With project finance backers on board, Amply Power eyes EV charging scale-up

Amply Power, a Bay Area startup founded last year, aims to bring project finance to the electric vehicle charging market. The company says it has already unlocked access to hundreds of millions of dollars for if and when it succeeds in scaling up. Its first deal announcement is set to be made in the coming weeks

Amply provides charging-as-a-service solutions to fleet operators seeking to electrify their vehicles – everything from passenger vehicles to delivery trucks to school buses. The startup pays for, installs and operates charging equipment for a particular fleet of vehicles, and then optimises energy consumption over the life of the contract at a simple pay-per-mile rate. By putting in place long-term charging contracts, generally between five and 12 years (based on the life of the vehicles), Amply seeks to replicate the infrastructure finance model within this as-a-service solution.

"We'll come in and put in the infrastructure and guarantee a set price for that. And the project is financeable and standardised. That's the future that we see," said Simon Lonsdale, founder and head of sales and strategy, in an interview with inspiratia last week. "In order to do that we have to prove the reliability of the fuel and we need to have confidence."

Founded last year by veterans of the solar, energy storage and EV charging industries, Amply is backed by US$3.8 million in venture capital from Obvious Ventures, Congruent Ventures, LACI, KittyHawk and PeopleFund.

The startup derives its model from the US solar market. Over the last decade, the solar industry has been transformed from niche to mainstream, now providing standardised turnkey solutions that make cheap, green energy widely available.

"We are following the steps that have been proven in the solar world," said Lonsdale. "That same level of innovation is necessary here. People have to step back and look at what's the optimum way of fuelling in the future."

As entrepreneurs in the EV charging market grapple with various business models, some have looked to the parallels in infrastructure financing – large upfront capital costs, long-term contractual revenues and hard assets. Amply says it has already secured large project finance commitments.

The company signed its initial contracts in the second half of last year, and its first project is up and running. In the next few weeks, it plans to reveal its first contract, which is with a government agency.

While the initial contracts could entail a dozen or so vehicles, Amply says these will act as pilot projects for customers looking to potentially electrify fleets of thousands of vehicles. With EV sales mooted to grow rapidly over the next decade, Amply has placed its bets on fleets.

Electricity as a fuel

Amply's analysis finds that electricity is cheaper than gasoline and diesel in most major US cities. Electrifying could save fleet operators an average of 37% on fuel costs, it reckons, with optimised charging – which takes advantage of off-peak hours and avoids demand charges – potentially increasing this saving to 60%. On that basis, Amply says it can help cut fuel costs while supporting the transition to green energy. The company currently sees its biggest opportunities in California, New York, Hawaii and Oregon.

But while fleet operators – such as transit agencies, universities and delivery companies – have shown strong awareness and increasing interest in vehicle electrification, they do not always get it right. This is due to a variety of factors, such charging at the wrong times. The overarching challenge for the market is demonstrating that electricity is a reliable fuel. Lonsdale points to one famous example in Denver, Colorado, where the city's electric bus programme turned out to be 60% more expensive than its diesel buses.

"You'd be amazed by how many early fleet operators took the leap [to electrification] and their drivers come in in the morning and don't know if their vehicle is charged," said Lonsdale.

In addition to optimising charging times, an important factor in advancing the EV market is working with utilities to develop rates that are more appropriate, to help swing the balance of the economics of competing fuels.

"We're seeing utilities in California really starting to understand this need," he said.

Financing plans 

By introducing project finance to the EV charging market, Amply has come armed with the potential of high leverage and non-recourse debt.

"We've got remarkable project finance commitments – we have access to hundreds of millions of dollars for when the projects are there," said Lonsdale, adding that the O&M model and long-term contracts resembling PPAs have given financial partners confidence. "A lot of other companies have struggled to get project finance set up."

Amply's partners also vary in risk appetite, with some preferring low-risk contracts with government agencies and others eager to be on cutting edge autonomous vehicle deals. The company has also lined up a pre-approved funding arrangement that functions like a fund when certain investment criteria are met.

A crucial risk is that the visibility on power prices rarely goes beyond a few years, whereas Amply offers fixed-price contracts that exceed a decade and still pledge to achieve cost savings for the customer. In the short term, rate risk can be mitigated by integrating solar and storage into charging installations. To cope with the long view, Amply will also hedge rates with energy trading companies and take advantage of energy aggregation.

"As you think about growing multiple customers over multiple sites and utilities, you become in effect an energy aggregator – the risk mitigation comes from scale," said Lonsdale.