The Real Reason Why Charging is SO Expensive...

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19:12Tom Hurst:So you've kind of mentioned it a little bit there, but I'm really curious to understand about land and ownership. And it seems the part of the success of working in the Northeast is that you have a fabulous relationship with local councils there. But equally, there are landlords involved in this as well. And there's a huge requirement for power on site, which can throw up some headaches as well. So I wonder if you could just walk us through who are the different stakeholders that need to be involved. and where do the biggest sources of friction arise?

19:46Imogen Bhogal:Okay, okay. I'm going to do my best in this one. So, I mean, what you're asking for is essentially the generic charge point operators development model. So, first of all, our teams have got to find a location. They've got to strike a deal with the landowner there to operate the infrastructure for a number of years, decades in our case, right? because we're investing in sites that will still be operational in 2050. So there's a lot of discussion there about how much land we need and how it will be utilized and all this and what the returns will be for our partners in that. So that's one discussion that will lead you to some form of agreement to lease that land.

20:30Imogen Bhogal:Then you've got to also secure power one way or another. You've got to reach out to the grid operators and understand what your connection costs are going to be, what the length of cable is going to be that brings the power from the main grid to your location. We've then got to, generally speaking, sign up some form of sublease or other form of contract between the grid operator and either us and or the landlord. It's also possible that there'll be a party called an independent distribution network operator involved, which is another third party, let's say, but there are good reasons for using them as well.

21:09Imogen Bhogal:and then you've got to go and convince the local authority that what you're proposing to build is worth building and actually adds value to the built environment and the transport ecosystem in the local area and then you've got to build the thing. But yeah, so a lot of these requisites they involve contracts, they involve legal negotiations, commercial negotiations and every negotiation is scoped for lag. You might shake hands with a landlord very quickly in the space of a few weeks, for example, but then the lawyers get involved. And we've got great, lovely lawyers in FastNet, and indeed our main legal external counsel that we use are fantastic.

21:51Imogen Bhogal:But you have got to deal with some either skeptical landlords or skeptical lawyers in particular at each phase of this process. And yeah, if there's one big lag, it's not one of these, it's not, you know, you hear about grid reinforcements and all these sorts of things. Yes, sometimes that is required. I'm sure it'll be required more and more as we go on. But the biggest lag originates from those legal negotiations that have been, I don't know, underpinned the built environment in the UK since the Magna Carta, basically, right? Like the property is king and all these sorts of things.

22:30Tom Hurst:God. And I wonder, and this could be a really stupid question, but how is that challenge changing given that data centers are becoming much more of a priority? They also need land that has good access to power. And yes, they're probably in different areas because where you drive and where you want a data center probably are different. But how is that changing the game for you?

22:52Imogen Bhogal:So far, not, I would say. Exactly as you say, we're in competition for land by good high traffic locations where our drivers are going to be comfortable, there's going to be amenities next door, or we're going to be able to add amenities. Luckily, most data centers are going for old industrial land or completely in the middle of nowhere to limit their impacts. I think one of the great things to note is that there has been a real flushing out of, I think they call it zombie projects on the distribution network, you know, that were holding up grid connection capacity for years and years with no development prospects.

23:29Imogen Bhogal:And so what's happened now is that we've seen the distribution network operators make power available much more quickly and straightforwardly to basically on a first come first serve basis, as long as you've got a prospect that can be delivered, you know, in reasonable timeframes. So maybe this will be an issue in the future. And I suspect it'll be driven by the UK's role in the AI transition more than anything else. But at least for charge point operators like us, it's not an issue that we've seen just yet.

23:59Tom Hurst:So in London, you're working in a slightly different way, I think, with an organization called Places for London. Can you tell us what that is and why it is a little bit different?

24:08Imogen Bhogal:Yeah, for us, it's a real, it's a monumental project. So Places for London is Transport for London's property business. It owns all the assets, all the land, you know, the factories, the shops, the retail units, the arches that make up the transport network and the land associated with that. So we entered into a joint venture with Places for London last year to build and operate a growing network of charging hubs all around the capital. So we'll both co-invest, you know, millions of pounds for some seriously, you know, advanced and exciting infrastructure, the likes of which we haven't seen in London before.

24:50Tom Hurst:And why is it that they, why is it that that sort of really streamlines that process? I know that sounds like a really obvious question.

