29/04/2021 Briefing

Drivers of change

Under the European Green Deal (EGD), as turbo-charged by the 2020 Communication on the 2030 Climate Ambition, the European Commission committed to reducing greenhouse gas emissions by 55% in 2030 (as against 1990 levels) and reaching carbon neutrality by 2050. However, we are on a trajectory of reducing emissions by only 60% by 2050 (as against 1990 levels). Therefore an extensive overhaul of law and policy is underway to adjust course to the rapid pace of change required.

It is recognised that transport is one of the main sources of carbon emissions (accounting for a fifth of the EU’s emissions) but, by 2015, was the sector with the lowest share of renewable energy (6%). The EU has committed to increasing that to 24% in 2030 and, by 2050, to having a zero emissions transport sector.  The transition to electric vehicles will play an important role in the decarbonisation of the transport sector, and development of EV infrastructure is taking place against the backdrop of a dynamic legal background.

Domestic policy

In Ireland, sales of electric cars are forecast to double in 2021 and continue to increase year on year.  Among other EV-related pledges, the Programme for Government commits to legislating to ban registration of new fossil-fuelled cars and light vehicles from 2030 onwards; to publishing an EV strategy to ensure charging infrastructure stays ahead of demand; to providing planning guidance to local authorities; and to publishing a procurement strategy for the public sector fleet.

This level of ambition is reflected also in the National Policy Framework on Alternative Fuels Infrastructure for Transport in Ireland (2017- 2030) and through EV grant schemes, as well as the National Energy and Climate Action Plan. A Ten-Year Strategy for the Haulage Sector is also on the way, and the revised EU Directive on the promotion of clean and energy-efficient road transport vehicles is being transposed.

Ambitious climate targets, rapid technological development, and increased interoperability of systems are the backdrop. What does this mean for legal considerations in the rollout of EV charging infrastructure in Ireland?

Key legal and commercial considerations

EV charging points may be rolled out by way of: (1) collaboration between a state body (such as ESB) and a private sector entity (by way of a concession contract or otherwise), (2) procurement of charging infrastructure by landowners or commercial entities who sub-contract the operation of charging infrastructure, or (3) by private sector development of EV infrastructure.

In each of these scenarios, there are a number of legal considerations for the developer, funder or charging unit operator (“Charge Point Operators” or “CPOs”). The following are illustrative examples of areas that are going to be relevant.

1. Energy regulation

Alternative fuels infrastructure: the Directive on Deployment of Alternative Fuels Infrastructure requires each EU member state to develop national plans to put in place a sufficient number of publicly availably refuelling and recharging points in accordance with a timetable up to 2030.  The Directive (which is partially transposed in Ireland) also sets out certain obligations for Charge Point Operators. The obligations involve the provision of non-discriminatory and ad hoc access to charging infrastructure for users, information to be provided to users including as to charging point locations, and complaints’ services. It also provides for shore-side infrastructure for maritime transport. Publication by the Commission of a proposal for a revised Directive is expected in 2021.

Grid upgrades and network development: widespread uptake of EVs is required to be taken into account by ESB Networks in the planning and operation of the electricity distribution network. It will be necessary to ensure that demand can be met in densely populated areas.

Licensing regime and consumer protection: Any entity which supplies electricity to end-users is required under the Electricity Regulation Act 1999 to hold an electricity supply licence. The Commission for the Regulation of Utilities has published two decision papers on EV charging infrastructure, which take the approach that the infrastructure operator is the “end user” for the purposes of the 1999 Act, meaning that CPOs are unlikely to require a supply licence to operate, thus ensuring that third parties are free to offer and provide charging services. CPOs are, however, required to enter into contracts with licensed electricity suppliers for the supply of electricity to their premises, including to any charging infrastructure on their premises.  Such operators can then offer access to their charging infrastructure on a commercial basis.

