Opportunity one: buses
Globally, we can expect the electric bus market to grow from less than 700,000 vehicles in 2021 to over 3 million by 2030. That would still only represent 11% of all buses in circulation, according to the IEA.
Fleets of electric buses also present opportunities for private capital investments. Bus operators usually benefit from long-term concession contracts with a municipality or a public body, providing them visibility on routes and bus utilisations. This creates an opportunity for a business-to-business (B2B) models. Under a B2B model, bus operators can offer long-term “off-take” (energy use) contracts for the charging stations to their energy service providers. This allows for the stable cashflow outlook necessary to raise debt financing.
Opportunity two: investing in the grid
The growth of the e-mobility sector will require significant investments to upgrade electricity grids, and increase renewable energy generation. Many countries in emerging markets are already engaged in ways to cater for growing electricity demand from a growing and more affluent population and favour renewable energy.
Grid services from EV charging remain marginal at this stage, but the technology required – bi-directional charging - is already in place in most of the newest electric vehicle models. Formalising how to monetise ancillary services provided by EV batteries connected to charging points could be key to creating stable cashflows. This may improve the revenue models of EVs, and therefore their bankability.
Beyond grid stabilisation benefits, smart charging of EVs, using differentiated electricity tariffs in off-peak hours, may also mitigate the pressure on electricity demand. That’s because vehicles can be charged during the day, when demand is lower and renewables generation is available.