24:58Imogen Bhogal:No, it's so the interesting thing is, it's still a commercial arrangement between us as a joint venture partner and and and places for London as a property owner as well. but you're dealing with a single property owner and the most important thing is we're dealing with a property owner that is motivated by more than just returns you know because often that that's a logical undertaking for anyone who owns land how much am I going to make but but through its role you know it's ultimately answering to the public body the the joint venture and and places for London are specifically motivated to to really enhance the charging experience for drivers in London to do more than just the bare minimum.

25:39Imogen Bhogal:It's not the charges around the back of parking bays, like you mentioned earlier. So it's flagship stuff that really demonstrates commitment. It demonstrates availability. And it provides large scale infrastructure for EV drivers. And beyond that, it's committed to its role in the community. It's committed to regeneration. iteration it's not just a story of you know uh what percentage return am I going to make on this

26:06Tom Hurst:particular property god that's a mammoth partnership and I'm guessing that it's it's exclusive with fastener there are other aren't other charging partners involved yeah we're their joint venture partner correct oh my goodness how did you wangle that that's incredible I think I

26:22Imogen Bhogal:mean really like as I said they're not motivated just by numbers right if you want to make a well in theory make a lot of money from charging you plop plomp down a charger and wait for the returns just to come rolling in. But if you want to build a long-term business that is sustainable and generates returns that are long-term as well, you actually need to focus much more on customer experience. You need to focus on the whole branding ecosystem. And one of the main reasons they chose us then was for our leading role in the transition, our long-term commitment to this since day one, and our proven ability to build this kind of infrastructure in the UK and across Europe as well.

26:56Tom Hurst:So I have to ask you the horrible question about cost, because if I don't, someone in the comments will say, why did you not ask about charging costs? What we know, and this is not unique to Fastnet, this is the case for every rapid charger across the UK, it's expensive. It's really expensive. I think currently it's around, well, somewhere between 79p and 98p per kilowatt hour, depending on which charger provider that you go to. We also know that there's been so much debate around the fact that, you know you pay 20 % VAT on public charging versus 5 % VAT on home charging and I'm just kind of curious to know what sets that price in the first place what are the mechanisms that determine that that's what you need to charge in order for this to be a profitable business yeah um okay well we can definitely delve into that right um we can look at what what makes up the price so uh looking at

27:51Imogen Bhogal:FastNet looking at just about any other operator of ultra rapid charging infrastructure there's a few key elements to the price. First of all, there's the actual cost of buying the energy. And when you break it down to the wholesale cost, it's not different at all or barely between the different operators, right? So our input costs are the same. You've then got the cost of building, well, it's not building, just operating a substation, a transformer on that particular location. Because if you want to be charging at speeds of up to a megawatt, for example, you also need a transformer of up to a megawatt and beyond.

28:21Imogen Bhogal:There are grid fees associated with that. So they start to lump on quite significantly. And they differ quite significantly between sites. Some were talking a couple of hundred pounds a year. Others were talking the tens of thousands per year with no real rhyme or reason from an infrastructure sort of perspective. You've then got all the costs associated with maintenance. You've got the costs associated with having built that in the first place and making those investments. And then we get to these, yeah, I mean, some of these more unnecessary costs like VAT, where, you know, if you're obviously you're lucky enough to benefit from the driveway discount, you're paying quite a different sum that is entirely out of control of the chargement operator.

29:06Imogen Bhogal:It's an inequality that's unnecessary and we don't like to see. And we're obviously still very keen for government to levelize.

29:18Tom Hurst:yeah what needs to happen then to ultimately see that cost come down is it a case of actually they just need to be in the ground for a long time to recoup some of those initial capex costs or what happens what what do you need uh what do we need

29:37what's the best way to describe this um it's part of that right i think a big piece here is that we

29:44Imogen Bhogal:are investing in advance of the transition. So we're investing for scale and levels of utilization and usage that we know are coming and we know are going to be on the roads in whether it's two, four, five, ten years time, because we believe these sites are valuable and they're going to continue to be valuable. So that investment does indeed need to be spread out over some depreciation period. It needs to be then recouped through charging revenues. That's a key part of it. But yeah, again, what also needs to change is these escalating grid fees. They've been going up year on year. And again, penalizing those operators like FastNed, who are having to invest in a big transformer now, a big substation, to be sure that these sites can continue to grow into the future and be valuable.

30:34Imogen Bhogal:So we're definitely keen to work with, whether it's Ofgem or just, you know, the government themselves on balancing out and being a bit more fair and proportionate with these particular costs.

