The EV revolution is well underway. Passenger EVs now account for 9% of all vehicles sold globally and in major markets such as Germany and the UK, EV penetration is 26% and 21% respectively. For the carbon conscious, this is good news. And for investors, some opportunities are clear e.g. power grid upgrades, renewables, charging point infrastructure. However, at Igneo Infrastructure Partners, we look at the less obvious opportunities also.
EV enablement
Wide scale EV roll-out requires huge investment - McKinsey estimate around €150bn will be spent on EV-related infrastructure in Europe by 2030. Less appreciated is the need for software solutions to manage and enable this infrastructure investment. Power grid and charge point management for example will require more sophisticated tools in order to manage peak demand from EV owners. The scope of software services to support greater EV adoption is wide:
- Location aggregators – allowing EV drivers to plan and book in advance their charging visits
- Interoperability – making communication standards compatible between vehicles, infrastructure and management systems
- Customer service – integrating payment and shared services
- Data analytics – efficient EV network planning
- Smart charging – managing energy requirements for EV charging
These present opportunities for EV-related businesses able to manage large data volumes such as EV charging operators together or in conjunction with businesses such as off-street car park operators and retail partners.
How to balance supply & demand
The crucial role of software as EV adoption grows is particularly acute given the need to balance power grids. With renewables accounting for more of the energy mix going forward, the inherent intermittency of renewables demands smart charging solutions. EV-led supply and demand power peaks need to be addressed. Indeed the UK Government and OfGem have published a roadmap for ‘smart charging’ - the assumption being that by 2050 almost 80% ofEV owners will be ‘smart charging’ their car, charging outside the evening peak when power is cheaper and grid pressure lower.
Network management needs software solutions
But supply/demand energy management is not only an issue during peak evening periods, it will be a factor throughout the day. As EV adoption increases, public charger utilisation will surpass private. This matters as Boston Consulting Group estimate up to 50% of EV power will be supplied by public chargers within 10-years. These public chargers, utilising fast-charge technology, will subsequently place heavy demands on power grids during peak periods. Managing networks of public EV charge points will be critical to providing practical solutions at scale for electric vehicle users, including using Vehicle-to-Grid and battery solutions. Software solutions are also needed to further manage customer usage data, pricing strategies and energy management.
As the world embraces EV’s, the need for significant investment in new infrastructure is obvious. But the opportunity set for investors is not restricted to physical infrastructure – software solutions linked to it are likely to sit at the heart of the EV revolution.
Our Renewable energy assets
Important information
This material is for general information purposes only. It does not constitute investment or financial advice and does not take into account any specific investment objectives, financial situation or needs. This is not an offer to provide asset management services, is not a recommendation or an offer or solicitation to buy, hold or sell any security or to execute any agreement for portfolio management or investment advisory services and this material has not been prepared in connection with any such offer. Before making any investment decision you should consider, with the assistance of a financial advisor, your individual investment needs, objectives and financial situation.
We have taken reasonable care to ensure that this material is accurate, current, and complete and fit for its intended purpose and audience as at the date of publication. No assurance is given or liability accepted regarding the accuracy, validity or completeness of this material and we do not undertake to update it in future if circumstances change.
To the extent this material contains any expression of opinion or forward-looking statements, such opinions and statements are based on assumptions, matters and sources believed to be true and reliable at the time of publication only. This material reflects the views of the individual writers only. Those views may change, may not prove to be valid and may not reflect the views of everyone at Igneo Infrastructure Partners or First Sentier Investors.
About First Sentier Investors
References to ‘we’, ‘us’ or ‘our’ are references to Igneo Infrastructure Partners or First Sentier Investors (as applicable). First Sentier Investors is a global asset management business which is ultimately owned by Mitsubishi UFJ Financial Group. Igneo Infrastructure Partners is an unlisted infrastructure asset management business and is part of the First Sentier Investors Group.
We communicate and conduct business through different legal entities in different locations. This material is communicated in:
Australia and New Zealand by First Sentier Investors (Australia) RE Ltd, authorised and regulated in Australia by the Australian Securities and Investments Commission (AFSL 240550; ABN 13 006 464 428)
European Economic Area by First Sentier Investors (Ireland) Limited, authorised and regulated in Ireland by the Central Bank of Ireland (CBI reg no. C182306; reg office 70 Sir John Rogerson’s Quay, Dublin 2, Ireland; reg company no. 629188)
Hong Kong by First Sentier Investors (Hong Kong) Limited and has not been reviewed by the Securities & Futures Commission in Hong Kong. First Sentier Investors and Igneo Infrastructure Partners are business names of First Sentier Investors (Hong Kong) Limited.
Singapore by First Sentier Investors (Singapore) (reg company no. 196900420D) and this advertisement or material has not been reviewed by the Monetary Authority of Singapore. First Sentier Investors (registration number 53236800B) and Igneo Infrastructure Partners (registration number 53447928J) are business divisions of First Sentier Investors (Singapore).
Japan by First Sentier Investors (Japan) Limited, authorised and regulated by the Financial Service Agency (Director of Kanto Local Finance Bureau (Registered Financial Institutions) No.2611)
United Kingdom by First Sentier Investors International IM Limited, authorised and regulated by the Financial Conduct Authority (reg. no. SC079063, reg office 23 St Andrew Square, Edinburgh, Scotland, EH2 1BB)
United States by First Sentier Investors (US) LLC, authorised and regulated by the Securities Exchange Commission (RIA 801-93167)
To the extent permitted by law, MUFG and its subsidiaries are not liable for any loss or damage as a result of reliance on any statement or information contained in this document. Neither MUFG nor any of its subsidiaries guarantee the performance of any investment products referred to in this document or the repayment of capital. Any investments referred to are not deposits or other liabilities of MUFG or its subsidiaries, and are subject to investment risk, including loss of income and capital invested.
© Igneo Infrastructure Partners
Part of the First Sentier Investors Group