The recent Energy White Paper re-states the government’s intention to phase out the sale of new petrol and diesel cars and vans by 2030.
Local authorities will continue to have a key role to play in boosting the availability of EV charging infrastructure (EVCI) in their areas, in particular for EV users - or prospective users - who lack off-street parking.
Having identified a need for EVCI to be installed at certain locations, one of the key considerations for a local authority will be how that EVCI is to be funded. Will the cost of procuring and installing the EVCI be funded, at least in part, by the authority itself or is the preference to find a private sector partner who will provide the authority with a funded EVCI solution?
Procurement of EVCI on authority funded basis
For a number of reasons, an authority may decide it is willing to fund and own specific EVCI. In particular, this may be where it wishes to see EVCI installed at locations where user demand is sufficiently low or uncertain as to make it an unattractive proposition for private sector investment.
For on-street installations, authorities can still take advantage of the Office of Low Emission Vehicles' On-street Residential Chargepoint scheme grant. This covers up to 75% of the capital cost of procurement and installation (subject to conditions).
Contracts for procurement of EVCI and related services may well constitute above-threshold public contracts which are regulated by the public procurement regime (as it currently applies). However, a number of framework or DPS arrangements have now been established, including within the last 12 months by Crown Commercial Services, so an authority will have other options where it wishes to avoid running a full, advertised tender process to select a supplier.
If an authority decides to operate the EVCI itself, it should assess state aid risk and structure its activities so that its intervention in the market does not give it an unfair competitive advantage.
- Pros: Greater control over where EVCI provided and at what cost to users
- Cons: Upfront capital cost, higher operational risk for authority
Third party funding/ownership of EVCI
In some locations, a private sector partner may be willing to provide an authority with a fully funded solution which sees the partner fund, own and operate the EVCI at its risk on a concession type basis.
The authority should consider if it requires any kind of fixed income or is content to receive a variable revenue share. Either way, state aid should not be a concern if it can demonstrate that a market rent/fee is being imposed.
(a) grant of lease/licence to third party following competitive tender
Depending on the level of risk transferred to the EVCI provider, the proposed arrangement may formally be a 'concession' for the purpose of the Concession Contracts Regulations 2016 (CCR). In any event though, as for authority funded EVCI, the authority will have the option of using an established framework/DPS arrangement to reduce the cost/complexity of the tender process.
- Pros: No upfront capital costs, risk transfer to provider, potential revenue stream (but lower than authority funded option)
- Cons: Uncertain appetite of EVCI providers to bear all risks, only viable for certain locations
(b) grant of a lease/licence to third party without competitive tender
If the authority is approached by a provider seeking to install EVCI at particular locations, the parties may wish to negotiate the relevant lease/licence arrangements directly, without a regulated procurement process being conducted.
In this scenario, the authority could consider granting a standalone lease/licence that grants the appropriate rights but (for public procurement reasons) without any obligation on the provider to install the EVCI.
- Pros: No upfront capital costs, risk transfer to provider, potential revenue stream (but lower than authority funded option), limited/no tendering cost
- Cons: Legal uncertainty, no guarantee EVCI will be supplied/timing of supply
In summary, the most appropriate procurement option for a particular authority will depend on a number of factors including: whether the EVCI opportunity is authority-driven or provider-driven; the availability of authority capital funds; and the risk appetite of each party.
Stuart Urquhart is legal director at UK law firm TLT