30:46Tom Hurst:That's really fascinating. And I mean, it's also interesting to me that, you know, FastNed and others also offer various, the rate is cheaper if you get a membership, for example, which, you know, for someone like myself, who my FastNed is the charger I use most frequently, that makes total sense. for people who are you know using all sorts of different networks perhaps less so but then when you look at someone like i think it's bev they have a crazy price of like 39p per kilowatt hour and i can't wrap my head around how they've reached that do you have any guesses um i don't

31:21Imogen Bhogal:think it's one to to sort of speak to any particular network right like um as i say underlying costs are very similar. They really are.

31:31Imogen Bhogal:I think, you know, whatever network it might be, you know, lowering your prices at certain times is a good way to drive up low utilisation, right, in theory. It doesn't necessarily guarantee that you're going to see more revenues, but it does help, you know, you justify and demonstrate certain things to your investors. So that can be a particular driver for this.

31:49Tom Hurst:So you've not been in the role for a million years. I think have you how long have you been with fast food eight years oh it actually kind of is

31:59Imogen Bhogal:yeah oh yeah when I when I started and I'm not even a veteran by the scale of the the UK industry right but when I started there were 22 ,000 EVs on the road I was like oh my god this thing is happening it's going to be huge and we're selling 20 22 ,000 EVs in a couple of weeks here in the UK

32:14Tom Hurst:now it's it's it's fantastic oh my goodness I have got that so wrong I thought it was three years because I was going to ask about your experience at all right um I can never say this word, Arup. I always want to say Arup. I can say Arup. When you sort of stepped out of that world and into the world of charging, what was the thing that surprised you the most, perhaps?

32:37Imogen Bhogal:I mean, when I was at Arup, you know, I was involved in energy and climate change consultancy. I've been advising, you know, whether it was local authorities, businesses, NGOs and such, with elements of climate strategy, emission strategy, energy policy, etc. I was definitely quite fed up of writing lovely reports, which I was thankful profusely. And you watch the reports go on a shelf somewhere and say, thank you very much, job done, okay. We've done our commitment here. I was really keen to get involved in an industry and make change in building things and making that happen. and you know literally back then hydrogen was still something that was possibly possibly a thing right the next big thing is coming these hydrogen cars can be great evs were were also on the table um and these you know renewables in particular you know that that they'd already hit that boom they'd already hit the mass market they were highly investable by big institutions and it was not the sort of thing that you could let's say break into as a as a novice in in some ways but EVs was a different story and hydrogen.

33:47Imogen Bhogal:But luckily, I had plenty of time to understand the fundamentals of thermodynamics and all the challenges associated with making hydrogen work for passenger cars versus EVs. Knowing that you can plug in an EV at home, I mean, that's the simple game changer. It's the simple reason why we're where we are today, right? Yeah, I'll make this leap. And then it was one of these things, like I happened to look at a LinkedIn advert at the right time. And because I'm actually half Dutch, so I'd been driving down the Dutch motorways that summer, seeing fastened stations even then, which were not too dissimilar from these, on the motorways, going, what is this infrastructure?

34:28Imogen Bhogal:This is really cool. These Dutch know what they're doing. But actually, I thought it might be hydrogen when I first saw it, right? But no, it was EVs, and I happened to see the opportunity at the right time. But honestly, what really surprised me, and I think is still largely the case in the, particularly the charging sector, was the degree of collaboration and openness and positivity that you see, right? Yes, there's a whole bunch, especially in the charging sector, there's a whole bunch of competitors involved. But I was really, you know, inspired by the degree to which everyone was working to build this sector, to put it all together, to communicate to drivers the benefits, the logic of doing this.

35:08Imogen Bhogal:And then creating something from nothing, right? Creating something from an idea, from a vision, and bringing people on board with us to make that happen. And to the point where the sort of predictions we boldly made previously are all coming true. And it's hugely satisfying.

35:26Tom Hurst:I'm so glad I asked you that question, because I kind of knew that you'd give that sort of response. You are so evidently someone who gets a real buzz and joy from delivering something that you believe in. And perhaps that is the difference between working in an engineering consultancy and what you do today.

35:46Imogen Bhogal:I'm sure everyone working in the engineering consultancies believes in everything they're doing.

35:54Tom Hurst:But whenever I meet anyone who's sort of quite new to the EV industry, they always say the same thing. Oh, my goodness, people are so nice. People want everyone else to be successful. And of course, I'm sure there are outliers to that rule. I've not met them yet. But it is that thing of we've all come into this industry at a similar sort of time, really believe in it. And it is that perfect case of all ships rising, et cetera, et cetera.

