Sustainable Investment Briefs: EV Growth Drives New Financing for Charging Networks

Electric Vehicles Drive New Financing for Charging Networks 

One of the hurdles to greater adoption of electric vehicles has been the relative lack of charging stations, compared to the huge network of gas stations worldwide. That’s starting to change in a big way though; more than $80 billion is expected to be spent on global EV charging infrastructure over the next eight years, according to Navigant.

It’s a bit of a chicken-and-egg scenario, in that the growth of electric vehicles will lead to more charging infrastructure, which in turn will encourage greater adoption of EVs. In any case, it’s clear that EV usage will grow dramatically in coming years.

Within eight years, electric cars will be as cheap as gasoline vehicles, according to the latest forecasts, with a projected 530 million EVs on roads worldwide by 2040. EVs will outsell fossil-fuel powered vehicles in 2038 as battery prices continue to plunge, Bloomberg New Energy Finance estimates.

The key emerging consumer demand for EVs will come from China and Europe. China is already leading the way in EV sales, with 352,000 last year (versus 159,000 in the US). That figure is expected to double this year as the Chinese government focuses on subsidizing EVs in an effort to combat pollution levels amidst a boom in urban population.

Important recent announcements include Tesla’s mass-market Model 3 starting reaching consumers this month, and Volvo’s plans to begin phasing out cars that run on fossil fuels in two years.

Key recent market drivers in Europe include:

  • The British government has announced that new diesel and petrol cars will be banned outright in the UK by 2040.
  • France will also phase out new diesel and gasoline vehicles by 2040.

All this growth is driving the funding of companies that build EV charging infrastructure:

EV charging firm ChargePoint raised $43 million in Series G venture funding in June, led by Siemens, to bolster its roll-out in Europe, bring its total fundraising to nearly $300 million since its founding 10 years ago. ChargePoint also announced that it will become the exclusive operator of all of GE’s nearly 9,800 EV charging stations.

In late July, EV charging startup Greenlots received funding from Energy Impact Partners, a utility investment group. Greenlots’ smart EV charging stations combine energy management services and behind-the-meter energy storage.

Other recent developments include the news in March that French utility Engie acquired EV-Box, which has deployed more than 40,000 charging stations across 20 countries, to expand its global footprint.

China is also to drive massive amounts of funding into new EV infrastructure. The government will deploy 100,000 public charging stations this year alone, almost doubling the 150,000 in place at the start of the year, according to reports.

Governments and Companies Renew Paris Accord Pledge

Despite the Trump administration’s rejection of the Paris climate agreement, there are growing commitments from across the U.S. to its central tenets. Among the latest evidence is the July 11 announcement of “America’s Pledge” – a coalition of 227 cities and counties, nine states and about 1,650 businesses and investors, all pledging to uphold the United States’ climate commitments under the Paris deal. Participants will team up with experts to quantify their climate commitments, with the results of that quantification expected to be announced at a United Nations climate change conference in November.

Cap-and-Trade to Continue in California

Further defying Trump’s actions on climate change, California lawmakers from both parties voted this month to extend the state’s cap-and-trade program through 2030. The program puts a price on carbon emissions and is meant to discourage businesses and individuals from burning fossil fuels, and encourage them instead to switch to clean energy sources.

This move is drawing attention the nine Northeast states that take part in the Regional Greenhouse Gas Initiative. It’s an interstate, market-based cap-and-trade program, and its members are now negotiating the future of the program beyond 2020.  So far, the RGGI has helped reduce emissions from power plants in the region by 40 percent between 2008 and 2016, according to a 2016 report by the Acadia Center.

Energy Storage Developer AMS Raises $34 million 

Distributed energy storage developer Advanced Microgrid Solutions announced this month that it raised more than $34 million in a Series B funding. The round was led by Energy Impact Partners, Southern Company and DBL Partners, who also led the company’s Series A round. Other participants in this round included GE Ventures, AGL Energy Limited and Macquarie Capital.  AMS’s total funding is now at $52 million.

AMS uses batteries and a proprietary software system to aggregate and operate its customer-sited batteries as a “fleet” that can be used as a grid resource, opening up multiple revenue streams from both utilities and building owners.  This aggregated storage model is called a “virtual power plant” or VPP.  (Read more about AMS and VPP developers gaining traction in our recent  briefing Behind the Growth of Battery Storage Financing & Deployment.)

Virtual Power Plant spending to grow 

Global implementation spending on virtual power plants (VPP) is expected to reach $2.1 billion annually by 2025, according to Navigant Research. Including energy storage, VPP growth should total nearly $69 billion by that year, with 38% of that coming from North America and 35% coming from Asia-Pacific.

Siemens and AES Form Energy Storage Joint Venture 

Siemens and AES have formed a new joint venture called Fluence, which will sell industrial-scale batteries to utilities, project developers and commercial and industrial customers.  The new company will be based in Washington, D.C. with offices in Germany and elsewhere. Combined, the companies say they have 48 operational storage facilities in 13 countries, totaling 463 MW.

New green labeling to boost investor confidence.  

The European Union is considering new labels to classify green bonds and other green financial products, hoping such labels would increase investor confidence and boost investment in the sector.  The EU Commission is expected to publish new proposals in early 2018.

Similar efforts are underway in the U.S. as well. In April, Standard &Poor’s launched its S&P Global Ratings Green Evaluation, an asset-level environmental credential that aims to provide investors with a more comprehensive picture of the green impact and climate risk attributes of their portfolios. The programs “Green Evaluations,” which are separate from S&P’s traditional credit ratings, can be used to assess the green impact of a variety of securities.

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