Part 2. Fleet Electrification and ESAs

The Importance of a Long-Term Plan and Partner

In our previous post about fleet electrification we discussed the broad benefits associated with utilizing an Energy Service Agreement (ESA). For this article we are going to focus on a difficult but potentially beneficial characteristic of transitioning a fleet of vehicles over time: phased growth.

The most cost-effective transition plan requires that fleet managers replace fossil fuel vehicles with electric vehicles as they hit their end of life, which does not allow a 100% fleet conversion in one deployment. Because of this, it's important to plan out infrastructure deployments that align with planned vehicle procurements.

If the fleet manager doesn't have a long term plan or technology partner, charging infrastructure can be piecemealed over time or drastically oversized on the first installation. When an installer is brought in for just the first charger installation, there is no incentive to build cost efficiently for the long term fleet transition. This can occur multiple times over the fleet transition, resulting in a higher total cost of the required infrastructure. In the case of one large installation of infrastructure, the system will be underutilized and certain components will hit their end of life before the fleet has fully transitioned. In both scenarios, capital is wasted and could be detrimental to the timely and cost effective transition to EV’s.

If the charging infrastructure is financed through an ESA with a partner like Scale Microgrid Solutions, financial interests are aligned and the infrastructure provider will look to build the system in the most cost-effective manner in order to provide the lowest total cost of ownership for the fleet. The provider will work with the fleet manager to plan out vehicle deployments to determine the optimal charging and energy infrastructure deployments that will result in a more efficient use of capital. Some providers can even match modular charging deployments with modular energy generation via a microgrid platform. Reducing the cost of electricity throughout the transition results in a further reduction of the total cost of ownership of electric vehicle fleets.

An infrastructure provider can model the in-depth relationship between overbuilding and rightsizing infrastructure to reduce the amount of deployments but also takes advantage of declining system costs and reducing construction costs. The right amount of chargers is identified upfront to support the growing fleet and take into account downtime for repairs and maintenance. Since the central switchgear of the charging infrastructure is also the heart of the microgrid, the switchgear is sized for the long-term to allow space for the low cost installation of additional chargers and energy generation equipment over the fleet’s transition. When the first installation occurs, space is included for future wiring and power distribution reducing the need for cutting concrete and other expensive construction activities. Long-term thinking applied to the first infrastructure deployment is critical to reducing the total cost of electrification.

If a fleet implements all of the long-term cost reductions upfront without a long term financial agreement, the CapEx of the first deployment could be prohibitively high. Within an ESA, the higher upfront costs are spread out over the agreement and when combined with the subsequent cost efficiencies, the total cost of ownership for the fleet is drastically reduced. With an ESA, the infrastructure provider has skin in the game and it is in our best interest to provide the lowest cost yet most reliable infrastructure for our customers. ESA’s allow electric vehicle fleets and their infrastructure providers to align their interests, creating a long term solution that outperforms a traditional CapEx transaction in every way.