e-Mobility ecosystem Part 2: The Charge Point Operator
May 28th – 2020: Welcome to our second blog in the series of seven describing the e-Mobility ecosystem.
The e-Mobility market consists of many actors and because of several types of growth developments these actors interact and overlap more and more, making it harder to fully understand the whole ecosystem. To help you get a clear and better understanding of the e-Mobility market, we will share with you our knowledge and view by a series of blogs where we will highlight several actors. In this blog we will focus on the Charge Point Operator (CPO) and will be covering the following aspects:
• The role, definition, and responsibilities of the CPO
• The relationship with the other roles in the ecosystem
• Developments in the market
• Pains and gains
• Needed solutions
The role, definition, and responsibilities of the CPO
A CPO operates several charging points making sure every one of them is continuously up and running for EV-drivers to charge their cars hassle-free. Thereby different use cases are at hand:
The CPO owns and manages the charging infrastructure himself
The CPO only provides the connection on behalf of the owners of the charging infrastructure
The CPO offers both services at the same time
Furthermore, the CPO role can be divided into a commercial and a technical role. Commercially a CPO takes care of the pricing of the charging infrastructure, the connection towards e-Mobility Service Provides (e-MSP’s), and the related administrative services that come along with it (e.g. point of interest (POI) data sharing). Technically a CPO is responsible for the maintenance of their network, including diagnostics, customer support and repair (the latter is mostly done with external partners). Depending on the business model, interest, and capabilities of the CPO it either has one of the two roles or both at the same time.
Relation to other roles in the market
The CPO takes one of the central roles in the e-Mobility ecosystem and has therefore many connections. The main actors a CPO relates to are the e-MSP and Roaming Hub and of course the charging infrastructure itself.
The e-MSP will be explained more in-depth in a future blog (number three out of this series). In short for now: an e-MSP provides end-users (EV-drivers) access to charging infrastructure on a local, national, and/or international level, this is part of what is so called roaming. There are many examples in the market where the CPO also acts as an e-MSP as well but even in that case a CPO might want to connect to other e-MSP’s to enlarge the amount of EV-drivers to charge at their charging network.
The Roaming Hub is an intermediate party which connects a CPO to multiple e-MSP’s at once and vice versa connects an e-MSP to multiple CPO’s. In short from an EV-driver perspective: the ability of charging your car on as many different charging networks as possible with just one charge card. There is a lot more to explain about roaming and the pros and cons of using a Roaming Hub, therefore a more in-depth blog about roaming will be made available in the future.
Back to the role of the CPO, what influence has the CPO in the e-Mobility ecosystem?
First, a CPO can influence the costs of charging hardware by negotiating large volume discounts resulting in reducing the hardware costs for themselves but eventually also the pricing for end-users. The cost price of charging hardware has dropped significantly in the past decade, mainly due to scale caused by the adoption of e-mobility worldwide, in which CPO’s took a prominent role.
Second, a CPO can determine the charging capacity at a charging location. The charging hardware itself has of course physical limitations of charging capacity by design but the flexibility is mostly available in the platform of the CPO in which you can determine all the dynamics (load balancing, threshold values, delayed and priority charging, etc.).
And third, a CPO defines the base price model of charging at a certain location which is being transferred to the e-MSP and eventually (most of the time with a markup for the e-MSP) to the EV-driver. The base price model can be segmented into several components: starting fee (one-off), duration or connection fee (/min), volume fee (/kWh), session fee (one-off). Most price models only make use of one or two components where the volume fee is most common in practice.
Developments in the market
The market of e-Mobility is continuously in development and all actors, including CPO’s need to make sure they act on time to keep their business model and market share successfully in place. Here a few examples:
Roaming and interoperability agreements differ strongly from country to country which is disadvantageous for the EV-driver in the end. Some countries like the Netherlands have made strong efforts to have roaming well organized from the start whereas e.g. United Kingdom leaves it more to the initiatives of the market players resulting in little interoperability still as of today. Overall, more and more countries discover that bringing e-Mobility to the next level the needs of the end-user need to be fulfilled on an international level. As CPO active in the public space you need to make sure you find the right partners that can bring you a large roaming network to stay attractive.
Differentiation between countries
Like roaming, hardware legislation also strongly differs from country to country which makes it harder for CPO’s to scale their business across Europe. Matching national customer needs already is challenging enough, let alone the policies from law makers. Examples are direct payment terminals for public charging, mandatory Schuko charging socket besides a regular Mode 3 charging socket and a visible integrated kWh display.
Defined in many ways, ranging from an online connected charge point, plug and charge, till vehicle to grid technology, smart charging can be read in any way you like. For the online part it is important to know is that legislation in several countries steers towards online connected charge points especially for charging points that can be procured in combination with subsidies and grants. Regarding the energy related technologies a clear differentiation in needs can be found in several market segments; ranging from static load balancing, battery and solar combined dynamic load balancing till pilot projects where vehicle to grid technologies are shown to the public giving a glance of what future will bring. As CPO this requires knowledge and expertise and a timely start of embedding such developments since it is often more complex than expected at first glance.
Already a hot topic in The Netherlands but as well becoming a structural topic on European level, how to bring more pricing transparency to the EV-driver? In the past decade it popped up several times but now discussions are highly likely to move to a more fundamental level. As CPO you need to be aware about your pricing model, what the effect of it is towards e-MSP’s and EV-drivers and how you can comply with upcoming regulation. More about pricing transparency can be found in this blog.
A fast-growing market attracts a lot of players, ranging from large international incumbents, existing players, tech giants till local start-ups. Currently everyone is trying to grasp a piece of the pie and with that widening their product portfolio, e.g. automotive players becoming energy utilities and vice versa. Our take is that over time the market will consolidate, and market players will specialize more on their core competence to stay relevant and be able to grow or maintain their business. As CPO you should be aware and critical which market(s) and customer segment(s) you want to service and with which value propositions.
Pains and gains
Now we have looked at the the role, definition and responsibilities of the CPO, the relationship with the other roles in the ecosystem, and the developments that are going on in the market, it becomes clear that a CPO can experience many different pains and gains.
Starting with the positive side, the gains, a new and fast-growing market brings opportunities and the market is still opening and leaves enough market share to start a successful long-term business as CPO. Several valuable business models can be found and/or designed around at the intersection of e-Mobility and Energy. To leapfrog directly into a sweet spot the right partners are available to support your CPO business.
Of course, there are a few downsides, the pains, in running a CPO business. First, it requires continuous development from your side to stay relevant, to be attractive and to keep your position in the market. Second, this brings out the need for expertise, which can be developed by a CPO itself by investing a lot of time and money in developing the right software and hardware infrastructure and setting up all the needed agreements (e.g. roaming), as an alternative for this pain a strategic partner can be found that enables you to make that leapfrog without large investments upfront. Doing so make sure you look for an independent partner to avoid derailing of your vision and mission in the future because another hidden agenda is being played.
What does it take to become a successful CPO? It all depends on your ambition and the market you want to become active. The picture shown above displays several solutions one can think of. Our solutions are developed based on our 13+ years’ experience in e-Mobility and in such a way that we can support anyone who wants to start a CPO business without the need for large investments upfront. Interested in our solutions? Three standard CPO solution packages are available which are tailored around your ambition and based on dozens of proven customer needs throughout the years. In case you are more advanced already and in need of a more specific solution, we provide a custom solution as well.
We are looking forward to offering you the most experienced and independent e-Mobility solution out there. Please get in touch in case you have any questions, we are happy to help!
Last Mile Solutions welcomes Heiner Sprunk as Country Director Germany