for the future maintenance costs. The disadvantage is that the financial returns will be reduced to the Council but this will be offset by the maintenance burden falling to the private partner. The concession model has been used by the majority of highway authorities and it is the preferred model from the Energy saving Trust who have been consulted on the draft strategy.