Electric passenger Vehicle adoption has exploded in recent years and will continue to do so. In the United States, the federal government wants electric vehicles to account for half of all new automobile sales by 2030. The UK goal is even more ambitious, with a proposed ban on all new petrol and diesel van and car sales by then. Medium- and heavy-goods vehicle electrification isn’t far behind, and it’s on a faster track.

The major concern is how all of these vehicles will be powered. A new asset class will emerge in 2022 to support electric vehicle Charging infrastructure. Investors must understand the potential and risks that come with this complex convergence of energy, transportation, and technology to avoid getting burned. Electric medium-goods vehicles will begin to be widely deployed in 2022, with heavy-goods vehicles following closely behind. However, there would be a substantial time gap between the delivery of the vehicles and the widespread availability of charging stations.

The charging equipment for fleets will be different. Smaller charging units, which take energy straight from the grid and are generally utilized throughout the day for short power-ups, have become commonplace in highway service stations and city roadsides. Fleets of heavy-goods EVs charging at the same time, on the other hand, will necessitate on-site electricity generation and storage, as well as robust, grid-interactive demand-side management. Charging these new fleets will put overcrowded grids under more strain in both the United States and Europe. For example, to power 50 articulated trucks – the sort commonly seen on highways – the grid would need to dispatch a peak load of 50 megawatts of energy, which is comparable to the energy required by a major factory or a hyper scale data center. As a result, investments in charging infrastructure must begin immediately.

When these new integrated load and energy sources are deployed, they will have the potential to be a flexible resource that can support the system by reducing load or even pushing electricity onto the grid when needed. When there is an overabundance of power, they can even operate as a sink. Smarter management and grid rules that allow for more flexible resources will assist to alleviate the surge in EV charging station demand.

All of this will necessitate more money, risk management, operations, and energy expertise than most businesses will have on staff, resulting in the emergence of a new sector of charging-infrastructure providers. Attracting investment into this emerging asset class, which could prove difficult, will be critical to developing EV-charging infrastructure in time to meet demand. Investors will need to be able to step in and recontract or even operate a facility themselves, in addition to understanding the science and logistics of charging at scale. Contracts for EV charging are distinct from those for more well-known asset types like solar and wind infrastructure; they will likely be shorter in duration than the underlying asset-financing period and may not necessarily come from creditworthy sources.

Charging infrastructure hwever, will provide investors with an once-in-a-lifetime opportunity to enter a multibillion-dollar market at the ground level next year. They will need to gain a solid grasp of consumer demand, real estate, capital markets, and energy in order to be able to provide finance at a rate that allows this new asset class to grow rapidly while still providing a profit. The public and private sectors are now coming together in many jurisdictions to support this effort, but there is still more work to be done, as we shall see when the first fleets of medium-goods EVs reach the road in 2022.