Plugging real estate into a brave new fuel-free world

How recent developments in the sector impact on developers, landlords and tenants as the UK moves closer to the electric revolution.

The UK has a legal obligation to reduce its emissions to net zero by 2050 now that the Government has passed the Climate Change Act 2008 (2050 Target Amendment) Order 2019. Electric vehicles (EVs) are key to making this happen. As the uptake in EVs continues to gather pace amongst consumers and service delivery companies alike, there is increasing pressure to ensure the necessary infrastructure is in place to meet this growing demand.

It has been estimated the UK needs an additional 25,000 EV charging points by 2030 to match EV demand. This inevitably has repercussions on landowners, developers, house builders and retailers who need to consider how to incorporate EV charge points into their new and existing developments to address the current lack of charging points and to maintain competitive advantage in an increasingly fuel - free world.

Impact on real estate

The Government has launched a consultation, Electric vehicle charging in residential and non-residential buildings which closes on 7 October 2019. It applies only to England and proposes to mandate the provision of EV charging points in residential and non-residential buildings. 

The consultation follows close on the heels of the Government publication, "Road to Zero," which sets out how the UK would support the move to all new vehicles being zero emission by 2040 (see our Infrastructure, Project and Energy Team's articles, The Road to EVs) and Road to Net Zero on how the proposed new legislation is designed to bring the UK closer to the electric revolution. 

EV charge points on residential and non-residential buildings: the consultation in more detail

How will the changes be implemented?

New buildings: The suggested requirement for EV charging infrastructure in new buildings and new buildings undergoing material change of use and major renovation will be enforced through the creation of a new part to the English Building Regulations. It reflects the requirements of the EU Energy Performance of Buildings Directive (EPBD) which came into force in July 2018, but the Government does not think it necessary to go further than the EPBD minimum at this stage, anticipating that businesses will install more charge points than the minimum requirement where there is a commercial case for doing so.

Existing buildings: This is required by the EPBD but the requirements for existing buildings will need new legislation to implement the changes (as the Building Regulations only cover new-build or major renovation work).There are those that feel 2025 is a long way off in a sector that is gathering pace at such a fast rate. 

The changes will mean that new supermarkets, workplaces and shopping centres will have to have at least one charge point; and in future, all non-residential buildings with more than 20 car parking spaces will have to have a charge point, giving some level of certainty for EV drivers that there will be somewhere to plug their car in when they reach their destination. However, balanced against consumer need for EV charge points, the requirement for a charge point for existing non-residential buildings with 20 car parking spaces, will affect a wide range of property owners from retail parks to public buildings such as schools, churches and community centres. As there is no central registry of private and public car parks in England, the Government recognises that it is difficult to determine the exact impact of the requirements. There may be an exemption for SME landlords of existing non-residential buildings.

Charging point cost

The Government estimates that installing charge points:

• for the average home will add an additional installation cost of approximately £976 per car parking  space compared to £2,040 for retro-fitting;
• in an average non-residential building will cost around £1,100 per car parking space upfront cost.
• in an average, existing, non-residential car park will cost around £5,000 per car park

The installation of cable routes at the time of construction is cheaper than a retro-fitted charge point. The Government recognises that the cost of installing charge points can be high in areas where significant electrical capacity reinforcements will be needed or in cases of material change of use which could, in some cases, trigger the need for new power supply to the car park. Government research has shown that for home owners who have a suitable parking space, the vast majority of EV charging takes place at home and will often be the cheaper and most convenient option.

Exemptions

Lead-in time for new residential and non-residential buildings

The EPBD allows for an exemption for buildings that have submitted their initial building notice or full plans application by 10 March 2021.The Government is consulting on what may be a reasonable lead-in time from the date of publishing the new regulations and guidance to the regulations coming into force. The intention is that the lead-in time should be sufficient for developers, consumers, building control bodies and industry to ensure the supply-chain can deliver.