2. Building regulations

Obligations on developers as regards charging points will likely be incorporated into Irish building regulations in the near future. Currently, at EU level, relevant legislation includes the requirement to install:

  • for new non-residential buildings and non-residential buildings undergoing major renovation with more than ten parking spaces, at least one recharging point and ducting infrastructure for one in every five parking spaces to enable the installation at a later stage of recharging points for electric vehicles, and
  • for new residential buildings and residential buildings undergoing major renovation with more than ten parking spaces, the installation of ducting infrastructure for every parking space to enable the installation, at a later stage, of recharging points for electric vehicles.

Like much of the EU legislation relevant in this area, this Directive is under review, with a new legislative proposal from the Commission anticipated in Q4 2021. The Irish Government is also developing new legislation on building regulation requirements for electric vehicle recharging infrastructure.

3. Health and safety

CPOs will be required to comply with all applicable health and safety laws in Ireland, including the Safety, Health and Welfare at Work Act 2005 and the Safety, Health and Welfare at Work (Construction) Regulations 2013. Where the CPO is not also the site owner, the site owner may also be obliged to assess and manage the health and safety risks linked to charge point installation and use.

4. Planning permission

In order to roll out charging point infrastructure, CPOs may need to obtain planning permission for the installation of charging points on their land, although it is worth noting that under the Planning and Development Acts, certain charge points are exempted from the obligation to obtain planning permission. Giving consideration to whether planning permission will be required for the installation of EV charging points is therefore likely to be important for developers.

Again, the legislative and policy framework is likely to evolve. The EU Sustainable and Smart Mobility Strategy indicates the Commission will publish recommendations on the planning and permitting processes for charging points. Among the many actions identified in Ireland’s Interim Climate Actions 2021 is the development and implementation of planning rules and guidelines across residential and non-residential parking locations for charging infrastructure, as referenced above.

5. Investment in EV infrastructure and financing

Historically, investing in charging infrastructure has been regarded as high risk due to the cost of installation of charging equipment, connection to the electricity grid and the potential for unreliable consumer demand. At the same time, the lack of charging infrastructure has deterred many consumers from purchasing EVs due to concerns around the availability of charging points. However, the changing policy and legal framework will provide impetus for change.

In terms of accessing funding, one potential approach might be closer partnerships between the public and private sectors. There are a number of options available to infrastructure operators to fund the roll out of EV charging infrastructure in circumstances where the purchase and installation works in respect of the charging points require financing. The CPO will earn a revenue stream from consumers for use of the charging infrastructure.  In purely private operations there will be demand risk associated with this revenue (i.e. the CPO’s income will depend on the demand uptake from final consumers) though it may be possible to mitigate this risk where the final users are vehicle fleet operators rather than private individuals who are likely to use charging infrastructure at their homes, where available. If a public body appoints a concessionaire to operate charging points, there may be a fixed revenue stream paid to the operator. A hybrid of both of these models may also be employed.

EV charging infrastructure that is done on a larger scale basis may, therefore, be capable of being project financed (where security is taken over contracted revenue streams). On a traditional project financing, lenders would also take security over the actual physical assets as well, though this may be less relevant in the case of charging infrastructure, given that it is likely to be installed in multiple locations and, in some cases, on land owned by third parties (rather than on a single site) and also may, in some cases, be upgraded or replaced with newer technology over a period shorter than the tenor of a traditional project financing. Other financing options may be available depending on the specifics of the project: there have been several recent examples of energy companies entering into green corporate loans in order to finance the development of charging infrastructure, given that infrastructure for clean energy vehicles is one of the categories of green projects listed in the LMA’s Green Loan Principles.

At EU level, the investment limb of the EGD and the Sustainable Finance Package may provide further options for funding EV charging infrastructure.  Green bonds or subsidies may be available to fund green transport solutions (based on technical screening criteria).

Changing landscape

Given the range of anticipated policy shifts and the move towards EVs, fuel forecourts are likely to increasingly focus on EV charging and retail (given longer refuelling times) than ever before. With the EU’s Sustainable and Smart Mobility Strategy indicating that “we must shift the existing paradigm of incremental change to fundamental transformation” we see a busy period ahead for the EV market and infrastructure development, as the full potential of EVs is realised.