The UK’s ban on the sale of new petrol and diesel cars and vans by 2030, coupled with the sky-rocketing cost of fuel, means that more and more people are looking to purchase or lease an electric vehicle (EV) for the first time. As EV ownership increases, so does the need for reliable EV charging solutions, whether at home, at work, en route or at a destination such as a supermarket, cinema or concert hall. The market for EV charging point and related solutions has developed considerably in the last few years, meaning that there is now a very exciting opportunity for property owners to get involved in the provision of EV charging, whether their land is commercial, residential or mixed use.
At Fladgate, we have experience of dealing with EV charging schemes, whether acting for the operator, landowner or for investors into the market. And so we wanted to share with you our top ten tips for landowners wanting to provide an “energy boost” to their assets!
- Operator: there are many charge point operators (CPOs) offering to install, operate and maintain EV charging equipment and it is important that you weigh up which CPO is the right one as you will likely be contracting on a fairly long term basis. Consider each shortlisted CPOs previous track record and ensure that, as part of your procurement process, you visit a sample of operations as well as talking to existing customers to get a feel across a range of issues including how each CPO supports planning requirements, engages with the distributed network operator (DNO), manages power upgrades and other civil works, manages its charging network including the speed at which it deals with faults, how it handles the customer experience from charge initiation through to payment, and what back office systems it uses. Landowners should also look into each CPO’s cyber security capabilities – there have been some high profile hacks of charge point infrastructure and no landowner will want the adverse publicity of a similar event taking place on its land.
- Space: clearly you need to have room for charging points. You also need to allow for any infrastructure, although most should be underground. You will need to consider how you balance the number of spaces given over to EV charging against general parking needs. For example, in a residential block with one space per flat, you may need to ask tenants individually which ones want EV on their spaces as there will be no spares. In a commercial development, you need to weigh up the number of EV spaces (which may need to be occupied longer than usual owing to charging times) against the number of general spaces, including enforcement of parking restrictions so that users don’t overstay and, in the process, block others from accessing a charge point.
- Power: there are different power levels for EV charging. Some charge points offer fast or rapid charging whereas some are just “trickle” and take much longer (8 hours or more) to recharge (usually to around 80% to preserve battery life). What you can offer will depend on the energy infrastructure available in the area and what your DNO is willing and able to install. This is quite a key consideration since “trickle” charging will not work for a small short-stay car park which will need to offer fast or rapid charging instead. The DNO may be able to provide greater power, but where doing so requires a new/enhanced substation or upgraded cabling this will have an impact on space requirements and the cost of overall installation.
- Heads of terms: heads of terms (HoTs) are the usual precursor to formal legal documents, are non-binding and cover the main commercial points agreed between the parties before the lawyers get fully involved. However even if you are used to agreeing HoTs on leasing deals, EV HoTs are likely to be quite different and the CPO may want some parts (such as exclusivity and confidentiality) to be binding i.e. they create a legal contract. Therefore, we would always advise that you involve lawyers at HoTs stage as we can make sure you are protected and that the key points of any deal are covered.
- Exclusivity: as mentioned above, CPOs may want exclusive rights to install and operate EV charging points on your land. Depending on the size of the site, this may be the only practical option although even then you need to consider how long such exclusivity should last, also the circumstances in which any exclusivity granted should cease (e.g. if the CPO doesn’t meet certain contractual promises (key performance indicators or KPIs) such as time to repair faulty charge points). But for a larger site, where multiple operators might be possible, you need to consider whether exclusivity is desirable and whether it could have competition law implications.
- Deal structure: there are many ways to structure an EV charging deal depending on the number of sites involved, the nature of the space available and how involved the landowner wants to be in the EV service being delivered on their land. The most common arrangements in our experience involve a contract which governs the commercial arrangements (e.g. CPO-funded, landlord-funded, profit share) and other important provisions such as asset ownership, expansion rights, KPIs, data sharing, buy-out and termination etc. and could deal with single or multiple sites; this document would be confidential between the parties but would be coupled with a lease agreement that documents the actual occupation of the land by the operator and which would usually be publicly available at the Land Registry.
- Landlord and tenant law: clearly there is a wealth of landlord and tenant law that needs to be considered when granting a lease to an EV operator but one particular point to flag relates to residential and mixed use land only and concerns tenants’ “right of first refusal” under section 5 of the Landlord and Tenant Act 1987. Breach of the provisions of this Act can result in criminal liability for the landowners so it is important that its requirements are considered carefully and early on since they are technical and quite “fiddly”.
- Data sharing: CPOs will need to process and share personal data (such as customer information and payment data) with third parties such as payments providers and will therefore be subject to the data protection laws such as UK GDPR; land owners on the other hand should think carefully before asking their CPO to share personal data with them given the added compliance burden this will entail. In many cases, business information about the charging experience (e.g. charge point utilisation metrics) should suffice
- Sustainability: sustainability for the land owner and the environment is central to the dialogue around EV charging. The EV charging industry is very competitive right now and offers to landlords are being driven up by short-term players looking to install, scale and sell their infrastructure to the highest bidder. Sustainable solutions should instead focus on longer-term future proofed partnerships enabling charge point installations to be rolled to meet increases in demand and EV uptake, allowing for an efficient and sustainable charging solution.
- Termination: it’s important for both parties to be able to exit the EV charging arrangements if something isn’t working for them. That could be at different stages of the deal: perhaps early on if power requirements can’t be met, short term if planning permission can’t be obtained or longer term if the CPO is not performing or the landowner thinks it can get a better deal. Termination will clearly have a different impact on the parties – financially and operationally – at different points and so can be a delicate subject which needs to be tackled in the HoTs at the outset.
As you can see, there are a wide range of issues to consider when looking at EV charging schemes and we can help guide you through them with our expert team of real estate and commercial lawyers.