In The News

Is the P3 EV sector starting to take off?

By Jonathan Davies

This article is from the P3 Bulletin. 

When the National Electric Vehicle Infrastructure (NEVI) program was ramping up, there was significant excitement around the role that P3 could play in delivering this new technology into areas where the private sector would not go alone.

However, over the last year, the excitement has dissipated somewhat, with many still unsure how the model could fit in. 

Many DOT's have opted to use the funding as a grant program, but earlier this month, the Georgia Department of Transportation (GDOT) released a request for proposals (RFP) on a P3 EV network. An official told P3 Bulletin that it was the fastest route to getting the infrastructure built - showing again that P3 can provide an alternate pathway that is efficient and effective at getting infrastructure built.
Josephine Tucker, JLL's Americas managing director, was one of the advisors on the project, and is bullish about the future of P3.
"The jury is out on what the best model is - there is no one size fits all approach - it really depends on the unique needs for each infrastructure owner/operator," she says. "EVs and other emerging energy technologies may lend themselves to P3-ish models due to the evolving market and complex operational requirements which invite opportunities for risk transfer. From that standpoint I think there is absolutely a case to be made for P3."

For P3s to fit, there has to be some kind of 'sweet spot' where there's enough demand that it's needed, but not enough that the market is going there anyway. In GDOT's case, that's in between their major cities. One of the main principles of so-called Bidenomics is to make sure development is spread to underinvested communities, such as rural regions.
"To reduce range anxiety and ensure equitable access to infrastructure we need to get EV chargers into places where the business case isn't there yet - this is where subsidies from federal and state programs can play a role in scaling critical infrastructure assets and lowering market participant costs," she says.

In a sense, these kinds of P3s may be a one-off wave, creating sufficient demand for the charging industry to take off, and meaning that GDOT never 
has to take the infrastructure back into its ownership.
There have been questions around the appetite from pure P3 players for this type of investment. Notably, in GDOT's list of those who attended its June presentation on its EV network plans there were only a few P3 developers in attendance.

"When we first started doing market sounding and fine tuning the elements of the plan, at the beginning the traditional P3 players were not interested, feeling that it doesn't make sense in technology, revenue or size," says Tucker.
But a year in, some of them started to change their tune. "Most of the typical P3 players are not going to be interested in something that costs between $10-30m with an uncertain revenue stream and a lot of federal attachments," she admits. "The appetite has begun to grow as the first wave has gotten underway and developers have seen opportunities to bundle, or to develop programs."

Developer Shikun & Binui is one of the firms looking to catch this wave - as evidenced by its recently launched Pennsylvania EV joint venture. The firm has a sense of excitement and anticipation about where this sector can go.
"My sense is the ideal structure for deploying those funds and EV projects is still getting figured out," says Sam Headon, Shikun & Binui's managing director of project development. "P3 is a model that could work well and we're continuing to look at a number of opportunities to try and find the right fit for us. We'll be watching Georgia very closely, and others, to see what the experience is like."
Firms circling these early opportunities could be making the first move into a sector of which NEVI, despite being huge in scale, is only the beginning.

Recognizing this, some organizations have looked at new ways in which they can take advantage: take S&B's recent launch of an EV outfit in Pennsylvania. And rather than focusing on rolling out chargers across a town city, or even major highway, P3s could prove to be an ideal solution to provide the charging facilities for fleet vehicles. A wide range of public authorities are looking at how to decarbonize their fleets, which often produce large proportions of their overall carbon emissions. Getting a private partner in to build, manage and maintain a charging hub could make a lot of sense.

"Looking at EV charging in the case of fleets or a charging hub, suddenly that becomes a much larger infrastructure project and lends itself to a P3," adds Tucker. "In terms of capex, they're big projects and a lot of complexity from a construction and risk standpoint."
Having the project centered in one place makes a lot of the risk easier to handle than the NEVI projects spread across hundreds of sites, hundreds of miles apart too.
Taking the bus sector as an example, there are many advantages here for P3s - particularly the predictability their operation demands.

EV projects have the potential to go huge. With demand on the grid struggling to keep up, EV projects can expand from a few chargers, to needing onsite solar, and then needing battery storage, and even microgrids. All this presents another major challenge that P3s can come in and solve: complexity.

"Looking at EV charging in the case of fleets or a charging hub, suddenly that becomes a much larger infrastructure project and lends itself to a P3," adds Tucker. "In terms of capex, these are much bigger projects with a lot of complexity from a construction and operational risk standpoint.
"What I would pay attention to is the intersection between transportation, real estate and energy infrastructure, there's an opportunity there for some really creative thinking around P3s."
These kinds of complicated projects are perking up the ears of developers such as Shikun, with Headon saying that his team is working on ways to make sure they can "do all the elements" that Tucker is describing.

It's not just EVs too, with the confluence of the IRA, IIJA and other major acts, projects are blending together many previously exclusive sectors to take advantage of the funding availability.
"That's where the markets are going, we're seeing more hybrids," Headon adds, suggesting it's a perfect fit for models such as P3s. "You've got to think about it in creative ways, it can unlock a lot of value."

Some will be thinking 'how can a P3 cope with that increasing, changing challenge?' Tucker believes there is an obvious answer.

"Progressive P3s are a great fit for this," Tucker explains. "Every project is unique and the technology/asset stack differs from one owner/operator to the next. The developers and solutions we are working with are evolving constantly. When this comes to market, progressive P3 can be a great way to go. However, these can take longer to execute and in cases where there is supply chain risk - for example, where vehicles have already been ordered and infrastructure is already on backlog - progressive P3 may not be the best approach."

Investors are on the watch too. One major investor/developer says they are having "early conversations" about the sector.

"It's a dynamic space but there certainly seems to be a role for P3," they suggest. "You can imagine a big bang approach where a big authority wants to accelerate a fleet transition and provide the necessary infrastructure and a new facility. There's a lot of moving parts but it's tailored to the developer model with a single point of responsibility that integrates the various services and the long-term maintenance and operation. The model has proven its merit."

The kind of P3s that could emerge will vary, of course. From the design, build, finance model to deliver the facilities alone, to the more traditional long­ term P3s with O&M that could add a lot of value to attract a different type of player, this is a developing space. Those who cut their teeth early, might have a big advantage going forward.
"The potential?" says Tucker. "It's massive. Anybody who's not looking at this is going to be out of business."

P3 Bulletin