To EV or not to EV - infrastructure is the question

 

It is the government's ambition that nearly all cars and vans should be zero-emission by 2050. Given the inevitable increase in demand for reliable charging infrastructure, local authorities will be considering the structural options available (assuming there is no suitable pre-existing framework).

Electric vehicle charging infrastructure (EVCI) could take a number of different forms: on-street charge points; charge points at existing authority owned or controlled car parks; or charge points on specifically developed sites.

”Local

For expediency, notwithstanding Brexit, this article is based on the existing procurement and state aid regime applicable in the UK.

Option 1 – procurement of EVCI for authority ownership following competitive tender

Most obviously, local authorities could carry out a regulated procurement for the entire installation, maintenance and operation of EVCI.

For 'on-street' installation (though car parks may also be considered), local authorities can take advantage of the Office of Low Emission Vehicles' On-street Residential Chargepoint scheme grant. This is paid in arrears on completion and covers up to 75% of the capital cost of procurement and installation (subject to conditions). The remaining operation and maintenance costs are borne by the local authority.

In terms of any regulated process that may apply, this will depend on the contract type (under the Public Contracts Regulations 2015 (PCR)) and whether the financial threshold to trigger the PCR has been met.

A typical contract with an EVCI provider may well be limited to a 'supply' or 'services' contract, which has a much lower financial threshold than a 'works' contract.

It is important therefore to understand what type of contract you are looking at and whether the regulation would apply.

If the local 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: Legal certainty and control

Cons: Upfront cost, cost of regulated procurement, ongoing operation and maintenance costs

Option 2 – third party funding/ownership of EVCI

If capital funds are limited, local authorities could instead agree (by way of a lease or, if 'on-street', a licence) that a third party will fund and own the EVCI.

The local authority should consider if it requires fixed income or is content to receive a revenue share. Either way, state aid should not be a concern if it can demonstrate that a market rent is being imposed.

(a) grant of a lease/licence to third party without competitive tender

If the authority is approached by a developer, the parties may wish to negotiate the relevant lease/licence arrangements directly, without going through a regulated procurement process.

The local authority could consider granting a standalone lease/licence that grants the appropriate rights without any obligation to install EVCI.

Prior to a Court of Appeal decision in November 2018, a line of case law gave authorities reasonable comfort that if they placed obligations on a contractor that only came into force if the contractor elected to proceed with the project in question (such election being entirely within the contractor's control) then this would not trigger a requirement for a regulated procurement.

However, the most recent ruling has put that emerging precedent into further doubt and specific legal advice should be sought in each case.

Pros: No upfront costs, net income, limited/no tendering cost

Cons: Legal uncertainty, uncertain appetite of EVCI providers to bear all risk, no guarantee EVCI will be supplied/timing of supply

(b) grant of lease/licence to third party following competitive tender

Where the local authority is proactively identifying potential EVCI sites but looking for fully funded installation/operation solutions, it should consider conducting a formal tender process.

Provided sufficient risk is transferred to the successful EVCI provider, the proposed arrangement may be a 'concession' for the purpose of the Concession Contracts Regulations 2016 (CCR). This has some benefits when compared with a supply/services contract regulated by the PCR:

  • Higher financial threshold – if the value of the concession is less than the financial threshold set out in the CCR (significantly higher than the threshold applicable to a supply/services contract regulated by the PCR) then the procurement will not be regulated (albeit there are EC Treaty principles that may still apply to any below threshold procurement);
  • Greater flexibility – if the CCR threshold is likely to be exceeded, the local authority would in any case be able to take advantage of the greater flexibility built into CCR, in terms of how the procurement process is conducted.

Pros: Legal certainty, control over if/when EVCI supplied, no upfront costs, net income

Cons: Possible cost of formal (CCR) procurement, uncertain appetite of EVCI providers to bear all risk

Conclusion

The most appropriate route will depend on a number of factors including whether the opportunity is local authority-driven or provider-driven; the risk appetite of each party; and the availability of local authority capital funds.

Stuart Urquhart, legal director, and Maeve Torrance, solicitor, at UK law firm TLT

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