Residential buildings

• The consultation is seeking views on including an exemption for buildings where it is not technologically feasible to include an EV charge point.
• It is also considering an appropriate £3,600 per charge point cost exemption threshold for residential buildings. This is in order to avoid placing a disproportionate cost on developers, potentially stopping much needed major renovations.
• The Government proposes to exempt major renovations where the cost of installing the cable routes would exceed 7% of the total cost of the renovation,

Non-residential buildings

• The Government wants to avoid placing a disproportionate cost on developers and stopping the proposed development. The Government proposes to exempt major renovations where the cost of installing the cable routes would exceed 7% of the total cost of the renovation
• The Government recognises that the demand for charge points and the type of charge points needed at non-residential buildings is mixed, and will depend on how the building is used and the wider provision of charge points in the local area.

The Government is consulting on exemptions for listed buildings and buildings in conservation areas. 

Legal considerations

• Getting connected: consider cable routes (or "ducting infrastructure" in the EPBD) including general network considerations and whether consent from the distribution system operator is required. Associated planning and health and safety regulations in installing and maintaining the charge points (either a wall-box or a free standing feeder pillar).
• Alternative Fuels Infrastructure Regulations 2017: Any new EV charge point must comply with these regulations. The regulations do state that all charge points that are available to the general public must have a minimum level of 'pay as you go' access. The Office for Product Safety and Standards has recently issued some helpful Guidance on this.
• Charging consumers: 'pay as you go for all rapid chargepoints'. On 2019 the Government announced that it wants to see all newly installed rapid and higher powered chargepoints provide debit or credit card payment by spring 2020, allowing EV drivers to use any public chargepoint through a single payment method without needing multiple smartphone apps or membership cards.
• Infrastructure/equipment:  Where someone other than the site owner owns and operates the infrastructure, this is likely to necessitate a lease. The consent of any lender or superior landlord may also be required. 
• Property rights: Any wayleaves/easements/advertising issues to be considered? It will be necessary to reach agreement on the number of parking spaces which will serve as "dedicated" charge points for EVs and those which are also available for general parking, but not charging.
• Landlord/tenant considerations: The burden will be on the landlord to get the charge point installed. Consider the impact on rent and future rent reviews on the installation of an EV charge point and repairing/insurance obligations and reinstatement at the end of the lease term. 
• Other "user friendly" considerations: Some retailers have announced plans to install EV chargers across their UK stores. It begs the question of how they can best use the EV driver's charging time to work to their advantage by increasing footfall in their stores whilst the vehicle charges. There are powers in the Automated and Electric Vehicles Act 2018 (AEV Act) to mandate that chargepoints are built at motorway service stations and "large fuel retailers" (to be defined in regulations), but the Government may only use these if the private sector does not do this

Smart charging

Smart charging means shifting the time of day when an EV charges (e.g. to during off-peak periods when electricity demand is low) or modulating the rate of charge at different times, in response to signals (e.g. electricity tariff information) to avoid the grid being overloaded.

From 1 July 2019, the Electric Vehicle Homecharge Scheme now requires that a charge point must be smart (as defined in the scheme criteria) in order to be eligible for funding. Currently, there is no general requirement for all charge points to be smart. However, Section 15 of the AEV Act gives the Government the power to require that all charge points sold or installed in the UK will have smart functionality. The Government has issued a consultation on how best to do this. It intends to introduce regulations that will require new private (home and workplace) charge points to be smart; and require that smart charge points meet device-level requirements, including on cyber security and interoperability. The consultation closes on 7 October 2019 and the regulations are expected to come into force in 2020. This will mean that from 2020 or soon after, all home and workplace charge points (but not public charge points) will need to be smart.

Comment

The silent revolution? There is no denying that EVs are here to stay and that silent, no fumes, vehicles are on the increase, the impact of which is creating noise in the property industry. The British Property Federation is considering the consultation and has asked its members to respond on the proposed requirements. We will continue to track developments in this area.