EV Charging Systems Installation Model for ERP

Proposed Structure of this Public Private Partnership (PPP) Model

The model will be leveraging a New-Build-Finance-User-Tariff arrangement for this project type. Given the highly technical and nascent nature of such charging infrastructure for this geography, the government may be best placed to support a private company with the appropriate experience to take on the core obligations in this model. The private-sector company in this model designs, finances and develops public transport program to generate emission reduction credits (ERCs). This company will also be tasked with owning the operation and maintenance of the public transport program under a long-term agreement from the government.

Table 1: Model Attributes

Proposed risk allocation of the Public Private Partnership Model

Key features of PPP structure

• Private sector entity is tasked to design, build, finance, operate and maintain EV chargers via agreement with the ministry/ government or state-owned entity
• The private sector entity acts as the implementation partner, and is responsible for all activities related to the implementation, management, monitoring and reporting of the project over the project crediting period
• In exchange, private sector entity can earn the carbon credits generated from the project as well as any potential fees charged to users of EV chargers

Figure 1: Financing and Activity Flows for the Model

Key considerations/risks for proposed project

• Extensive stakeholder engagement required to ensure buy-in from operators of public transport as well as any other relevant stakeholders
• Need to consider any regulatory requirements of minimum domestic company involvement according to local company law, and ensure close collaboration with government or state-owned entity in the permitting process
• Need to work with grid operators to ensure stable good energy grid capabilities to withstand increased electricity consumption from use of electric vehicles
• The government or state-owned entity will need to support the project company’s business case robustness, especially for securing funding, by ensuring that there are demand-side policies or incentives in place that will encourage users to shift from internal combustion engine (ICE) vehicles to EVs
• Partnering with a service provider for the project’s marketing, sales and pricing is needed to identify potential offset buyers, negotiate contracts, and secure good target price per tonne to enable the financial viability of ERC generation
• Contracting a monitoring, verification and reporting (MRV) service provider with experience in conducting MRV and preparing the necessary documents for generating ERCs in a voluntary carbon market standard will reduce risk of registration and issuance delays or bottlenecks, and strengthen credibility of project’s carbon integrity quality

Case Study: Convergence Energy Services Ltd. (CESL) EV Charging Infrastructure Project, India

Project description

CESL, a wholly owned subsidiary of Energy Efficiency Services Limited (EESL) under the Ministry of Power, Government of India, is undertaking a project to install, operate, and maintain EV charging infrastructure across India through partnerships with public and private sectors. This project aims to scale up the EV market in the country. Chargers installed under this project include ARAl- certified slow chargers, Bharat EV chargers, a combination of fast chargers, and standalone CCS2 and Type-2 AC chargers.

A total of 3,766 EV chargers will be installed across different locations across India which are New Delhi, Kolkata, Nagpur, Chennai, Kochi, and Thiruvananthapuram.

Targeted results

Expected annual ERCs generated from the program will be 150,928 tonnes.

CESL was one among the selected bidders by the Indian government for implementing electric vehicle charging infrastructure at selected locations across India. CESL is given the mandate through established legally binding project agreements to install, own, operate, and maintain EV charging infrastructure in locations where it has installed EV chargers. CESL has ownership of the emission reductions that result from this project.

Figure 2: Structure of Case Study PPP

Summary of the model financials

Assuming a similar project context as the case study above, the estimated project’s Net Present Value (NPV) without ERC in- and outflows – only considering non-ERC inflows through other revenue streams or cost savings enabled by the project – is positive at $1.4 million (M¹). With ERC cashflows, the financial viability of the total project marginally improves to have a positive NPV of $1.6 M, which highlights the potential for ERCs to make at costly projects more financially viable. Incorporating ERC generation into these types of projects help to offset he high upfront capital requirements (e.g., investments and installation of EV chargers) before the continuous recurring fee for EV charger use helps make the project profitable.

Table 2: Summary of sources of inflows and outflows and key assumptions

Table 3: Net cashflows summary (in USD)

Footnote 1: All proces are expressed in United States Dollars