36:18Imogen Bhogal:Yeah. Yeah. I think that's absolutely right. You know, I'm sure it will turn horrendously cutthroat in 10 years time or so. But we have got to to make that transition that, you know, there's 30 million more cars that need to shift one way or another and they need to be provided for. So there's a lot of work to be done. And yeah, I'm much more in favor of growing the pie rather than fighting for slices of the pie.

36:39Tom Hurst:That's a perfect analogy. Now, you've mentioned a couple of them as we've gone through this podcast. So, for example, good relationships with local authorities, working more closely with Ofgem around the cost of transformers and powers or etc. And also the 20 % versus 5 % VAT. but if you had a kind of wish list of stuff that you could just write on a little bit of paper or announce on this podcast and by the power of the podcast it would just be fixed and sorted

37:10Imogen Bhogal:what would be on your list i mean i mean the ultimate wish is can we can we delete contracts you know can we just make them not exist and can we go to something that like we have in the netherlands where whether it's a location lease or a grid contract it's two pages long it's an embarrassingly short. It's straightforward to deliver and it leads to lightning paces of delivery. So I would gladly find, you know, accept a wish that meant that we had less contracts. That would change the whole legal landscape in the UK and a whole bunch of people would be without jobs. So let's not wish that. But yeah, that, you know, you talk about barriers to deployment and And it's crazy.

37:52You know, this is a systemic thing for us in the UK.

37:57Imogen Bhogal:But then in terms of other wishes, right, like practically speaking, what we need as a charge point operator to continue to make these investments is we need a degree of certainty around where EV sales are going, where the transition is going. And what's been so great about the UK is that for really quite some time, we've had clear commitment from government across different administrations now on the direction of travel, on this commitment to phase out dates and all these sorts of things. And so if I had a wish, it's really that we do hold strong because the deployment of infrastructure depends on this.

38:32Imogen Bhogal:jobs depend on this um and the uk's competitiveness in in both the europe and the world and academically and technologically is also closely tied to this it's been you know so the signals from government have been such great uh signals of intent um my wish is to keep them do you know and from a consumer perspective it's always the trope that your house and your car and your wedding and like the biggest

38:58Tom Hurst:purchases that happen in your life and actually if there's any degree of uncertainty that's created through those signals changing it's it's annoying for household chit chat which let alone of course all of the ripple effect that that has to the economy to planning to jobs etc etc um i cannot believe the difference between the contract process here in the uk versus it is real that's yeah i mean it i wouldn't have even known to have asked that question that is

39:30Imogen Bhogal:Yeah, it's the uncomfortable truth. I mean, don't get me wrong. There's a lot of things. Actually, it has to be said. In the UK, we do a lot of things right. And when I talk with my country director counterparts in France, Germany, Holland, there are definitely things that they envy as well. But contracts is one of the main ones. But the other, we've got differences between us, but the common thread is really the political will behind it. So that's the main thing that we need, whatever country we operate in, that we really need. We need this commitment to the transition, basically, because then we will invest millions into the UK, into whatever country we can to help drive this and really just maintain the standards and shape what drivers expect and what they feel that they should expect.

40:20Imogen Bhogal:I think my biggest concern for the future is that drivers themselves come to come to see it as acceptable, that they just, you know, plug in a dusty, dirty charger out in the rain, whatever it might be. Right. For all their needs. I don't think it needs to be that way. I think it's quite a depressing reduction in expectations. Right. That we're here to change.

40:42Tom Hurst:Well, the other double points that I will give fastener is obviously not only that there is a canopy, but the screens are all at eye level. and that is not the case with some charges where it's really low screened up um like the screen is really low down and you see some people doing a funny squat or you know anyway well no it's a

41:02Imogen Bhogal:balancing act as well right because that that is very important for those uh wheelchair users for example that need to need to access them as well so we we find a balance um uh make sure that our sites are open for everybody and i think that that is the key for us as well we we cannot afford to either directly or indiscriminately, indirectly discriminate. It really matters to us that everyone is safe and comfortable using the super structure because we want to sell kilowatt hours of electricity. Why would we exclude any particular party or driver? It's fundamental.

41:38Tom Hurst:Thank you so much to Tom for joining us on the podcast today and for dealing with my rather snotty voice as well. I really appreciate it. Before you go, as I said at the start, if you could like, subscribe, share with a friend, we will forever be your friend. But also, if you could also write a guest that you'd like to see appear on the podcast, that would be wonderful. We always read the comments. We always appreciate your points of view. So yeah, write any names that you think of in there and we'll be sure to pursue them and get them on the podcast in the near future. But that is all that we have time for today.

42:15Tom Hurst:As ever, if you have been, thank you for listening and watching.